Archive for March, 2009

What’s the Future of HR Post Recession?

In the wake of governance issues, executive compensation blow-back, so-called “recognition junkets” and other negative news, HR cannot remain functionally the same as the market and economy recover.

I see HR changing fundamentally at both the executive and employee level in these ways:

Executive Level

• HR will have a seat at the executive table, possibly as a CEO of a Fortune 100 company. If not in the chief executive seat, then definitely as a chief officer whose opinion is valued and desired.

• HR will take a more prominent role in corporate governance, possible as a chief integrity officer, enforcing the exercise of proper control over compensation and bonus packages and use of corporate funds in other appropriate ways.

• HR will become a trusted coach to senior executives – perhaps the sole voice willing to tell the CEO when he’s going in the wrong direction.

Employee Level

• HR will drive the effort for global team building and collaboration, ensuring unique cultural differences are honored and respected.

• HR will take full ownership of directing talent organization and distribution to create high performance workforces for strategic success.

HR will adjust to generational change requirements as Generation Y becomes ever more prominent (e.g., changing annual performance review to ongoing feedback format with 360 degree elements).

Difficult times are often the seeding bed for innovation and positive change – the explosion of the PC in the early 1980s, the explosion of the internet in the mid 1990s. I believe this recession will weed out the bad habits, complacency and ignorance that has kept HR from achieving its true purpose in guiding and directing a company in the most powerful way – directly through its people.

Am I off base? Do you see these changes on the horizon as well? Other changes I’m missing? Tell me in comments.

Competitive Advantage in a Recession * Thoughts from Watson Wyatt

In this recession, are you holding on by your fingernails or are you trying to grow your market share and increase your competitive advantage? I started to talk about this last week in connection with retention. This week, I’ll examine the connection between competitive advantage and employee engagement more deeply.

Watson Wyatt’s 2008/2009 Work USA Report really dug into this, finding:

“When employees are highly engaged, their companies enjoy 26 percent higher employee productivity, have lower turnover risk and are more likely to attract top talent. Their companies have also earned 13 percent greater total returns to shareholders over the last five years.

“According to the survey findings, highly engaged employees are twice as likely as their less engaged peers to be top performers. They also miss 20 percent fewer days of work and three-quarters of them exceed or far exceed expectations in their most recent performance review. Additionally, highly engaged workers tend to be more supportive of organizational change initiatives and resilient in the face of change.”

Three strong take-aways from the Watson Wyatt research are:

1) Communicate New Directions – The research reiterates our best practice recommendation to clearly communicate changed strategic objectives or company plans and “directly connect employees to the purpose of the organization.” We’ve found the best way to accomplish both is through a strategic recognition program that ties frequent and timely employee recognition directly to strategic objectives and company values. In this way you not only communicate strategic objectives to employees, but you show them how their specific actions help accomplish those objectives.

2) Recognize and Reward Equitably – “Employees who indicate their organization effectively delivers on the employment deal are 20 times as likely to be highly engaged and 50 percent more likely to be top performers.” Your employees know you could not meet your goals without them and their efforts. Acknowledge that simple fact. Tell them “thank you.” Reward them appropriately, even in lean times. As long as awards are equitable across recipients, reduced values will be accepted.

3) Include the Middle Tier – Another Globoforce best practice is to offer all the opportunity to participate. Watson Wyatt calls this “investing in the core” (60% of the typical workforce). Why is this important? I can’t put it better than Watson Wyatt’s researchers: “Highly engaged employees are already working at or near their peak but are often limited by their less engaged co-workers. Focusing on engaging core contributors can improve both groups’ productivity.

Have your strategic objectives changed due to the recession? How are you communicating those changes? Are you confident all employees “get it” and are working together as productively as possible to achieve them? What are you doing proactively to encourage that? Do you agree with Watson Wyatt’s findings? Join the conversation in comments.

Are You Taking Your Employees for Granted?

A common theme running through media reports, blog posts, industry research and even my interactions with companies evaluating strategic recognition programs is the tendency to take employees for granted during a recession. Of course, such an attitude also leads to retention and engagement issues as well.

A survey by Robert Half International is particularly telling. Senior executives were asked why top-performing employees left with unhappiness with management being the top reason at 35%, limited opportunities for advancement as second and lack of recognition as third. This is close to separate survey results I cited in a post earlier this week.

Do you want to retain or even increase your competitive advantage? Then you must not take your employees for granted. Here are three ways to show your employees you appreciate them and their efforts.

  1. Demonstrably value your employees – Show them you know what their strengths are. Put them in roles or give them assignments that let them flex their muscles. Give them opportunities in your strategically important functions. Then don’t forget to tell them why you are doing this – because you recognize their talents and need their contributions to succeed.
  2. Communicate and recognize – Be accessible, address concerns openly, and recognize effort frequently and appropriately. There is much fodder for the rumor mill in most organizations today. Pre-empt the rumors by giving regular status updates. Say thank you. Let people know their efforts are valid, worthy, noticed and above all, appreciated. More on this common theme next week.
  3. Prevent poaching of top talent – Companies that manage to get the above points right stand a better chance of retaining their top talent. Or put another way, keep their competitors from poaching their top performers. The entire state of California is facing a retention challenge of mega proportions as surrounding states aggressively campaign to poach individual talent and even entire companies. Keep your competitors away from what makes you better than the rest – your people.

