The People Prophet

Human Capital Metrics – Time to Rethink Their Value?

2007-07-23T13:37:00.000-05:00

Over the course of many years there have been countless attempts to develop HR/HC metrics. Always the skeptic, I have come to believe that the attempt to develop and utilize the metrics is a little overblown. For example an extensive analyses of staffing, employee training, rewards provided, and employee attitudes are difficult to accurately measure and for many executives outside of HR, worthless. In short, with few exceptions, I don’t think the traditional HR metrics are worth a hoot. Looks like I’m not alone. According to a study conducted by ISR, a global research firm, few of the metrics evaluate the effect of human capital management on corporate performance. ISR conducted a poll in which 100 business executives were asked their opinions regarding HR/HC metrics. Here’s what they said:

91 percent of those surveyed have some measures related to human capital, but only 46 percent assess the impact of human capital on business performance.

77 percent of those surveyed conduct an employee opinion survey, but only 47 percent use those findings as part of their human capital key performance indicators or balanced business scorecard.

A modest 43 percent of the respondents use human capital measures within senior executive appraisals, and an even smaller percentage – 30 percent – include human capital measures as part of the senior executive bonus system.

Uh, in a nutshell, that’s not good. So, where to from here? Jack Fitz-enz, founder and chairman of the Saratoga Institute, now a part of Spherion's Human Capital Consulting Group, suggests these 10 metrics. Interestingly, the HCM software my firm developed addresses all but two of the metrics.

Your Most Important Issues. These are the targets of all lower-level measures. Whether it be one or a few measures, make certain that you are focused on them and that your metrics lead in a direct line to them.

Human Capital Value Added. How do the people in your organization optimize themselves for the good of the company and for themselves? This is the prime measure of a person's contribution to profitability and shows that you can answer the question: "What are people worth?"

Human Capital ROI. This is the ratio of dollars spent on pay and benefits to an adjusted profit figure.

Separation Cost. It's important to know how many people are leaving and from which areas, but it's more important to know what that costs the organization. The average cost of separation for an employee is at least six months' equivalent of revenue per employee.

Voluntary Separation Rate. Loss of personnel represents potential lost opportunity, lost revenue, and more highly stressed employees who have to fill in the gaps. If you can cut the separation rate, you don't incur the cost of hiring for these positions or lose quality in your customer service.

Total Labor Cost Revenue Percent. This is total benefit and compensation cost as a percent of organizational revenue: the complete cost of human capital. In other words, this shows how much of what you are taking in through revenue goes to support the company's total labor cost (including temporary, seasonal, and contract or contingent workers. Thus, it accounts for all your W-2 and 1099 employees.

This metric is designed to help you track changes in your workforce. You can do this best by comparing this metric to your revenue factor, your compensation costs, your benefit costs, and your contingent off-payroll Costs. If your Total Labor Cost Revenue Percent is increasing, you need to see if this is because your compensation costs or your benefit costs are increasing or if your revenue is decreasing. This will help you determine what actions to take based on your business objectives. Cutting costs may only help in the short-term if revenue is decreasing.

Also, by looking at this number in comparison to your contingent off-payroll costs, you can analyze whether or not your contingent workforce is contributing to an increase or decrease in your total labor costs.

Total Compensation Revenue Percent. This is the percent of the organization's revenues that are allocated to the direct costs of the employees. This differs slightly from Total Labor Cost Percent; it does not include the costs for any off-payroll employees who receive a 1099. It only accounts for any on-payroll employees. Again, it is best to compare this measure to your Revenue Factor, your compensation costs, and your benefit costs to analyze what is happening with workers before creating strategies to address any concerns.

Training Investment Factor. Forces are in conflict within the workplace. There is a continuing invasion and distribution of technology aimed at improving individual productivity and a growing demand for better service. Yet many workers cannot read, write, do simple calculations or talk intelligently with customers. The organization must invest in bringing up basic skills.

Time to Start. With the ongoing shortage of talent, recruitment will be a major challenge. Monitoring the time from approval of a requisition until someone is on the job is a strategic indicator of revenue production.

