Building an HR Foundation

Establish your credibility, competence, and trustworthiness

HHHR Photo

The most important thing an HR professional who’s moving into a new job or department can do is to build and establish a rock-solid foundation of credibility, competence, and trustworthiness. Today, I’m going to discuss how to do this.

There are two things an HR pro typically does when starting a new job at an organization or transferring to a new department.

  1. They come in with “guns a blazing” and immediately start changing the way everything is done and immediately start introducing HR initiatives. They focus on quickly making a big splash introducing HR initiatives and impressing senior leadership.
  2. They come in and take the time to get and know the employee’s, their team, processes, and culture. They focus on providing outstanding customer service to their client base and getting a good lay of the land and culture before making significant changes and introducing big HR initiatives.

Yes of course, sometimes you have to come in with “guns a blazing” and get things fixed quickly. The situation, and leadership, demands it because they need things to be fixed, and fixed yesterday. While it seems to make sense at first, it’s not. It will mostly cause significant chaos and business disruption. It certainly does not establish the credibility, competence, and trustworthiness for the new HR pro!

The best and most effective way for the HR pro to establish their credibility, competence, and trustworthiness in the eyes of their new company/department is to take the time to get to know and understand the team, processes, and culture before making any drastic changes. Build that important and critical foundation.

Remember, Human Resource pro, you are dealing with humans and, as such, you need to build a foundation of relationships first before you will be able to accomplish anything with any credibility and trust. Everybody in your organization is watching what you are doing and how you are doing it.

Start building a solid foundation so that you will be seen as a credible HR expert. Make sure there are minimal mistakes made with the basics like payroll, benefits, answers about polices, etc.

Here are the steps I recommend to build a strong and stable foundation that will establish your credibility and ability to effectively manage the HR function in your new organization. I think we all know this but often forget as it is the blocking and takleing.

  1. Most importantly – get to know the team. Get out of your office every single day and CIRCULATE around the office(s), store, plant, etc. and chat with your fellow employees. Learn your employee’s names and what’s important to them both personally and professionally. This helps them see HR as a part of their team, not the Grim Reaper that only makes an appearance when something bad is about to happen.
  2. Study and know the employee handbook (I know, zzzzzzzzzzzzzzzz) and other policies and procedures. You’ll need to be able to answer policy and procedure questions from employees as you circulate and as they come by your office/desk.
  3. Dig into the HRIS and make sure all the data in there is complete and accurate. It often isn’t. Make sure it is so that everything that feeds from the HRIS (payroll, benefit integration, etc) will also be accurate.
  4. Become the expert in the health and retirement benefits your organization offers. Make sure enrollments are completed with 100% accuracy. Build great relationships with your brokers and ask lots of questions.
  5. Respond quickly, accurately, and politely to all manager and employee requests and questions. Remember, you are a service organization supporting the other functional areas of the organization. Don’t ever be condescending because you think they should know the answer. You are the HR expert, not them and they are coming to you for your expertise – the reason you have the job!

By doing these five basic steps, you build the foundation of a successful HR function in your new organization. These are the basics that will establish you as a credible and trustworthy HR professional in your employee’s eyes.

Yes, I know every senior HR professional, and leadership team, wants to do the exciting strategic stuff but without that important foundation, the strategic HR initiatives will fall flat because you will not have the credibility and trust from the very people who need to buy in to those initiatives.

You absolutely must have a solid and effective foundation in order to effectively build the strategic framework that your leadership, managers, and employees will embrace. This will ensure your success in your organization and allow you to more easily have your strategic HR initiatives be successfully adopted.

Taking a Knee is a Workplace Issue

NFL Players are Hurting Their Employer's Business

I’m going to throw my hat in the ring on the NFL players taking a knee during the National Anthem thing. Personally, I don’t like it and, as a result, have changed my NFL viewing habits because of it. With that out of the way, and since this is an HR blog, I’m going to address how this relates to HR.

To me this is purely a workplace issue, not a free speech issue. The players are at their workplace when they are protesting. These protests are hurting their employer’s reputation and earnings as evidenced by the significant drop in attendance and drop in TV ratings week after week.

The players’ free speech isn’t constitutionally protected here. The constitution prevents the government from making a law that stops freedom of speech and the government is not preventing them from protesting. Their protests are causing the NFL direct financial harm by fans boycotting their games either by not attending and/or not watching.

I’ve never worked for an employer that would allow me to protest while I was at work and if I did, I’m 100% certain, I would be disciplined and/or no longer work there.

I’ve read some articles claiming their protests are a protected concerted activity under the National Labor Relations Act. This one from the New York Times and this one from a pro-union blog. Their arguments are compelling but I really don’t see it as the players are not protesting their working conditions nor are they engaging in political advocacy as it relates directly to their job.

From my understanding they are protesting in support of former 49ers quarterback Colin Kaepernick.

Here is what he said when this all started:

 “I’m going to continue to stand with the people that are being oppressed. To me, this is something that has to change. When there’s significant change and I feel that flag represents what it’s supposed to represent, and this country is representing people the way that it’s supposed to, I’ll stand.”

