The HR expertise domain of People Knowledge counts toward 17 percent for both exams. This domain covers the essential HR knowledge needed for relating to people. The following are the functional areas that fall within the People Knowledge domain:

•   Functional Area 1—HR Strategic Planning

•   Functional Area 2—Talent Acquisition

•   Functional Area 3—Employee Engagement & Retention

•   Functional Area 4—Learning & Development

•   Functional Area 5—Total Rewards

HR professionals are expected to know how to perform the following Body of Competency and Knowledge (BoCK) statements for the People Knowledge domain:

•   01 Creating and setting the strategic direction of the HR function

•   02 Acquiring or developing the talent necessary for pursuing organizational goals

•   03 Maintaining a satisfied and engaged workforce while minimizing unwanted employee turnover

•   04 Developing a total rewards program that maximizes the effectiveness of the organization’s compensation and benefits

Functional Area 1—HR Strategic Planning

Here is SHRM’s BoCK definition: “HR Strategic Planning involves the activities necessary for developing, implementing, and managing the strategic direction required to achieve organizational success and to create value for stakeholders.”¹

All career levels of HR are expected to support and contribute to the strategic direction and role of HR. HR professionals must be able to identify and understand the organization’s strategic initiatives, plans, and direction for decision-making, as well as contribute to the organization’s overall strategy. All of that involves understanding the internal and external environments and utilizing the organization’s mission and vision as a focus for determining where HR can support goals and sustain a competitive advantage.

Key Concepts

•   Approaches to project management (e.g., traditional, lean, Six Sigma, agile, critical chain) and processes (e.g., initiating, planning and design, launching/executing, monitoring and controlling, closing)

•   Concepts of systems thinking (e.g., related parts, input-processes-output) and components of an organizational system (e.g., interdependence, necessity of feedback, differentiation of units)

•   Organizational mission, vision and values, and their relation to strategic management and planning

•   Project planning, monitoring and reporting methods and tools (e.g., critical path analysis, Gantt charts, variance analysis, outcome monitoring)

•   Project leadership, governance, and structures (e.g., team roles, team management, work breakdown structures)

•   Role of strategic management and planning in creating and sustaining competitive advantage

•   Strategic planning analysis frameworks (e.g., PESTLE analysis, SWOT analysis, industry analysis, scenario planning, growth-share matrix)

•   Strategic planning process (e.g., formulation, goal-setting, implementation, evaluation)

•   Systems theory and input-process-output models

The following are the proficiency indicators that SHRM has identified as key concepts:

The Role of Strategy

The role of strategy is one that aligns all functions in an organization to “row together” toward defining the organization’s goals and direction. The creation of strategic goals requires a vision of growth that is associated with the organization’s mission, and, of course, includes the result of value for stakeholders. The development of goals, initiatives, and objectives is a necessary part of strategy to make sure everyone is on the same page, leading in the direction of attaining the defined strategy.

What Is Strategy?

Strategy is the planning of long-range goals and actions to attain those goals. Initiatives, objectives, and tactics are outlined in detail for each specific function in the organization and coordinated over a defined period of time. Strategy will look within the walls of the organization at its strengths, weaknesses, and vulnerabilities, along with looking outward at competition, opportunities, and external issues and influences.

Some theorists believe that strategy emerges in response to environmental threats and opportunities and cannot be planned rationally—because no one person can foresee everything about the future. Theorist Henry Mintzberg² is associated with this strategy approach. Others believe that the gathering of data is its core source for setting and choosing direction—much like a control system that would have targets. Michael Porter’s perspective of the five forces in planning is aligned with this process.³ Both concepts and processes have value. Strategic planning is necessary to set the direction and path for an organization, and the management of strategy (strategic management) is required in leadership of the organization to ensure that functions in the organization are aligning their activities to help move the organization toward its goals and strategic plans.

Requirements for Strategic Planning and Management   Several strategic-planning processes begin with the extension of the annual operating budget into a typical five-year projection. This can be a valuable exercise, particularly for organizations that have operated on a yearly or even monthly planning cycle. Most organizations soon discover that five-year operational and financial forecasts, in and of themselves, are ineffective as strategic-planning tools because they are predicated on the assumption of no significant change in environmental, economic, and competitive conditions.

There are certain concepts for the creation of strategy and the management of it.

•   Aligning effort It’s important to ensure that all functions are aligned with the organization’s mission and goals. This is where a 10,000-foot helicopter ride is of benefit to have a broader view, ensuring that policies and practices are aligned with the strategy and intention.

•   Controlling drift This is important to ensure that an organization is not coasting along doing what it’s always done and missing the boat or, at worse, becoming blindsided because of disruption in its marketplace or industry with substitution.

•   Focusing on core competencies This means knowing what the organization is good at for its customer base and being sure to focus efforts on those competencies.

•   Systems thinking Keep in mind the inter-relations of both internal and external factors, such as stakeholders, industry forces, and the other influences on an organization. This includes looking at both the opportunities and the risks or conflicts and to what degree the risks are acceptable to the organization.

•   Using structure as a strategic level Does the structure of the organization support the strategy, or does it hamper it because of current policies and expectations within the organization?

•   Using culture as a strategic level Does the culture align itself with the intended strategy? As an example, if the strategy is to have front-line employees make return decisions on the spot with a customer, is the organization’s orientation program providing training and demonstrated shadowing for new front-line hires to develop the desired behaviors?

Benefits of Strategy   The benefits of strategy are helping everyone in the organization focus on the future with a written plan that contains goals to further the organization’s existence. From top to rank and file, strategy provides a map that gives direction and intention on where the organization plans to use and spend its resources. It helps keep decision-making and activities aligned to ensure that they support the attainment of the planned strategy. It provides a spotlight on what resources are needed, such as talent and development, to progress with the strategy. It also helps determine both positive and negative outcomes for suggested strategies.

Mistakes to Avoid   Organizations can fail to obtain the benefits of strategic planning through their process and/or the management of strategy. They can avoid failing by remembering not to take shortcuts with the process of strategic planning. Analysis such as SWOT (discussed later in this chapter) and an honest look inward, along with valid research externally, are absolutely necessary. Being too comfortable with the status quo and not challenging or assessing the potential risks is another mistake to avoid. Lacking follow-through and alignment of the plan throughout the organization is one of the most common mistakes—creating “the plan” and putting it in a binder on the shelf to just dust it off at next year’s planning retreat is a waste of time, effort, and execution. Insufficient involvement or commitment from management will sideline a good strategic plan in its tracks. Lastly, lack of communication throughout the organization on what the strategic plan is, and what it means to each employee and function in the organization, will thwart efforts and should be avoided.

Levels of Strategy   There are three levels of strategy.

•   Organizational level This level involves a general vision of the future, typically what the organization plans to grow into, as an umbrella over the entire organization.

•   Business unit level This level focuses on the “how” and “where” the organization will focus to create value for its shareholders. The focus is on the business units such as sectors, divisions, regions, and product units.

•   Operational level This level focuses on the activities and actions the functions within the organization will take to progress it toward its vision. Finance, manufacturing, R&D, marketing, HR, and so on are operational-level examples.

Role of HR in Strategy   With HR, the operational level is going to be the main focus. HR’s policies, programs, and processes will need to correlate, collaborate, and align with the organization’s business units. HR’s resources will need to be spent on the activities that add value and assist in the business units in fulfilling their work toward the strategic plans. It may be with workforce planning, talent development, or incentive compensation programs.

HR professionals need to develop strategic planning skills—which are discussed in the following sections—such as scanning the environment, formulating strategy, assessing risks, and setting SMART goals and objectives. This role that HR fulfills is the biggest growing role that organizations demand today, which is why the HR job title of HR business partner was created.

HR’s role includes building bridges with both internal and external stakeholders, where they exist. HR needs to view issues from differing perspectives and seek resolutions to help “bridge” the differing functions in a collaborative effort. There may be a policy within the payroll function of finance that conflicts with a new compensation incentive plan that is being developed with the sales unit to help account management personnel achieve goals that fit the strategic plan. The HR professional will need to view the two conflicting issues and seek resolution for the best of the organization and its strategy.

Role of Value in Strategy

The basic premise with strategic planning and management is to lead activities that yield a great value. Understanding how an organization creates value with its mission is the first step. By value we are not talking cultural values; we are referencing the value it brings to its end customer or stakeholder. What causes the organization to be successful to its customers/stakeholders—that is its value. How well is it achieving its mission, and does its mission still serve its customers/stakeholders?

Value Chain   The value chain is another model by Michael Porter,⁴ which describes the process by which a business receives materials and then adds value to the materials through processes that create their finished product or service, which is then sold to customers. Organizations will conduct their value-chain analysis through looking at the steps in their production that are employed to create their product or service and then identifying the way to increase the efficiency of the production chain. The end goal is to create maximum value for the least possible cost, which creates the organization’s competitive advantage. Figure 4-1 illustrates Porter’s concept of the value chain with primary and secondary activities. It demonstrates the interconnections of various functions in delivering value to the end customer or the organization.

Figure 4-1     Porter value chain concept

Primary activities, which will vary according to the type of organization’s activities, contribute directly to the value that is created for the customer. An example is a food manufacturer that uses distributors and retailers for its product. The value of the primary activities depends on the secondary activities that provide services to the primary functions. HR administration of most HR functions will fall within this area, as will finance and IT.

A strategist, be it an HR professional or an internal or outside consult, needs to understand the flow in creating value. They need to know which activities in the organization are considered central to its mission, reflecting its core activities, and which ones are the most profitable activities or could be profitably outsourced.

Stakeholder Concept   R. Edward Freeman offered the stakeholder concept in the mid-1980s⁵ as another perspective to the shareholder view of a corporation (which was to create wealth for the shareholders). Freeman’s stakeholder concept recognizes the different types of value an organization creates. Yes, there may be monetary value as viewed by investors, but there is also value that a community may perceive via the employment taxes or corporate social responsibility contributions it makes. Figure 4-2 depicts Freeman’s stakeholder concept. Understanding the various perceptions from the view of each stakeholder is especially challenging for a global organization. The customer’s expectations alone will greatly vary. Employees in other countries will have differing perspectives based on their cultural norms.

Figure 4-2     Freeman stakeholder concept

HR’s Role in Defining and Creating Value   The biggest role HR has in defining and creating value for its organization is knowing the workforce. Knowing core competencies of talent, the marketplace for talent that is needed, and the legal environment in which the organization employs its workforce—these are critical value-producing activities for HR.

The Strategic Planning Process

As we’ve explained, the strategic creation planning process is about designing the organization for the future. Whether that is a plan that is for 1 year, 5 years, or longer, it will always involve the four basic stages and will be continually dynamic and changing as conditions change for an organization.

•   Formulation of the strategy, which is gathering the critical and necessary data.

•   Development of the strategy, which is considering the competitive advantage and the markets it competes in.

•   Implementation stage, which is creating the specific objectives and initiatives that produce outcomes associated with the goals.

•   Ealuation stage, which is the final stage where metrics and achievements are accessed and reported upon to stakeholders.

Strategy Formulation

Strategy formulation is the process by which an organization chooses the most appropriate courses of action to achieve its defined goals.

Information Gathering and Analysis

A major part in strategic planning is the process of gathering data. It should be done prior to and during the creation of the strategic plan and continue on through the implementation and to the monitoring process of the strategic plan. Data can be secondary or primary data and gathered through internal or external means.

Improving Your Business and Organizational “Radar”   Information is the key to business success. When something is “on the radar,” it is being tracked. That means someone believes the information is important to the organization’s success. So, the question becomes, “What should we be tracking or monitoring?” Get this right and you will be able to keep your eye on all the critical elements surrounding your organization, sort the critical from the mundane, and decide on the future movements of your group with accuracy.

Environmental Scanning

Seeing what is happening in the environment around you is important. Identifying the important information among the plethora of unimportant stuff becomes a challenge.

PESTEL Analysis   One technique for sorting out the important from the unimportant is PESTEL analysis.

PESTEL stands for:

P—Political
E—Economic
S—Social
T—Technological
E—Environmental
L—Legal

Develop ways that you can gather information in each of these categories, and you will be well out front of your competitors in your ability to make well-informed decisions. According to the Professional Academy, these are the elements and what to look for when gathering information:⁶

•   Political factors These are all about how and to what degree a government intervenes in the economy. This can include government policy, political stability or instability in overseas markets, foreign trade policy, tax policy, labor law, environmental law, trade restrictions, and so on.

It is clear from the earlier list that political factors often have an impact on organizations and how they do business. Organizations need to be able to respond to the current and anticipated future legislation and adjust their marketing policy accordingly.

•   Economic factors Economic factors have a significant impact on how organizations do business and how profitable they are. Factors include economic growth, interest rates, exchange rates, inflation, disposable income of consumers and businesses, and so on.

These factors can be further broken down into macro-economics and micro-economics factors. Macro-economic factors deal with the management of demand in any given economy. Governments use interest rate control, taxation policy, and government expenditure as their main mechanisms to influence these demand factors.

Micro-economic factors are all about the way people spend their incomes. This has a large impact on business-to-consumer organizations in particular.

•   Social factors Also known as sociocultural factors, these are the areas that involve the shared belief and attitudes of the population. These factors include population growth, age distribution, health consciousness, career attitudes, and so on. These factors are of particular interest as they have a direct effect on how marketers understand customers and what drives them.

•   Technological factors We all know how fast the technological landscape changes and how this impacts the way we market our products. Technological factors affect marketing of our products and our HR services in three distinct ways.

•   New ways of producing goods and services—using remote access for employee updates directly to the human resource information system (HRIS)

•   New ways of distributing goods and services—providing employee online access to their employee records so they can request changes to correct errors

•   New ways of communicating with target markets—using e-mail, text messages, and a company emergency messaging system to notify employees of critical changes in the work environment

•   Environmental factors These factors have only really come to the forefront in the last 15 years or so. They have become important because of the increasing scarcity of raw materials, pollution targets, doing business as an ethical and sustainable company, and carbon footprint targets set by governments. If HR were to reduce or eliminate paper records, that could have an impact on the environment (less paper used, fewer trees cut) and cost to the organization (a higher profit, however small a contribution). More and more consumers are demanding that the products they buy are sourced ethically and, if possible, from a sustainable source. HR can make a contribution to that effort and be cited by corporate as an example of how the organization is reducing its impact on the environment.

•   Legal factors Legal factors include health and safety, equal opportunity, advertising standards, consumer rights and laws, product labeling, and product safety. It is clear that HR professionals need to know what is and what is not legal to avoid embarrassment and bad PR or worse.

After you have completed a PESTEL analysis, you should be able to use this to help you identify the strengths and weaknesses for a SWOT analysis.