Don’t just take my word for it. See what Towers Perrin’s engagement gurus had to say on the topic here and here.

Are you taking your employees for granted? If not, what are you doing to show your employees you don’t take them for granted and keep them from being poached by the competition? Tell me in comments.

Why Should You Care about Retention in a Recession?

Are you adapting your HR strategy and approach to the changing needs dictated by the recession? I was somewhat surprised to see these recent findings:

“A survey of 336 senior HR practitioners by consultancy TalentDrain found just a third (31%) were adapting their approach and putting a renewed focus on existing employees. Organisations which had changed their HR strategy were concentrating efforts on existing staff, with 72% giving increased priority to organisational management, 67% to communication, and 54% to employee engagement and retention.”

However, it is encouraging to see that those organizations that do understand the need for change are focusing on the critical areas of communication, engagement and retention in such high numbers. reported even higher numbers with 63% of employees admitting to looking for a new job. Bosses have little concept of this, believing only 41% are looking.

Why is retention so important in a recession? Three reasons:

1) Keep your top players engaged in your organization and focused on your priorities (and, of course, away from your competitors)

2) Engage your middle tier of employees to create networks of success – foster teamwork up and down the chain. After all, your top performers can’t deliver the results you need in a vacuum.

3) Ensure you are staffed appropriately for when the upturn comes.

Appropriate staffing is a delicate balance, expressed best by Fred Crandall of Watson Wyatt Worldwide: “The biggest issue our clients face right now is regaining momentum when business picks up, while having to hire the fewest number of new people.”

The company best poised to take advantage of the eventual upturn is the one that does not have to seek out new talent, train them, incorporate them into the company culture, steep them in the strategic priorities, and only then begin to see results. This ties into the point I made last week about the fallacy of across-the-board, indiscriminate layoffs. A recent article in the Boston Globe highlighted this point well:

“Make cuts and freezes based solely on employee performance and future opportunities. While this approach is logical and appears obvious, too many organizations take the misguided approach of spreading the pain around the organization, “to be fair” (i.e. 10% layoff for each division, one person cut per manager, company wide hiring freeze, etc.). Think about the company that instituted a company-wide hiring freeze so that all managers felt treated the same: if one division is shrinking and one is growing, it does not make sense to treat these divisions the same; yet this is the approach many companies take.”

Where does retention rank in level of importance for you or your organization now? What are you doing to ensure your top performers stay, your middle tier are engaged and working well as team, and your staffing levels are appropriate for today and when the upturn comes? Share your techniques in comments.

Counteract the Negative Impact of Layoffs

After seeing the tremendous number of layoffs in January and February, I was struck by the many reports showing the negative impact layoffs have, not just on employees and morale, but on actual company financial performance. Just look at this one example cited recently in Bnet:

“One of the most documented issues is that mass layoffs often leave companies worse off financially than they were. For example, between the summers of 2000 and 2001, Bain & Company studied layoffs at S&P 500 companies. A bulk came from the tech sector, with telecom, computers, semiconductor equipment, office electronics, and electronics accounting for at least 44 percent of the layoffs. The findings ran counter to what many executives believe:

• Just over 25 percent of the companies announced layoffs — certainly a significant portion, but far from a universal reaction.
• The best performing stocks were for companies that did the fewest layoffs. Companies that laid off between 3 and 10 percent of employees had, on average, flat share prices. Those that laid off more than 10 percent saw shares drop by 38 percent.
• Adjusted for sales growth rates, companies that don’t downsize outperformed those that did.
• Unless positions can be eliminated for long enough — at least six to 12 months, and possibly as long as 18 months for knowledge-based businesses — there is no financial payback to the company because it typically has to hire replacement workers as conditions are getting better.

“[The Bain Report concluded]: ‘Big job cuts can also affect the employees who stay. Declining morale means lower productivity — many will spend time looking for new jobs. Employees will tend to be less innovative, and less willing to take bold steps to solve problems.’”

The Globe and Mail (access requires subscription) also wrote on “workers worrying about cuts…to almost everything that makes them feel valued and enables them to do their jobs with a degree of satisfaction and a measure of accomplishment.” This article made three excellent observations:

“You heighten stress and undermine performance when you tell people they are lucky to be employed.”

“You can’t get blood from a stone. And if you treat people like disposable units of productivity, you will generate even more cynicism and erode any existing shred of loyalty.”

“Understand worker psychology. In tough times, people want to be comforted, not terrified. They also want to feel part of something bigger than themselves.”

Reduce stress and increase performance by telling people you appreciate them and their efforts.

Reduce cynicism and increase loyalty by fostering a company culture employees want to be a part of, contribute to and help ensure stays around

Communicate clearly the needs of your company (your strategic objectives) and, more importantly, show employees how their individual, specific efforts and tasks help the company achieve those objectives. Do so in the most positive way possible – with strategic recognition. Let them be a visible, knowledgeable part of your efforts to retain your competitive advantage and market share.

What about you? What are your suggestions? Be sure to take our weekly poll.