“This stand wasn’t for me. This is because I’m seeing things happen to people that don’t have a voice, people that don’t have a platform to talk and have their voices heard, and effect change. So I’m in the position where I can do that and I’m going to do that for people that can’t.”

“It’s something that can unify this team. It’s something that can unify this country. If we have these real conversations that are uncomfortable for a lot of people. If we have these conversations, there’s a better understanding of where both sides are coming from.”

“I have great respect for the men and women that have fought for this country. I have family, I have friends that have gone and fought for this country. And they fight for freedom, they fight for the people, they fight for liberty and justice, for everyone. That’s not happening. People are dying in vain because this country isn’t holding their end of the bargain up, as far as giving freedom and justice, liberty to everybody. That’s something that’s not happening. I’ve seen videos, I’ve seen circumstances where men and women that have been in the military have come back and been treated unjustly by the country they fought have for, and have been murdered by the country they fought for, on our land. That’s not right.”

His statement has nothing to do with working conditions or political advocacy that relates directly to the job of being an NFL player. I don’t see how these athletes are being oppressed. They’re living the American Dream. They get to play the greatest game on earth, get paid millions of dollars, are celebrities, and are worshiped as heroes by millions of fans.

Kaepernick’s protests are an attempt to bring attention to other people who are being oppressed. In fact he even said “This stand wasn’t for me” in this statement. Whatever you think of his statement and the reasons behind his protest, this has nothing to do with working conditions and political advocacy as it relates directly to their work in the NFL.

I think his reasons are admirable but he brought it to his workplace and decided to protest during our National Anthem and flag unfurling. This has caught on throughout the NFL and many of us don’t connect the two and find it offensive and disrespectful to our country and those who have fought to ensure and protect our freedoms, despite what they say to the contrary.

Now many fans are exercising their power by boycotting games causing the NFL to lose a lot of goodwill, reputation, and most importantly, revenue.

When an employee’s conduct directly hurts an employer’s business, as is clearly happening here, that employer has every right to take corrective action on the employee. The protesting NFL players are protesting while at the workplace and are causing a serious negative financial impact on their employer.

The NFL is, in my opinion, obligated to take the appropriate corrective action to protect their business.

Dealing with National Politics in the Workplace

You can’t get away from it these days. It’s all the media is talking about, it’s all over our social media feeds, it’s on all the award shows and entertainment programs we’re watching, it’s overheard in the stores and coffee shops we are visiting, and it’s in our workplace. Political discussions are everywhere and we are more politically polarized than I’ve ever seen in my life.

With today’s massive megaphone of social media and the 24 hour news cycle, many people have expressed their passion about the political issues and their candidates. And there’s something to offend just about anybody with the current hot-button issues such as race, class, gender, abortion, LGBT rights, immigration, terrorism, religion, etc.

I would venture to guess that we have all witnessed some very heated exchanges between family, friends, and coworkers regarding today’s political climate. I’ve seen people I respect and care about say or write some pretty horrible things about others based simply on their political beliefs.

People are more polarized in their positions like I’ve never seen before and those positions are making their way into the workplace and affecting morale and productivity.

In addition, many of today’s issues swerve into employment law. Political discussions about issues that affect working conditions such as minimum wage, equal pay, and paid leave might be protected by federal law.  While, on the other hand, political discussions about race, gender, and religion may lead to harassment or discrimination claims. And it only takes one person to pop off during a heated discussion and alienate another employee and/or cause a hostile work environment or a potential harassment claim.

I make it a practice not to discuss politics at work – especially these days. I hear enough of it on my Sirius radio when I commute to and from work and when I’m home trying to catch up on the news. Frankly, I’m exhausted of it all and don’t want to have to deal with it when I’m at work.

But, I’m HR, so I have to deal with it at work.

As such, I’ve come up with a couple of proven recommendations to help keep things under control.

First and foremost, HR must remain neutral. This is my number one recommendation. Whatever your beliefs, HR must be neutral and not take a side in a disputed conversation about politics. HR absolutely should not engage in a conversation with other employees expressing their political opinions and joining in with them bashing a side. I guarantee that you have employees on the other side who will hear or overhear what you said which will erode your credibility with them.

The purpose of your neutrality allows all of your employees to feel safe coming to you with their concerns about potentially uncomfortable or hostile political conversations they overheard or were part of. It’s HR’s job to make sure employees feel safe to surface any concerns they have from conversations they’ve had or overheard that make them feel uncomfortable or offended.

Second, Establish and communicate ground rules. Meet with your senior leaders to determine what political discussions your organization is willing to tolerate/accept at work. Will you ban it entirely or will you allow some as long as their respectful, appropriate, and inclusive of all beliefs?

Once you have that established,  conduct an all hands meeting and follow up with an email reminding your employees to be professional, respectful, and tolerant of other employee’s political beliefs. Remind them of the process for airing their complaints and how they will be dealt with and what the consequences will be for violating these ground rules. You must, as HR, clearly communicate to your employee population where you draw the line between acceptable and unacceptable behavior. You can’t be ambiguous.

It’s also important to understand that you can’t ignore the issue at work. Ignoring it will only make the situation worse because these conversations may escalate into profanity and direct threats. Other employees who want to stay out of these discussions may also be unwillingly dragged in.