SWOT Analysis

SWOT stands for the following:

•   Strengths What are the strengths of your HR organization? What do you do really well? What do you want to continue doing into the future? It could be HRIS, sexual harassment prevention, or onboarding.

•   Weaknesses These are the areas you know need improvement. Maybe it is the amount and quality of employee training, recruiting for diversity, or benefit program analysis.

•   Opportunities A merger or acquisition offers opportunities to examine all HR systems in both organizations and determine which will serve the new employer group best in the future. New reporting requirements imposed by government entities or customer groups give us the chance to determine how they will be met and the information used for improvement in our HR department.

•   Threats These are the challenges we face as HR professionals. For example, an outside vendor may propose to deliver benefit program management more cheaply than we can do it in-house. Initially, new government requirements can be perceived as threats. Properly managed, they can sometimes be converted into opportunities.

Industry Analysis

Industry analysis is a tool that facilitates a company’s understanding of its position relative to other companies that produce similar products or services. Understanding the forces at work in the overall industry is an important component of effective strategic planning. Industry analysis enables HR professionals to identify the threats and opportunities facing their businesses and to focus their resources on developing unique capabilities that could lead to a competitive advantage.⁷ How are HR professionals throughout our industry conducting their business? What are they doing that can be applied within our organization?

Industry Lifecycle   There are four generally recognized phases to the lifecycle of a business or industry.

•   Introduction This is the beginning of the organization. It’s the entrepreneurial phase where everything is new. Policies and systems are being created as they are needed.

•   Growth After the new organization has gotten a foothold in its marketplace, it begins to grow. Growth is influenced by all the factors we have explored in SWOT and PESTEL analyses.

•   Maturity This is the time when the organization is comfortable with its size, its influence, and its income.

•   Decline The phase when systems have gotten surpassed by technological advances and products and services have become passé. Without updates to its core reasons for existing, the organization will ultimately cease to exist.

Porter’s Five Forces   Each employer organization has pressures from both internal and external sources. Those pressures impact the competitiveness the organization will be able to apply to the world in which it operates. Porter first published his suggestion that these five forces are what influence competitiveness. The Harvard Business Review article appeared in 1979.⁸ These pressures consist of forces close to a company that affect its ability to serve its customers and make a profit.

The five forces are as follows:

•   Threat of new entrants When a company does so well that their success attracts new competitors who want to get in on that success, the competition can drive down profits.

•   Threat of substitutes In modern terms, these are the “knock off” products that may even be legal if the original product patents have expired. Other people use different products or services to address the same need that the original product or service solved. Examples are digital watches versus analog watches and cell phones versus land lines.

•   Bargaining power of customers When customer orders are large, they can force the lowering of price. Consider the big-box stores and how their orders influence suppliers.

•   Bargaining power of suppliers If there are few options for sourcing component parts, raw materials, or other supplies, the supplier can have a strong influence on the cost of end products.

•   Industry rivalry Industry competitors greatly influence our ability to succeed in the marketplace. They can often drive our price to end users and force us to clearly differentiate how our products and services are superior to the other industry players.

Strategic Investment Decisions   In evaluating capital expenditure decisions, we should consider three techniques to see how investment decisions are evaluated: accounting rate of return, payback, and discounted cash flow techniques. In HR terms, investments should be evaluated based on the period of time it takes to reclaim the investment (using a new applicant tracking software system), what the payback amount will be (savings in HR payroll expense from new software application), and what impact there will be on cash flow (reduction in HR budget that can put cash back into the organizational P&L statement).

Growth Share Matrix   Sometimes called the Boston box or Boston matrix, the growth share matrix can be created with plotting on two axes. The x-axis is the relative market share. The y-axis is market growth. Those two axes create four quadrants. When market share increases and market growth does too, the companies are “stars.” When market growth is high but market share is low, companies are questionable for investment. When market share is high but growth is low, companies can be good cash cows. Finally, when both market growth and market share are low, companies can be described as investment dogs. Figure 4-3 is an example of a growth share matrix.

Figure 4-3     Growth share matrix

The GE-McKinsey Nine-Box Matrix   The nine-box matrix, shown in Figure 4-4, offers a systematic approach for the decentralized corporation to determine where best to invest its cash. Rather than rely on each business unit’s projections of its future prospects, the company can judge a unit by two factors that will determine whether it’s going to do well in the future: the attractiveness of the relevant industry and the unit’s competitive strength within that industry.⁹

Figure 4-4     The GE-McKinsey nine-box matrix chart

Defining Mission, Vision, and Values

According to SHRM, mission, vision, and values can be defined as follows:

•   Mission Mission is a concise explanation of the organization’s reason for existence. It describes the organization’s purpose and its overall intention. The mission statement supports the vision and serves to communicate purpose and direction to employees, customers, vendors, and other stakeholders.

•   Vision Vision looks forward and creates a mental image of the ideal state that the organization wants to achieve. It is inspirational and aspirational and should challenge employees.

•   Values Values are the core principles that guide and direct the organization and its culture. In a values-led organization, the values create a moral compass for the organization and its employees.

Mission and Vision Statements   A mission statement answers these questions: What is our organization’s purpose? Why does our organization exist? A vision statement answers these questions: What problem are we seeking to solve? Where are we headed? If we achieved all strategic goals, what would we look like 10 years from now?

Organizational Values   Organizational values will answer these questions: What values are unique to our organization? What values should guide the operations of our company? What conduct should our employees uphold?

Articulating the HR Mission, Vision, and Values   HR professionals are accountable for creating the HR mission, vision, and values statements. Beyond that, they are responsible for communicating them to senior executives and to the general employee body in terms that can be well understood. When creating a presentation about the HR role and its place in the overall organization, consider these questions: What will be the impact on me [the executive or employee]? Why should I care about the role of HR in the organization? How will this make my job easier?

Setting Goals

Setting HR goals within the construct of articulated mission, vision, and values statements is the next step. What do we want to accomplish in the coming period of time? The time period could be a month or a year. What contributions can be made by HR to the overall organization’s efforts? HR can make a financial impact, for example.

Using the SMART method will ensure that the goals created stand a chance of actually being achieved. Here’s an example of an achievable goal:

Implement a new telecommunicating policy that complies with new ERGO standards for the IT department by end of second quarter.

SMART goal setting stands for the following:

•   Specific Know exactly what you want to accomplish. Goals must be well defined. They must be clear and unambiguous.

•   Measurable Have a yardstick to measure the specific intention.

•   Attainable Make the goal achievable.

•   Realistic Make the goal realistic to achieve in the time frame and relevant to align with the organization’s strategic plan.

•   Timed Specify whether this goal has an implementation date.

Composing goals with the SMART outline and using action verbs such as identify, describe, create, implement, and define will guide the objective of the goal’s direction.

A word of caution when goal setting: be careful of the smorgasbord effect, which means getting so excited about creating SMART goals for the HR plan that too many are selected, which can cause a dilution of focus and resources.

Aligning HR Goals and Objectives   Once HR goals are set, it is necessary for a final step in the process. That is to check that HR goals are aligned with organizational goals and objectives. If HR isn’t going to be supporting the overall goals of the employer organization, then adjustments should be made. There is no room for “grandstanding” or building personal “kingdoms.” HR must be a team player with the other executives in the leadership group. HR’s contributions must be clear to the executive team.

Developing Strategy

A strategy is a statement of how we are going to get things done. It is less specific than an action plan. Once the mission, vision, and values have been established, the logical next step is to ask “How will we accomplish these things?” It is a broad statement about what approach we will take to implement the mission at each point. Then, later, will come the action plan that answers the questions of who, when, and what.

Developing Strategies That Fit

This is according to Community Tool Box: “A good strategy will take into account existing barriers and resources (people, money, power, materials, etc.). It will also stay with the overall vision, mission, and objectives of the initiative. Often, an initiative will use many different strategies—providing information, enhancing support, removing barriers, providing resources, etc.—to achieve its goals.

“Objectives [goals] outline the aims of an initiative—what success would look like in achieving the vision and mission. By contrast, strategies suggest paths to take (and how to move along) on the road to success. That is, strategies help you determine how you will realize your vision and objectives through the nitty-gritty world of action.”¹⁰

It wouldn’t make much sense to plan how to do something that isn’t part of the mission, vision, or values of the organization. Follow the mission and stay within the boundaries of the vision and values. Strategy will allow you to determine how to implement your mission. If you discover a strategy that isn’t speaking to the mission, get rid of it. It will be a distraction at best and a waste of resources at worst.

Business Strategy: How We Will Compete

Each enterprise must assess for itself the missions and strategies that it needs to accomplish its goals. Competing in an open market requires that assessment be updated periodically. After all, world conditions will change with time. Employer organizations need to be flexible to accommodate those shifts.

In HR terms, should the HR functions be performed by in-house staff or by hiring a consultant from the outside? Perhaps contracting with a large vendor would be the more cost-effective approach. Payroll is the obvious example. Oftentimes, vendors can perform the payroll function more cheaply than can internal staff. Other examples are HRIS management or benefit management (employee assistance programs). If you want to compete for rights to deliver any given HR function to your employees, it will be necessary for you to develop a business plan explaining how you will be able to do it better than the external vendors.

Creating Competitive Advantage   Delivering HR services using people on the payroll gives you flexibility because they can often spend a portion of their time working on projects that are not the primary focus of their other work. If you have HR professionals assigned to compensation analysis, they may have some time while waiting for compensation data input that could be used to review policies as part of a two-year review cycle. That efficiency wouldn’t be available to you if you hired an outsider to do the compensation analysis.

According to the Priority Metrics Group,¹¹ there are six ways to differentiate your organization within a competitive marketplace, regardless of where in the world you are located (see Table 4-1).

Table 4-1     Six Ways to Differentiate Your Product or Service

Porter’s Competitive Strategies   What forces drive competition in an industry? What moves will competitors make? How will one’s industry evolve? How do strategic planners respond to competitive actions? How can a firm be best positioned to compete in the long run?

In 1985, Porter suggested that there are four primary competitive strategies that organizations can rely on when plotting their future business course.¹² Porter called the generic strategies cost leadership (no frills), differentiation (creating uniquely desirable products and services), and focus (offering a specialized service in a niche market). He then subdivided the focus strategy into two parts: cost focus and differentiation focus (Table 4-2).¹³

Table 4-2     Porter’s Competitive Strategies

Cost Leadership   Within the cost leadership strategy, profits can be increased by reducing costs while maintaining prices at industry average. Market share can be increased by both reducing costs and lowering prices, taking sales away from competitors. The no-frills retailers have opted to cut costs to a minimum and pass their savings on to customers in lower prices. This helps them grab market share and ensure their stores are as full as possible, further driving down cost. Think of Costco, Home Depot, and Lowes. This same thinking can be applied to the HR department if being the lowest-cost HR department in the industry is a mission of the group.

Differentiation   Differentiation involves making your products or services different from and more attractive than those of your competitors. How will you set yourself apart from your competition? Your competition in the HR world are the HR managers in other companies within your industry. Are they running a group that delivers HR services to their employees with a 1:150 HR professional to employee ratio? What if, at the same time, your HR professional to employee ratio was running 2:150? You are spending twice as much for HR professionals as your competitors. If you can differentiate your services based on cost, you should be able to do so based on quality. Being a full-service HR department means you “hold the hand of employees” as they ask for help with benefits enrollment, discrimination complaint processing, and training enrollment. Unless you can be better in either cost or quality, you will lose out to the competition. Important to this approach is that you can actually deliver the differentiated product or service, in high quality and in the time promised. The marketplace will long remember the broken promises made to customers, so beware of making promises you cannot keep.

Focus   When you focus on niche markets, it is possible to use focus as a strategy. Making something that no one else does that serves a specific requirement is one way. Examples are making dog collars using all natural materials or creating a sea-shell shop that imports sea shells from all over the world so customers can have a one-stop shopping experience. It costs customers less time and money to search the world for what they want when you have it all conveniently located in your offerings.

Companies that use focus strategies concentrate on particular niche markets and, by understanding the dynamics of that market and the unique needs of customers within it, develop uniquely low-cost or well-specified products for the market. Because they serve customers in their market uniquely well, they tend to build strong brand loyalty among their customers. This makes their particular market segment less attractive to competitors.¹⁴

Impact of Business Strategies on HR Strategy   Business strategy is paramount. HR strategy must support that business strategy. So, begin with questions like these: What is the business mission? What strategies will be used to accomplish that mission? How can HR support those business strategies? HR is one component of the organization, as is finance, accounting, marketing, production, and research. If all of these components are not supporting the business strategy, there is little likelihood that business goals will be accomplished.

Your HR organization and its strategies can have an impact on the overall business strategies if you follow these ten steps to make it happen:¹⁵

1.   Understand your organization’s business. Spend time every day talking with sales, production, quality, and accounting. Make sure that you know what is going on in that bigger world.

2.   Share responsibility for business goals and plans. The overall business goals are your goals, too. When you make plans for your department, they should be directed to achieving overall business objectives as well as human resource goals. Developing a performance culture is a goal you’ll likely own.

3.   Know the human resource business thoroughly. Your customers rely on you for correct and insightful information and advice. What more is there to say? You are reliable, credible, trustworthy, and knowledgeable, and you have deep integrity.

4.   Run your department like a business. Your goals must contribute to the accomplishment of the overall business objectives. Your action plans to achieve the goals need to translate into daily “to-do” lists for your staff. Every significant activity requires a feedback loop or audit so you know that it is being accomplished.

5.   Measure outcomes and goal achievement, not work processes. Employee and executive surveys are often used to identify how these people see HR performance.

6.   Remember the people in human resources. Is your office a magnet for people who need help, advice, or a sounding board? Are some of your visitors your senior managers? Even the CEO? If so, you remember that you are there to serve your organization’s people so that they can meet your business goals.

7.   Express thoughtful opinions backed by data and study. You have to understand the numbers. How else can you offer a substantial, intelligent opinion about business direction? Learn everything you can so that you have opinions and so your opinions are backed up with data. You need to understand the effect of decisions that your office makes on the work of the rest of the company. (For example, don’t schedule meetings with plant personnel on the last day of their shipping month.)

8.   Harness the benefits of technology. You’ll provide better customer service and free your time for dreaming up new value-added strategies. You cannot overestimate the impact of an effective HRIS. Need reports about attendance? How about salary reports for your whole organization? Interested in turnover and retention figures?

9.   Recommend programs for people who continually improve the business. When you propose new programs or problem-solve people issues, suggest solutions that support the accomplishment of business goals. You have reasons for suggesting a new variable pay system such as encouraging managers to accomplish business objectives. What’s better—the “thank you” card system that appears to help employee motivation and productivity or the attendance system that has reduced absenteeism by 4 percent?

