1. You cannot rely on the HR function to take care of your people. Every Manager in the company must understand the value of people. Executives and managers must do their part to address strategic people challenges. It is not all up to the HR Department; it is a shared responsibility.
2. HR cannot effectively drive change without a non-HR sponsor. Executive buy-in and in particular the CEO's ongoing and firm commitment are essential to change management. There tend to be just a few change agents in the organization as a whole and this is way many programs and changes fail miserably. See point 1 as well.
3. The entire HR function must learn to help leaders improve their talent decisions, not just implement them. HR practitioners must develop analytical insight to support executive “decision making”. HR is sitting on tons of data but few of which is properly monitored and adjusted to be ready and served up as management information.
4. Simply rebranding HR as “strategic” is not enough. Executives must either hire people capable of assessing people challenges and devising executable solutions or help HR staff develop the required skills and capabilities. If you do not know it, then find it elsewhere and bring it on board or invest in acquiring the skills first. HR strategy is much easier said than done.
5. Bonuses are not tokens to buy future performance. Executives must realize that a "bonus" is a sum of money given to an employee in addition to their regular pay because of excellent work, length of service, accumulated favors, etc. It is not a form of bribery to convince an employee to stay and perform well in the coming year. Concentrate on and fix the true reasons as to why an employee is seriously interested in leaving in the first place.
Tuesday, January 13, 2009
Tuesday, December 16, 2008
How do you know if your HR Head lacks strategic potential or leadership?
• S/he focuses on and strives to keep administrative transactions and other non-strategic activities in-house by limiting the HR budget to HR personnel salaries as much as possible.
• S/he does not understand, drive, nor support (financially or otherwise) any employer branding initiatives and perceives recruitment marketing as a waste of time.
• S/he is unable to recognize that competition for critical talent is heating up and does not understand the supply and demand of critical workforce segments.
• S/he is unable to monitor availability of critical talent for the organization and does not work to influence it (e.g. University engagement).
• S/he does not strive to gain insights into employee factors as turnover or age within the organization’s critical workforce segments.
• S/he believes the company’s recruiter is a junior role and does not have an issue with the recruiter being in charge of overtaking administrative duties connected with e.g. visa for expatriates, new staff announcements, etc.
• S/he does not know the answer to the question: Why would great people want to work at their Company?
• S/he does not recognize the link between the company’s standing in the talent market and its position in the product/service market.
• S/he does not understand, drive, nor support (financially or otherwise) any employer branding initiatives and perceives recruitment marketing as a waste of time.
• S/he is unable to recognize that competition for critical talent is heating up and does not understand the supply and demand of critical workforce segments.
• S/he is unable to monitor availability of critical talent for the organization and does not work to influence it (e.g. University engagement).
• S/he does not strive to gain insights into employee factors as turnover or age within the organization’s critical workforce segments.
• S/he believes the company’s recruiter is a junior role and does not have an issue with the recruiter being in charge of overtaking administrative duties connected with e.g. visa for expatriates, new staff announcements, etc.
• S/he does not know the answer to the question: Why would great people want to work at their Company?
• S/he does not recognize the link between the company’s standing in the talent market and its position in the product/service market.
Tuesday, November 11, 2008
HR People in China
In China, the HR profession has relatively low barriers to entry. Even today, many HR Departments are filled with HR people without any formal HR qualifications.
Traditionally, vacancies in the HR Department were taken up by graduates of English schools or Finance professionals whose talents were incommensurate with their new responsibilities and duties.
Another wave of HR professionals comes from consulting companies. Just like advertising agencies develop talent for their in-house Marketing Department, recruitment agencies and HR consulting companies produce a talent pool of in-house recruiters and HR executives. These candidates may find themselves overwhelmed with the amount of daily Admin work that requires their attention.
The final batch of HR professionals comes from an Operations background. This group usually starts their career in Marketing, Sales, or Product Development. They in fact have very limited HR know-how.
To climb the corporate ladder, HR people from all three groups must prove that they have a solid understanding of the company's business, can contribute to and collaborate effectively with senior management, and convert data into management information. In a nutshell, the best HR people are entrepreneurial, highly dedicated, solutions-oriented, and hungry to work with people to drive change, development and training, and individual/team/company performance.
Traditionally, vacancies in the HR Department were taken up by graduates of English schools or Finance professionals whose talents were incommensurate with their new responsibilities and duties.
Another wave of HR professionals comes from consulting companies. Just like advertising agencies develop talent for their in-house Marketing Department, recruitment agencies and HR consulting companies produce a talent pool of in-house recruiters and HR executives. These candidates may find themselves overwhelmed with the amount of daily Admin work that requires their attention.
The final batch of HR professionals comes from an Operations background. This group usually starts their career in Marketing, Sales, or Product Development. They in fact have very limited HR know-how.
