We have all said, these are crazy times and that business is forever changed. What does this mean for HR? Last week, I posted a blog that argued HR’s time to be strategic is now. So, what kind of skills will it take for an HR professional to be successful in the next 5 years?
2) Change Management skills- HR must lead and not follow.
3) Performance Management - It is all about performance.
4) Workforce planning/Staffing - Right people in the right seat at the right time.
5) Strategic focus- Understand the business, the direction, and how HR can impact results
2) Understanding the organization’s customer and the service culture-Understand what value the organization brings to the customer, make sure employees deliver on that value and design infrastructure to support service delivery.
3) Relationship builder-Ability to build relationships with line managers, executives, vendors, etc. in order to share knowledge and collaborate on solutions.
4) Business consultant-by understanding the business HR aligns all systems to support business strategies, goals and objectives.
5) Operational expert-HR studies operations to create and improve best processes.
Now more than ever companies need HR’s expertise in the areas of efficiency and performance. The predictions for 2009 are not positive, so we know that we are facing many challenges in the upcoming year. Companies will have to make tough decisions about people and expenses. I believe this is a time where HR can shine. After all, in service related businesses the people costs can make up 60-70% of the overall costs in an organization.
So, forget about the table! Quit talking about the table. Don’t worry about the table.
A company’s service climate is a function of its customer strategy and is strongly correlated with customer satisfaction. Measuring your employees’ perceptions of how strongly you execute service quality and service capability is predictive of customer behaviors. For example, when employees perceive they work in a positive service climate, customers report they experience a positive service quality and are more satisfied.
I believe the new key words will be Performance and Accountability.
So with that said, HR will be in a great place to make those two things happen by creating:
1) A true pay for performance system
2) Metrics that link to the organizational goals and objectives
Before you start on the two items above, I believe HR will need to make sure its house is in good order. In other words, make sure that the basics are being done correctly like compliance, payroll, benefits, handbooks, and polices and then you can start on the strategic projects.
A good first step is to conduct a very thorough HR Audit to see where you stand. The audit can certainly be handled internally but like any other audit, it is always good to get an outside, objective pair of eyes.
View a sample Audit Form to see items that should be considered during an HR Audit. After the audit is complete you can then prioritize the action items that resulted from the audit. Action items should be results oriented and linked to the goals and objectives of the organization.
My colleagues and I have been working on an extensive job analysis project for the past few months. As we study over 200+ jobs I am reminded why this is such a great study for HR professionals to consider:
1) It is the best and fastest way for an HR person to understand the business.
2) It becomes crystal clear who the top performers are when you interview, observe and collect job data
3) Recruiting is much more effective because you know the knowledge, skills and abilities for each job
4) Inconsistencies within job titles and job families are uncovered
5) Job analysis data can then be used to CUSTOMIZE compensation redesign, performance management and training design
And let’s not forget that the major deliverable of a job analysis is up to date job descriptions. I believe that you should take a competency and skills based approach when performing this type of analysis. This approach works well with succession planning and career development.
The most important part of the job analysis process is the actual data collection. Our team has been scoring the jobs using the PAQ (Position Analysis Questionnaire) that has 195 scored items. You can imagine the detail for each job. In order to score each job we have been using several data points that give us rich information on each job;
1) Job questionnaires that are filled out by each incumbent
2) Job observation-certain jobs are observed to get a better understanding of that job
3) Current job descriptions
4) Manager interviews
By understanding the jobs and what makes individuals successful in those jobs is a good first step in making sure HR systems are aligned. If we don’t understand the job then is makes it very hard to hire for that job, train for that job, appraise that job and set realistic expectations for the job.
Action Item: Start Job Analysis, January 2009
I think it is very hard to compare apples to apples when looking at this number. Many people include managers time for interviews, some do not. Some people include training costs, others do not. Here are the items I recommend:
- Salaries including benefits (recruiters)
-
Salaries including benefits (managers)
- Travel, lodging and related expenses
- Contract recruiter or search firm fees
- Advertisements
- Job fairs
- College recruitment
- Employee referral award
- Screening (background checks, pre-employment testing)
- Training new employee
- RAMP UP Costs (New hires time to get to efficiency)
I believe it is important to look at cost per hire by job category. Here are a few suggestions:
- Hourly
- Leadership
- College graduates
- Professionals
This metric is a great way to show efficiency in the recruiting area. It is easy to derive and you can definitely start measuring tomorrow!
If you would like an excel file that contains these fields with formulas please email me and I will send it to you.
This week is about giving thanks and with this year of uncertainty and change, I have a wonderful story about some very kind people.
I sent an email last week to everyone in my Outlook database, about 800+. The net of the email was about a charity in Atlanta, Samaritan House needing some assistance. I am on the board for Sam House and over the past few years we have held a Christmas party for hundreds of homeless men and women. We sing, we give out gift bags and we serve lunch. This year, donations were down. After I sent a plea to my contacts, in an matter of hours they donated toothbrushes, toiletries, hats, gloves, socks, underwear, etc. We are very close to having our goal of 300 gift bags.