10.   Learn and grow every day through every possible method. Use your knowledge of how people develop to do what is necessary to continue your growth curve.

•   Seek out a more experienced mentor or sounding board. You need someone you can confide in and learn from.

•   Attend professional HR conferences, meetings, and events.

•   Attend executive leadership and management meetings in addition to your HR professional associations. You seek knowledge that goes beyond the bounds of your discipline and department.

•   Attend at least 40 hours of training and education every year. Make sure your staff members attend, too. Cover all aspects of the business and running a business.

•   Seek out people who will ask you questions and challenge your beliefs so you can continue to grow. For example, a woman works with a CEO, who asks her questions. She may not always like them, but the questions challenge her to think things through and to follow issues to their logical conclusion. He repeatedly asks, “How will you know if that is working? Happening? Bringing the results you want?” You need to be able to respond.

Corporate Strategy: Where We Will Compete   Whatever the corporate strategy, we need to be able to support it from the HR department. Remember, strategy is how we will meet our goals and objectives. Once we identify how we will get there (what strategies we will use), we can begin developing the action plan that will assign individual responsibilities for each element of the strategy.

Determining which markets to address is a question business strategy must address. If the answer is that expansion into international locations is appropriate, then HR strategic planning will need to address those requirements.

Growth Strategy Options   Growth can happen through market penetration (capturing a greater portion of the existing market with current products/services), market expansion (selling current products in a new market), diversification (selling new products to new markets), and acquisition (purchasing another company to gain broader product or service offerings).¹⁶ Growth requires financial support. HR can contribute by controlling expenses. These are some ways that growth strategy can be a viable option.

•   Market penetration Increasing market share through options such as lowering prices

•   Market expansion Developing new markets where current products and services can be sold

•   Product expansion Increasing the number of products or product features

•   Diversification strategies Selling new products to new markets

•   Acquisition strategies Purchasing another organization in an effort to expand product line or markets

Managing Growth Options   The key to a long, healthy corporate life is steady growth. According to a 1998 survey, of the companies that enjoyed greater than 10 percent sales growth per year, about 78 percent were still around 6 years after starting. Of the companies with flat or decreasing sales, only 27.5 percent survived for 6 years.¹⁷

Managing growth requires substantial market intelligence. Researching the needs of the target market, receptivity to product names or applications, and financial requirements of the expansion effort are all concerns that need to be addressed. HR can contribute to those research efforts through identification of employee benefit packages and their costs, specification of employee recruiting techniques and costs, and cultural challenges that will be faced because of the expansion.

Mergers and Acquisitions   Mergers and acquisitions (M&As) are transactions in which the ownership of companies, other business organizations, or their operating units are transferred or combined. As an aspect of strategic management, M&As can allow enterprises to grow, shrink, and change the nature of their business or competitive position. From a legal point of view, a merger is a legal consolidation of two entities into one entity, whereas an acquisition occurs when one entity takes ownership of another entity’s stock, equity interests, or assets. Mergers and acquisitions are means to new markets, new products or services, or a new management team. All could figure strategically into your future plans.

Sometimes it makes good business sense to purchase another organization or merge with another organization. When markets are different and a combined organization can offer both entities a broader sales base, there is synergy. When product lines can be added through mergers and acquisitions, there is synergy. Then HR interventions are needed that will address cultural blending and employee support systems.

•   HR’s role in the mergers and acquisitions strategy HR is almost always called upon to do due diligence in the investigative phase prior to finalizing a merger or acquisition. What union agreements does the new company have? How will those provisions fit into our organization? What policies does the new company have, and how will they blend with our policies? (Examples are holiday and vacation computations, sick leave policies, and parental leave policies.)

•   Planning the HR integration strategy An estimated 70 percent to 90 percent of all M&As fail to achieve their anticipated strategic and financial objectives.¹⁸ This rate of failure is often attributed to various HR-related factors, such as incompatible cultures, management styles, poor motivation, loss of key talent, lack of communication, diminished trust, and uncertainty of long-term goals.

Both mergers and acquisitions present significant challenges to HR professionals. The M&A process requires management of both organizations to consider all implications of a proposed merger or acquisition before agreeing to one—which necessarily involves consideration of the “people issues” created by a proposed merger or acquisition. HR professionals are often involved in the process by advising management on human resource matters, including using surveys and other metrics to gather relevant data, identifying potential conflicts or HR challenges between the two companies, integrating HR practices and company cultures after an M&A, and managing talent decisions such as layoffs, to name a few.¹⁹

Developing integration strategy is like developing any other strategy. It requires asking who the stakeholders are (our company, their company, customers, stockholders, employees) and what benefits can be achieved by successfully completing the merger or acquisition (expanding markets, expanding product line, reducing expenses/costs, gaining customers/market share, and improving customer perception of our business).

Then follow the same basic steps used in other strategic planning sessions.²⁰

1.   Identify the vision. What is the desired future? What is the inspiration? What aspirations will we identify?

2.   Identify the mission. What is the clear and compelling objective for the integration?

3.   Identify the goals. What must be achieved? What needs should be met?

4.   Identify the strategies. What is the plan that will lead us to achieving our mission and goals?

5.   Identify the initiatives. What tactical and operational plans will be necessary to successfully implement the strategy?

Implementing   Once established, the HR strategy for a merger or acquisition needs to be implemented. That requires further analysis of the tactics and operational plans that will be needed for our achieving success. All of the basic support programs needed in running a business must be either blended or transitioned to one of the existing systems.

Here are a few of the keys needed to make a merger/acquisition successful based on the principles of the Accelerating Implementation Methodology (AIM):²¹

•   Define the changes in terms of human behavior The speed of an integration is determined by how you manage the human elements of the change. Remember to define the changes in terms of what people need to be doing differently. What are we doing? Why are we doing it, and what are the consequences if we don’t succeed?

•   Generate sponsorship Sponsorship is the single most important factor in ensuring a fast and successful implementation. Every sponsor, from senior management down to the line managers, must express, model, and reinforce their commitment to the change. You will not get a cultural change with minor changes in sponsor behavior!

•   Manage resistance Resistance is inevitable even when people see the merger as positive. Resistance is a function of disruption, and an M&A can be very disruptive. Make sure you have a plan on how to manage it, including responding quickly to concerns, rumors, and questions.

•   Tighten up communications Every communication sent must include a feedback loop. This way, when a communication goes out, feedback will come back in. Use a variety of communication channels, with an emphasis on the face-to-face method.

•   Manage reinforcements The only way to implement actual culture change is to integrate the behavioral elements of the new culture into the daily business activities and then dramatically change the reinforcements—that is, the positive and negative consequences that managers apply on a daily basis with their direct reports.

Monitoring and Evaluating   It is all well and good to know where we want to go and how we want to get there. However, it is equally important to know if we are actually walking the path we outlined for ourselves in the strategic planning. That is what monitoring and evaluating will tell us. Monitoring is the process of continually measuring the progress achievements of a project. It also assesses results that matter. Evaluation is the process of measuring the success of project achievements and the quality of those achievements. Establishing milestones for an M&A project will help you understand if you are on schedule, and quality measures will provide feedback about the success you have had so far with your implementation.

Measuring our incremental success can be great feedback to help us make adjustments where necessary so we can get back on track when necessary. HR can monitor recruiting and staffing functions, benefit design and implementation functions, employee relocation, policy development and implementation, and legal compliance requirements. Each of those functions should be evaluated for progress toward the goal. How many requisitions were filled within 10 days, 30 days, or longer? How quickly were policies developed when they were needed? What compliance requirements were met or not met (EEO discrimination complaint rate, compliance evaluation closures with “no violation” determination from the Department of Labor)? What was the retention rate of new hires? What was the turnover rate at each compensation level within the organization? All these and more are valid measurements that can be used by HR to monitor the progress toward the goal of completing a merger or acquisition.

Divestiture Strategies   The opposite of merger is divestiture. Divestiture is the removal of assets or processes that are no longer needed and that can be converted into cash. As a strategy, “spinning off” pieces of an organization can leave the remainder of the company in a healthier state financially. Splitting up a company can be equally painful and complicated.

For example, in 1982, Judge Green ordered the bifurcation of the Bell System. It was necessary to create a new enterprise that had the legacy telephone company businesses and a new company that would be unregulated and allowed to compete openly in the business communication marketplace. On January 1, 1983, American Bell was born. It was staffed by 100,000 employees who had been transitioned from the 23 legacy operating companies in the Bell System. And the new company had no revenue. It survived the first year or so on loans from the former telephone operating companies. And it was necessary to pay those 100,000 people from the very beginning. The plan called for employee records to be transferred from the 23 operating companies to the new American Bell accounting center in Lakeland, Florida. Well, unfortunately, there were large differences among record storage systems among the 23 companies. So, data fields and formatting requirements were all different. Blending the imported records was not working on a practical level. It was necessary for HR to create a staff that would scrub the employee records to be sure they were both accurate and properly formatted for the new accounting system in Lakeland. Once that was done, things began to run smoothly. In the beginning, approximately 10 to 25 percent of the American Bell staff was not receiving paychecks. Branch sales managers were writing checks on the branch account to their employees as substitute paychecks. It took almost an entire year to unravel all of the payments that were made and reconcile them with payroll.

Identifying how we will accomplish the divestiture seems like a reasonable step to take, and HR professionals can contribute to that planning process by identifying how they will add value to the end result.

Communicating Strategy   “If you don’t communicate your strategy in a way that your people understand and find compelling, how can you expect them to help you succeed with it? Research suggests only 5 percent of the people in an organization understand its strategy.”²² According to Harvard Business Review, there are eight ways to effectively communicate your strategy.²³

•   Keep the message simple but deep in meaning. Most organizations have a deeper meaning as to why they exist. This tends to influence strategy, decision-making, and behaviors at executive levels but often isn’t well articulated for employees. What you call it doesn’t matter—your purpose, your why, your core belief, your center. What does matter is that you establish its relevance with employees in a way that makes them care more about the company and about the job they do.

•   Build behavior based on market and customer insights. For employees to fully understand how your strategy is different and better than the competition, they need to be in touch with market realities. The challenge is in how to effectively convey those realities so that your people can act on them. By building internal campaigns based on market and customer insights, you bring your strategy to life for your employees through this important lens. Package your content so that it can be shared broadly with all departments in your organization but in a hands-on way.

•   Use the discipline of a framework. Inspire, educate, reinforce.

•   Think broader than the typical CEO-delivered message, and don’t disappear. Employees are more likely to believe what leaders say when they hear similar arguments from their peers, and conversations can be more persuasive and engaging than one-way presentations. Designate a team of employees to serve as ambassadors responsible for delivering important messages at all levels.

•   Put on your “real person” hat. And take off your “corporate person/executive” hat. The fact is, not many people are deeply inspired by the pieces of communication that their companies put out. Much of it ignores one of the most important truths of communication, especially communication in the early twenty-first century: be real. “Corporate speak” comes off as hollow and lacking in meaning. Authentic messages from you will help employees see the challenges and opportunities as you see them and understand and care about the direction in which you’re trying to take the company.

•   Tell a story. Facts and figures won’t be remembered. Stories and experiences will. Use storytelling as much as possible to bring humanity to the company and to help employees understand the relevance of your strategy and real-life examples of progress and shortfalls against it. Ask employees to share stories as well and use these as the foundation for dialogues that foster greater understanding of the behaviors that you want to encourage and enhance versus those that pose risks.

•   Use twenty-first-century media and be unexpected. Consider the roles of social media, networking, blogs, and games to get the word out in ways that your employees are used to engaging in. Where your message shows up also says a lot. Aim to catch people somewhere that they would least expect it. Is it in the restroom? In the stairwell? On their mobile phone?

•   Make the necessary investment. Most executives recognize how important their employee audience is. They are the largest expense to the company. They often communicate directly with your customers. They single-handedly control most perceptions that consumers have about the brand. So, if this is a given, why are we so reluctant to fund internal communication campaigns?

Implementing Strategy Production

Implementation is the process that turns strategies and plans into actions in order to accomplish strategic objectives and goals. Implementing your strategic plan is as important, or even more important, than your strategy.²⁴

Implementation of Strategy

Implementation requires an action plan. It may be called an implementation plan. Regardless of its name, it is a document that assigns responsibility to individuals or specific groups, determines due dates, and sets periodic progress meetings to see whether you are still on track, what unexpected problems have arisen, and what other resources might be needed to fully complete the action plan.

Consider Elon Musk and his SpaceX company. Their mission has been to build and fly a rocket that would launch payloads and then return to a soft landing on a barge in the ocean. Of course, he wanted to reuse the rocket and reduce overall costs in the process. They developed a strategic plan (determining how they would reach their goals) and then assigned responsibilities to specific individuals and groups (to carry out the plan) and had routine meetings to confirm they were still on track with the plan. When the first two rockets landed too hard and blew up as a result, they went back to the drawing board to determine the problem and try again. The third launch got it right, and the company has begun lifting government and private payloads into space ever since.

What Organizations Need for Effective Implementation   First there are objectives. Those are the goals we want to accomplish. Then comes strategy. That is a statement of how we will reach each goal. Then comes the implementation plan (action plan) that answers the questions of who, when, and where. Think of it as a spreadsheet or a table that can be expanded as needed. Table 4-3 is an example.

Table 4-3     Strategic Action Plan

Allocating Resources

Ultimately, resources come down to budget. But there are many components that can be identified and managed along the way to that bottom-line budget impact. To determine how we will succeed, it is necessary to develop a business case to present to the executive team.

Making a Business Case   A major responsibility falling on the shoulders of HR professionals these days is the development and presentation of a business case for the organizational programs that will solve specific problems. For example, a business case is needed when recommending certain medical insurance programs, particularly if the employer has not provided such benefits in the past.

A business case is a written or oral presentation that identifies a problem, analyzes the various possible solutions, and makes a recommendation for implementing one of them. It will almost always have an analysis of financial impact, personnel impact, and customer impact. It is designed and presented using business terminology. For example, a recommendation for medical insurance would include the current cost plus a forecast of future costs both in total dollars and in dollars per employee. It will have specific information about the way in which the recommendation will solve the problem that has been identified. (For example, the retention of employees is significantly improved if the employer offers medical insurance to workers. Higher retention means less turnover and lower recruiting and training costs.) All of the benefits will have dollar values assigned to them in a business case presentation.

Making a business case means assembling business reasons for taking some action. The case will be ultimately presented to the decision-maker, be it an executive or the board of directors.