When you overhear a controversial political discussion happening at your workplace, and you’ve established the accepted ground rules, you simply remind the employees engaged in the conversation that they are not behaving in an acceptable manner (professional, respectful, or tolerant). If they continue after your reminder, you simply begin your organization’s disciplinary process.

Hopefully these suggestions will help you keep your workplace professional, respectful, civil and ultimately productive! Also, if situations arise where intervention of a third party is required to ward off office politics, expert help and counsel on several matters can always be available at Labor Law Compliance Center. Feel free to reach out to them.

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What are Metrics and how to Avoid Common Mistakes When Working with Them

Seventh Entry in the Metrics and Analytics Series

Now that we’ve spent several weeks in the Metrics and Analytics Series defining what analytics are and discussing several real world applications, I want to spend this week reviewing and defining metrics and some common mistakes when using them.

Let’s start out by defining what metrics are according to Jac Fitz-Enz in his book The New HR Analytics. According to Fitz-Enz, metrics “are numbers that indicate how well a unit or an organization is performing in a specific function.” Rather than relying on anecdotal evidence, metrics provide context to where we can analyze performance much more accurately.

These metrics come in the form of percentages, ratios, complex formulas, or incremental differences and can be either individual or aggregated. We can also track them over time in order to show trends.

The data for the metrics are found in both internal and external sources. Internally, the data are payroll, employee surveys, Enterprise Resource Planning (ERP) systems, HR functions, marketing data, sales data, and financial statements. Externally, the data are common benchmarks in your industry, national and local labor market trends, salary surveys, actions from competitors, workforce demographics, and government reports.

In addition, the data collected is both quantitative and qualitative.

Quantitative data are the numbers. Examples of quantitative data are retention rate, overtime, training & development hours per employee which can be found in most HRIS systems. Some other examples are tracking the number of daily employee-client interactions, the number of units an employee produces, etc. These data can be used to rank employees to award bonuses, raises, and promotions for those who excel as well as offer additional training and coaching or discipline employees who are falling short. You can learn more on reputable career coaching at https://juliehancoaching.com/.

Qualitative data are actions and behaviors that are observed. There are no numbers involved which means the data are subjective. Often these data are collected via employee surveys, interviews, and observations. Examples of qualitative data are why employees stay or leave an organization, the value of teamwork in an organization, the effectiveness of how a supervisor manages her direct reports, etc.

It’s also very important to avoid making certain common mistakes when working with metrics. HR Professionals need to show that we understand what we are talking about and how we analyze and report them as they contribute to the improving the business. I have summarized the following common mistakes from the The New HR Analytics.

  • Confusing Data with Information – Don’t bury yourself in data thinking you will find some valuable information simply from gathering it. You will need to know what you will do with it once you have it.
  • Valuing Inside Versus Outside Data – As Fitz-Enz says “…no one in the organization cares what is happening with the human resource function. All they want to know is what value HR is generating for the company.” Don’t get hung up on the HR activities, instead focus on the employee activity and how it impacts the organization.
  • Generating Irrelevant Data – Metrics must be able to effectively answer relevant business questions so the focus must be to collect and report only data that is important to the business. Learn and understand what metrics are important to your organization.
  • Measuring Activity Versus Impact – Don’t collect and report data that doesn’t show some positive or negative effect. Just reporting costs, quantities, or time cycles without describing their effects on the business is ineffective and a waste of everybody’s time.
  • Relying on Gross Numbers – Try to avoid averages as they mask the effects on the business. Analyze the mean, median, mode, and the percentile in order to determine if the data points are spread out in a wide range or are bunched up around the middle.
  • Not Telling the Story – After collecting and analyzing the data, make sure to tell the story of what happened, why it happened, when it happened, where it happened, how it happened, and to whom it happened.  Never report something if it doesn’t tell a story.
  • Analysis Stagnation – What are the implications of the data and what are you going to do with it? If the data and the story are compelling enough, determine how to get management to take action in order to solve the identified problem or exploit the identified opportunity.

I encourage you to take another look at these common mistakes and do what you can to avoid them. As I mentioned, HR Professionals must, in order to be take seriously, be able to understand what we are talking about and how to effectively analyze and report our data in order to positively impact the business of our organization.

I invite you to take the survey located at the top of the sidebar on this week’s post about metrics and some common mistakes about them.

Linking Human Capital Measurements to ROI – Part 2

Sixth Entry in the Metrics and Analytics Series

Last week, I published Part 1 of Linking Human Capital Measurements to ROI, setting the stage for the four human capital metrics that track the return on investment in human capital. My source is Kirk Hallowell’s essay in The New HR Analytics book by Jac Fitz-Enz.

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As a brief summary,  Hallowell’s four metrics are designed to be event driven (how and when the measurement takes place), clear and easy to understand, and focus on the highest points of leverage for gain or loss of ROI (fewer strategic measures).

So, with that, let’s dig in!

Performance metric 1 – Time to Full Productivity (TFP)

An employee’s time to full productivity (TFP) is simply a learning-value curve that will increase over time as that employee improves their knowledge, skills, and productivity. TFP is a very important metric because it can focus and direct the organization’s investment strategies. In order for this metric to be effective, however, full productivity needs to be clearly defined and quantified in order to properly measure it.