Revenue Factor. This is the basic measure understood by managers.

Labor Economics and the Market for Ignorance

2007-07-12T12:28:00.000-05:00

I live in San Antonio, Texas. It’s a wonderful city in which to live and raise a family. However, the city is home to a sizable population of the under-informed. And when it comes to labor issues, these folks just itch for a fight. The latest issue to make headlines is whether an employer, named in the story below, is racist and discriminatory. Here’s what WOAI in San Antonio writes about our latest debacle:

Is it racist to pay workers more for the same job in a mostly Anglo upscale neighborhood than you would pay in a mostly minority poorer neighborhood?

A labor rights group says it is 'racist and discriminatory' for Bill Miller Bar-B-Q to pay workers $9 an hour at locations on San Antonio's north side, while workers doing the same job for Bill Miller on the mostly Latino west side make $6.50 an hour.

Activist Monica Garcia of the Southwest Workers Union says she knows the reason for the pay disparity...she says it's blatantly racist.

Full credit is given to Jim Forsyth with WOAI for writing this. Read Mr. Forsyth’s entire article on WOAI’s website.

Here’s my take:

Activists need to be much more informed about their chosen rants. The Revs. Al Sharpton and Jesse Jackson often are poorly informed regarding the issues on which they choose to comment. Remember Rev. Sharpton’s Tawana Brawley controversy? Cindy Sheehan has very little knowledge, if any, regarding the political issues prompting the war with Iraq. How could she? She is not on the U.S. government’s payroll. Activists carry a significant amount of personal baggage representing what are most likely years of hardship and the perception of personal injustice. When an issue conveniently comes along reflecting those personal hardships, out comes the bullhorn. Such is most likely the case with Ms. Garcia.

The allegation of racism is simply ridiculous. Ms. Garcia should consider attempting to sell the media (and thus the public) on allegations of discrimination alone and leave racism out of the equation. Racism is not covered by Title VII of the Civil Rights Act of 1964 nor is it covered by any other employment-related law. Discrimination, on the other hand, IS covered by the Age Discrimination in Employment Act, Executive Order 11246, the Equal Opportunity Act of 1972, the Rehabilitation Act of 1973, the Pregnancy Discrimination Act of 1978, the Age Discrimination in Employment Amendments of 1986, the Age Discrimination Claims Assistance Act of 1988, the Americans with Disabilities Act of 1990, the Older Workers Benefit Protection Act of 1990, the Age Discrimination Claims Assistance Amendments of 1990, the Civil Rights Act of 1991, the Age Discrimination in Employment Amendments of 1996, the Higher Education Amendments of 1998, and Executive Order 13145.

Ms. Garcia clearly has very little concept of labor economics. Where the labor supply is in greater demand and thus the supply is shorter, the price for labor increases. Such is the case here in San Antonio where the north side of town is largely represented by citizens who have at the very least a high school diploma and many have achieved education beyond high school (I’m stating this as delicately as possible). Point is; there is not as large a labor pool of workers from which to draw in order to staff the restaurants on the north side of town as compared to the other locations in the city. The greater the supply, the lower the price. Simple economics. It has nothing to do with racism.

I could go on… the price of housing is more expensive on the north side of San Antonio. The price of food is higher on the north side of San Antonio despite the fact that we have one grocer in the city. The price of fuel is higher on the north side. Reasons? The demand for housing is greater on the north side of town and the residents of the north side of the city are in a better position to pay more. It's not fair, but that's not part of the equation.

Some may ask why this issue is even in the Prophet’s blog. Here’s why:

Labor economics is apparently not well understood by a majority of the population. A little research would be useful. However, intelligence doesn’t sell well in the media.

The “racism card” is a cheap shot. It’s yelled in what seems to be desperation. When in doubt, or not, yell racism. Discrimination, on the other hand, is a valid issue. If a non-minority worker and a “worker of color” hold the same job, have the same tenure, and perform identically, and the “worker of color” is paid less than the non-minority worker, THAT is discrimination. If that is the issue Ms. Garcia is attempting to promote, she should prove it in court.