Project Management Principles and Practices   Projects come and go in the life of HR professionals. There are projects for the implementation of new benefit programs, assessment of new recruiting sources, and all the projects associated with new paths of business that the organization is embarking on. Being able to juggle all those things at the same time while assuring that each gets the proper amount of attention and actually moves toward a conclusion is the mark of a good project manager.

A project consists of a series of activities and tasks that have been identified that need to be performed to accomplish an outcome. Dates are identified, people are assigned to the tasks, and resources such as budget and people are allocated. Overseeing a project is project management.

Project Management Tools   A standard tool used in project management is the Gantt chart, also known as an activity log or milestone chart, and it is widely available as a template or dedicated software programs. A Gantt chart normally identifies in chronological bar graph order what needs to occur first and simultaneously in a step fashion (see Figure 4-5). The benefit of a Gantt chart is the visual monitoring and communication of who is on first base and doing what task, what needs to occur before progression to second base, and where the results have to be before a run is counted at home plate.

Figure 4-5     Sample Gantt chart

Managing Change

Suffice it to say that managing change is the largest driving force behind employee relations. Change is a process that people and organizations undergo as a response; it is a transformation toward flexibility. HR is involved in managing the people issues resulting from change, either planned change or a reactive change, such as something occurring from an external source like an employment-related law regulating behavior in the workplace.

Helping both employees and management in an organized process through the roller-coaster ride of change, as identified by Elisabeth Kubler-Ross in her book On Death and Dying,²⁵ is an emotional intelligent (EQ) competency skill for HR professionals and leaders. First, shock and denial about the change is awakened within people. Next is the response of anger. Depression eventually sets in about the “loss” of status quo resulting from the change. Then movement toward bargaining and dialogue occurs related to the change. Finally, the roller-coaster ride ends with reaching a level of acceptance about the change. The key knowledge is in understanding the change and the management of the anticipated reactions.

Donald Kirkpatrick’s How to Manage Change Effectively²⁶ discusses a model with the seven basic steps in the change management process for HR and organizations to prepare with.

•   Determining the need or desire for change

•   Preparing the tentative plans for change

•   Discussing alternative and probable reactions to the change

•   Making a final decision about the change

•   Establishing a project plan and associated timetable

•   Communicating the change

•   Implementing the change and evaluation

Response to Change   Employees are people, and people react to change differently. Fear of the unknown can bring on some strong emotional responses. Here are some of the possibilities of neutral or negative reactions:²⁷

•   “Not me!” This is when somebody else is better suited for the new job assignment, or it’s when there’s denial that they are able to make the changes necessary.

•   “What will this do to my job security?” Will my job survive the changes?

•   Anger Frustration can build to anger when employees believe they are losing control over their work.

•   Gossip Uncertainty and frustration can result in employees gossiping about the change. Sometimes this turns to viciousness and vindictiveness, which are problematic.

•   “Who’s in charge here?” Uncertainty of reporting relationships can be frustrating also. One group in the midst of resizing used to say, “If the boss calls, get her name.”

•   Panic Emotional upset about the change can cause a severe lack of confidence that can even cause physical illness.

•   “I quit!” This is the ultimate response to change by an employee. Unfortunately, the cost to the employee is greater than the cost to the organization.

Here are some examples of positive reactions:

•   “This is a challenge.” Open minded about the new work arrangement, some employees are confident that they can gain the necessary knowledge to do the work ahead.

•   Enthusiasm Eager to accept new assignments, these workers can’t wait to dig in.

•   “Maybe I could adjust to this change.” After a period of observation, they agree to give the change a chance.

•   Positive vision These are people who see the bigger picture and have confidence in the organization’s leadership.

Conditions That Make Change Possible   Ken Blanchard and Scott Blanchard have listed six steps to ensuring successful change implementation for any organization.²⁸

•   Beat communication breakdown People don’t want to be “sold” by executives on the advantages of the changes to come. They want to be able to understand what will be happening and why.

•   Get personal Help employees answer these questions: What’s in it for me to change? Will I win or lose? Will I look good? How will I find the time to implement this change? Will I have to learn new skills? Can I do it?

•   Plan your action Leaders need to be able to drive forward with answers to these questions: What do I do first, second, third? How do I manage all the details? What happens if it doesn’t work as planned? Where do I go for help? How long will this take? Is what we are experiencing typical? How will the organizational structure and systems change?

•   Sell the change If leaders have done a good job on the previous steps, employees will often sell themselves on the change as a good thing.

•   Collaborate smartly People begin turning outward to ask who else should be involved with questions such as these: How can we work with others to get them involved in what we are doing? How do we spread the word?

•   Refine for success Refinement questions are a good sign and show that the people in the organization are focused on continuous improvement. How can we improve on our original idea? How do we make the change even better?

Models for Managing Change   If the list of conditions that make change possible aren’t enough, you can find more information about managing change in your industry from industry associations and even from your competitors who may already have gone through something similar to your challenge. Specific industry models can be extremely helpful because they are constructed with the language of your industry, not someone else’s. HR associations such as SHRM can be helpful with both written reports available and offerings of live expert help to counsel you through your planning and executing change management.

HR’s Role in Change Management   SHRM suggests that there are four roles HR professionals must play in change management. How that is done will vary according to the type of change being addressed.²⁹ Here are the four basic roles HR can play under the circumstances:

•   Leader With management establish vision and clear direction and shape culture to minimize obstacles.

•   Educator Coach managers to implement and drive change on their teams, provide necessary training and tools to prepare employees for change, and build a communication road map to resonate with different audiences.

•   Advisor Create transparency as a liaison between executives and employees.

•   Demonstrator Design methods to reinforce the change, create a mind-set of change by modeling, and encourage other executives to do the same.

Put them together, and the acronym is LEAD.

Evaluating Strategic Performance

Performance management is a systematic process that helps improve organizational effectiveness by providing feedback to employees on their performance results and improvement needs. When individual performance is linked to organizational strategic objectives, employees can see how they help impact accomplishments at the organizational level. It is employee accomplishments and contributions that drive the business results of an organization, so a regular feedback system discussing individual performance is at the core of a good performance management system. It ensures that employees are on course for the completion of tasks and goals that are aligned with the organization’s goals and that the resources and support are provided for the employee to perform such functions.

Performance Evaluation and Reporting

Creating and communicating the organization’s vision, mission, strategies, specific goals, and values form the foundation that is needed for the performance management system. Then performance standards are agreed upon by both the line management and the employee on what the job requires and what will be measured. At this stage, it is essential that employees clearly understand the standards, including expected behavior standards set forth, for their jobs. Feedback is the next stage and can be both informal and formal. Formal feedback can entail a written performance appraisal.

Defining Performance Objectives

Employees need to know and understand what specific performance is expected of them in performing their jobs and the acceptable behavior. This communication begins with the very first discussion in a job interview and certainly with the job offer and new-hire onboarding orientation. The discussion continues on a consistent basis both with the reinforcement of organizational standards that are outlined in employee handbooks and other written material and with performance appraisal review sessions. The clearer the expectations set for employees, the greater the success in having expectations met.

Effective Performance Measurement   Key to successfully using performance management are the following touchstones:

•   Focus on results.

•   Develop a culture of accountability.

•   Align all organizational activities with overall organizational goals.

•   Provide a common language for success.

•   Make measurements simple to use.

Take a look at Figure 4-6 and you will likely find these concepts easier to grasp.³⁰

Figure 4-6     Effective performance management touchstones

Using a Balanced Scorecard to Align Objectives with Strategy   According to Howard Rohm, CEO of the Balanced Scorecard Institute, “The balanced scorecard is a robust organization-wide strategic planning, management and communications system. These are strategy-based systems that align the work people do with organization vision and strategy, communicate strategic intent throughout the organization and to external stakeholders, and provide a basis for better aligning strategic objectives with resources. In strategy-based scorecard systems, strategic and operational performance measures (outcomes, outputs, process and inputs) are only one of several important components, and the measures are used to better inform decision making at all levels in the organization. In strategy-based systems, accomplishments and results are the main focus, based on good strategy executed well. A planning and management scorecard system uses strategic and operational performance information to measure and evaluate how well the organization is performing with financial and customer results, operational efficiency, and organization capacity building.”³¹

Using Benchmarking to Set Performance Objectives   According to the Construction Industries Institute (CII), “Benchmarking is the systematic process of measuring one’s performance against recognized leaders for the purpose of determining best practices that lead to superior performance when adapted and utilized.³²

“To be successful, benchmarking should be implemented as a structured, systematic process. It will not be successful if applied in an ad hoc fashion on a random basis. In most cases benchmarking is best-practice-oriented and is part of a continuous improvement program that incorporates a feedback process. Benchmarking requires an understanding of what is important to the organization (sometimes called critical success factors) and then measuring performance for these factors.”

Benchmarking can be internal or external. Strategic objectives usually establish comparisons with external sources. An example is found in compensation. Using salary surveys, employers can determine where they rate on compensation scales for any given job content. If the goal is to be in the second quartile, it is easy to determine whether that objective is being met by looking at the external pay for survey participants and the pay offered for the same job content.

SMART Goals/Objectives   SMART is the acronym that you can use to guide your goal setting. Its criteria are commonly attributed to Peter Drucker’s Management by Objectives concept and as discussed in the earlier “Setting Goals” section.

How Many and How Often   Examine your organizational goals and strategies for achieving those goals. You should have as many objectives as you need to identify the work you must do to properly contribute to achieving those organizational goals. Your goals should focus on HR issues, and there should be at least one for each of the major HR functions. Without them, you won’t be able to tell how you are really doing in your HR efforts.

Common Organizational Metrics   Here are some common ways that organizations measure their own performance:

•   Marketing metrics SEO keyword ranking, web traffic sources

•   Sales metrics Sales growth, average sale value, average profit margin

•   Financial metrics Debt to equity ratio, working capital

•   Social media metrics Social followers versus target

•   Customer feedback metrics End-of-transaction survey responses, quarterly survey responses

•   Employee metrics Cost per hire, retention rate, health care costs

Financial Statement and Metrics   Financial metrics reveal characteristics of financial data that might not be apparent from a simple review of the numbers.³³

•   Cash flow metrics Businesspeople evaluate streams of cash flow events, such as investment outcomes or business case cash flow estimates.

•   Financial statement metrics Businesspeople use these metrics to evaluate a firm’s financial position and financial performance, such as liquidity, payback period, and return on investment (ROI).

Nonfinancial Organizational Performance Metrics   Here are any measurements that do not have a financial component. Consider such things as the following:

•   Customer satisfaction trends

•   Supplier delivery date accuracy

•   Recruiting source candidate submission acceptance

•   Workplace security and safety performance

Countless other possibilities exist. The challenge is to identify those things that can contribute strategically to your organizational goal achievement. Measure the things that matter. Measuring things that don’t matter, or that you have no control over, will only bring a sense of failure and lower morale.

Using Business Intelligence   Business intelligence (BI) refers to the tools, technologies, applications, and practices used to collect, integrate, analyze, and present an organization’s raw data to create insightful and actionable business information. BI as a discipline and as a technology-driven process is made up of several related activities, including the following:

•   Data mining

•   Online analytical processing

•   Querying

•   Reporting

Today’s trend toward using “Big Data” (huge databases with hundreds or even thousands of data elements) makes it essential that employers are able to reach into those databases and extract only those elements that will be useful in monitoring business activities and accomplishments.

Data Analysis Methods   Data can come in large or small files. And the large files can be really large files. The “cloud” is home to many examples of exceptionally large databases. Consider the U.S. Bureau of the Census as one such source. Its 2010 Occupational Database has information about individuals with accompanying information about race, gender, work industry, job category (EEO-1, EEO-3, EEO-4, EEO-5), job title, work location, home location (city, state, ZIP code), and more. If you only want to know about people working in a specific county in the HR professionals job category, you would need some method for extracting that information from the database before you could analyze it. Once you have the data in hand, the following are some ways in which you could analyze the smaller components of interest.

Variance Analysis   Variance analysis is the quantitative investigation of the difference between actual and planned behavior. This analysis is used to maintain control over a business. For example, if you budget for sales to be $10,000 and actual sales are $8,000, variance analysis yields a difference of $2,000. Variance analysis is especially effective when you review the amount of a variance on a trend line so that sudden changes in the variance level from month to month are more readily apparent.³⁴

Regression Analysis   This is a technique for isolating which factors really have an impact on the issue you are studying. Does time in service have an impact on current compensation levels? To know, it is necessary to isolate time in service and take away consideration of other variables such as employee age, race, gender, years of experience in the industry, starting compensation amount, and any other variable that might interfere with the analysis of time in service. Regression analysis is generally accepted as the most accurate analysis tool available for assessing such things as employment discrimination like disparate impact.

Trend Analysis   Trend analysis is the process of comparing business data over time to identify any consistent results or trends. You can then develop a strategy to respond to these trends in line with your business goals.

Trend analysis helps you understand how your business has performed and predict where current business operations and practices will take you. Done well, it will give you ideas about how you might change things to move your business in the right direction.³⁵

Let’s say you are experiencing what you believe is unfavorable turnover among your production workforce. To begin the process of determining why that may be happening, it can be helpful to determine whether there actually is a turnover trend. Plotting the turnover rates for each month (or year) can allow you to see graphically what is actually happening. If there is an increasing slope in the results, you can begin the process of identifying causes for the trend. If you determine that the results are more or less consistent with an occasional spike in the turnover rate, you may decide that no action is required beyond what you are already doing to control turnover.

Graphic Presentation of Data Analysis   Let’s assume we want to see the trend of our job requisitions during the past year. Table 4-4 shows the data.

Table 4-4     Requisition by Month 1

Figures 4-7 and 4-8 show a couple of ways you might want to display the data in graph format. The months are represented by the numbers 1 through 12. The number of requisitions is shown on the left y-axis.

Figure 4-7     Requisition by month 2

Figure 4-8     Requisition by month 3

Communicating Data Analysis   Once you have determined that your data is as accurate as you can get it, then determine what the data says to you. What message is there from the data? Then determine how you will present the data message to your audience. Different audiences sometimes require different presentations. If you are explaining the cost of benefit plans to the general employee body, you may use general cost charts. The same discussion with senior executives or the board of directors may be more detailed. While the subject is the same, the way you convey the message can be different.

Providing Leadership and Strategy

Henry Mintzberg said, “Leaders don’t do most of the things that their organizations get done; they do not even make them get done. Rather, they help to establish the structures, conditions, and attitudes through which things get done. And that requires a collaborative mind-set.” Leaders’ critical focus should be on providing guidance and vision, controlling risks, and providing working environments where employees can contribute their best performance rather than just following directions. Leaders who manage employees should have the key skills of planning, staffing, organizing, controlling yet motivating people, and managing resources and budgets.