An employee’s competencies and professional relationships will predict the employee’s future performance and contribution to the organizations overall performance.

The primary goal here is for the organization to shorten the employee’s TFP as much as they possibly can. Some of the ways they can do this are listed here:

  • Use an integrated talent development system
  • Hire employees for their competencies and adaptive learning skills
  • Provide competency-based training
  • Deliver a robust and effective onboarding process
  • Identify and address development needs early
  • Deliver timely and effective feedback
  • Provide incentive-based pay
  • Optimize environmental issues (work flow, equipment, support resources, etc.)

Performance Metric 2 – Quality of Hire

The quality of hire is how the employee fits within the organization’s culture and their ability to accomplish their job responsibilities. Different employees will reach full productivity at different rates depending on their skills and experience.  Each employee will have a different starting point, shape, and trajectory on the learning-value curve.

Several variables that can determine the quality of hire are listed here:

  • The employee’s key experiences as they relate to the job responsibilities
  • Their past work and performance
  • A competency assessment
  • Their adaptive learning skills
  • Personality variables as measured by an assessment

Of course, the actual quality of a hire will vary greatly depending on how the candidates are sourced and recruited. Employees with stronger and more developed competencies will achieve their TFP much quicker.

We can also use the quality of hire to justify pay differences between new hires by paying more to those who can show that they are capable of reaching TFP sooner than their peers.  An organization’s decision to invest more in a higher quality of hire will be justified when that new hire reaches their TFP quicker than her peers.

Performance Metric 3 – Quality of Promotion

The quality of a promotion depends on how well the newly promoted manager adjusts and learns their new position. There will be a dip in their learning-value curve after their promotion but if the employee was properly vetted for the promotion and the proper training is administered, the learning-value curve will recover and the employee’s performance will start to provide a solid return on investment.

Most of us can agree that one of the most difficult transitions an employee makes is when they are promoted from a line employee to a supervisor. The employee must shift from being a technical/administrative/functional expert to a management expert.

In addition, when the newly promoted employee becomes the supervisor of people with whom they were peers, they will often fail or struggle for a long period of time. This is where the organization must invest in management training, coaching and effective feedback in order to realize a good ROI.

And this is where the learning-value curve takes a dip.

If the employee’s promotion is successful, their learning-value curve will recover from the dip and begin an upward increase positively impacting their direct reports, systems, and processes.

Performance Metric 4 – Quality of Separation

The loss of good employees can have a tremendous negative impact on an organization’s economic return. Typically, an organization does not measure this impact leaving it a costly and unknown mystery to how serious the impact actually is.

When a good employee leaves an organization, the ROI in human capital is potentially reduced in the following ways:

  • The potential for the employee to add economic value from their performance immediately stops.
  • The organization’s investment in training, experience, and internal networking of the employee is immediately lost.
  • New investments to replace the employee must be made in order to maintain and grow productivity.
  • Loss of potential revenue streams and broken customer relationships may hurt the organization’s profitability.
  • The employee may move to a competitor and take their intellectual capital and customer relationships with them.
  • The remaining employee’s morale and productivity is typically negatively impacted.

The separation costs of a top-performing employee has been estimated to be 75 to 125% of that employee’s annual salary when including lost opportunity costs and adding the direct and indirect costs of hiring, training, onboarding a new employee.

 

The four metrics I just briefly discussed here give organizations the opportunity to apply a dollar amount on the cost or return on investment as they relate to human capital investment as was done above in the Quality of Separation metric above.

I highly recommend you read Hallowell’s essay in Fitz-Enz’s book where he does a great job of explaining the four metrics as they apply to his case study.

Please take this week’s survey, located at the top of the sidebar, about this week’s subject of linking human capital measurements to ROI!

Linking Human Capital Measurements to ROI – Part 1

Fifth Entry in the Metrics and Analytics Series

While looking for ideas for this week’s post and podcast, I came across a very interesting essay in The New HR Analytics book by Jac Fitz-Enz that I feel is very important in understanding how human capital measurements should be made in terms of linking them to an organization’s return on investment (ROI).

The essay is by Kirk Hallowell titled “Roberta Versus the Inventory Control System: A Case Study in Human Capital Return on Investment”.  I’m not going to discuss the actual case study presented in the essay but I want to review the key concepts in the essay as I think they make a great deal of sense in how we should change the way we think about human capital metrics and ROI.

The concepts he discusses identify ways to link an organization’s investments in human capital to their financial returns in the same manner they apply to depreciating or appreciating their tangible assets. Hallowell suggests, and I agree, that accounting metrics and rules need to be modified in order to change the way we think about how we invest in people.

Human Resource costs – recruiting, payroll, benefits, training & development, etc. can typically be a full 70% of an organization’s budget. The fact that most companies don’t have a reliable and consistent method of measuring this much of a company’s budget is concerning to say the least. In addition, human capital costs are always expensed rather than depreciated. This prevents the organization’s leadership from effectively managing and maximizing their human capital return on investment the same way they do with their other tangible asset investments.