Ms. Garcia and any of her followers should conduct some research beyond observing the "Help Wanted - We Pay $x.xx" signs on store fronts. Knowledge of, in this case discrimination law, well-researched facts and a the development of a solid argument carry more weight than a stupid rant. But, ranting comes easy for those who are ignorant.

HR Managers Gone Bad

2007-07-06T11:30:00.000-05:00

Once in awhile, sometimes more often than I wish, I’ll hear stories about HR practioners gone bad. We’ve all heard them and it’s irritating because it stains our reputations as professionals. Here’s one I heard of not long ago…

Seems an employer has a work hours policy of between 9:00 a.m. and 3:00 p.m. In other words, employees of what I’ll call ABC Corp, are expected to be in their chairs between the hours of 9:00 and 3:00. Simple enough. The employees can come in early and leave a little early or come in late and leave a little late as long as they get in a minimum of eight hours of work. This particular employer has, like many employers, a building with a large parking lot right next to it. As ABC Corp is a sole tenant, it is pretty simple to see who is coming and going. Of course, over time, talented parking lot observers (PLOs) will be able to associate cars with people. So it seems was the case. The PLOs noticed that the parking lot was beginning to empty out shortly after 3:00 day after day. The “perps” included employees of ABC Corp that came in just before 9:00 in the morning. Simple math tells us that those perps hadn’t put in the required eight hours.

It didn’t take long before ABC Corp management took notice and called upon the HR manager to correct the issue. The manager’s mandate? Nail the perps and remind the employees that the ability to work flexible work hours is a privilege, not a right. Well, as one might expect, that’s exactly what the HR manager did and with badge in hand, reminded the employees that they were there to work the required hours. Nothing like endearing oneself to the workforce.

Some of you might be asking what’s wrong with the HR manager’s actions? Oh, let me list the ways. OK, I will.

The HR manager acted as a police officer. Policing the work force is not the responsibility of the HR manager nor should the HR manager have let the company execs convince the HR manager otherwise.
Acting as a police officer, which many HR professionals feel compelled to do, does nothing to gain the trust of the workforce. Managers are not only relieved of their respective responsibilities to talk directly to their subordinates regarding reasons for early departure, but, and this is a large but (I’ll leave the other ‘t’ off), the managers have less respect for the HR manager as well. After all, managers are employees too.
As the HR manager played the cop card, the manager pitted the workforce against the management team who then held the HR manager responsible for the mess. Not a position of envy. Repairing this sort of damage takes time and may, in fact, be irreparable.

Now the last reason. This reason is not bulleted because it is, perhaps, the most important reason the HR manager was wrong to act in the manner in which the manager acted and thus deserves its own paragraph. The HR manager missed an important opportunity to correct the problem by not exploring the root cause of the early departures. If employees are leaving early, there must be reasons. For example, are there individual relationship problems between subordinates and their managers? Are employees bored because there are too many employees with task overlap? Do they understand that they have specific objectives they are working towards? Has ABC Corp fully communicated the goals of the organization to the extent that the employees feel a part of ABC and wish therefore to contribute? Is there a daycare problem? There are, undoubtedly, more questions one could ask. In other words, what is ailing the human capital prompting early departures?

As is the case in the example above, HR managers are too often caught in a role of police officer. There are reasons for this sort of thing but that doesn’t excuse the HR manager. Clearly, the HR manager should endeavor to communicate his or her abilities as a professional to the management team. Most importantly, the wise HR manager should look beyond the tendency to react in a punitive fashion and explore the real issues behind, in this case, the early departures.

What about you? Are you aware of HR managers gone bad?

Employee Relations – Whose Job is it?