The HR professional as a leader will have a dual focus: being a leader for the HR function and being able to assist in identifying and developing the organization’s leaders.

Leadership Characteristics

The key characteristics and skills for leadership have been written about for decades by many well-known and publicized authors. The skill set that began as hierarchical in design where coercion and intimidation were main factors has clearly changed in today’s organizations. The models and opinions of successful leadership characteristics in the twenty-first century that you’ll find associated with the SHRM exam are those of James Kouzes and Barry Posner,³⁶ Erica Fox,³⁷ Daniel Goleman,³⁸ and Marshall Goldsmith.³⁹

In their studies and research, Kouzes and Posner found that the following practices made successful leaders:

•   Practice 1: Challenging the process Successful leaders will recognize when there is a need for change.

•   Practice 2: Inspiring a shared vision Successful leaders will have a vision and get their employees to be inspired by the same vision.

•   Practice 3: Enabling others to act Successful leaders will empower their employees to do their best work, bringing out their full potential and encouraging collaboration in the workforce.

•   Practice 4: Modeling the way Successful leaders will walk the talk and lead by example.

•   Practice 5: Encouraging the heart Successful leaders will help their work groups celebrate the achievements and yet learn from their disappointments and matters of adversity.

Daniel Goleman’s research report about emotional intelligence, focused on psychology and neuroscience, offers insight about our “two minds,” the rational and the emotional. Goleman delineates the five crucial skills of emotional intelligence for leaders and shows how they determine leaders’ success in relationships, work, and physical well-being. The following are the five key emotional intelligence skills associated with successful leadership characteristics:

•   Self-awareness A leader knows how they feel and how their emotions or actions can affect people around them.

•   Self-regulation This key skill is about staying in control and regulating your actions and communications so to rarely verbally attack others or make rushed or emotional decisions.

•   Motivation A self-motived leader will work consistently toward goals and have high standards for the quality of their own work.

•   Empathy A leader who has empathy is essential for managing people and teams in today’s work environment. They have the ability to put themselves in someone else’s shoes. Through empathic skills, they can help develop the people they manage, challenge others who are acting unfairly, give constructive feedback, and also listen deeply for the meaning in conversations.

•   Social skills Leaders with emotional intelligence are great communicators. They’re just as open to hearing the bad news as the good news. They are great at inspiring their people to a vision, and they are also good at managing change or resolving conflicts diplomatically.

In Erica Fox’s research, she sees the successful leader as having a multifaceted personality, what she calls an inner team. This inner team draws on the following strengths of characteristics to lead: intuition, reason, emotion, and willpower. As depicted in Figure 4-9, Fox labels these “inner team” members as follows: CEO as the inspirational dreamer, CFO as the analytical thinker, COO as the practical warrior, and the CPO as the emotional lover.

Figure 4-9     Fox’s inner team leader model

With Marshall Goldsmith’s work, he identifies the 21 habits of behavior that derail a leader’s effectiveness and holds them back. These behaviors have to change and adapt to the level of leadership a person’s career grows into. The 21 bad habits are as follows:

1.   Winning too much The need to win at all costs and in all situations.

2.   Adding too much value A desire to add two cents to every discussion.

3.   Passing judgment The need to evaluate others and impose our standards/values on them.

4.   Making destructive comments Sarcasm and cutting remarks.

5.   Starting with “no,” “but,” or “however” The overuse of these negative qualifiers, which conveys “I’m right. You’re wrong.”

6.   Telling the world how smart we are The need to show people we’re smarter than they think we are.

7.   Speaking when angry Using emotional volatility in communications.

8.   Negativity (“Let me explain why that won’t work.”) The need to share our negative thoughts.

9.   Withholding information The refusal to share information for an advantage over others.

10.   Failing to give proper recognition The inability to provide praise, rewards, and compliments.

11.   Claiming credit we do not deserve The overestimate of our contribution to some success.

12.   Making excuses The need to excuse annoying behavior as a permanent fixture so others will excuse us for it.

13.   Clinging to the past The need to deflect blame away from ourselves; this is a subset of blaming everyone else.

14.   Playing favorites Failing to see that we treat someone unfairly.

15.   Refusing to express regret The inability to take responsibility for our actions.

16.   Not listening The most passive-aggressive form of disrespect for others.

17.   Failing to express gratitude The most basic form of bad manners.

18.   Punishing the messenger The misguided need to attack the innocent who are providing information.

19.   Passing the buck Blaming everyone but ourselves.

20.   An excessive need to be “me” Exalting our faults as virtues simply because they embody who we are.

21.   Refusing to accept any responsibility for needing to change “That’s just the way I am. Take it or leave it.”

Theories About Leadership

In this section on leadership theories, we recognize that your formal education most likely went into great depth about each of the theories. What follows is a refresher on the basics of the leadership theories that will help you with your OD and HR initiatives. There are five basic schools of leadership theories: trait theory, behavioral school, contingency or situational school, leaders and followers, and dispersed leadership.

Trait Theory   The theory of trait leadership was developed from early leadership research, which focused primarily on finding a group of heritable attributes that differentiated leaders from nonleaders. Basically, it asserted that leaders were born and not made, and the focus was on personal characteristics and attributes that included mental and physical abilities. Although this perspective has been criticized immensely over the past century, scholars still continue to study the effects of personality traits on leader effectiveness. Past research has demonstrated that successful leaders differ from other people and possess certain core personality traits that significantly contribute to their success. It has been called the great person leadership theory with its assumption that leaders are different from the average person. The five traits identified are as follows:

•   Intelligence

•   Dominance

•   Self-confidence

•   High levels of energy and vitality

•   Task or technical relevance knowledge

More current research has failed to identify one set of traits that always differentiates a leader.

Behavioral School   The behavioral school theory focuses on a leader’s ability to manage the performance and contribution of others, those they manage. Douglas McGregor’s Theory X and Theory Y and Blake-Mouton apply to the behavioral school theory. Behavioral school identifies two dimensions of leadership behavior—focused on the employee and focused on the job to do. Consideration is the employee-centered behavior; initiating structure is the job-oriented behavior.

McGregor’s theory⁴⁰ offers two approaches to motivating employees: Theory X, which suggests an authoritative management style because it assumes that employees inherently do not like to work and must be controlled and closely monitored; and Theory Y, which suggests a participative style of management, under the belief that employees dislike controls and inherently want to do their best. It is obvious to see that a Theory Y type of supervisor will provide better leadership and produce greater satisfaction.

Another theory in the behavioral school is the situational leadership model developed originally in 1964 by Robert R. Blake and Jane Mouton⁴¹ and later updated by them. It is a managerial grid model that identifies five different leadership styles based on the concern for people and the concern for production. Figure 4-10 illustrates the Blake-Mouton behavioral leadership theory and the resulting leadership styles.

Figure 4-10     Blake-Mouton behavioral leadership theory

The types of leaders/managers are as follows:

•   Impoverished style (1, 1): evade and elude In this style, managers have low concern for both people and production. Managers use this style to preserve job and job seniority, protecting themselves by avoiding getting into trouble. The main concern for the manager is not to be held responsible for any mistakes, which results in less innovative decisions.

•   Country club style (1, 9): yield and comply This style has a high concern for people and a low concern for production. Managers using this style pay much attention to the security and comfort of the employees, in hopes that this will increase performance. The resulting atmosphere is usually friendly but not necessarily very productive.

•   Produce or perish style (9, 1): control and dominate With a high concern for production and a low concern for people, managers using this style find employee needs unimportant; they provide their employees with money and expect performance in return. Managers using this style also pressure their employees through rules and punishments to achieve the company goals. This style is often used in cases of crisis management.

•   Middle-of-the-road style (5, 5): balance and compromise Managers using this style try to balance between company goals and workers’ needs. By giving some concern to both people and production, managers who use this style hope to achieve suitable performance, but doing so gives away a bit of each concern so that neither production nor people needs are met.

•   Team style (9, 9): contribute and commit In this style, high concern is paid both to people and to production. Managers choosing to use this style encourage teamwork and commitment among employees. This method relies heavily on making employees feel like they’re constructive parts of the company.

•   The opportunistic style: exploit and manipulate Individuals using this style, which was added to the grid theory before 1999, do not have a fixed location on the grid. They adopt whichever behavior offers the greatest personal benefit.

•   The paternalistic style: prescribe and guide This style was added to the grid theory before 1999. Managers using this style praise and support but discourage challenges to their thinking.

Contingency or Situational School   The well-known theories for contingency and situational leadership are the ones that accept differing leadership styles and adapt to the situations or people involved.

Widely referred to as the Hersey-Blanchard situational leadership theory, the fundamental underpinning of the situational leadership theory is that there is no single “best” style of leadership. Effective leadership is task-relevant, and the most successful leaders are those who adapt their leadership style to the maturity (“the capacity to set high but attainable goals, willingness and ability to take responsibility for the task, and relevant education and/or experience of an individual or a group for the task”) of the individual or group they are attempting to lead or influence. Effective leadership varies, not only with the person or group that is being influenced but also depends with the task, job, or function that needs to be accomplished. The Hersey-Blanchard situational leadership theory rests on two fundamental concepts: leadership style and the individual or group’s maturity level. Figure 4-11 depicts the situational leadership model.

Figure 4-11     Situational leadership model

The Hersey-Blanchard situational leadership theory⁴² identifies four levels of maturity, M1 through M4.

•   M1 Employees still lack the specific skills required for the job at hand and are unable and unwilling to do or to take responsibility for this job or task.

•   M2 Employees are unable to take on responsibility for the task being done; however, they are willing to work at the task. They are novice but enthusiastic.

•   M3 Employees are experienced and able to do the task but lack the confidence or the willingness to take on responsibility.

•   M4 Employees are experienced at the task and comfortable with their own ability to do it well. They are able and willing to not only do the task but to take responsibility for the task.

Leadership has four tasks based on an employee’s maturity.

•   Delegating The leader is still involved in decisions; however, the process and responsibility have been passed to the individual or group. The leader stays involved to monitor progress.

•   Participating This is where shared decision-making with the work group about how a task is accomplished takes place; the leader is providing less task direction while maintaining high relationship behavior with the group.

•   Selling While the leader is still providing the direction, the leader is now using two-way communication and providing the socioemotional support that will allow the individual or group being influenced to buy into the process.

•   Telling Characterized by one-way communication in which the leader defines the roles of the individual or group and provides the what, how, why, when, and where to do the task.

The most popular situational contingency theory was developed by Fred Fiedler.⁴³ The Fiedler contingency theory holds that group effectiveness depends on an appropriate match between a leader’s style (essentially a trait measure) and the demands of the situation. Fiedler considers situational control the extent to which a leader can determine what their group is going to do to be the primary contingency factor in determining the effectiveness of leader behavior.

Fiedler’s contingency model is a dynamic model where the personal characteristics and motivation of the leader are said to interact with the current situation that the group faces. Thus, the contingency model marks a shift away from the tendency to attribute leadership effectiveness to personality alone.

Fiedler asserts that there are three factors determining the favorableness of the environment for the leader.

•   Leader-member relations The degrees of trust, confidence, and respect that employees have in their leader

•   Task structure The extent to which the tasks the employees are engaged in are defined (clear or ambiguous, structured or unstructured)

•   Position power The degree of power and influence the leader has over their subordinates

Changing one of the three factors is a more effective route rather than trying to change the leadership’s trait.

Action-Centered Leadership   Action-centered leadership is a model created by John Adair⁴⁴ and states that effective leaders accomplish goals and tasks through the efforts of the team they lead. To do so, they must do three things in their leadership of groups.

1.   Structure the task and make sure everyone knows what is expected.

2.   Develop each team member, review and evaluate their outcomes, coach/motivate, and support.

3.   Coordinate the team’s workflow, resolve disputes, ensure compliance with rules, and cause collaboration.

Leaders and Followers   Jon Katzenback’s and Douglas Smith’s leadership theory “Leaders and Followers” recognizes that the leader is not a hero per se but a team leader and servant to the team. With their leadership theory, leaders ask more questions rather than simply provide answers—a coaching tactic. They share opportunities to lead the team. Working with each other to solve problems is high with this style, along with building a solid foundation of the problems and issues before jumping into work on a resolution. Modern organizations of today generally rely heavily on team leaders and thus this style of leadership.

Dispersed Leadership   Sometimes referred to as emergent leadership, with the dispersed leadership theory, leaders will emerge from a working group because of their expertise or experience to lead and influence the group working on a situation or task. This typically is not a person who is given authority by way of title, such as manager or supervisor, within the hierarchy. The leader is someone the group has chosen to follow. This style of leadership has grown in the twenty-first century because of more self-managed teams in flat organizational structures.

Transformational and Transactional Leadership   Leadership can be either transformational or transactional in nature. A transformational leadership approach is one that stimulates and inspires people to work together toward achieving a common goal. Transformational leaders are charismatic (which instills pride, respect, and trust in the leader’s sense of mission and vision); inspirational, with the communication skills necessary to gain engagement; stimulating, where the promotion of intelligence and challenge are at play; and attentive to individual needs, giving personal attention in manners of coaching or mentoring.

Transactional leadership has characteristics associated with contingent reward, where effort is rewarded via accomplishment; management by exception, in which corrective action is taken when standards are not met or protocol is broken; and laissez faire, in which responsibility is abdicated and decision-making is delayed or avoided.

Transactional leadership has been widely used and the norm historically for decades; transformational leadership has been proven to improve productivity and morale in the long run. A blend of both transactional and transformational leadership is typically warranted and the most effective.

Global Leadership Models   There are key issues to be aware of in global organizations that apply to global leadership models. Things become more complex because of cultural and language barriers along with geographical and time zone differences. Managing the diverse global workplaces becomes complicated with laws, regulations, and practices differing from country to country. In 2004 and 2007, results from the Global Leadership and Organizational Behavior Effectiveness (GLOBE) Research Program found the data to support the shared cultural dimensions that were derived from Geert Hofstede and other cultural researchers.⁴⁶

Cultural Issues   There are two cultural constructs that have a great influence on communication and training/development activities: power distance and high-context/low-context culture. Dr. Geert Hofstede,⁴⁷ well known for his pioneering research of cross-cultural groups in organizations, conducted a study of how workplace values were influenced by culture. He developed a model that identifies five primary dimensions to differentiate cultures. The five dimensions are as follows: power distance, individualism, uncertainty avoidance, masculinity, and long-term orientation.

Power distance is the extent to which less-powerful members of organizations expect and accept that power is distributed unequally. In high-power distance organizations, the less powerful employee accepts autocratic structures.

Individualism refers to the extent to which people are expected to stand up for themselves. With high individualism, an individual’s rights are most important.