In recent discussions I have heard two schools of thought regarding how HR can be viewed as a profit center:
1) By reducing costs such as absenteeism, turnover, and bad hires, HR can add more to the bottom line
2) HR can add value to the organization by increasing revenue
I believe we are getting pretty good at number one and we must continue to do so and measure those efficiencies. My question is how does HR contribute to a revenue increase?
Consider this example by James Perry and Russell Lobsenz:
Let’s assume that 2,500 staff members or 25% of a 10,000-person company consists of sales professionals. Now, assume that 10% of the sales force outperforms its peers by 100% and that the annual per person sales quota is $500,000. This means that 250 sales people would be selling $1,000,000 per year and contributing $125 million more in sales than their peers (250 top performers X $500,000 = $125 million). Assume that HR has the ability to differentiate the competencies or unique behaviors of the 250 sales people considered to be top performers. With this competency profile in hand, tools can be developed and used to predict future sales performance. This profile can then be used to optimize recruiting, selection, performance management, and training and development systems. If the number of top performing sales people could be improved by 5%, or an additional 125 sales people contribute $1,000,000 in annual sales, revenue would increase by $62.5 million ($500,000 X 125). Now, let’s assume HR invests $2 million on interventions, such as software tools for improved performance evaluations to develop the next 5% of top performers. The ROI would be 31 times the $2 million investment! Is there a CEO or CFO anywhere in the world that wouldn’t make this investment?
Now, that is a great example of how HR can become a profit center. 1) HR is aligned to the goals of the organization, 2) HR holds people accountable for results, 3) HR tracks performance, and 5) HR systems(training, performance, compensation, etc) are linked to each other and the goals and objectives of the company.
HR is now ready for their very own Human Capital Profit and Loss Statement.
What do you think?
We are definitely in unchartered territory. I believe that the way we have done business is and will change forever. The words accountability and productivity will be key going forward.
Which brings me to employee performance…of course, I had to tie that in somehow. I think now more than ever performance is the new mantra for HR. With layoffs occurring on an hour by hour basis at some point we will have shed ourselves of our bottom performers. When this occurs how will we decide who stays and who goes?
It has to be:
• Who is performing the highest?
• Who is adding the most value: (as defined by the customer)
So, how will we be able to measure this or tell who is performing and adding value? We should say our super duper performance management system. We all know this is a very big lie.
In a recent Wall Street Journal article, (subscription needed) Samuel Culbert suggests, “Get Rid of the Performance Appraisal.” Culbert suggests a “two-side, reciprocally accountable, performance preview.” The emphasis is on PREVIEW which is based on the future. The premise is you will be setting an employee up for success not reviewing failures. I LIKE IT.
ACTION ITEM: Review your current performance appraisal system and determine if it is success focused.
Smart business people know that “this too shall pass” and “who cares about the table” it is all about value and impact. I love it when a conversation with a top HR person starts off with “Let me tell you how we measure the success of our business” 1) market share 2) efficient processes and 3) revenue growth. Any by the way, “this is how HR will impact those 3 areas.” WOW….now that is cool.
Another discussion was around understanding how something subjective like culture, can be measured in an objective way and be tied to things like decrease in turnover, employee engagement, etc. Not that we have the definitive answer on the subject, but it is a good conversation.
I belive now more than ever, we should be talking about productivity, efficiency, value and effectiveness. HR can and must contribute to increasing these areas. More importantly, HR needs to measure its contribution to these areas.
Maybe we need to change our title to, Business Analyst, Performance Consultant, or Chief Productivity Officer.
Does all this connectivity equal liability?
A HR Audit will determine if:
• HR Strategy is linked to the organizational goals and objectives thus providing the linkage necessary to be high performing
• HR Metrics are being utilized to track HR performance making sure HR is effective and efficient
• Policies and procedures are compliant and are being consistently implemented throughout the organization to prevent unwanted legal exposure
• The Performance management program is measuring the competencies that make your organization successful
• Recruiting processes are yielding high quality talent based on your organizational competencies
By taking the time now to determine what can be done to save costs and improve productivity, HR can focus on adding value during this economic downturn. The pressure of adding value to the organization will be heightened as top executives have to make sure that systems are streamlined, customers are served and profits are protected. Now, more than ever HR must be focused on those activities that can add to the top line, protect the bottom line and increase productivity.
SourceMy answer is usually around starting small, getting some credibility by showing impact, and then you can go from there.
In Al Adamson’s, HR Executive Online article, Building Workforce Analytics, Adamson discusses 6 key challenges that must be overcome in order to continue a successful metrics program:
I think the best way to make employee engagement data meaningful is to make it actionable. Here are some tips on how to make the data actionable:
1) Ask questions that are specific enough so that you know what to do if you score high or low on that question.
