"Companies have a hard time distinguishing between the cost of paying people and the value of investing in them"
-Thomas A Stewart
I think this quote from Thomas Stewart captures one of the most significant issues that organizations still face almost 200 years after the Industrial Revolution, the idea that it is the acquisition and deployment of talent that typically determines the long term success and sustainability of organizations.
I have spent more than three decades directly and indirectly involved in the profession we call Human Resources and I have the say the progress has been underwhelming.
A recent poll of CEO’s regarding what they perceived as the key value provided by their human resource function resulted in a pretty disappointing number indicating they weren’t really sure, with another significant group responding the primary value was in compliance and protecting the organization from litigation.
What is even more disappointing is that a poll conducted by Focus.com in 2012 of Human Resources executives and professionals reported similar results; a majority reported compliance with various local, State, and Federal laws and regulations as their number one priority and value to their client organization.
The result of this as you might suspect is that very few organizations have a very clear, articulated human resources philosophy and strategy that is refined and driven by the top levels of the organization and then disseminated throughout the organization.
The U.S Department of Labor estimates that employee turnover costs our economy $5 trillion every year.
Another study concluded that although we spend over $100 billion annually on training, the retention or skills transfer rate measured out 18 months is less than 10%.
Yet another study reported the following:
- Of employees surveyed 23% of non- management employees (less than 1 in 4) described themselves as engaged or highly engaged
- 65% of those employees evaluating themselves as non-engaged indicated they would change employers for a pay increase of 5%
- 80% of employees who have issues or don’t feel supported by their immediate supervisor describe themselves as disengaged
- 39% of those surveyed do not have trust and confidence in senior management in their organization.
So at this point you may be asking yourself what point I am trying to make,
My point is this; if we were losing $5.1 trillion annually to international trade or quality issues there would be a concerted effort to define and address the issues associated with those losses.
So why not a greater proliferation of a human resources strategy within organizations and societally?
In my experience there are a number of reasons:
- Even with evidence to the contrary the management of relationships is still in many organizations considered to be a soft skill.
- As noted earlier C level executives in many organizations don’t have clear expectations of their human resources team and human resources professionals themselves are focused on tactical and hygiene factors rather than integrating human resources strategy with organizational strategy.
- Many organizations still see employees as collateral rather than stakeholders. Focus is on the customer and shareholder at the expense of the employee.
- For many years the solution to increased employee expectations and regulations expanding the responsibility of employers to provide safer environments and societal considerations like health care, time off for parenting and family issues was to move operations off shore to take advantage of lower labor costs and less restrictive labor laws.
- While we have taught management for generations we still value technical competency over leadership and make many of our hiring decisions on that basis.
- We embraced the concept of human capital, employees are an asset to be deployed and leveraged like capital.
The U.S. culture has also put entrepreneurship and the creation of wealth at the top of our pyramid. I want to be clear here that I am a capitalist; I think growing the economy is absolutely the best and most sustainable way to create a robust social infrastructure.
There are some caveats.
- Many entrepreneurs I have worked with are great innovators, but poor managers and lacking the leadership skills necessary to create sustained enterprises.
- When the development of wealth is the primary objective balancing those objectives with other broad based societal goals goes out the window.
Now let’s examine an alternative; a business strategy that incorporates alignment of individual employee goals and objectives with organizational goals and objectives.
- Hay Group studies show that high engagement can improve revenue growth by 250 % and reduce turnover by as much as 40%
- 70% of organizations with high engagement exited the downtown with higher levels of employee motivation than pre-recession.
- 90% of the Fortune Magazine Worlds’ Most Admired Companies have developed and maintained an explicit employment brand.
- The World’s most admired companies incorporate building human capacity, teamwork, and customer loyalty into their performance rewards and management programs.
You will probably notice some familiar vernacular in these statistics, words like employee engagement and employment branding. The reason you see that language is because those are code words for organizations that embed human resources strategy within their larger strategy. It is not buried in Human Resources.
Engagement has become important enough that Gallup stated in 2011 that the most predictive indicator of an organization’s long term sustainability is employee engagement, and that high employee engagement has a direct and indirect positive correlation to every key performance indicator.
As a human resources executive, C level executive and management consultant for over thirty years I have discovered a universal truth-
People join cultures not organizations and they leave managers not companies. Your product or service brand will never be better than your employment brand.
The cold reality is that your brand lives where your customers and your employees interact. Building a strong employment brand is an essential component of having a truly engaged culture and having a truly engaged culture is at minimum a competitive advantage, as time evolves I believe it will become a strategic imperative.
So assuming that you have read this far and are at least curious about how to go about creating this kind of a strategy and culture let’s shift gears and talk about some how to’s-
Although this may seem trite and overused you start this process by developing the core values of the organization. There shouldn’t be too many of them and they should be yours.
Don’t borrow them from another organization no matter how much you admire them.
- Your values need to be written in stone. Not complying with a core value means you don’t hired or you don’t get to stay. No exceptions.
- Your values need to be understandable and applicable to every job at every level.
- Your values need to be promulgated by the C level, but owned by everybody.
The fundamental building blocks of an engaged culture and integrated human resource strategy possesses the following elements:
An engaged environment includes the following:
- A management team that is competent and skilled in fundamental human relations skills
- Recruiting and hiring staff that fit your culture
- Satisfying work content.
- Association with an organization that they respect and that respects them.
- Mutual commitment to them and their careers.
You might notice that I put the management team competencies first, that is deliberate. As I mentioned previously people join cultures and leave managers. Creating a culture where management and leadership aren’t optional is an essential first step.
The next step is equally important. Too many times I see organizations recruit people exclusively on the basis of their technical competency, usually illustrated by success in a prior role and/or organization.
Technical competency remains important, but my recommendation is look to the track record of performing tasks and completing projects as indicative of those abilities rather than certifications, education, and experience. I emphasize experience because I find it typically pretty unreliable. Most people and organizations equate tenure with experience, they are quite different.
Different roles have different attributes, but for me I have a core set that I require in anyone who works in my organization:
- Commitment to the Team (congruency).
- Ability to see the Big Picture
- Ability to learn and share New Skills
- The ability to listen for and discern for Key Information.
Bluntly if you execute on the first two elements the others are largely embedded in your process.
So I want to describe my best practice model for you -
- Define your organizational culture
- Ensure your leadership team understands and models your value
- Define candidate position requirements (technical skills)
- Delineating appropriate candidate attributes (cultural fit)
- Recruit the candidate pool, assess and onboard appropriate staff
Organizations with clearly defined employment brands and high levels of employee engagement always outperform the competition. Why give up a competitive advantage?
If you don’t want to believe me at face value take a look at organizations like Google, Starbuck’s, Amazon, Zappo’s, and Virgin. They build their culture from the ground up and commitment not compliance is the expectation.
The enclosed video clip from the U.K. also reinforces the fundamental premise of this article- we hire, manage, and work with people; not human capital!
Every organization has a choice relative to their human resources strategy. They can build it in or bolt it on. I advocate for the former…..