Uncertainty avoidance is the extent to which members of a society cope with anxiety by minimizing uncertainty. High uncertainty avoidance cultures like structure and rules.

Masculinity also includes femininity and refers to the value placed on male or female values from a Western culture perspective. Feminine cultures place more value on relationships and harmony, wherein masculine cultures value competitiveness and assertiveness.

Long-term orientation is the degree to which the society embraces long-term devotion to traditional values. High long-term orientation has a respect for loyalty commitments and work ethic is strong.

The American Management Association (AMA) developed a list of global leadership skills, listed in Table 4-5. This list was developed in 2012 via a survey conducted of more than 1,000 global practitioners and emphasizes the essential need for having fluency in local cultures for global organizations.

Table 4-5     AMA’s Global Leader Competencies

Key Leadership Skills   More than just business knowledge and expertise, leaders require a number of skills to manage a workforce. Leadership is an ability to influence others toward a strategy, results, and goals. It entails keeping the organization’s vision and mission in sight associated with its strategy, providing the direction on how that mission and vision will be accomplished, and providing the tools and means to attain them, while motivating or encouraging people to work toward the vision.

Throughout this book, we discuss the multitude of key leadership skills. Those that are associated directly with strategy are focused on motivating a work group, making ethical decisions, having communications skills for aligning with stakeholders, and managing conflicts.

Ethical Behavior   One of the key leadership competencies is being the role model for ethical decisions and actions. Being consistent and thoughtful with the challenging ethical decisions is at the core of this key leadership skill. To do so, a leader needs to recognize the ethical situations when they arise. They need to dig in to fully establish the facts about a given situation and their various options. Next they need to evaluate the ethical dimensions of possible actions they can take. These might include religious or cultural beliefs/norms. Then the leader would apply the relevant codes of ethics and behavior toward each option that has been presented in the situation. Consulting with others, perhaps inside the organization such as HR and other senior management levels, or perhaps outside such as legal consultants, should be one of the options. The last parameter is owning the decision once it is made and perhaps learning from the mistakes/errors that are made from the issue/situation—all so that future decisions can be made better.

Communication   Communication is absolutely essential for effective leadership—sharing the vision, the strategy, the direction in which the organization is headed, at every level of function. It requires a thorough understanding of what is needed for the listeners to “hear the message” and uses various means to communicate matters appropriately.

Understanding a Listener’s Needs and Expectations   The leader as a communicator needs to consider the message they want to send, who the “receiver” is intended to be, and in what manner they intend to provide it. A rule of thumb to use in all communications is recalling “MIM,” which stands for Message, Intended Receiver, Medium to Be Used. First the communicator should “be in the shoes” of the intended receiver and consider all the varying perspectives that receiver might have. Consider how the receiver might misunderstand the message and what their perception might be.

Planning Communication   What is the best manner for the communication to occur for the intended receiver (e.g., verbal, meeting presentation, written)? If the receiver does not have easy access to the Internet or an intranet, that is going to hamper the timeliness of the communication. In planning the communication of strategy, this question is the first one to consider: What information is needed to be communicated, in what order, on what dates, by whom, and specifically to whom? Next, what medium is to be used? Last, what feedback mechanism is in place to ensure the intended communication was received and understood? This feedback will provide an awareness of what may need altering in the message to improve understanding and impact.

Managing Conflict   Conflict is natural, and it is bound to happen in all work settings. In most conflicts, neither party is right or wrong; instead, different opinions collide to create disagreement. Is conflict a bad thing? Not necessarily. Conflict can help lead to new discoveries of methods and improvements in matters such as policies and procedures. Interpersonal conflicts are bound to occur when groups of people are working together. There need to be rules of behavior associated with conflict, such as conflict of culture, personal differences, communication styles, and treatment of others. If there is constant conflict, that will surely erode collaboration and relationships in the workplace. Leaders, including HR professionals, should know how to approach conflict proactively and have the skills to resolve it effectively.

Conflict-Resolution Modes   When conflicts need to be resolved, the process of conflict resolution involves techniques to resolve issues and maintain effective working relationships. When a direct supervisor is unable to resolve the conflict, HR is normally brought in as an intervention and mediator. Clear and open communication is the cornerstone of successful conflict resolution, and thus HR professionals must be skilled communicators. This includes creating an open communication environment that encourages the disconnected parties to talk. Listening and probing with nondefensive inquiries will help dissipate the conflict.

Whether it is co-workers who are jockeying for the desk next to the window or the employee who wants the room cooler and the other one who doesn’t, immediate conflict resolution is essential. Steps for conflict resolution by a leader involve the following:

•   Acknowledge that an opposing situation exists. Acquaint yourself with what’s happening and be open about the problem.

•   Let the individuals express their feelings. Emotions fly and feelings of anger and/or hurt usually accompany conflicts. Before any kind of probing can take place, acknowledge the emotions and feelings.

•   Define the problem. What is the issue? What is the negative impact on the work or relationships? Are different personality styles part of the problem? Meet with the opposing parties separately at first and gain their perspective about the situation.

•   Determine the underlying need. There is no goal of deciding which person is right or wrong; the goal is to reach a solution that everyone can live with. Looking first for needs, rather than solutions, is a powerful tool for generating win-win options. To discover needs, you must try to find out why people want the solutions they initially propose. Once you understand the advantages their solutions have for them, you have discovered their needs.

•   Find common areas of agreement. Agree on the problem; agree on some small change to give a feeling of compromise.

Find solutions to satisfy needs.

•   Generate multiple alternatives.

•   Determine which actions will be taken.

•   Make sure involved parties buy into actions. (Total silence may be a sign of passive resistance.) Be sure you get real agreement from everyone.

•   Determine follow-up to monitor actions and sustained agreements. Schedule a follow-up check-in to determine how the solutions are working and how those involved feel about how the solutions are working.

What if the conflict goes unresolved? If the conflict is causing a disruption in the workplace and it remains unresolved, you may need to explore other avenues. An outside consultant such as a mediator may be able to offer other insights on solving the conflict problem. In some cases, the conflict becomes a performance issue and may become a topic for coaching sessions, performance appraisals, or disciplinary action.

Negotiation Methods

Some conflict may be to a level that it requires negotiation for a compromise. The methods used in negotiation methods are similar to some used in conflict resolution. Discussed more thoroughly in Chapter 5, negotiation involves knowing the needs and wants of both sides of the conflict. There are several different negotiating styles, yet the most common are the three that are known as soft, hard, or principled.

Soft negotiations have a focus that is based on the value of the relationship. Hard negotiations have a focus that is associated with win-lose at all costs to the relationship. Principled negotiations have a focus that is aimed at mutual gain for both sides. Principled negotiations are what most organizations expect from their leadership—collaboration and relationship building.

Functional Area 2—Talent Acquisition

This is SHRM’s BoCK definition: “Talent Acquisition encompasses the activities involved in building and maintaining a workforce that meets the needs of the organization.”⁴⁸

Talent acquisition involves all the HR strategies and processes that are involved in attracting, recruiting, and selecting talent that has the skills, knowledge, and abilities needed in the workforce to meet the organization’s needs. HR professionals will analyze and understand the organization’s workforce requirements and staffing needs to enable them to assist management with assessing current and future labor needs.

Key Concepts

•   Approaches to employee onboarding

•   Approaches to sourcing (e.g., external talent pipelines)

•   Employment categories (e.g., salaried/hourly, contract, temporary, interns)

•   Job analysis and identification of job requirements

•   Job offer contingencies (e.g., background investigations, credit checks)

•   Job offer negotiations (e.g., salary)

•   Methods for creating and maintaining a positive employer value proposition (EVP) and employment brand

•   Methods for external and internal employee recruitment (e.g., job ads, career fairs)

•   Methods for selection assessment (e.g., ability, job knowledge, noncognitive tests, assessment centers, interviews)

•   Talent acquisition metrics (e.g., cost per hire, time to fill)

The following are the proficiency indicators that SHRM has identified as key concepts:

Organizational Staffing Requirements

Staffing is the lifeblood of an organization as people are required to make any organization run. Getting the right ones into the right jobs is the function known as staffing.

Staffing Challenges

At any time, one or more of these challenges can appear to the dismay of HR professionals. Dealing with them effectively is the measure of a skilled HR manager.

Changing Demographics   When housing becomes too expensive for job applicants to live close to the job and commute distances are greater than people want to undertake, the workforce demographics can shift, sometimes rapidly. Look at any major metropolitan area these days, and it is easy to identify this problem. Employer responses may be too expensive for practical purposes. Raising the pay scale so new hires have enough money to either rent or buy a home could just be too expensive.

Lack of Skilled Labor   According to a Manpower Group survey, more than 40 percent of all employers globally report difficulty filling skilled jobs.⁴⁹

Government and Regulatory Barriers to Hiring   The moment an employer hires its first worker, it becomes subject to more than 50 federal laws that require compliance, everything from safety to payroll and credit reporting. There are untold numbers of state laws that also demand attention, depending on the work locations being used.

Brain Drain   The departure of educated or professional people away from an employer to another employer usually is for better pay or living conditions. Particularly in industries such as high-technology and engineering there is a high cost for key personnel exodus.

Availability of Reliable Data   Workforce planning and strategic staffing initiatives become problematic when there is a lack of current, reliable data. A lack of reliability in either the forecast of job openings or the ability to develop high-quality talent pools from which to draw job candidates will quickly bring the recruiting process to a halt.

Economic Cycles   Economy cycles impact employer headcount levels. Employers are often faced with the challenge of identifying qualified recruits from a scarcity of resources when things get better through growth and demand. Likewise, when the economy turns down, layoffs are often the result.

Business Lifecycles   Recruiting and retention strategies will necessarily change as business moves through four stages, or lifecycles, of existence. In the beginning (startup) and through its growth years, recruiting is typically hectic. Expansion means hiring. In its maturity and decline years, layoffs and downsizing/resizing are frequent impacts. Specific strategies are required for each of these four cycles.

PEST Factors   PEST, i.e., political, economic, social, and technological factors, must be considered when conducting an environmental scan, strategic planning, or being engaged in other forecasting efforts. World events often drive, or at least influence, environmental scans conducted by using the PEST factors.

Employee Lifecycles   Staffing challenges are greatly influenced by employee lifecycles. Here are the relationships:

•   Recruitment and selection Finding the best fit between a job and an employee

•   Onboarding and orientation Gaining information and tools necessary to succeed in the job and getting acclimated to the organization’s culture

•   Training and development Promoting engagement and retention by developing an employee’s skills and commitment

•   Performance management Working with employees helping them achieve their goals and objectives and priming them to become a stronger employee

•   Transition Achieving the best match of an employee’s capabilities with an organization’s needs through transfer, promotion, demotion, resignation, and retirement

Technology Shifts   In years past, recruiting was done with the aid of “position available” advertisements in the local newspaper. Today, social media is the primary source of job candidates. This is a paradigm shift. An example can be found when wristwatches were no longer made with springs but transitioned to models with electronic quartz movements. When robots entered the workplace, helping handle dangerous and repetitive tasks in the automobile industry, employees were tasked with feeding the robot materials and receiving from it the completed subassembly, which was another paradigm shift. When the Bell System used live operators to handle long-distance calls, emergency calls, and questions that are now handled by computer, another paradigm shift took place.

Cherry Picking: Pressure on Salary Levels   Offering more money beyond the approved pay range can effectively entice a desirable job candidate to accept a job offer but can also cause issues for other parts of an organization. If the hiring manager makes a job offer above the pay range maximum, something must happen to bring that individual back into the proper compensation range. Usually, this requires management to “freeze” the new hire’s pay level until natural escalation pressures enable the company’s pay structure to catch up. The short-term benefit of attracting a desirable job candidate this way is often overcome by general employee discontent and, as a result, discouragement. In addition, state and federal pay requirements, when applicable, must be followed in any case.

Creating a Job vs. Hiring for Work   When an engineering firm encounters an engineer with a certain specialty, experience, and educational credentials to back it up, the company may want to hire that person rather than let them go on to some other firm. In that case, it becomes necessary to create a job opening for the new engineer. As opposed to that scenario, often the practice is to have a job opening identified and then seek candidates for that job with the intent to hire the best qualified out of the batch. Filling a job need is quite different from creating a job for someone special we must hire to save the talent within our employee ranks.

Strategic Staffing

Staffing according to the business strategies requires understanding what those strategies are. Even if strategic plans are not formalized, successful employers need some form of organizational goals to effectively manage their business. HR professionals are uniquely positioned to help managers understand the importance of measurable strategic goals to be successful as HR business partners providing appropriate job candidates to the operations units. When accounting is undertaking a conversion of its financial records processing system or operations is installing a new computer-centric milling system, the HR professional supporting them will need to understand the importance of those changes to accomplishing business goals. HR professionals cannot simply enjoy sitting in the HR world. They must be fluent in the language of their brothers and sisters in other parts of the business. Until they are, they will not be as helpful in staffing jobs in those other organizations as they otherwise could be.

Planning for Talent Acquisition on a Global Basis

Global staffing depends on recognizing and acquiring talent with precisely the job skills needed in a given work location, even when that work location happens to be halfway around the world.

Global Integration vs. Local Responsiveness Strategy

Strategically, it may be determined that recruiting, processing, and hiring people can be done from a remote location such as at a company’s headquarters. Certainly, any talent acquisition program must be able to embrace global requirements. It will come as no surprise that maintaining a local responsiveness to acquisition requirements is also a key to success. It is important that people processing job candidates have the same level of empathy for local needs as local staff. Responsiveness to local management will go a long way toward building a strong working relationship. In the end, it is a customer service relationship that is important.

Orientation and Talent Staffing

Nancy Simonelli at Reliance Staffing and Recruiting says, “Employees who attend a structured orientation program are more likely to remain with the company after 3 years than those who do not. If you are going to spend money and time acquiring top talent and paying them to work, why not prepare them to succeed and stay?”⁵⁰ So, a solid strategy for orientation training after a new hire accepts the job offer is to use a structured orientation program. Be sure to cover everything on your checklist, not just payroll and benefit information. Be sure to include things like, “How we do things around here.”

Growth Strategies

Identifying growth in workforce needs will allow strategic preparation for recruiting and acquisition of talent that will be needed to permit the growth to be successful. It can take weeks or months to identify specific job candidate needs and then to create a recruiting program that will assimilate those candidates as active participants in the selection process. Starting before you have a specific requisition can be a good strategy for being ready when the time comes.

Maturity of the Global Location

How well can your global locations continue to serve your business needs? Is there a ready workforce with the talent necessary to satisfy your job requirements? In the face of an economic downturn, can you continue to maintain a branding program so that the job candidate market will react positively when openings occur again? Are there competitors in the same locations? Do they seek to attract the same type of talent to their workforce as you want to have in yours? The broader the supply and demand in your areas of talent need, the more likely you will be able to find what you want when you actually start looking.