To climb the corporate ladder, HR people from all three groups must prove that they have a solid understanding of the company's business, can contribute to and collaborate effectively with senior management, and convert data into management information. In a nutshell, the best HR people are entrepreneurial, highly dedicated, solutions-oriented, and hungry to work with people to drive change, development and training, and individual/team/company performance.
Tuesday, October 14, 2008
Offer Acceptance Rate and Show Up Rate
An Offer Acceptance Rate shows the percentage of job offers that have been accepted from the hiring process. It is calculated by knowing the Job Offers Accepted by the Job Offers Extended.
In China, this metric can be complimented by a Show Up Rate which would be the Onboards Completed by Jobs Offers Accepted as it is not uncommon for Candidates not to show up for their first day of work even though they accepted the offer.
Both ratios may be good indicators for measuring the strength of your employer brand, productivity and skillfulness of your recruiters/hiring managers in assessing the needs and wants of the Candidate, and quality and effectiveness of internal communications.
A low rate should force the organization to reevaluate:
• The ways it markets its employee value proposition,
• The salaries benchmarking data,
• Candidates' journey with particular focus on pre-employment activities, and
• The communication approach with Candidates.
An organization should also take proactive steps before, during, and after an offer acceptance to ensure a high conversion rate. A few sample initiatives include:
• Be clear about your employee value proposition and communicate it persuasively.
• Send the Candidate a small company gift, marketing collaterals, and/or a card from the Division Head or even better, the CEO.
• Let the Division Head/CEO call the Candidate.
• Invite the Candidate to join any team activities that are scheduled before his/her Onboard Day.
• Connect with the Candidate via Facebook or Twitter in order to update him/her on the organization's status and any new happenings or successes.
In China, this metric can be complimented by a Show Up Rate which would be the Onboards Completed by Jobs Offers Accepted as it is not uncommon for Candidates not to show up for their first day of work even though they accepted the offer.
Both ratios may be good indicators for measuring the strength of your employer brand, productivity and skillfulness of your recruiters/hiring managers in assessing the needs and wants of the Candidate, and quality and effectiveness of internal communications.
A low rate should force the organization to reevaluate:
• The ways it markets its employee value proposition,
• The salaries benchmarking data,
• Candidates' journey with particular focus on pre-employment activities, and
• The communication approach with Candidates.
An organization should also take proactive steps before, during, and after an offer acceptance to ensure a high conversion rate. A few sample initiatives include:
• Be clear about your employee value proposition and communicate it persuasively.
• Send the Candidate a small company gift, marketing collaterals, and/or a card from the Division Head or even better, the CEO.
• Let the Division Head/CEO call the Candidate.
• Invite the Candidate to join any team activities that are scheduled before his/her Onboard Day.
• Connect with the Candidate via Facebook or Twitter in order to update him/her on the organization's status and any new happenings or successes.
Tuesday, September 16, 2008
Focus on Strengths
In both Marketing and HR, the dilemma arises as to where one should allocate resources. Two choices exist; either focus on strengths or concentrate on compensating weaknesses.
For Marketing, these two approaches are discussed, for example, by Dru*:
• Guide and encourage high performers to deliver even greater results or help low performers reach average results.
• Motivate employees by focusing on their strengths or helping them identify and overcome some of their weaknesses.
• Reward, grow, and retain “A” players or concentrate on salvaging “C” players.
Without a doubt, performance-driven organizations will choose to focus on high-performers and allocate resources accordingly.
* Dru, Jean-Marie (2007). How Disruption Brought Order: The Story of Winning Strategy in the World of Advertising. Hampshire: Palgrave Macmillan. P. 177.
For Marketing, these two approaches are discussed, for example, by Dru*:
“If a P&G product had a 12 percent market share in Normandy and only 6 percent in Alsace, P&G would spend twice as much in Normandy as in Alsace. P&G invests where it is strong. Colgate would have done the opposite, believing that the 6 percent in Alsace, lower than the national average, was clear evidence of underexploited potential requiring investment.”For HR, alternative examples include:
• Guide and encourage high performers to deliver even greater results or help low performers reach average results.
• Motivate employees by focusing on their strengths or helping them identify and overcome some of their weaknesses.
• Reward, grow, and retain “A” players or concentrate on salvaging “C” players.
Without a doubt, performance-driven organizations will choose to focus on high-performers and allocate resources accordingly.
* Dru, Jean-Marie (2007). How Disruption Brought Order: The Story of Winning Strategy in the World of Advertising. Hampshire: Palgrave Macmillan. P. 177.
Tuesday, September 9, 2008
HR Catch 22
Strategic HR
To add value and deliver results, HR needs an opportunity to work in partnership with senior management. But, this can only happen if HR first proves that the department adds value.