When a company invests in their tangible and people assets, they do so with the goal of achieving the same business results but the way the company processes the accounting for each investment is completely different.  Human capital costs are expensed and immediately impact the company’s balance sheet while investments in tangible assets (physical plants, equipment, etc.) are listed as assets and depreciated for up to 30 years.

The result? The tangible assets, which are typically a much greater investment, are recognized as a significantly lower expense on the company’s balance sheet than an initial investment in human capital expenses.

As tangible assets age, they decrease in value and within a certain period of time, they lose all of their value and will need to be replaced. These tangible assets will require maintenance and utility costs to keep them from deteriorating too quickly.

Unlike tangible assets, human capital assets actually increases in value over time. Employees gain experience, expertise, and knowledge becoming more efficient through their work and training. Effective training and management will make the company’s operations more efficient and employees will increase their ability to add value to the organization’s operations. This will happen while the company’s investment in salary, benefits, administration, and training remains more or less consistent.

The return on investment for organizations is always driven by their people but the investment is listed as a nondepreciated expense. Crazy. We have our most valuable asset, our people. We invest in finding the best people we can, train and develop them, and as a result the value of that asset actually increases!  But we treat it simply as an expense rather than an actual appreciating asset!

Hallowell’s solution is to introduce four human capital metrics that will track the return on investment in both the tangible and human capital assets. The four metrics are designed to be event driven, clear and easy to understand, and focus on the highest points of leverage for gain or loss of ROI.

I will explore these four human capital metrics in next week’s post and podcast. This post is a little shorter than usual but if I include the four metrics, it becomes too large of a post so I decided to split this topic into two parts.

Please take this week’s survey, located at the top of the sidebar, about this week’s subject of linking human capital measurements to ROI!

The Creative Destruction of the Retail Industry

Amazon Has Changed the Retail Landscape

Amazon announced this past week that it will be adding 100,000 new full-time jobs in the US in the next 18 months. Having spent the early part of my career in the retail industry as a store manager for Macy’s, I like to still keep up with the news and goings-on in the retail industry.

What’s so interesting about the news from Amazon is the news from the big traditional retailers that is happening at the same time. Macy’s closed 40 stores in 2016 and announced it will close 100 more in 2017, recently listing 68 of those stores getting the ax. In addition, Sears Holdings announced that it is closing 150 Sears and KMart stores, and JC Penney recently announced it will be closing a bunch of its stores. I’m only touching on the major retailers here and there are dozens of the small retailers closing stores as well that are too numerous to list.

Obviously, Amazon and technology have fundamentally changed the entire retail landscape. The big traditional retailers didn’t see it coming and didn’t, or couldn’t, keep up. They seem to be heading in the direction of some smaller retailers, Blockbuster and Borders who are a shell of what they once were or no longer even exist.

I remember being asked by one of my employees back in the early 2000’s when I was a store manager for Macy’s what I thought about online retail putting traditional retail out of business. My employee was very concerned and I told her that I doubt companies like Amazon would ever be much of a threat to the big retail giants like Macy’s, Sears, JCP, etc.  After all, people like to go out and shop, handle merchandise, try things on, and talk to and interact with other people. I thought online retail would certainly have it’s niche (books, music, etc.) but didn’t think it would ever pose a serious threat to traditional retail.

Boy was I wrong!

Really wrong.

The news that Amazon is planning to hire 100,000 people at the same time the big traditional retailers are announcing huge store closings and layoffs tells you everything you need to know. Amazon has successfully changed the way people like to shop and I  include myself in that change.

Frankly, I love shopping on Amazon and because I’m a Prime member, I get “free” shipping for most of what I buy from them. Yes I know it’s a gimmick but it does make me feel special!

I find it a pain to go to the mall  and much easier to find what I want online where the selection is unlimited I click a few times and then get a package delivered to me in a couple days! I find it very satisfying.

There are some who are criticizing Amazon complaining that the jobs they are creating are low paying jobs. This is true, however, most retail jobs in general, have always been low paying jobs anyway so it looks to me that they are basically just replacing many of the jobs that the big traditional retailers are cutting.

There are also a lot of good paying jobs at Amazon, just as there are/were at the traditional retailers. There is the buying organization, management, HR, recruiting, IT, and other support services.

Amazon also makes an interesting claim that they sustain an additional 300,000 jobs due to their marketplace business:

Amazon has said that its employment figures alone do not capture its full effect on jobs. On Thursday, the company said its marketplace business, through which independent merchants sell goods on the company’s site, sustained 300,000 additional jobs in the United States.

And sure, Amazon has had some growing pains and had some bad press about their workplace culture but in talking with some of my friends who work there, they are making efforts to improve.

Jeff Bezos and his team have done an amazing job building their company from an online bookseller to a full line store and fundamentally changing our shopping behaviors. They’ve been aggressive and innovative and it’s been fascinating to watch.

Amazon is leading another round of creative destruction in the retail industry where one form of the retail industry is being replaced by a new and much more innovative one.  Shopping malls with  big anchor stores are being replaced by online retail just like downtown shopping districts were replaced by shopping malls back in the 1950’s -1990’s.  And I’m sure we will see something replace online retail in the future.