2) Analyze the data so that you know exactly what DRIVES engagement. This does require some extra statistical steps (correlations, factor analysis) but it is worth it. These DRIVERS will enable you to focus on what is really important.
3) Report the data in a way that is meaningful to your audience. Use the “killer slide” concept. Tell the data story in one or two slides at the beginning of the presentation. Spend the rest of the time ACTION PLANNING around what to do about the data.
4) Use the right metric for engagement data. Instead of using mean scores, because after all that is just an average, report data using % favorable instead. Percentage favorable is the % of respondents that gave a question a favorable rating. For example, on a 5 point scale, the respondents that scored a question a 4 or a 5, would be considered favorable.
5) You need to track engagement data over time to really make the data have meaning. By understanding how scores move and why, you will be able to become predictive with your data. By combining other data points like turnover and customer satisfaction your data becomes intelligence that is critical to the business.
Many times after a survey is completed, the engagement data is put away until the next time a survey is delivered. I say take that data and use it, you will be surprised what you learn.
The answer to that question is… everything! Does this scenario sound familiar in your organization?
The Veterans and Boomers that have been with your organization for 20+ years are quite frustrated with the “new kids” coming onboard. “They just don’t work as hard as we do.” “They aren’t loyal to this organization” “They have not paid their dues yet”
For this first time in history we have 4 distinct demographic groups in our work places:
1) Veterans
2) Boomers
3) GenXers
4) GenYers
With these very different generations, how do we keep them engaged and loyal to our companies? The first consideration is to understand how each group views the workplace. (double click on table for a larger view)
Just as we target our customers’ needs based on demographics, we will need to do the same for our employees. It is no longer “one size fits all” when it comes to careers, rewards, and job content. Companies with this mentality are going to find themselves without talent in a world where talent is in short supply. So, how will you think and act differently regarding the changing workforce? Is your Human Resource Department ready for this challenge?
The first step is to analyze employee engagement by generation and to understand the differences in scores. Then, like a detective search for root causes of differences so that you can take action based on that data. For example, if you find that Xer’s prefer time off to a monetary bonus for a job well done consider giving employees a choice when it comes to rewards.
ACTION ITEM: Start analyzing your employee engagement data by generation!
What if you had the ability to predict the value of an employee over his tenure with your company? That intelligence sure would make employment decisions like hiring, firing, and training a lot easier.
For many years, marketing professionals have been calculating Customer Lifetime Value (CLV). CLV is defined as the present value (usually expressed in currency) of future profits that can be calculated based on current customer profits and customer behavior. There are many variations in models but most contain the following components:
- Data from Best Buy shows that stores where employee engagement increased by a tenth of a point (on a five-point scale) experienced a $100,000 increase in annual sales.
- JC Penney has found that stores with top-quartile engagement scores generate roughly 10% more in sales per square foot than average and 36% more operating income than similar-sized stores in the lowest quartile.
So now that you see the WHY behind tracking employee engagement data, here are the 13 “Must Haves” when you start an employee engagement project:
- Shared goals-Make sure upper management is onboard with the idea and that the goal for everyone is continuous improvement
- PR-Communicate the upcoming survey to the employees explaining the reasons for the survey and to set expectations for the follow up of results, confidentiality, etc.
- Questions-Make sure you are prepared to take action based on the questions you ask. Even if that action is monitoring that question, make sure you know what you will be doing with the data.
- Delivery-Make sure respondents have access to the survey. Many times production and field workers do not have Internet access. Have paper copies available for those groups.
- Language-If you have multiple languages represented in your employee population consider survey translation. Meanings do get confused and you want to avoid survey error.
- Response rate-Monitor response rates and publish those to employees encouraging 100% participation.
- Data analysis-The data has to be analyzed in a way so that action can be taken. This means that the onion must be peeled back so that the data is meaningful to those taking action.
- Data story-DO NOT USE ENDLESS CHARTS AND GRAPHS. Tell an effective data story beginning with 2 killer slides that gets to the POINT in a succinct, understandable way. (see post: How to tell a GREAT data story)
- Communicate again-Be sure to discuss survey results with employees. Also, any action items that have been planned as a result of the data should be reported as well.
- Action planning-Don’t stop the process after the last report out. Make sure you managers are involved with action planning to improve and/or maintain scores.
- Remeasure-After actions have been taken, go back and remeasure to track results
- Get predictive-Begin analyzing historical data and other relevant company data to be able to produce intelligence like Best Buys and JC Penny.
- Include engagement scores on HR scorecard and Company Scorecard
Action item: Talk to management about employee survey, 4th quarter 2008!
(C) 2008 Ulrich Kerler & Marcus Schiesser Report an issue | Feedback | Privacy Policy | TOS