2007-06-28T16:39:00.000-05:00

Does it ever appear to you that managers are simply too busy to deal with their subordinates? You know, the coaching, mentoring, guiding, ensuring people are doing their jobs sort of stuff. The sort of stuff that is used to retain employees. I suppose that’s why we have jobs, in part. As HR professionals, we deal with managers’ people issues. Employee relations, right? Employee relations has been one of the tasks of HR professionals for years. It’s the sort of thing where Fred walks into the HR manager’s office and unloads an unpleasant employee relations issue on the willing HR manager who eagerly takes it on in an effort to be helpful. Fred simply didn’t want to bother his manager with the issue. Happens every day. Here’s the rub, we’ve got to stop it from occurring. That’s right. Employee relations should NOT be a task for which the HR manager is responsible.

Now, let me clarify. I’m not suggesting that HR professionals no longer address federal, state, and local labor law issues. I suppose one could label such tasks as employee relations. I tend to associate the knowledge of employment law with, well, employment law. Not employee relations. What I’m addressing here is the relationship a manager has with his subordinate… his or her skill at building relationships with his or her employees. This sort of skill includes, but is not limited to, the ability to clearly describe what is expected of the employee with respect to performance; the ability to recognize the employee’s work when warranted; the ability to guide, coach and mentor the employee; the ability to correct performance as necessary; the ability to provide a career path for the employee; and on and on.

It’s those “abilities” that many managers don’t have, don’t want to have, or simply don’t have time to perform (or so they say). So, in steps the HR professional to save the day. Nothing could be less helpful for the manager. Instead of taking a monkey off of the manager’s back, by removing the employee relations responsibilities, the monkey now in effect, becomes a gorilla. Mistakes the manager has made which resulted in Fred’s initial visit above are made again. The manager does not have the opportunity to learn from someone who knows how to handle the issue. That someone is the HR professional. It is his or her job to coach and mentor the manager. Not to do the job for the manager.

So, whip out your job descriptions and remove the employee relations responsibilities. Leave that to the managers. Don’t make the mistake of prohibiting them from doing their jobs. Oh, one last thing. The number one reason people leave their jobs voluntarily is due to the relationship they do, or don’t have with their managers. Help your managers so they can help you and your employer retain good, talented, capable employees.

Part IV of a Series - It's Time to Embrace Technology!

2007-06-20T11:24:00.000-05:00

Technology. Some, if not many, HR professionals have not yet embraced the concept. After all, HR professionals often enter the profession due to their fondness for working with people as opposed to dealing with numbers and computers. But alas, the time has come to put our arms around technology and give it a big smooch. A word or two to clarify… I’m not talking about one’s prowess with Word or skill at manipulating all of the features in Excel although even those two applications tend to toss up challenges for some. What I’m talking about is the necessity to adopt the concept of automation with two goals in mind: the resulting decrease in administration and the potential to accomplish what might otherwise be exceptionally difficult.

I’m an advocate for automating as much as possible in the HR administration workday. Doing so should (or might) enhance the value of what HR, and more importantly, what HCM has to offer the employer. That offering of value has very little, if anything, to do with administration. Administration DOES NOT ADD VALUE! In fact, the function is often the first to be outsourced.

OK, so administration is automated or outsourced. What’s next? Here’s my list of HCM functions that would greatly benefit from the boost technology offers:

Establishment of strategic goals and supportive employee objectives;
Analysis of the workforce’s capabilities and budgeting of the workforce;
Development and management of full and complete job descriptions;
Comparison of the external labor market to the internal labor market and salary and bonus budgeting followed up by supervisor recommendations;
Internal communication concerning the status of requisitions between hiring mangers and internal or external recruiters and full budgeting of expenses associate with recruiting;
Management of performance appraisals including 360 feedback and full performance documentation; and
Development of career paths, training plans, and succession plans.

These are the HCM functions that truly add value to the employer’s mission. Why you might ask? Because these functions focus on the very core of what a well-run business does: utilize human capital to its greatest potential resulting in the maximization of profitability potential for the shareholders and the employees.

At this point, some HR professionals may have the proverbial “deer in the headlights” look with the words, “what the heck” trembling from their lips. If we, as HR professionals, fail to heed the warning we have repeatedly heard, which is to add value, we will be devalued as a profession. Any hope for a “seat at the table” will be lost. The introduction of technology can help avoid devaluation of our field. Let’s face facts. HR professionals have a target on their backs. The inability or failure to embrace technology does nothing to fade the colors of the target.