Board Seat
To make a contribution, HR needs a board seat. But, this can only happen if HR first makes a tangible contribution.
HR Leadership
To change the image and status of HR, highly ambitious and competent leaders must join and work in this field. But, this can only happen if the status of HR is first transformed.
Attracting Talent
To attract talent, a company must establish itself as an up-and-comer and a great place to work. But, this can only happen if the company has great talent from the beginning.
Promotion
To be promoted, an employee must prove essential skills required for a higher position (managerial role). But, this can only happen if s/he is promoted or at least challenged first in order to learn and grow (job stretch).
HR Investment
To invest in HR, an entrepreneurial company must reach financial stability. But, this can only happen if the company invests in HR (e.g. founder’s time, effort, and approach to managing people) in the first place.
Trainer-Training Company-Client
To understand the client’s training needs and be able to quote appropriate and accurate trainer fees, the trainer must be engaged by the training company and involved in the sales process with the client. But, this can only happen if the trainer fees between the trainer and training company are agreed upon beforehand.
Staff Appraisal
Staff appraisal forms are designed for reluctant managers but they are least likely to use them effectively. Instead, good managers fill out the appraisal forms properly and precisely but in general are the ones who do not need them. (Paul Kearns, 2003).
Training
Employees who do not enjoy learning and training look for excuses as not enough time in order to avoid participating in development initiatives. Instead, employees who enjoy and value training rarely miss a day of training and oftentimes are the ones who need it the least.
Performance
When your HR performance system is ineffective, low performers are most likely to stay onboard even though you generally would like them to leave. Instead, high performers who you would like to hold on to and retain are the ones most likely to leave.
To add value and deliver results, HR needs an opportunity to work in partnership with senior management. But, this can only happen if HR first proves that the department adds value.
Board Seat
To make a contribution, HR needs a board seat. But, this can only happen if HR first makes a tangible contribution.
HR Leadership
To change the image and status of HR, highly ambitious and competent leaders must join and work in this field. But, this can only happen if the status of HR is first transformed.
Attracting Talent
To attract talent, a company must establish itself as an up-and-comer and a great place to work. But, this can only happen if the company has great talent from the beginning.
Promotion
To be promoted, an employee must prove essential skills required for a higher position (managerial role). But, this can only happen if s/he is promoted or at least challenged first in order to learn and grow (job stretch).
HR Investment
To invest in HR, an entrepreneurial company must reach financial stability. But, this can only happen if the company invests in HR (e.g. founder’s time, effort, and approach to managing people) in the first place.
Trainer-Training Company-Client
To understand the client’s training needs and be able to quote appropriate and accurate trainer fees, the trainer must be engaged by the training company and involved in the sales process with the client. But, this can only happen if the trainer fees between the trainer and training company are agreed upon beforehand.
Staff Appraisal
Staff appraisal forms are designed for reluctant managers but they are least likely to use them effectively. Instead, good managers fill out the appraisal forms properly and precisely but in general are the ones who do not need them. (Paul Kearns, 2003).
Training
Employees who do not enjoy learning and training look for excuses as not enough time in order to avoid participating in development initiatives. Instead, employees who enjoy and value training rarely miss a day of training and oftentimes are the ones who need it the least.
Performance
When your HR performance system is ineffective, low performers are most likely to stay onboard even though you generally would like them to leave. Instead, high performers who you would like to hold on to and retain are the ones most likely to leave.
Tuesday, September 2, 2008
HR Ratio versus HR Contribution
“The real payoff is when we add a new hospital or other operating unit, we don’t have to add an accountant or HR professional.” Dennis Dahlen, Vice President of Finance, Banner Health
As HR is required to bring value, the HR ratio (number of HR professionals for every 100 employees) is used in many companies as an efficiency indicator. This ratio is helpful for benchmarking purposes against industry standards. However, due to limitations of benchmarking, the results are not always conclusive.
In SMEs, a typical HR ratio is 1:100 because HR processes are not usually fully automated and HR is still an evolving function. In larger organizations with added stability, mature processes, and higher degree of automation, a typical HR ratio is 1:250. Regarding China; the HR ratio is moving from 1:100 to 1:200 or 1:300*. Nonetheless, research aimed at specifying policies and practices of HR management systems for high performance shows that firms with high HR management quality have roughly double the number of HR professionals per employee (1:139.51) as compared to companies with low HR management quality (1:253.88)**.
I recently met a HR director from a global company with 1,200 staff in China. This international company employs 50 people in the HR & Admin department leading to a HR ratio of around 1:25 (or 4 HR employees for 100 employees) while payroll, recruitment, and training are outsourced to HR service providers. Their HR ratio shows a major deviation for the benchmarks above but as long as the value addition of each HR employee is greater than the cost incurred to the company, there should be no issues.