Creative destruction is tough.  It’s tough on many people. But creative destruction is also good and necessary for advancement and growth. If we didn’t have it, we wouldn’t have all the things that make our lives so much more enjoyable. All you have to do is look back 50 years, 100 years, 200 years and see how far we’ve come and it was all because we allowed creative destruction run its natural course.

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An Interesting Alternative to the Traditional Annual Performance Appraisal

Adobe's Check-in Performance Approach

It’s a new year and now that the holidays are over, it’s time to start thinking about everybody’s favorite topic – THE PERFORMANCE APPRAISAL!

Yay.

I’ve written extensively about the traditional annual performance appraisal and believe there is a place for it in certain organizations but I also think it’s time to explore something new and innovative that will be more effective in today’s modern workplace.

There’s a lot of talk about scrapping the performance appraisal altogether. I’m starting to believe that the traditional annual PA is becoming obsolete in today’s modern workplace. There still needs to be some sort of tool, however, to set employee objectives and expectations and then to measure how the employee did against those expectations.

Today, I’m going to explore an alternative to the annual performance appraisal that, in my opinion, is one of the better systems. I did some research and landed on one that seems to be the best, Adobe’s Check-in Performance Approach.

There are three components that make up the Check-in Framework. It’s important to note that the Framework emphasizes that it is the employee’s responsibility to take ownership of their career. I love this approach because it aligns very closely to a similar feedback system I’ve been using and refining in the field for years called Responsibility Based Performance, something I will write about in the future.

1. Expectations, which is driven by the manager. This is where the manager works closely with the employee to establish the employee’s expectations and goals. The manager also helps the employee clarify their role, responsibilities, and success criteria throughout the year.

The first step in any sort of performance appraisal discussion is the need to establish clear expectations and objectives. The Check-in Framework is no different. Employees want to know exactly what’s expected of them and how their performance aligns with the organization’s objectives.

Employees and managers need to meet annually to establish and outline the employee’s objectives in writing. The objectives should be clear to both the manager and employee on what needs to be accomplished and how it should be accomplished. Once the objectives have been agreed upon, they will need to be reviewed and refined throughout the year. The frequency of this periodic review will depend on the department or business unit.

In order to hold everybody accountable to this Framework, employees will need to be surveyed several times throughout the year to make sure they have set expectations with their managers and are having regular follow-up meetings to review and refine their objectives. It is also critical that senior leaders show their support for the program and are following up to make sure this is happening.

2. Feedback, which is driven by both the manager and the employee. Feedback is the key to the entire Framework and will require the most amount of training. This is where both the manager and the employee give and receive ongoing feedback. The manager also provides ongoing and timely feedback that recognizes good performance and works to improve and address performance issues.

Again, feedback is the key to the entire Framework and is the most difficult component to get right. It will require quite a bit of training of the organization’s managers and follow-up by HR in order to get it right. The goal with the feedback component is to have employees at all levels of the organization give and receive feedback.

Feedback needs to be timely and relevant to the needs of the business and the employee. It needs to be given with the honest intention of helping the employee understand that they are doing a good job or that they need to improve. Remember also that feedback should be both positive and constructive.

If employees are not meeting their objectives or performing up to their expectations, they will need to enter into the organization’s corrective action process.

Adobe uses the Specifics, Ask, Impact, Do (SAID) model of giving feedback.

Specifics – State what the person has or has not done by using concrete examples.
Ask – Ask open ended questions to understand their perspective. (How do you see the situation? Did I contribute to the problem in some way?)
Impact – Express the impact on the business, team, or you. When framed as a means to reach a specific business goal, it becomes an opportunity to solve a problem or understand how their actions impacted the business directly.
Do – State what needs to continue or change.

I also strongly recommend taking a look at the Manager Tools Feedback Model for advice on how to give effective feedback. It’s similar to SAID but leaves out the Ask element.

Its also worth taking a look at my friend Morag Barret’s recent article on delivering tough feedback.

Again, to hold everybody accountable, employees will need to be surveyed throughout the year to make sure they are receiving regular feedback from their manager. Senior leadership will also need to support and follow up to make sure this is happening.

3. Growth & Development, which is driven by the employee, supported by the manager, and enabled by the organization. Here, the organization and manager must provide opportunities to the employee to develop and increase their skills, knowledge, and experience in their current role. These opportunities, of course, must be aligned with the business needs of the organization and the employee’s individual ambitions.

The organization must provide a work environment that encourages and helps employees grow and develop their skills and knowledge as it relates to the organization’s business. Giving them different job experiences, providing training and opportunities are ways to help employees expand their skills in their current roles and to develop them for future roles within the organization.

The skills and knowledge that are being developed must, of course, align with the needs and objectives of the organization in order for the employee’s growth and development to be relevant and actionable.

The organization should create a form that will help employees communicate their interests, career goals, and professional aspirations. The employee and manager should discuss these so that the appropriate opportunities can be provided by the organization and supported by the manager.

Once again, to hold everybody accountable, employee surveys will need to be taken to measure the effectiveness of the Growth & Development component as it relates to employee engagement.

I really like this Framework and would love to help an organization implement a version of it. It’s an innovative system that would be very effective measuring employee performance and developing employees in today’s modern workplace.