Part III of a Series - Performance Management

2007-06-11T12:48:00.000-05:00

Of 129 Major U.S. companies, 66 percent rely on performance plans to determine salary increases and 47 percent rely on performance plans to determine bonuses. Yet, few firms measure whether the plans positively impact business and 30 percent don’t measure success of programs at all. While most companies use performance plans to measure their employees’ success, few turn the tables on themselves to measure if these programs are successful.[1] Enter HCM. Proper management of a company’s human capital can influence a company’s profitability. In fact, there is a clear relationship between the effectiveness of a company's human capital and the creation of superior shareholder returns. Watson Wyatt’s Human Capital Index (HCI) research studied people management practices in over 600 companies from 16 countries across Europe and combined this with independent financial data. It showed a clear link between specific people management practices and financial performance. Similar results have been found in Watson Wyatt's North American and Asia-Pacific HCI studies. This relationship the study identified is so clear that a significant improvement in 30 key HR practices is associated with a 30 percent increase in market value.[2] Results of a Deloitte & Touche Human Capital ROI Study suggest human capital practices may account for as much as 43 percent of the difference between a company's market-to-book value and its competitors.[3]

OK, so we know performance expectations should be clearly defined. What do we base the expectations on? Corporate goals and the aligned employee’s objectives. One of the significant factors often overlook by HR professionals is the need to assist in the development and execution of goals and objectives. This is not to suggest that we march into corporate America’s board rooms with our new found HCM orientation backed by a solid education and lead a discussion on the development of corporate goals. Let’s hope we get there someday. We can, however, assist in the communication of goals and assist in the development of supportive objectives throughout the organization. There’s a lot of room to work here. A full 84% of companies don’t believe the employee objectives are aligned with company goals.[4] Make no mistake. This is not a simple task and technology must be utilized to assist in this endeavor. After all, creating strategy is simple… implementing it is very difficult.[5]

So, here’s my point. Aligning goals and objectives with performance expectations is not only wise, it is necessary. But, it takes effort to do so and technology can help. That’s the topic of the next installment of this series.

[1] Hewitt Study Reveals Companies Measure Employees, Not Themselves, With Performance Plans, April 5, 2005
[2] The Watson Wyatt Human Capital Index (HCI)

[3] Creating Shareholder Value Through People; Deloitte & Touche, 2002
[4] Hewitt Study Reveals Companies Measure Employees, Not Themselves, With Performance Plans, April 5, 2005
[5] Got a Good Strategy? Try to Implement It; Wharton School of the University of Pennsylvania; May 2005

Part II of a Series - What is HCM?

2007-05-29T17:39:00.000-05:00

OK, here’s the skinny on Human Capital Management. HCM improves how organizations employ, deploy, develop and evaluate their workforce. Further,

The practice of human capital management measures the economic value of an employee’s skill set. HCM includes the analysis of an employee’s education, experience and abilities. These abilities may also be acquired on the job thus increasing an employee’s value.
HCM offers a clear strategic advantage and is critical in strategic and operational planning.
Human capital management places the right people in the right jobs to most effectively produce results and drive the organization towards achieving its goals.
HCM focuses on results, not processes.

While much attention has been paid to the practice of finance and accounting, the workforce has suffered from a lack of attention. CEOs of the nation's fastest-growing private companies are spending almost 50 percent of their company’s total budget on their workforce, yet less than a third have formal programs in place to retain key employees. Moreover, less than a third regularly discuss retention issues during management meetings, or understand why key employees are leaving the company.[1] The simple fact of the matter is, without talented, engaged employees, the numbers are of secondary importance behind keeping the doors to the business open.