External Factors

Influences from outside the employer’s organization can include such things as local employment laws for wage and hour issues, minimum wage levels, mandated benefit requirements, cultural impacts on production schedules (e.g., holidays), and local commute patterns. All of these and more must be considered as part of your strategic talent acquisition process.

Social Responsibility

Do subcontractors or suppliers participate in pay disparities or racial discrimination because of local cultural practices? It is incumbent upon the employer to determine whether it should even create a work location where those problems exist. And, if so, what will it take to address changes in those cultural standards?

Information Technology

What type of Internet connections are available in the work location chosen for your organization’s needs? What types of computer support are available? Will you be using off-the-shelf software programs or something your in-house programmers have created or modified? Is there local support talent that can address these and other related types of infrastructure needs?

Visa Requirements

What type of visa requirements exist in your prospective work location? Can international candidates come and go without difficulty, or are there special work permit requirements they must meet? Are certain countries barred from sending workers to your location? How will you be able to work within those requirements? Talent acquisition can be made more difficult if there are these types of impediments.

Employment Branding

Branding is another word for reputation. What do people in your target workforce think about your company? How can you influence that?

Employment Branding Defined

According to Chris Mossevelde, “Employer branding is the process of promoting a company, or an organization, as the employer of choice to a desired target group, one which a company needs and wants to recruit and retain.”⁵¹

Building a Brand

Mossevelde continues, “The company can only attract current and future employees if it has an identity that is true, credible, relevant, distinctive and aspirational. To achieve this, extensive research needs to be conducted.” What does the public think of your organization? What does the group of people you consider a target recruiting source group think of your organization as an employer? Learning what exists will enable you to determine what action steps must be taken to mold your brand into the perceptions you want others to have.

Employee Value Proposition

An employee value proposition (EVP) is the unique set of benefits that an employee receives in return for the skills, capabilities, and experience they bring to a company.

Harnessing Social Media

In mid-2017, CareerBuilder.com posted the results of its latest study regarding the use of social media in the employment process. Here is what that study found: “70 percent of employers use social media to screen candidates before hiring, up significantly from 60 percent last year and 11 percent in 2006.”⁵² The lesson is clear. Employers must be using social media outlets to find the best talent available. And, social media can influence the employer’s brand in the eyes of those it will eventually want to recruit.

Best Practices for Employment Branding

To influence your brand, it is necessary to manage the expectations and perceptions of your job candidate target group. The first step is to identify key words that describe your company as a good place to work. If you say things like exciting, flexible, genuine, and challenging, you may advance to the next step. If you say things like old-fashioned, slow (to change), manipulative, and boring, you may have some work to do before moving to the next step. If you need to work on your employment brand, begin with a task force (group) of employees who can help identify key actions that will be needed to improve your organization’s image. Consider focus groups for people in your prime employment recruiting populations to determine what they really think about your organization as an employer.

1.   What changes might be necessary if you are to move forward? How can social media become a tool in that change process?

2.   Develop and implement your action plan to bring about the changes your organization needs.

3.   Evaluate the impact of changes you have created.

4.   Repeat as necessary.

Job Analysis and Job Documentation

Establishing job content and determining how the job interacts with other jobs are important. Documenting the results can become what we know as a job description. That job description can become the foundation for analyzing its content and plotting its fit into compensation structures.

Job Analysis

Determining the level of responsibility embedded in the job and how it impacts the overall organization is what can be called job analysis. In addition to tasks and areas of responsibility assigned to the job, analysis should include the types of physical and mental conditions under which the job operates. That can vary widely from job to job. Consider the physical and mental requirements for an electrical high-tension line technician with those of the computer program coder. One faces the outside weather elements year around. The other sits inside using a computer keyboard to convert thought patterns into code the machine can use. Someone who doesn’t like heights or working in rain and snow would probably not be a great candidate for the technician’s job. And, someone who has a high need for being outside, working on different job sites each day, would likely not do well in the computer programmer’s job.

Job Documentation

Written descriptions of the key elements of a job, its working conditions, and its mental and physical demands will eventually constitute the documentation of the job and its content.

Job Descriptions   Job descriptions follow a general template for content. The same template can be used in constructing a CEO’s job description as for an airline pilot. It is the content that falls within the template that varies.

Elements of Job Descriptions   Here is a typical job description template:

Administrative

•   Date the job description was prepared

•   Title of the job

•   FLSA status: Exempt or nonexempt

•   Objective: What does the job accomplish and how does it impact other jobs in the organization

Summary of Job Content

Essential job functions: Brief description of the specific tasks, duties, and responsibilities

Mental and educational requirements: Formal education (degrees), certifications, licensing, journey-level craft training, extensive mathematical training (essential job requirements; the job cannot be done without these educational requirements)

Skill requirements: Typing, welding, swimming, running harvesting equipment, docking spacecraft

Physical factors: Hearing, seeing (watching/inspecting), touching, operating, standing, bending, squatting, reaching, lifting, carrying

Environmental factors: Outside weather conditions, inside workplace conditions, confined spaces, heat, cold, wet, dry, odors, dust, hazardous materials

Hours: Number of eight-hour shifts per week, overtime requirements, lunch/break requirements

Unplanned activities: Duties or tasks that could come up, interactions, and support of other jobs

Approvals: Reviews and approvals of management people authorized to design job content

Job Descriptions in the Global Environment   Global consistency can be helpful over time. While compensation rates may vary from country to country, the same job content may apply across borders. Having job content consistency may be helpful in the outreach and recruiting efforts your organization makes. Be sure, however, that the wording used accurately communicates the message. Expectations for honesty and forthrightness exist at many locations around the world. Yet, depending on the work location, how the message is expressed may be quite different. In France, value is often placed on open disagreement as discussions move toward consensus. In Mexico, open disagreement is considered rude and disrespectful. In Indonesia, an open disagreement would be considered aggressive and negative because the reputation of the other person can be damaged. International differences do matter.

Job Specifications   A job description is a series of statements describing the role, responsibility, duties, and scope of a particular job. A job specification states the minimum qualifications required for performing a that job. What education is required? What physical and mental abilities are a must? What experience is essential? Those answers are posted in the job requisition so potential candidates will be able to assess the match they may have with the job requirements.

Writing and Updating Job Descriptions and Job Specifications   It is the duty of the supervisor and/or manager to develop and maintain accurate job descriptions and job specifications. Often this is done with the help of HR professionals. In larger organizations, there is a staff of HR people who are responsible for evaluating, rating, and assigning pay levels to job descriptions and compensation classifications as appropriate. They support line managers and supervisors in documenting their subordinate jobs. An annual review is mandated for all federal contractors who are required to maintain affirmative action plans for the disabled. Those requirements are focused on the need for accurate descriptions of physical and mental job requirements. Essential tasks, duties, and responsibilities are considered in order to determine whether a job accommodation can be made or circumstances call for it.

Accurate job specifications are important when a job opening occurs because the hiring manager often needs to move quickly. Pausing the process to be sure job specifications are accurate will be unnecessary if the specifications are already reviewed and updated.

Employment Categories   The term employment categories is used by many to mean often conflicting things. The two most often referenced are categories evolving from the Fair Labor Standards Act (FLSA) and those based on company policy. So, SHRM generally considers the following to be employment categories.

These are the FLSA classifications:

•   Nonexempt Employees are people whose job content is not exempt from the requirements for minimum wage and overtime requirements.

•   Exempt Employees are people whose job content does not require overtime payment.

These are the company policy classifications:

•   Regular full-time employees are regularly scheduled to work the company’s full-time schedule. Usually, they are eligible for company benefit programs depending on eligibility conditions.

•   Regular part-time workers are regularly scheduled to work less than the company’s full-time schedule. They may be eligible for some company benefit programs.

•   Temporary full-time employees are interim workers assigned to specific projects or scheduled to work for a specific limited duration. Benefits may or may not be offered.

•   Temporary part-time employees are hired to temporarily supplement the workforce or to help with a specific project. They are regularly scheduled to work less than the company’s full-time schedule for a limited duration. They are usually not eligible for company benefit programs.

•   On-call employees are scheduled as needed for a nonspecified time period. Normally there is no eligibility for company benefit programs.

•   Interns may be college or university students, high school students, or post-graduate adults who perform work for a specified period of time, i.e., summer, academic semester, and so on.

Sourcing and Recruiting

Geoff Webb writes on LinkedIn, “A Sourcer finds the passive candidates, the ones not applying through the corporate website or posting on the job boards. A Sourcer is a hunter. A Sourcer creates interest and drives talent to the organization. This means doing research: pouring over org charts, job descriptions, and social media profiles, while sourcing talent by accessing search engines and competitor web pages. This means engaging potential candidates: messaging through social media, sending emails, picking up the phone. And because a hunt often involves a chase, this means repeating, tweaking, and refining these activities—until you have a slate of qualified prospects to hand off to…

“…the Recruiter. The Recruiter manages the relationships, guiding the candidates and the hiring manager through the screening, selection, and hiring process. This means phone calls, meetings, and interviews. This also means administration—a lot of it: posting jobs, reviewing applicant submissions through the corporate website, coordinating schedules, uploading documents, extending offers—going back and forth until all the details come together and the job opening has been filled.”⁵³

Sourcing and Recruiting in Diverse Markets

McKinsey & Company studied the relationship between diversity and financial returns in business terms. Among their findings were these:⁵⁴

•   “In the United States, there is a linear relationship between racial and ethnic diversity and better financial performance: for every 10 percent increase in racial and ethnic diversity on the senior-executive team, earnings before interest and taxes (EBIT) rise 0.8 percent.

•   “In the United Kingdom, greater gender diversity on the senior-executive team corresponded to the highest performance uplift in our data set: for every 10 percent increase in gender diversity, EBIT rose by 3.5 percent.”

The conclusion is that sourcing and recruiting in diverse markets is a positive thing for the employer and its financial returns.

Recruiting Methods

Finding the right job candidate is a process that has changed little over time. What has changed is where we go to look for that stellar candidate. Two words say it all for external sourcing: social media.

Internal Recruiting   Looking for people who can fill openings often begins by looking internally. Notifying current employees about job openings can be done in any of several ways: sending an e-mail blast to all employees with the announcement, posting the opening announcement on the employee bulletin board, posting the opening announcement on the organization’s web site or employee channels, and asking all managers and supervisors to announce the opening to their employee groups. Some organizations believe it is good for morale to give current employees the opportunity to apply for new job openings, especially if it would mean a promotion to the candidate. Whatever the reason, selecting someone from the current employee ranks will cost less than searching for and screening a group of people from outside the organization.

External Recruiting   These are proven external recruiting methods:

•   Job boards This includes services such as Monster, ZipRecruiter, Career Bliss, Recruit Net, Jobs2Careers, CareerJet, and Glassdoor.

•   Social media This includes LinkedIn, Facebook, Twitter, YouTube, Instagram, and more.

•   Web site The employer’s Internet site is a perfect place to post job openings and even an application form.

•   Referrals Employee referrals are a wonderful source of job candidates. And don’t discount referrals from clients, customers, vendors, and the general public.

Other Recruiting Strategies   Employment agencies and temporary help agencies are more traditional, but they still have appeal today. Temporary help workers can “test-drive” the company to see whether it is a good match with their objectives, and the company can “test-drive” the employee to see whether they would be a good match for the employer’s culture.

Employment Branding   An employment brand is the market perception of what it’s like to work for an organization. It relies heavily on culture and current and former employee testimonials about experience on the payroll.

Robust Sourcing Strategy   Sourcing, as you know, is the art of seeking candidates before they apply for a job. Hunting may be a better term. If your sourcing strategy is robust, you have an active presence in the employment market looking for organizations, Internet sites, and social media accounts that represent the type of individual knowledge, skills, and abilities that you believe you will require now or in the future.

Recruiting Effectiveness

Establishing and maintaining a recruiting program is not cheap. It requires the investment of an internal staff of people dedicated to that activity or the time and effort of consulting support that will offer the same services. The trick is to be sure you are getting your money’s worth in the bargain.

Measurers of Recruitment Effectiveness   There are two general areas of interest when measuring recruiting efforts.⁵⁵

•   Speed and efficiency

•   Time between opening the requisition and presenting a qualified candidate slate

•   Time for feedback from hiring manager to recruiter

•   Requisition aging

•   Quality metrics

•   Number of candidates selected for interview

•   Interview to offer ratio

HR Metrics   In addition to the recruiting measurements, we can measure the quality of new hires (job performance ratings, the percentage of new hires promoted within a year, the percentage of new hires retained after a year) and turnover cost (unemployment insurance expense, workers’ compensation expense, cost of training a replacement, cost of recruiting and hiring a new employee).

Cautions Regarding Metrics   We need to be careful that the metrics we choose to use actually report on something that actually matters in our recruiting program. It is easy to get sidetracked into believing something is important when it really isn’t. Who really cares about things like the number of typos in a job requisition or the number of people who don’t know how to use social media? Be precise in what you measure because if it doesn’t tell you something that can help you manage the process, it shouldn’t be in your portfolio of metrics.

Peoplepower Reporting   Slicing and dicing the demographics of your workforce can have some value if you are interested in identifying representations of various groups for your diversity program. Here are some things that can be computed and reported.

Headcount   These are the number of people on the payroll, the number of people in candidate pools, the number of people who come from each recruiting source, and so on.

Groups and Subgroups   Numbers can be analyzed for group or unit representations such as department, division, unit, work location, or country. Within these there can be subgroups that might offer additional focus on your recruiting efforts. Focus on what will provide you with the most valuable feedback for the process. You must be able to “do” something with the information you compute. If you don’t, there is no point in doing the analysis.

Demographics   Race, gender, disability, veteran status, and national origin are some of the affinity groups that can offer insight into the nature of your workforce composition and the effectiveness of such sourcing options such as employee referrals. You may have reporting requirements as part of your affirmative action program compliance. Be sure there is both value in collecting and analyzing the data and that someone will be doing something with it.

Cost of Hire/Cost per Hire   The American National Standards Institute (ANSI) has some standards for hiring metrics. Along with their partner, the Society for Human Resource Management (SHRM), ANSI has developed and published the following standards.

Cost of Hire   This measurement uses external costs and internal costs to determine overall cost per person hired during any given time period. This formula looks at the number of hires and the costs to obtain them. It enables us to derive expenses for each new hire stated as an average.

External costs are those expenses such as external agency fees, advertising costs, job fair costs, travel costs, and other similar expenses for the time period being analyzed. Internal costs are expenses that can include fully loaded salary and benefits of the recruiting team and fixed costs such as physical infrastructure.

