HR That Works Blog

We are witnessing a great deal of M&A activity once again. While tough times produce many wonderful buying opportunities, all come with inherent risks. There are numerous risks you want to audit for from a human resource perspective including:

1. How do the cultures of the two organizations different? Peter Drucker claimed that 2 out of 3 M&A’s fail due to cultural reasons. As Dr. Deming taught us, you have to drive the fear out of the situation. Fear that the acquired executives and employees will not respect your ways of doing business and fear on the part of the newcomers that you won’t be considerate of their insights. Great leaders take these fears head-on so that the M&A doesn’t get destroyed by unnecessary dramas.
2. You want to look at the best HR practices from each organization. Does one company hire employees better than the other? How do they manage performance or motivate employees? What standards do they set for promotions? How do they manage compliance concerns? What sorts of training programs do they operate? Who has the “best practices”?
3. The M&A process implies there will be a culling of the herd. How will you identify who is left off the bus in a way that doesn’t let go of the wrong employee and prevents you from getting sued in the process? Have your criteria for the inevitable layoffs and terminations been reviewed by employment counsel?
4. Compensation and benefits is another very important consideration during the M&A process. Inevitably, executives and employees will be paid differently for doing the same or similar work. This will be an excellent time to revisit your compensation and benefit plans and strategies in general. Are you paying competitive salaries and wages? You have to look to the marketplace for that answer. What would you have to hire one of these employees for today? Are you using competitive benefits? As mentioned in previous posts, a dollar spent on benefits versus a dollar spent on compensation has a greater perceived value to employees. Consider this fact at a time when many companies are looking to shed benefits. Lastly, what can you learn from each other’s incentive programs? What boosts sales or productivity?

HR should be instrumental in making sure the “soft stuff” is addressed during the M&A process. HR That Works Members have access to an entire M&A audit that they should consider using during such a process.

1. Make sure you hire from the bottom of the barrel – Bad employees are great! They will all but guarantee you a life full of drama. Why be on easy street when you can have a work force run amuck with whiners, thieves, liars and con-artists? Besides, who wants to spend the time and money necessary to do extensive interviews, skill tests, background checks and character assessments?

2. Over promise and under deliver – Tell people what you think they want to hear. It’s a lot more expedient than radical honesty. The fun thing is there is absolutely no limit on the amount of promises you can make. If somebody complains about the last promise you made then make him or her a new one. The fact is people want to be lied to. This “walk your talk” integrity stuff is strictly for amateurs.

3. Keep your business plans to yourself – All this talk about sharing your vision, mission and goals is pure bologna. People like to be kept in the dark. Besides, if mushrooms can thrive in that environment why can’t your employees?

4. Control as much as you can – Spending your time trying to empower other people is just so exhausting. Better off engaging in control and manipulation so that they don’t dare think for themselves. If they try to revolt, then bring in the heavy artillery.

5. Give them all 2s – Everybody knows that the way to motivate people is to scare the “you know what” out of them. One of the best ways of doing that is to give them poor performance evaluations. They will be fearful for their jobs and be motivated to work like crazy just to survive. In fact, it’s probably a good idea to give them disciplinary notices on a regular basis whether they deserve them or not.

6. Create internal competition – Ever see rats climb all over each other in order to get at a piece of cheese? Don’t think this doesn’t work with your employees too. Make it very clear there can only be one good employee every month. This is a particularly appropriate strategy in the sales area. Make sure only one person in your sales organization gets that trip to Hawaii every year. The less in the way of best practices they share with each other, the better your odds of motivating them out of a scarcity mentality.

7. Bag the meetings – This business about holding team meetings is highly overrated. Besides, it just takes people away from doing their jobs. The last thing you want to do is give people another excuse not to do their work.

8. Work ‘em ‘til they drop – Squeeze every ounce out of your employees every chance you get. Never mind that you have to pay them overtime or that they may burn out and make tons of mistakes. There’s plenty more bodies where they came from.

9. Ignore today’s compliance obligations – There are so many personnel law obligations that trying to reach the “Golden Shores of Compliance” is a futile effort at best. Better off letting your exposures run rampant and deal with them in the courtroom. Besides, we just love our lawyers.

