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Strategic Human Resources Actions

April 26, 2004
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ere are what John Sullivan (in his new book) lists as some of the actions workforce management professionals can take that are "a little bold."


GENERAL MANAGEMENT

   Integrate your managers through metrics -- Managers often work independently and fail to share best practices among each other. By offering each individual manager on the management team an incentive, based on the overall performance of the management team, you can encourage managers to cooperate. By tying managerial performance together with a common bond, you can encourage top managers to help improve the performance of the below-average managers.

   By asking employees to rate the quality of their own management and then rewarding managers with high scores, you can also encourage managers to play closer attention to their people management practices.

   Bad management-identification program -- One of the primary reasons that employees quit their jobs is the bad management practices of their direct supervisor. Develop a program that can identify "bad managers," and then develop strategies for fixing these managers, transferring them back to more technical jobs, or releasing them.

   Measure and reward managers for good people management -- Managers who practice good people management have the most productive employees. Unfortunately, most firms have no measurement system for assessing individual managers on how they manage their people. Human resources should send a clear message to individual managers that managing people is important by developing a system for rewarding managers for great people management.

   Off-cycle actions -- Going "against the grain" might seem unwise on the surface, but in some cases, it can lead to being the first or the only competitor in the field. For example, if the economy is down and no one is recruiting on college campuses, you might find that if you actively recruit, you might get some "superstar hires" that you would have had little or no chance of getting when everyone else was going full speed in college recruiting. Yes, this means creating open positions when the company is not doing well, but it might also mean that you will be able to "explode" out of the box better than your competitors can when the economy improves.

   There are other off-cycle actions; for example, intensifying retention programs even though your turnover rate is currently very low. Most employees expect special treatment when they know there is a high demand for their talent. This off-cycle approach is so effective because, when you pay attention and recognize employees when it's not needed, employees tend to appreciate it more. In addition, when the job market improves, they might just remember how well you treated them when you did not have to.

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HUMAN RESOURCES ADMINISTRATION

   Reward results in human resources -- Human resources managers must be recognized and rewarded for their results in maintaining a competitive advantage over the organization's competitors. Human resources lags woefully behind in the use of incentives for its people and programs, however. Combining metrics with significant bonuses for performance can have a dramatic impact on human resources productivity.

   In particular, rewards should be offered to all if human resources meets its overall goals. Incentives are also effective for recruiters, generalists (if their business unit achieved its goals), and those in leadership development. It does not take much; as little as a five percent bonus will improve performance by significantly more than five percent. A note of caution, though; bonuses must be tied to numerical results, not subjective terms like "merit" or leadership.

   Reward cooperation -- Human resources is known for having functional silos; this runs counter to the goal of developing a competitive advantage. In order to ensure that human resources functions work together, human resources needs to develop a common metric and reward that crosses all critical human resources functions. This way, human resources professionals are given incentives to work together.

   Prioritize programs -- It's not important to be great in every area, just in critical ones. That means that human resources must identify which programs and processes are critical to the firm's success and focus on maintaining a competitive advantage in those areas.

   Shifting resources -- In addition to prioritizing programs, human resources leadership must ensure that human resources budget and time allocations continually shift from low priority human resources programs to high priority ones.

   Employment brand -- One of the areas that is critical if you are to build a competitive advantage is the organization's "brand" as a good place to work. Because most human resources departments spend little time and effort on building a brand, this is an area where it is relatively easy to provide a competitive advantage.

   Managers are your "delivery system" -- It's important to remember that supervisors or line managers "deliver" a great deal of a firm's people management services like policy interpretations, performance assessment, and motivation. Although human resources does deliver some information directly to employees, most of that is filtered or redefined by line managers. As a result, it is important for human resources to realize that the primary delivery system for people-management services is the manager.

   Human resources must accordingly design its programs based on the strengths and the weaknesses of the delivery system the manager. It is not enough to develop a human resources program; it must be pre tested utilizing managers in order to see if what you intended actually will filter through to the employees.