As a reminder, last week I started a new feature called the HHHR Weekly Survey (using SurveyGizmo) where I survey my readers and listeners on the current blog post and podcast. Remember to take the survey I’ve included for this post which is located on the top of the sidebar or can be found by clicking here.

Some Predictive HR Analytics to Start Using

Fourth Entry in the Metrics and Analytics Series

Today I’m going to review and explore a number of actual predictive HR analytic measurements that Jac Fitz-Enz discusses in his book, The New HR Analytics.  The first eight are ones that Fitz-Enz considers the most effective  based on his actual experience working with many different organizations since the 1980s. The additional three are from other experts and are equally useful as leading indicators.

Fitz-Enz uses ratios but I like to use percentages instead, so I tweaked his definitions a bit.

1. Professional/Managerial Percentage: This is the number of professionals and managers compared as a percentage to the total number of employees in the organization’s workforce.  (e.g.  Let’s take an organization with 2500 employees and 1352 professionals and managers. They would have a Professional/Managerial Percentage of 54.08% (1352/2500=.5408)). Typically, a organization with a higher percentage would be considered as having a greater chance for future growth and profitability. In this example, the organization may or may not have a potential problem because it would depend on the nature of the business and/or industry.

2. Readiness Percentage (Succession): This is the percentage of  key jobs with at least one qualified person ready to take over.  (e.g. An organization with 82 key jobs has determined through their succession plan review and analysis that they currently have 36 employees who can effectively step in and take over if those key jobs are vacated. This would be a Readiness Percentage of 43.9% (36/82=.4390)). The closer this number is to 100%, the better so in this example, the organization has a fairly serious gap in their succession planning strategy for their key positions. This will likely result in slower growth while these positions remain vacant during the talent acquisition process and increased costs as they recruit for outside and often expensive talent.

3. Commitment Percentage: This is the percentage of the organization’s staff that is committed to the organization’s overall mission and vision. This percentage is measured by an employee survey.  (e.g. An employee survey was conducted and it was discovered that only 739 of the organization’s 2500 employees knew and believed in the organization’s mission and vision. This would be a Commitment Percentage of 29.56% (739/2500=.2956)).  The higher this percentage, the better. In the example, the organization shows signs of a serious lack of commitment and employee buy-in of the organization’s values and mission. A lack of commitment shows a lack of engagement which leads to lower productivity and increased turnover.

4. Leadership Rating: This is the performance rating of the organization’s current leadership as measured by the organization’s staff.  This is also measured by an employee survey. (e.g. In a survey, using a scale of 1 to 5 with 1 being Unsatisfactory, 3 being Meets Expectations, and 5 being Outstanding, the organization’s staff rated their leadership at an average score of 2.43). According to the scale, the organization’s leaders are below expectations. This rating is predictive of employee retention and turnover rates as it is well known that the most common reason people quit their jobs is because of poor managers and leadership.

5. Climate-Culture Rating: This is the rating the organization’s staff gives as to whether the organization is a good place to work and is also measured by an employee survey. (e.g.  In a survey and using the same 1 to 5 rating scale, the employees give the organization a Climate-Culture Rating of 2.12 which would be below expectations). This rating is also predictive of retention and turnover rates because the second most common reason people quit their jobs is based on the poor working climate and culture of the organization.

6. Training Rating: These are the scores from the organization’s current training programs that develop skills that help employees get their jobs done now.  Interestingly, this rating is not concerned in training for skills needed for the future because having skills you don’t use or need now does not add positively to corporate value.

7. Accession Percentage (Turnover): This is the number of new and replacement hires as compared to  the total number of employees in the workforce.  (e.g. An organization with 2500 employees had 1750 new and replacement hires during the previous year for an Accession (turnover) Percentage of 70% (1750/2500=.700)). Of course, this is a negative indicator and the lower the number the better. There are both hard costs, conservatively estimated to be six to nine month’s of the employee’s salary to hire and train that employee, and the soft costs, lower engagement and morale from the remaining staff and lower productivity from the new hire.

8. Depletion Percentage (Turnover): This is the percentage of the top talent the organization lost in a year. (e.g. An organization with 2500 employees lost 126 of their top employees in the previous year for a Depletion Percentage of  5.04% (126/2500=.0504)). This is also a negative indicator and a lower number is better. The higher the number, the worse the organization’s future ability to maximize profitability as they are losing their best innovators, producers, and leaders not to mention the hard and soft costs we discussed earlier associated with turnover.

As I mentioned at the beginning, in addition to these eight measurements, there are three more predictive HR analytic measurements mentioned in the book that also serve as very good leading indicators. There isn’t a lot of detail in the book on these measurements but they seem interesting and ones that I will explore further in the future.

1. Executive Stability Ratio and Separation Rate: This rate shows that executives with more than three years of executive experience lowers voluntary employee turnover in the organization.

2. Management Ratio and Promotion Rate: The number of employees that each manager in an organization supervises impacts the number of promotions that those employees have available to them. Managers with a smaller span of control, supervising fewer employees, have fewer promotion opportunities for  them. This affects employee engagement, morale, and retention.