Obviously, there is a need for greater attention paid to the workforce or human capital. Not so obvious is that there’s a clear benefit for doing so. While HR relies on a myriad of metrics to justify the profession’s existence, HCM’s primary metrics are simple: is the company able to retain quality employees and is the company profitable? Sure, there are additional metrics that are very telling such as turnover ratios but the primary determining factor of whether human capital management adds value is largely determined by the company is making money. If so, there is a ROI for properly practicing human capital management. Next time: performance management.

[1] Fast-Growth Private Companies Spend Almost Half Of Total Budget On Workforce, But Employee Retention Is Not A Top Priority, PricewaterhouseCoopers, September 2006

Part I of a Series – Is HR Ready to be Strategic?

2007-05-21T15:23:00.000-05:00

Many HR professionals seek the proverbial “seat at the table.” However, those in the C-Suite, the CEOs, CFOs, COOs and other chiefs, may have a difficult time supporting their quest. The seat demands the ability to think strategically. However, in addition to lacking an ROI orientation, HR professionals as a rule are not strategic.

Ed Lawler, founder and director of the Center for Effective Organizations at the University of Southern California in Los Angeles, has been gathering data on the effectiveness of HR since 1995. In 2002, he commented that he had seen very little change in how HR professionals were spending their time:

"It seems that instead of responding to this period of business turbulence by playing a central strategic business partner role, HR has responded by maintaining the status quo."

I'll wager to guess that there are a lot of critics who would agree with Ed. I do. Count me in as a critic. The typical HR practioner is an efficient tactician but is not a strategist.

OK. The ability to think strategically may be a problem. What other things ail us? Let’s see… we’re not going out of our respective ways to become better educated in the business of business. We are not terribly adept at learning about the businesses in which we work. We often don’t have a clue about operations or the clients our employers serve. In addition, for many HR professionals, education and training is secondary to ensuring employees adhere to the dress code. And finally, sadly, a four-year degree is not required in order to become certified as a PHR or SPHR, the profession’s best known certifications.

Clearly, a philosophical change is needed. The need for HR professionals to “insource” new skills has never been more apparent than it is today. That’s where human capital management (HCM) comes in. But there’s a catch… there’s a fundamental difference in the qualifications and drive one must have in order to practice HCM as opposed to HR. Those who properly practice HCM must be business oriented. Let’s be clear. HR remains focused on personnel administration and does not require an advanced education in order to practice in the field. HCM’s focus is on utilizing the investment of people in order to enhance profitability potential.

So, what exactly is HCM and how is it practiced? I’ll address that in Part II of this series next week.

The Talent Age

2007-05-15T09:46:00.000-05:00

We are in the Talent Age. That’s right. We’ve moved from the Stone Age to the Agricultural Age to the Industrial (or Iron) Age to the Knowledge Age (or Information) and now to the Talent Age. What exactly is the Talent Age you might ask? Let’s first take a look at what it is not. It is not about things that can be purchased, it’s not about location, and it’s not about technology or processes. Surprised? After all, as a (largely) consumer society, we are accustomed to getting charged up (no need to pardon that pun) about the best price, best location, and latest technology. In the recent past, those factors have defined a business' competitive advantage. Thanks to the Internet and with it the advent of advertising’s level playing field, the smallest retailer can compete with other retailers across the globe. These factors to which we have grown so accustomed are thus becoming less relevant. Price, location (or close to it), and, barring intellectual property roadblocks, technology can be copied or closely emulated. Little room is left for absolute differentiation between price, location, and technology.

So, that brings us back to a definition of the Talent Age. But first, some questions: What is it in business that is a constant variable? What determines whether a business thrives or simply exists? Remember, it is becoming more and more difficult to define a competitive advantage based on price, location or technology. The variable, the true competitive advantage is people. Talent. You and me. It is our knowledge, skills, abilities, performance, diverse backgrounds, drive, desire, innovative capabilities, and innate intellect that define a business' competitive advantage. Welcome to the Talent Age.

In a September 2006 interview with Tony Bingham, President and CEO of the American Society for Training and Development (ASTD), Robert Reich, former Secretary of Labor, said this:

“The only unique asset that a business has for gaining a sustained competitive advantage over rivals is its workforce -- the skills and dedication of its employees. There is no other sustainable competitive advantage in the modern, hightech, global economy. Barriers to entry are dropping like mad, so the quality of your workforce in terms of innovation and customer relations is basically all there is.”