   Human resources advisory group -- Like most other functions, human resources tends to be isolated from outside criticism. To counter that insularity, human resources should put together an advisory group to provide critical input and ideas, and to act as "beta testers." The group should include line managers, individuals who hate bureaucracy, individuals from finance, and some other diverse thinkers. Ask this group to be critical of everything you propose and offer suggestions in order to make your programs easier to implement and more strategic.

   Competitive intelligence -- A significant side benefit of doing a competitive analysis between firms is that you frequently gain competitive intelligence information about the operation of their people-management programs. This information can be used to improve existing programs so that you can leapfrog over your competitors. Cooperate with the competitive intelligence staff within your own business units and piggyback on their processes and sources.

   Experimentation -- Constantly try new things in every area of human resources on the assumption that you can't beat them if you don't act differently. Rapidly drop the ones that don't work. Run pilot and test programs to see if great "ideas" really become great "programs."

   On demand -- Human resources has a bad habit of offering "flavor of the month" programs to managers. Flooding managers with programs that they don't want can be a tactical error that can result in a lot of wasted resources on "unwanted" programs. A wiser approach is to first identify manager needs and provide information to managers about programs and services that you could provide. But only offer new human resources programs after managers request or "demand" them. Proof that managers really want a human resources program is typically if they are willing to fund it.

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RECRUITING

   Develop a "most wanted" list -- A "most wanted" list is an element of a recruiting strategy that espouses asking your key managers which individuals working at competitors that are "to die for." By identifying the specific individuals you want to hire, by name, at the beginning of the hiring process, you take a good deal of the "chance" out of the recruiting process.

   Pre-identifying targets allows you to focus a significant portion of your recruiting time and resources on convincing a relatively small number of "highly desirable" individuals to come to work with your firm. And the net result is that you can, first, really "wow" your managers and, second, you can increase the effectiveness of your firm dramatically by bringing in these "high-impact" individuals.

   Hire to hurt -- Identify key individuals at your competitors who, if they were hired away, would significantly hurt your competitor. Look at competitors as you would a sports team with no backups in crucial positions. Be sure and exclude people who are easily replaceable in the marketplace or who have a strong "second" who can step in easily. Ask your current employees who formerly worked for your competitors to help you identify these key individuals.

   Benchmark to recruit -- Call the top firms (or piggyback on others at your firm who are actively benchmarking) to benchmark their best practices. Use that benchmarking process to identify and build relationships with potential recruiting targets.

   First day of hire, ask, "who else is good?" -- When you hire someone from a competing firm, it is essential that you use that opportunity to gather the names of employees from their former firm who you might want to recruit. Ask the new hire who else at the firm is really good or will soon be good, as well as who is undesirable. Ask new hires (and reward them) if they will help you in recruiting top talent from their former employers.

   Pre-need hiring -- Hire people in key positions before there is an urgent need. If you wait until someone leaves a key job, that means that there inevitably will be a delay before the new hire is up to speed. This can dramatically slow your time to market. Hire people before they are needed so they can ramp up their skills and be ready when you need them. Calculate the learning curve and the time-to-fill periods, and use that to determine when to "pre-need" hire.

   On-site professional seminars -- People who continually learn and improve are the type of talent you want to recruit. These are the same kind of people who regularly attend seminars. By holding professional seminars on your site, you can physically draw them to your premises while simultaneously improving your organization's "brand."

   When they arrive you can excite them with your facility, get them to meet your people, and show them your cool projects and tools all under the guise of helping them learn to perform their current job better. Bring in outside experts as speakers in order to draw them in. Invite potential hires to speak along with your own top employees. Demonstrate to attendees that your firm and its employees are on the leading edge of knowledge.

   Invited open house -- An "invite a friend to work" program has a simple premise. Any organization needs to get candidates "in the door" in order to have a real chance of closing the sale. Car dealers and realtors have used this strategy for decades. A "bring a friend to work program" gets potential candidates to come to your facility and talk to your team. It targets employed but "passive" job seekers who wouldn't apply for a job but might come to an event to see what it's like where "my friend" works.