10. Train solely from within – Or, forget training altogether! Better off recycling ignorance than employing profound knowledge – which can only be gathered from outside of a system.
SPECIAL BONUS SECRET:

11. Forget your commitments – This bonus secret is a real powerful one and brings us full circle. Besides, your workforce probably isn’t very committed to you. They say they want to work for you for years and then they quit after only a couple of months. What’s up with that?

These secrets will all but guarantee your business failure. One last note: Just make sure you bleed the company to a point of extinction before you employ these powerful secrets.

NOTE: If management failure is not your bag, then take full advantage of the HR That Works website!

Watch this short video of Don Phin explaining seven HR strategies that will help every company grow its bottom line.

HR That Works is a strategic HR program that makes good use of technology. HRIS systems are technology driven systems which are administrative in nature (like QuickBooks is for finance) and best at managing employee data…but they too can be used strategically. I came across this article on HRIS programs and I thought it would be of value to both our Partners and our Members:

Software Advice, an online resource for HR software reviews, recently posted their 2011 Market Trends Report for Human Resources Information Systems (HRIS). There is an expected employment growth rate of about 8% over 2011 according to a survey from Manpower’s Outlook. However, that growth will not drive demand for core HRIS systems. Software Advice suggests that firms will better leverage existing systems by implementing new applications. While HRIS demand will remain steady, it is likely that demand for strategic HR software will increase as firms up their hiring efforts and aim for a higher-performing workforce. Leading vendors will enhance their app portfolios through acquisitions, and we can expect to see some new blood in the market as the barriers to entry have lowered considerably in the past few years thanks to new deployment options.

Software Advice decided to track six high-level trends:

• Core HR
• Self-Service Applications
• Management Dashboards
• Strategic HR
• Cloud HR Systems
• New Entrants

You can read about each of these trends individually in the report, but we will dig into one in particular right now: Strategic HR.

The report predicts that this area will be the most active in terms of consolidation activity and will experience noticeable growth over 2011, despite the lowered demand during the recession. Talent management and performance management overlap quite a bit, sharing features such as recruitment automation, applicant tracking, and the onboarding and assessment of employees. Because of these apps, HR software vendors have been able to extend their reach, deploying hiring managers across the entire organizations. There have been several leaders in this area, but there is a micro-trend of core HR vendors entering this space as well. It will be interesting to watch this particular area develop over the year.

Here’s a podcast I listened to on HBR regarding HR.

Harvard Business IdeaCast 190: How to Make HR Relevant
Featured Guest: Susan Cantrell, fellow at the Accenture Institute for High Performance and coauthor of Workforce of One: Revolutionizing Talent Management Through Customization. Copyright 2010 Harvard Business School Publishing

Here is a great HBR article that is a follow up to one that caused much stirring among HR folks a few years back. http://blogs.hbr.org/taylor/2010/06/why_we_shouldnt_hate_hr.html. Take a look at the comments I added to the article below it.

Over the years the Human Resources Department has transitioned through any number of “latest thinking” management concepts and corresponding “buzz phrases” – from “matrix management” to “broadbanding” to “onboarding” and “headwinds”.  Each new approach seemed the brainchild of management consultants seeking to encourage what they called creative thinking and the latest strategies to improve the human factor.

Lately though a persistent theme has settled in that HR should become a “Business Partner” of the organization, in order to be taken seriously by senior management and enhance the value-added contribution of its programs.  This encouragement suggests that HR is not currently a player on the Senior Executive team – but needs to be.

So what exactly is an HR business partner?  Several key criteria have been tagged as descriptors:

• Diagnose business needs
• Develop management’s capability to address HR issues
• Provide advice and a point of view
• The primary focus is driving the business forward
• To educate, motivate and influence others

Does the above describe the HR function at your company?  Is HR considered a business partner?

Your Father’s Personnel Department

Today most would chuckle at memories of the “old” Personnel department, whose primary responsibilities seem to have been tasks like recruiting, record keeping, arranging the blood drives, the safety shoe program and running the annual picnic / Christmas party.  The head of Personnel was rarely considered a “player” at management meetings.  Some in management claimed that the department was only a necessary evil.

That Personnel was viewed as the department focused on the interests of the employees.  Its management was staffed by employee relations generalists, was sensitized by the needs of employees and left the running of the business to the “businessmen”.  Personnel dealt with people.