3. Training Investment Factor and Promotion Rate: This measurement shows that the more an organization spends on training programs, the more employee professional development will occur which should increase employee engagement, morale, and productivity.

These 11 predictive HR analytic measurements are all excellent and a great place to start.

Most of the data you need can be found on your current HRIS and you can run an employee survey to collect the data you need for the remainder. I suggest using SuveyGizmo or SurveyMonkey to create and administer an employee survey. They both have free accounts and trial periods where you can test run some surveys with no financial risk.

I prefer using SurveyGizmo and have decided to add a new feature, using SurveyGizmo, called the HHHR Weekly Survey based on my latest post and podcast, if appropriate. So take a look at the top of the sidebar on the right or click on this link and take the survey.

Why we have to fill out a Form I-9 and the consequences if we don’t

This week, I’m going to start discussing the importance of the Form I-9 (Don’t worry, I will continue the Metrics & Analytics Series. I just like to occasionally cover another topic from time to time). Nearly every single client that I visit fails to understand the importance of correctly filling out their I-9’s.

In fact, it is my understanding that many organizations don’t take it seriously. They are very sloppy about completing them correctly, if at all, and have no idea of the major liability they incur by not taking it seriously.

Let’s start by discussing what the Form I-9 is and why we have to fill it out.

From the U.S. Citizenship and Immigration Services (USCIS) website they explain it this way:

Form I-9 is used for verifying the identity and employment authorization of individuals hired for employment in the United States. All U.S. employers must ensure proper completion of Form I-9 for each individual they hire for employment in the United States. This includes citizens and noncitizens. Both employees and employers (or authorized representatives of the employer) must complete the form. On the form, an employee must attest to his or her employment authorization. The employee must also present his or her employer with acceptable documents evidencing identity and employment authorization. The employer must examine the employment eligibility and identity document(s) an employee presents to determine whether the document(s) reasonably appear to be genuine and to relate to the employee and record the document information on the Form I-9. The list of acceptable documents can be found on the last page of the form. Employers must retain Form I-9 for a designated period and make it available for inspection by authorized government officers.

The USCIS clearly states here that every employer in the U.S. must complete a Form I-9 for every employee they hire including citizens and noncitizens. There are no exceptions. There are also heavy fines and penalties for not complying with the requirement.

To give you an idea of how serious the fines are, let’s review what the USCIS has posted on their website:

1. For knowingly hiring an unauthorized alien for employment or to knowingly continue to employ an unauthorized alien in the U.S., the fines range from $539 to $4,313 for each unauthorized alien for the first offense and goes to $6,469 to $21,563 for the third and subsequent offenses.

2. For failing to comply with Form I-9 employment verification requirements (failing to fill out a form), the fines range from $216 to $2,156 per each form.

3. For committing or participating in document fraud for satisfying a requirement benefit of the employment verification process (knowingly accepting and attesting to fraudulent documents of an employee that prove they are authorized to work in the U.S.), the fines range from $445 to $3,563 for each document for the first offense and $3,563 to $8,908 per document for second and subsequent offenses.

4. For committing document abuse (specifying which documents the employee must use or requiring more documents then are legally required to verify they are authorized to work in the U.S. instead of allowing them to choose which documents to use from the list accompanying the Form I-9), the fines range from $178 to $1,782 per violation.

I’ve worked with clients that have several hundred employees who have no Form I-9s completed. They didn’t know or think it was important. I, of course, help them understand how important it is and get them into compliance as soon as possible.

Let’s walk through a fictional scenario with an employer who has 300 employees and has done a poor job of completing Form I-9s.

During an internal audit, they discovered that only 72 of the 300 employees have a Form I-9. These employees were hired in the early days of the company’s history when they had a good HR professional who understood the importance of the document. She left the company several years ago and the company didn’t replace her as they no longer thought HR was important and gave the HR responsibilities to different people in the subsequent years. First the payroll clerk, then the administrative assistant, then to the office manager, and so on.

None of them knew much about the Form I-9 and didn’t complete them when the company’s newly hired employees came on board. The result is 228 employees without a Form I-9.

Had an internal audit not taken place and Immigration and Customs Enforcement (ICE) came out to do an audit, they could potentially fine this company 228 missing I-9s X $2,156 maximum fine/missing I-9s = $491,568 for failing to comply with the employment verification requirements by having no Form I-9s for their 228 employees. That’s half a million dollars for failing to fill out a form that takes approximately 10 minutes per employee. That’s half a million dollars the company could use to grow their business. That’s half a million dollars because they didn’t think HR was important and thought anybody could do it. I bet they’d change their mind with a fine this big.

I’ve just focused on the failure to complete Form I-9’s in the above scenario. There is also a huge liability issue with Form I-9’s with mistakes which I will cover when I discuss how to correct mistakes.

Form I-9’s are not trivial. They are to be taken seriously by every employer in the U.S. Today, I just covered the reasons why we need to fill them out and what happens when we don’t. Future posts and podcasts will discuss exactly how to fill out the form, how to conduct an internal audit, how to make make corrections, and the filing and retention requirements.

It’s a big deal that could potentially put a company out of business and will require several posts and episodes to fully cover the topic.