   "Bring a friend to work" is a high-touch variation of the traditional employee referral program. It differs from traditional "open house" programs (that are open to the public) in that individual employees invite people they know on a professional basis and who have the competencies the organization needs. If the "friend" is hired, the employee gets the standard referral bonus.

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RETENTION AND EMPLOYEE RELATIONS

   Who is at risk of leaving? -- Instead of guessing who is going to leave the organization, it is better to take a proactive approach in identifying who is at risk of leaving. Possible strategies include searching the Web for your own employees' resumes; placing a blind ad to see if your own employees apply; or asking other workers to identify who is "looking." Also consider hiring an executive search professional to tell you who is a prime candidate for other firms, who is looking, and who is safe. By getting real data and outside opinions, you increase the odds of identifying the correct individuals who truly are at risk.

   Challenge plans or learning plans -- One of the top reasons employees leave a job is that they are not challenged in their current job. By giving each employee an individual challenge plan, employees can continue to grow and learn. A challenge plan would include new projects, tasks and presentations in front of management. Managers and employees both could choose from a list of "tried and true" challenges if they are unsure of what might challenge them.

   Pre-exit interviews -- Instead of waiting until someone quits, it pays to be proactive and ask key employees why they stay By identifying what keeps them in the job and at your organization, you can reinforce the positives and eliminate what frustrates them the most. Interviews should be held every six months for employees who are at risk.

   Re-recruit -- Superstar employees often leave because they are courted and praised by outside recruiters. Managers must remember to do the same periodically in order to reduce turnover. Why wait until recruiters call and "sweet talk" your top talent? Every six months treat your employees as potential recruits and "re-do the deal" to re-energize and excite them.

   Blocking tools -- In this aggressive world, managers must anticipate large scale raiding by competitors. Managers must develop "blocking tools" in order to protect the organization's talent resources. These tools include anticipating competitors' actions through competitive intelligence, developing a blocking team, re-recruiting top talent, offering "stay-on" bonuses, and doing a competitive analysis of the raider. Other blocking strategies might include tools to make it difficult for competitors to identify your top talent, to know your pay ranges, and to find your weaknesses.

   Attention plans -- Many employees desire recognition and attention. One-way to systematically ensure that key employees get exposure is to develop an individual "attention plan" for each of them. Ask the employee what kinds of exposure he or she wants, and plot out a plan to insure it happens. Attention areas might include committee assignments, presentations, write ups, chances to be a team leader, meetings with the CEO, and meetings with members of the board of directors.

   Post exit interviews -- Many people fail to give the real reason for leaving a job because they fear potential retaliation by their manager in the form of a bad reference. If, however, you postpone the interview until three to six months after the termination, the chances of getting a candid reason for leaving increase dramatically. Use an independent market research firm to identify why employees have left, what the salary differential is at their present job, and even if they're interested in returning.

   Change the players -- Even when sports teams win championships, the next year they frequently change more than 10 percent of their team. Teams change their players in order to stay fresh or to adapt to the changing competition or environment. Unfortunately, such high turnover rates are quite unusual in business. If you are trying to be strategic, a low turnover rate could be a big mistake, especially if you have poor hiring practices, weak training, or ineffective incentive and motivation programs. My advice to managers is that "if you continually lose the game, change the players."

   Drop the "deadwood" -- Improve people productivity by dropping the deadwood. Instead of giving everyone a second and third chance, run the metrics to see if investing in poor performers has a higher return than getting rid of the poor performers as soon as it becomes obvious they aren't performing. Instead of crying "we might get sued," quantify the real risks of lawsuits. Develop "no-fault divorce" approaches to termination in order to encourage managers to drop bottom performers quickly.