Today, companies expect more.   Leadership expects less transactional administration and more strategic thinking.  Being labeled a “people person” is now considered a negative, a source of humor among recruiters.

What are the signs that HR is a true business partner at your company?

• Direct report to the President / CEO and listed as a member of the Senior Team
• Able to speak with credibility and respect at the management table
• Able to advance the value of HR to those holding negative biases
• Consulted by senior management on human factor issues
• Company decisions affecting employees are initiated by the head of HR

As a newly designated business partner-wannabe, Human Resources in many companies has transitioned away from the traditional role of caring for / representing the employees.  It has focused instead on utilizing the human capital to assist management in achieving objectives and driving business success.  However, the more successful HR has become as a business partner the greater the danger that employees will lose trust and confidence in HR, exactly because the focus has moved away from employees. 

As HR has developed a new stratagem, some might say a new identity, what has been the cost to the original mission?  What part of itself has been lost while chasing the role of business partner?

Danger Signs

Have a care that you don’t lose the heart and soul of HR – its caring connection about employees.  Don’t start looking at them as merely numbers on a spreadsheet or boxes on an organization chart.  There are other departments who already do that very well.

Is the HR function served or harmed by leadership that is “counting the chairs” on their way up the hierarchy?  These are typically fast-trackers who are not HR-trained, but only temporary visitors to the department for a “broadening” of their management experience.  Why is that acceptable for the HR function, but wouldn’t be tolerated in IT, Finance, Marketing, Engineering or Manufacturing?  Is the head of any of these other functions anything less than a seasoned expert in that profession? 

Why is HR viewed as different?  Why are other functions already presumed to be business partners?  Only HR is being challenged, remaining a newbie, on probation at best, at worst one step away from getting the coffee.

Lip service to the people department?  Even while sitting at the Senior Management table negative biases from the old days often remain:

• Remember the safety shoe program?  It’s hard to be taken seriously after so many years focusing on administration.  Does HR deal with important issues today?
• If the head of HR has only been appointed to gain experience toward their ultimate loftier goal, how serious can we take a temporary worker who is only passing through?
• HR is still perceived of as offering restrictive advice, what can’t be done; they remain the gatekeeper of corporate policies.  Being an advocate of policy doesn’t win friends.

From the employee’s perspective it is important to consider HR as the source and advocate of fair and equitable treatment, compliance with all regulations affecting employees, and their representative among senior management.

What if senior management doesn’t feel that way?  What if they want HR to become just another “business partner” concerned more about the bottom line – to the exclusion of the human factor?

Have a care that we get what we want – Business Partner – and then our employees choke on it as we lose our way.

Article courtesy of Chuck Csizmar, CCP, CMC Compensation Group.

Retired GE president Jack Welch has been a long-time supporter of the HR function. His columns and blogs are widely published. Here are a few of Welch’s pointers:

1. CEOs need to get the importance of HR. Most importantly, they need to understand that they probably aren’t very good at HR and need to find somebody who is.
2. If you’re an HR executive, ask yourself: Just how good are you? How well are you performing? Do you really want to do more? If you’re not having an impact, why would you want to be the HR person?
3. Great HR people are both pastors and parents. They have to listen like a pastor and maintain confidentiality, but they have to tell it straight like a parent.
4. Finally, HR executives need to pound the table to get a voice in their organizations. Riding along, being a bureaucrat, or playing less than a critical role in the organization should be unacceptable to anyone worth their salt.

To learn more about Jack’s excellent HR philosophies, go to his Web site at www.welchway.com.

Ranking and rating often come into play during downsizing programs. For many companies, it’s the first time that they’ve used these tools. As a rule, they’ve done a poor job of developing benchmarks and they often act in a rushed, subjective, or ad hoc basis. For example, if you tried to identify the top five performers in your department (or the five most dispensable), without data to back up these assessments, you’re leaving yourself wide open to accusations of discrimination based on age, race, gender, or other criteria. That’s why it’s a good idea for employers to consult with legal and personnel experts during the downsizing process.

Once you have your rankings, focus on nurturing the top 20% of performers. Your company wouldn’t be around without them, so give them the support that they deserve. However, make sure that their performance is a balanced one. If their success is due to a 60, 70, or 80-hour workweek, it’s simply not sustainable. Under most circumstances, employees should get their jobs done in 40 hours, and managers within 50. Anything beyond that can destroy a culture, career, and company.