After all, the HR ratio is a tactical metric only and focuses on the relationship between quantitative measures (HR’s department size and the company’s size). Size of the HR department can vary considerably and depends on several factors:
• Nature of organization,
• Size,
• Age and phase of growth,
• Management approach,
• Employee profile,
• Centralization or decentralization of the HR function,
• The number of office locations and geographic distribution of employees,
• Expected level of service and support,
• The amount of automation utilized,
• The amount of HR functions outsourced (recruitment, training, payroll, benefits, etc.), and
• The relative complexity of the strategic mission and objectives for the HR function.
Importantly however, there is no clear causal relationship between size and strategic value-added HR.
Therefore, HR should focus on measuring contributions made by HR staff. Three possible measures to consider are:
• “Profit per HR employee” placing the emphasis on the return on HR talent,
• “Number of HR employees” indicating growth, and
• “HR leadership bench strength” (Number of employees who are promotable “ready replacements” for each of the key jobs in the HR function) indicating sustainability.
Once all three measures are tracked and translated into HR practices geared towards HR staff, adding a HR employee will mean “improving the company’s profits”.
Thus, from the strategic angle, companies should ask:
• Does the HR staff have competencies and abilities to deliver results?
• To what extent is HR staff effective in strategic partnering with line managers?
• To what extent is HR staff effective in facilitating change?
• To what extent is HR staff effective in advocating employees?
• To what extent is HR staff effective in providing HR operational excellence?
The ideal HR department size or being concerned with another HR hire would not be an issue then.
* Powell, Jonathan (2007, November 17). ”Fast-changing world of HR”. In Classified Post. p. 42.
** Becker, Brain E., Huselid, Mark A, and Ulrich, Dave (2001). The HR Scorecard: Linking People, Strategy, and Performance. Boston, MA: Harvard Business School Press.
As HR is required to bring value, the HR ratio (number of HR professionals for every 100 employees) is used in many companies as an efficiency indicator. This ratio is helpful for benchmarking purposes against industry standards. However, due to limitations of benchmarking, the results are not always conclusive.
In SMEs, a typical HR ratio is 1:100 because HR processes are not usually fully automated and HR is still an evolving function. In larger organizations with added stability, mature processes, and higher degree of automation, a typical HR ratio is 1:250. Regarding China; the HR ratio is moving from 1:100 to 1:200 or 1:300*. Nonetheless, research aimed at specifying policies and practices of HR management systems for high performance shows that firms with high HR management quality have roughly double the number of HR professionals per employee (1:139.51) as compared to companies with low HR management quality (1:253.88)**.
I recently met a HR director from a global company with 1,200 staff in China. This international company employs 50 people in the HR & Admin department leading to a HR ratio of around 1:25 (or 4 HR employees for 100 employees) while payroll, recruitment, and training are outsourced to HR service providers. Their HR ratio shows a major deviation for the benchmarks above but as long as the value addition of each HR employee is greater than the cost incurred to the company, there should be no issues.
After all, the HR ratio is a tactical metric only and focuses on the relationship between quantitative measures (HR’s department size and the company’s size). Size of the HR department can vary considerably and depends on several factors:
• Nature of organization,
• Size,
• Age and phase of growth,
• Management approach,
• Employee profile,
• Centralization or decentralization of the HR function,
• The number of office locations and geographic distribution of employees,
• Expected level of service and support,
• The amount of automation utilized,
• The amount of HR functions outsourced (recruitment, training, payroll, benefits, etc.), and
• The relative complexity of the strategic mission and objectives for the HR function.
Importantly however, there is no clear causal relationship between size and strategic value-added HR.
Therefore, HR should focus on measuring contributions made by HR staff. Three possible measures to consider are:
• “Profit per HR employee” placing the emphasis on the return on HR talent,
• “Number of HR employees” indicating growth, and
• “HR leadership bench strength” (Number of employees who are promotable “ready replacements” for each of the key jobs in the HR function) indicating sustainability.
Once all three measures are tracked and translated into HR practices geared towards HR staff, adding a HR employee will mean “improving the company’s profits”.
Thus, from the strategic angle, companies should ask:
• Does the HR staff have competencies and abilities to deliver results?
• To what extent is HR staff effective in strategic partnering with line managers?
• To what extent is HR staff effective in facilitating change?
• To what extent is HR staff effective in advocating employees?
• To what extent is HR staff effective in providing HR operational excellence?
The ideal HR department size or being concerned with another HR hire would not be an issue then.
* Powell, Jonathan (2007, November 17). ”Fast-changing world of HR”. In Classified Post. p. 42.
** Becker, Brain E., Huselid, Mark A, and Ulrich, Dave (2001). The HR Scorecard: Linking People, Strategy, and Performance. Boston, MA: Harvard Business School Press.
Subscribe to:
Posts (Atom)