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WORKFORCE PLANNING

   Bench strength (back-fill) plan -- In a time of high turnover, it's increasingly essential to have a strategy for identifying and developing individuals who can take over if an employee leaves. A "bench strength" plan differs from traditional succession planning in that it only covers replacing key jobs within a single department. It is not a company-wide succession plan. Individual managers are held responsible (and are rewarded) for developing at least one individual to fill every key job.

   Redeployment -- Quite often businesses reduce their productivity not because they have the wrong people but because they have good people in the wrong job. This is especially true in businesses that are undergoing continuous rapid change. Initially placing an "innovator" in a business unit, for example, might have been a wise move when the business was in its early growth stages. Once the business has transitioned into a commodity business, however, it makes more sense to move the "innovator" out and into another business where "innovative ideas" can be put to better use this can have more of an impact as well.

   Rather than waiting for the employee alone to figure out where his or her own best internal job placement should be, a better approach is for human resources and managers together to proactively identify and move talent from areas of relatively low return to jobs with a higher return. This process is known as proactive intra placement or redeployment.

   Targeted succession plans -- Targeted succession plans are narrowly focused strategies for ensuring that individuals are available to fill vacant key positions. They also tell key employees in advance that they have a future at the organization. Targeted areas often include major software implementation efforts and product development teams. Most succession plans fail because they are too broad and cover too long a period of time. Targeted plans allow the focus and forecasting to be more narrowly applied with the goal of increasing the accuracy of the planning.

   Corporate headcount "fat" assessment plan -- Rather than learning at the last minute that the organization needs to do a layoff, establish a set of assessment tools that will let you know in advance where headcount may be excessive. Monitor ratios, such as output per employee, employees to managers, overall department headcount to productivity, and overall labor costs per unit of output, to identify possible "fat" areas.

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COMPENSATION AND INCENTIVES

   What should I pay? -- Salary surveys can be out of date by the time they are published. If they are, you run the risk of "under offering" top candidates. In order to improve the accuracy of your offers, it is critical to capture the "other" offers that each of your new hires and applicants have in order to confirm what the competitive offers really were. You should also ask your current recruiters and outside executive search professionals what the real market rate is.

   Pay for performance -- Increase productivity by changing the way you pay people. Shift from the "money distribution department" to a function that provides incentives to productivity and the behaviors that increase it. Place a significant emphasis on, and allocate resources to, non monetary rewards and recognition. Identify and educate managers on which kinds of pay, recognition, and incentives have the most impact on productivity per dollar spent.

   Measure and reward increasing productivity. Increase the percentage of every worker's pay that is "at risk" based on his or her output, because there is evidence for most jobs that, as you increase the percentage of an employee's pay that is at risk, performance increases.

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MOTIVATION AND COMMUNICATION

   "More of/less of" motivation list -- A simple way of identifying what employees want more of in their jobs (and what they want less of) is to ask each employee what job and environmental factors they wish to have increased and decreased. Done quarterly, this process gives managers a chance to understand what employees want. Surveying employees and new hires about what motivates them helps managers better understand how to keep them excited. Topics should include what frustrates you? What challenges you? What are your learning goals?

   You do not have the right to remain silent -- This is a tool that explains the shared responsibility that an employee has in his or her own management and motivation. You must educate each employee (begin on the first day) that employees have a shared responsibility to help their managers and the organization understand what motivates and frustrates them. Employees are also asked about their aspirations and the key aspects of their "dream" job. Two way communication needs to be established at the very start so employees understand they have an important role in educating their manager about what excites and challenges them.

   Develop an employee "balance" sheet -- In addition to assessing the economic impact of programs, some managers find it helpful also to provide employees with an assessment of their individual economic impact. One way to do that is to give each of your key employees an employee balance sheet at the end of each year. This sheet compares the economic value of the employee's output with the cost of salary, benefits and training. This format encourages workers to be more aware of their economic impact to the company.