Put the bottom 20% of employees on a performance plan that’s so well designed that if they don’t live up to it, in a sense, they fire themselves.

Find out what’s going on when people move up or down in the rankings. What’s the reason for their sudden success or failure? How can you reward success and turn around failure?

There’s no good reason to avoid rating and ranking your employees. It’s your responsibility as a manager to put people in a position that gives them the opportunity to succeed. Get them involved in defining the process — and you’ll find that ranking and rating can work for your business.

Malcolm Gladwell’s third book, Outliers, focuses on the origins of success. Gladwell brings home lessons that should be remembered. Think about how these factors might apply to you or your company:

1. There’s no substitute for hard work. Although much of the book teaches how circumstance and nurturing have a big impact on success, the one common denominator is willingness to put in the hard work. No athlete, business person, musician, or anyone else succeeds without hard work. One of my favorite sayings in the book is an ancient Chinese one, “No man who rises before dawn 365 days a year fails to make his family rich.” (I can honestly say that I do this at least 300 days per year, so I’m getting close!).
2. The 10,000 Hour Rule. If you want to be great at something, or at least be known as an expert, you need to study this subject for at least 10,000 hours. This holds true whether in business, law, medicine, technology, sports, music, etc. One of the downsides associated with letting more experienced employees go is losing their store of wisdom and expertise. If you’re in a “no choice” situation, at least try to have the departing employees provide you as much of their stored wisdom in writing as possible
3. The importance of cultural norms. For example, many Asians are accomplished in math not because of their IQ — but due to their work ethic: how their numbering system works, the precision required to grow rice, and of course, willingness to attend school an extra 50 days a year. What is the work norm at your company? Punching the clock or making sure things get done?
4. The need for opportunity and encouragement. Many successful people have been in the right place at the right time. Perhaps they were just born at the right time. Perhaps others saw their innate talents and helped to nurture them. The bottom line: no one succeeds alone. We all need encouragement and nurturing. This becomes a real challenge when companies are shutting down on communications and training.
5. Once you’re smart enough — you’re smart enough. As Daniel Goleman wrote in his book about emotional intelligence, “It’s just not IQ that matters.” An individual’s ability to deal with emotions and have practical insight is just as, if not more, important than IQ. After a certain point (roughly 130 IQ), the additional IQ points don’t make folks any more successful. Same would hold true for skill testing. If they are a top 20% user, chances are that’s good enough to make a difference. The rest depends on personal drive, emotional skills, etc
6. Pedigree matters — to a degree. As with IQ, going to good schools matters. Going to top ten schools doesn’t matter nearly as much. Just as opportunity, encouragement, support, and other “external” factors impact on the propensity for success, we should not overlook these factors when assessing someone’s potential. Perhaps there is great potential right under your nose; they just haven’t had the right circumstances to show their true mettle. This is one reason that I stress the importance of character assessment, skill testing, and other tools to get past your initial “impressions” about someone’s potential.
7. The importance of expressing yourself. This discussion first came up in a risk management context in which Korean airline pilots were causing crashes because subordinates were intimidated about contradicting their superiors — even in the face of a disaster. Based on my litigation experience, CEOs are the last ones to know the truth until they’re in the middle of a trial. Here’s the point: we must “invite” subordinates to bring us their ideas, to break past the Culture of Silence. At the same time, subordinates must have the courage to speak up when appropriate.
8. Meaningful work. One of my favorite quotes from the Gladwell book is, “Hard work is a prison sentence only if it doesn’t have meaning.” I work hard, but I love the work that I do. It provides me the three factors that Gladwell says are to essential to our work: autonomy, complexity, and meaning.

• Autonomy gives us a sense of responsibility for the work that we do.
• Complexity allows us to grow and learn.
• Meaning lets us realize the impact of our work.
• Collective learning.

The lack of opportunity for autonomy, complexity, and meaning will continue to deprive employers of excellent workers who find it more meaningful to work for themselves. To what degree are you allowing your employees autonomy, complexity, and meaning in their day-to-day activities? How can they get that from you greater than by working on their own or for someone else?

In conclusion, there’s no substitute for discovering the formula for success at your company!