OK, so we are now in the Talent Age. Talent defines a business. Talent provides a competitive advantage. Talent is going to drive profit. Talent is important, expensive and dynamic. Great. Who manages the talent? Someone or some function must provide guidance, leadership, and coaching to managers in ordre that they can more effectively manage talent as we begin work in this new Age. This person or function must also have a good if not great grasp of business and be able to engage the workforce (see my post below). That’s where Human Capital Management supported by technology comes into the picture. That’s the topic of my next post.

Listen Up, Managers and Executives!

2007-05-07T15:36:00.000-05:00

Managers, we're not providing an environment where the workforce feels engaged. Here's the nuts and bolts: many senior managers (let’s just call them executives) apparently don’t think employees are capable of understanding the business and thus don’t want to share the business of the business with the employees. Granted, it’s not necessary to share every single detail with employees, but there plenty of missed opportunities to engage the workforce… ironically to the detriment of the organization.

Let’s dig in. And executives, this is aimed directly at you (or y’all as I’m in Texas).

If you don’t tell employees what is going on, they will fill it in with their own assumptions (rumors). Not addressing a situation that has occurred or will occur up front is, and I’ll call it like it is, unwise. Again, reality is such that not everything can or should be conveyed to the workforce. Publicly held companies are barred from disclosing insider information. However, it is wise to confront a situation head-on with the workforce and communicate in a truthful manner. A note here… it amazes me how few executives either don’t know this or don’t care about what the workforce knows or doesn’t know.
The workforce is a lot smarter than you think it is. Great ideas emanate from an engaged, informed workforce. There are many examples out there… DuPont’s nylon (Wallace Carothers in 1934), 3M’s Post-It Notes (Art Fry in 1977), or CERN’s World Wide Web (Tim Berners-Lee and Robert Cailliau in 1990) to name just three of thousands. The benefits are huge but here’s the rub: employees are typically NOT engaged.
The workforce wants to be engaged. Not sharing goals with the workforce does nothing to ensure the goals of the organization are met. It is surprising how few organizations engage their employees in the development of objectives aimed at accomplishing corporate goals. In fact, a full 84% of companies don’t believe the employee objectives are aligned with company goals (Hewitt Study Reveals Companies Measure Employees, Not Themselves, With Performance Plans, April 5, 2005). Yet, employees WANT to be engaged.
The cost of NOT engaging the workforce is high. A recent survey titled, "Working in America: What Employees Want," conducted by Harris Interactive® and sponsored by Kronos® Incorporated, found that in today's knowledge economy many organizations still do not recognize the link between their workforce and business performance. The study found that only 36 percent of employed adults work for organizations that invest in programs or activities that create a satisfied workforce. Yet, of the more than 1,000 U.S. employed adults surveyed, more than 80 percent responded that these programs were important to them. Here’s the rub: 58 percent of employed Americans say they would, or maybe would, consider leaving their current employer if the economy continues to improve.

Here's the bottom line: engage the workforce. The workforce can help you enhance your profitability potential. Sure there’s a risk with sharing information. You give up some power and authority. Plane and simple. But the benefits FAR outweigh the risks.

I’ll end with a Gallup Study that enforces the notion that an engaged workforce inspires innovation (executives, think profit!). I would post it here, executives, but I’m sure you don’t want to read it. After all, there are just some things you don’t need to know.