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DEVELOPMENT

   Employee learning plan -- One of the main reasons that people either accept or quit a job is their rate of learning. Top professionals demand the opportunity to learn continuously. By asking each top performer about their learning goals and how they learn best, managers can develop individualized learning plans to ensure that the employee learns at a speed necessary to excite and stimulate them.

   Parallel benchmarking -- Benchmark the best practices in related or parallel industries that traditionally implement advanced programs faster than your industry does. Learn from the advanced programs and processes of other disciplines, industries or geographic regions. For example, I once developed an incredibly fast "speed of hire" process for a Fortune 100 company based solely on information gathered from "fast lube" and fast food chains. I studied the existing processes throughout human resources, but they were all slow, so there was really little to learn.

   Part of any strategic approach is being aware of the best practices that exist outside your discipline. In particular, disciplines of finance, marketing, PR, and decision sciences are frequently ahead of human resources in metrics and program development.

   Where top performers learn -- In a fast changing world it is essential that everyone is continually learning. Unfortunately, in a fast paced world there's often little time for traditional learning. One way to speed up the learning process is to provide employees with "presorted sources."

   By asking top performers directly which resources they use to learn quickly (e.g., what sources have top performers utilized and found effective), human resources can relatively easily identify which sources are effective and which sources have little value. Then provide this "best practice" learning list to managers and employees so that they can begin learning the same way that the company's top performers do.

   Virtual learning networks -- A learning network is a group of individuals that exchanges information and ideas in real time. By sharing reading and learning, members can learn faster and from each other. Normally, a learning network consists of four to 10 individuals with a passion for learning. Information can be exchanged through e-mail, fax, telephone, in person, or by a combination of approaches. Information that might be exchanged includes best practices, problems, articles and more.

   There are three basic types of learning networks: e-mail, fax and telephone. In the first two types, a problem, article or proposal is sent to the group for comment. Ideas and criticisms are given and the results are summarized and sent to all (or to all who participated). Telephone groups use conference calls and hold roundtable discussions.

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COMMON "STRATEGIC ERRORS" OF HUMAN RESOURCES DEPARTMENTS

   Now that you've seen a list of provocative and innovative strategic human resources ideas, it's time to consider the opposite. After conducting an audit of human resources department operations, it is common to find the following errors or omissions:

  • Not measuring or rewarding managers for great people management.
  • Not tracking management satisfaction with human resources.
  • Not allocating resources to human resources in line with strategic goals.
  • Treating all employees and business units the same in recruiting and other human resources functions.
  • Not having a feedback loop to learn and revise the human resources processes when things don't work (i.e., bad hires, bad promotions and losing key individuals).
  • Failing to do zero based budgeting to critically assess existing human resources programs, and then dropping the weak ones.
  • Promoting managers based on technical skills rather than their people skills.
  • Having no formal non monetary motivation team compensation.
  • Not including on the job training and job rotations as an essential element of the development function.
  • Using the same target pay percentile for all jobs and business units when clearly all jobs do not have the same business impact.
  • Having no formal retention department or program.
  • Only using cost based and no qualitative human resources metrics.
  • Having few transfers to and from line management.
  • Having no periodic measurement of individual human resources and business knowledge.
  • Having no periodic human resources audit.
  • Not developing and continually running "what if?" scenarios to ensure there is a plan "B" for the entire range of possible problems.
  • Failing to develop human resources programs that cannot be easily copied by competitors.
  • Hiring human resources staff without business or line experience.
  • Not coordinating human resources plans with other business functions to ensure a coordinated effort.
  • Failing to ask new hires why they considered and accepted the job in order to determine which organization efforts had any direct impact on their decision (pay, training, benefits, career Web site, etc.).
  • Not having new human resources programs assessed by someone with "fresh eyes" and by managers that hate human resources.
  • Failing to measure human resources response time and on time service delivery.
  • Failing to assess the value of the human resources department's "brand name" and market share.

Reprinted with permission from "Rethinking Strategic HR," by Dr. John Sullivan, © 2004, CCH Incorporated. All Rights Reserved.

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