Gaining Respect in HR

2007-04-30T11:47:00.000-05:00

I gave a talk recently to a group of HR professionals. One of the questions was, “How do you gain respect as an HR professional?” Though my first reaction was to rant about education and the need to quit party planning, here’s what I suggested:

Learn everything you can about the business. Spend time with the workforce and learn their jobs. Become an expert in a field that is critical to the operations of the company. For example, if you are in the trucking industry, get a CDL. If you are in a regulated industry, learn the regulations. If you have the opportunity to get licensed in a field, do so.
Determine your ROI. What value are you adding to your employer's mission?
Help your company achieve its goals. Teach employees how to develop objectives in support of the goals. Arrange group meetings and focus on getting things accomplished.
Become technology savvy and focus on connecting people to business strategies, to each other, to shared knowledge, and to the operational tools necessary to drive organizational success.
Outsource tasks that do not add value. For example, off-load payroll, benefits administration, employee relocation, and some recruiting tasks. While obviously necessary, they won't gain you any momentum.
Distance yourself from a great deal of the social work inherent in most aspects of HR. Teach the managers to do this for their staff. Again, while some of this sort of thing is necessary, you won't get any Brownie points for doing this stuff.
Do not get yourself in a position where you are the corporate cop. For Pete's sake, talk about a career killer! Nothing like blowing up any chance at respect.
Ensure you are well educated. If you do not have a four year degree, get one. If you are not certified, become certified.
Hang around with the CFO or controller. Learn the numbers and be able to speak finance.
Dramatically limit your friendships within the company. If you are a manager, do not socialize with those who report to you.
As you gain respect, remember that everything you do is watched closely by employees.
Learn to coach experienced managers and teach inexperienced managers.
Do not pit yourself between a manager and his/her subordinate. You will always find yourself in a losing situation.
Do not allow yourself to become the corporate grim reaper. Remember that employees who are terminated terminate themselves. Coach managers to deliver the bad news. Let managers manage. Do not take that responsibility from them.

Here’s my point: HR professionals need to concentrate less on policing the workforce and focus on the business. I'm not the lone wolf here... there are others who agree.

DO They Hate HR?

2007-04-25T14:45:00.000-05:00

We hear it and repeat it often. Our most important asset is our people. Really? Do we engage them in the operations of the company? Do we assist managers in the development of their subordinates? Do we turn to the talent embodied in the workforce and hold them accountable for the attainment of their objectives? Do we address performance issues head on? That's what the HR profession SHOULD do. But, we are often too busy planning parties and picnics, administering health benefits, and dealing with people stuff the executives don't want to do. Adding value? Nope. We want a seat at the proverbial table but we are too busy acting as the dress code cops.

Agree? So now what? We should help our employer attain the goals of the organization. We should be strategic. But, sadly, that is not the case. Look no further than the August 2005 cover article in Fast Company titled, "Why We Hate HR." In the article, the author, Keith H. Hammonds, stated "After close to 20 years of hopeful rhetoric about becoming "strategic partners" with a "seat at the table" where the business decisions that matter are made, most human-resources professionals aren't nearly there. They have no seat, and the table is locked inside a conference room to which they have no key. HR people are, for most practical purposes, neither strategic nor leaders."

And there it is, folks. We are not viewed as strategic according to Mr. Hammonds. I'll be willing to bet that most small company executives agree. Maybe even some of the larger ones. We can argue with his point, point our fingers at others, and point to our accomplishments as administrators. But at the end of the day, what's the point? Unless we, as HR professionals refashion our field, we are doomed. Ed Lawler, director of the Center for Effective Organizations at the University of Southern California in Los Angeles, has been gathering data on the effectiveness of HR since 1995. In the last seven years, he’s seen very little change in how HR professionals are spending their time. "It seems that instead of responding to this period of business turbulence by playing a central strategic business partner role," Lawler says, "HR has responded by maintaining the status quo."

I gave a talk to our local SHRM chapter not long ago. During the course of the talk I asked whether the 320 some-odd attendees knew what their corporate goals were. Less than 10% raised their hands. That's not going to get us a seat at the table.

I could stop here and my point is probably well made. But, I won't because that's no help. So, OK, where to from here? Consider these points. Have you (or your HR professional):

Assisted with the development of a strategic plan?
Communicated the goals to the workforce and assisted them in the development of objectives?
Developed a headcount budget?
Earned at least an undergraduate degree?

Clearly, as HR professionals, many have a long way to go. This blog will attempt to assist and educate. Anyway, that's my point. Let's see yours.