Cost per Hire Internal/Comparable   Determining the internal cost per hire uses the same formula but includes only internal costs in the formula numerator. It is possible to compute external cost per hire and compare the two results.

Days to Fill   From the time a requisition is posted until the employment offer has been made can be called the Days to Fill measurement.

Attrition   There are several analyses that could prove helpful when looking at attrition. Consider these:

•   Number of employees leaving before the first service anniversary

•   Number of employees leaving before the fifth service anniversary

•   Number of employees leaving total

•   Number of employees leaving voluntarily (within a job or group)

•   Number of employees leaving involuntarily (within a job or group)

Recruitment Cost and Yield Ratios   Ratios are the numerical representation of comparisons. They are normally stated as a percentage. The recruiting cost ratio (RCR) is one of those measurements. It is looks at the cost per hire based on compensation rather than headcount.

The RCR tells you how much you spent recruiting for every dollar of first-year compensation paid to the new hires.

Obviously, the lower the percentage, the better (more efficient) the result.

Another measure of recruiting efficiency and effectiveness is the recruitment yield ratio. It can be calculated at each step of the recruiting and hiring process to determine how successful you are at each stage of the process.

•   How many people were minimally qualified compared to total responses?

•   How many people were sent to the hiring manager compared to minimally qualified?

•   How many people were interviewed compared to those sent to the hiring manager?

•   How many people were hired compared to those interviewed?

At each state, you can compare a ratio or percentage. The greater the percentage, the better.

Achieving a higher ratio (percentage) means your yield is greater for whatever comparative group you are using. Here is another example:

We have hired 25 new computer programmers. It took an average of four interviews for each new hire. So, our recruitment yield ratio is 25 / 4 = 6.25. If we only required an average of three interviews per new hire, the RYR would be 25 / 3 = 8.33. The higher our RYR, the better. It allows us to recognize that many interviews in the hiring process add to the cost of hiring. Lowering the average number of interviews per hire will raise our ratio.

Workforce Analytics   Looking at the existing incumbent population, we can parse the numbers to tell us things like the representation of PhDs in a given job title or the number of people by gender in trade jobs (carpenter, plumber, electrician, landscaper). Recruiting cost ratio can be computed for job titles, job groups, departmental units, and more.

Leveraging Technology in Sourcing and Recruiting

Even if you are a small employer and don’t have access to expensive computer programs, it is still possible to use Excel spreadsheets to provide you with periodic analysis results. Once you have established your spreadsheet to track things like the number of requisitions per month, the time between requisition and job offer, and the cost of hiring at each occupational level, you can create pivot tables that will provide automatic analysis charts once they are set up. Be sure you learn how to create and use pivot tables. They can make your life easier.

Internet Recruiting   Getting candidates from your own organization’s web site is a great way to recruit. Other sources can be the state employment service web site, the web site run by your industry, or the web site run by colleges and universities. All of those activities can be tracked and the data analyzed.

Social Media   Social media sites have become a primary recruiting aid in many organizations. It wasn’t long ago one expert offered the belief that 70 to 75 percent of jobs are being filled through social media sources. If you are not using social media in your recruiting efforts, you should be considering it.

Selection

Once the recruiting effort has yielded proper candidates qualified for the open position, it is incumbent upon the hiring manager to determine who will get the job offer. That offer should go to the person who is best qualified for the job. That is the best business decision. The best qualified will provide your organization with the greatest return on your investment. Selecting someone other than the best qualified will cost your organization more in the final analysis.

Talent Selection Process

It is helpful sometimes to use a matrix constructed of the job qualifications specified in the job posting, as shown in Table 4-6.

Table 4-6     Candidate Selection Factors Chart

You can easily tell which candidate is the best match for your job requirements when you look at the chart. Candidate 1 is clearly better qualified than the others. Candidate 2 is running a strong second, and should you be unable to hire your first choice, you might feel quite comfortable with Candidate 2 as your alternate. The only possible downside to that individual is independence. Candidate 3 is clearly the poorest of the four candidates. Having fallen asleep during the interview, this candidate received a “minus” score for “Drive/Energy.” Candidate 4 is good and solid but not quite as good as the first two. And, then, there is the problem with Candidate 4’s ability to travel, which is something the job will require.

Screening

Screening is the process of presorting job candidates to determine who meets minimum eligibility requirements of the job opening.

Screen   The first pass in screening should be to determine whether the candidate meets the job qualifications as specified in the job requisition posting. Anyone who does not meet the job requirements should be removed from the group. No further processing of that group is needed. Sometimes a telephone interview is next in the screening process. Then comes an “in-person” interview, with the hiring manager and, possibly, with the HR manager, too. There may be other interviews with people who will be in the same work group or other supervisors. The process should contain decision points that match your organization’s requirements.

Lately, video interviews have become popular. That can be helpful to job candidates who are a far distance from the work location.

Tracking Applicants   Data on job applicants is really important. Keeping track of it is even sometimes required. If you are a federal contractor, you will be required to maintain specific applicant-tracking data points. It will be used to analyze disparity in the selection process, comparing females to males and minorities to nonminorities. Disparity analysis can suggest that there is more investigation required, and you will want to do more follow-up to learn more about the specifics of given selections. Ultimately, an enforcement agency, like the Equal Employment Opportunity Commission (EEOC) or the Office of Federal Contract Compliance Programs (OFCCP), would be doing the same type of analysis if a complaint is filed with either or both agencies.

According to EEOC guidelines, it is alright to invite job applicants to self-identify their race/ethnicity and gender. You should use the standard EEOC categories for each.

•   Race/ethnicity White, Black/African American, Hispanic, Asian, Native Hawaiian/Pacific Islander, Native American/American Indian, two or more races

•   Gender Male, female

Inviting self-identification suggests the information being given is voluntary. If an applicant doesn’t want to self-identify, they don’t have to. And, employers are not required to have the information for job applicants. Its only use is in disparity analysis. Race/ethnicity information will become mandatory for employer tracking once the applicant accepts a job offer and joins the payroll. The laws enforced by the Equal Opportunity Commission (EEOC) require employers to collect and keep employee race and gender information.

Application Forms   Application forms are not required by any federal law. In addition to being a handy device that can mitigate an employer’s risk of discrimination claims, they are a handy way to collect information about job candidates that an employer would like to have. They can also be a test for honesty. It is estimated that as many as 60 percent of job applications have exaggerations or false information in them.

Résumés and Curricula Vitae   Résumés and curricula vitae (CV) are documents prepared by an individual to describe educational and employment history. Résumés are normally used with employers other than educational institutions. CVs are documents with much the same information, but a different format used in educational employment settings. Both résumés and CVs are intended to offer potential employers an overview of the individual’s background with a positive “spin.” They almost never contain compensation information, information about gaps in the employment timeline, or contact information for reference checking.

Potential Problem Warning Signs   Here are some examples of things that should attract your attention so you can probe more deeply with the applicant:⁵⁶

•   Foreign jobs that do not follow a logical pattern of job progression, pay little, or conveniently have the exact requirements you are looking for.

•   Jobs at companies that have gone out of business (although there are more legitimate examples these days).

•   Too many jobs where the supervisor that the applicant worked for is gone with no forwarding address.

•   Jobs at companies whose line of business is the normal line of work of the applicant, but this one position under a long-gone supervisor is the exact type of experience you are looking for. This is especially suspect if this experience is outside the normal work patterns of that company.

•   The experience is so long ago that any references would normally have moved on, retired, or died.

•   Self-employment where the experience may well have taken more equipment, structure, organization, or industry position than a small self-run company would be able to provide.

•   “Volunteer” experience for a company that most probably would not entertain the notion of such an arrangement.

•   Volunteer experience for an extended period of time when a means of support would have been required for the applicant.

•   A job at a company that has since been merged and cannot find a record of the position having existed.

•   Dates of employment that always start and end on exact starts of months or years; January 1, April 1, and so on.

How should you react when you discover one of these flags waving at you from your applicant’s résumé? Mark it for follow-up with the applicant, perhaps in an interview. If you know that a claim is untrue, you would be justified in putting that applicant’s documentation in a “Suspect” file folder without further consideration.

Interviewing

Interviews are conducted so you can get more information from an applicant and impart information to them about your organization. Sometimes interviews are conducted by HR professionals and other times by hiring managers or groups of people from the hiring department. Interviews can be conducted face to face, on the telephone, or by a video hookup such as Skype. Often, these days, there is more than one interview before a selection decision is made.

Type of Interviews   There are many types of interviews. They are named for the characteristics applied to the process of interviewing. The following are the primary types of interviews used today.

Structured Interview   An interviewer asks every applicant the same questions along with follow-up probes that may be different depending on the initial response. Structured interviews make it possible to gather similar information from all candidates and use it to comparatively measure relative job-based attributes.

Unstructured Interview   While not exactly “freewheeling,” these interviews follow threads of information as they are revealed. No two interviews are alike in that regard. The interviewer must discern key information from the overall discussion.

Behavioral Interview   In a behavioral interview, an interviewer focuses on how the applicant previously handled actual situations (real, not hypothetical). The interviewer probes specific situations looking for past behaviors and how the applicant handled those experiences. The questions probe the knowledge, skills, abilities, and other personal characteristics identified as essential to success of the job. The interviewer looks for three things: a description of an actual situation or task, the action taken, and the result or outcome. The principle behind behavioral interviewing is that past performance is the best predictor of future performance.

Competency-Based Interview   In this type of interview, each question probes a specific skill or competency. Candidates are asked about their behavior in certain circumstances. Then, they are asked to explain how that happened in a real-life example.

Group Interview   Group interviews happen when multiple job candidates are interviewed by more than one interviewer at the same time. Group interviews are used in specific situations where several candidates are being considered for the same job in which the duties are limited and clearly defined, such as a merry-go-round operator. A fishbowl interview brings multiple candidates together to work with each other in an actual group activity or exercise. It is similar to an in-basket exercise except it involves a group of candidates. A team interview typically involves a group of interviewers with a perspective of the actual interactions associated with the job. This might include supervisors, subordinates, peers, customers, and so on. It is like a 360-degree exercise. Finally, in a panel interview, questions are distributed among a group of interviewers, typically those most qualified in a particular area. At the end of the panel interview, the panel caucuses with the purpose of coming to a group consensus regarding the result.

Stress Interview   In this type of interview, an interviewer creates an aggressive posture—in other words, deliberately creating some type of stress to see how the candidate reacts to stressful situations. For example, using a room where the candidate has to face an open window with the sun in their eyes can put the candidate under stress. (That could also be problematic if the candidate has serious vision problems that rise to the level of a disability.) This type of interview is used more often in law enforcement, air traffic control, and similar high-stress occupations. The stress interview was more common in the 1970s and 1980s. Today, it is not recommended because of the likelihood that it will be interpreted as personal bias.

Guidelines for Interviews   The University of Nebraska at Kearney offers these tips for interviews:⁵⁷

•   Directly observe certain aspects of an applicant’s behavior, such as ability to communicate, alertness, self-confidence, understanding of necessary technical concepts, and so on.

•   Obtain additional information regarding the applicant’s education, work experience, relevant community activities, or job-related interests that can supplement or fill gaps on written application materials.

•   Identify and assess the extent of the applicant’s knowledge, skills, and other characteristics or competencies by inquiring about past performance and achievements.

•   Preview the job and what the organization expects of employees and what employees can expect in return—so that the applicants can determine whether they are interested in the position.

•   Identify the need for any accommodation that might be required to enable the applicant with a disability to perform the functions of the position.

•   Promote a good public image of the institution.

Interview Questions   Questions you can and can’t ask in an employment interview are described in Table 4-7.⁵⁸

Table 4-7     Questions You Can and Can’t Ask in an Employment Interview (continued)

Interview Biases   Hiring managers who interview may inadvertently create EEO problems or make ill-fated selection choices without the proper training and guidance from HR. Hiring is typically not a frequent responsibility of a line manager; it may have been several years since they had to hire an employee. A discussion of some common factors that may create problems in interviewing would be helpful from HR. They include the following:⁵⁹

•   Stereotyping This involves forming a generalized opinion about how candidates of a particular gender, religion, or race may think, act, feel, or respond. An example would be presuming a woman would prefer to work indoors rather than outdoors.

•   Inconsistency in questioning This involves asking different questions of different candidates. An example would be asking only the male candidates to describe a time when they used critical-thinking skills in their last job.

•   First-impression error This is when the interviewer makes a snap judgment and lets their first impression (be it positive or negative) cloud the entire interview. An example is where added credence is given to a candidate because the person graduated from an Ivy League college.

•   Negative emphasis This involves rejecting a candidate on the basis of a small amount of negative information. An example is when a male candidate is wearing a large earring plug, and in the interviewer’s judgment this is inappropriate, yet the job the candidate is interviewing for is a phone customer service position—there is no customer visual contact.

•   Halo/horn effect This is when the interviewer allows one strong point that they value to overshadow all other information. Halo is in the candidate’s favor, and horn is in the opposite direction.

•   Nonverbal bias An undue emphasis is placed on nonverbal cues that are unrelated to potential job performance. An example is a distracting mannerism such as biting the nails.

•   Contrast effect This is when a strong candidate has interviewed after a weak candidate, making the person appear more qualified than they actually are—only because of the contrast.

•   Similar-to-me error The interviewer selects candidates based on personal characteristics that they share, rather than job-related criteria. An example would be that both the interviewer and the candidate attend the same local NFL sports team home games.

•   Cultural noise This is when a candidate is masking their response, providing what is considered “politically correct” and not revealing anything or being factual.

Assessing and Evaluating

Assessing candidates and evaluating their assessment tests is helpful in screening to ensure the best qualified for the job position is forwarded on for hiring manager’s consideration.

Assessment Methods   These are measurement approaches for behavior:

•   Personality tests These tests are self-reporting, projective techniques (ink blots), and behavioral assessment (role play).

•   Ability tests These tests tend to have high reliability but risk disparity results for race or gender.

•   Performance tests and work samples Candidates are asked to perform one or more of the tasks required by the job opening. If the job involves writing, the candidate is given a pencil, paper, and an allotted amount of time to write a sample for consideration. Performance tests can be set up in a workstation model so working conditions can be much the same as on the actual job.

•   Integrity tests These are designed to assess the applicant’s tendency to be honest, trustworthy, and dependable.

•   Structured interview The aim of this approach is to ensure that each interview subject is presented with the same questions in the same order.

Discretionary Assessment Methods   Other methods are used to separate those who will receive a job offer from the other finalists; they might include consideration of the following:

•   The person’s match to the organization

•   Personal motivation level

•   Behaviors complementary to organizational personality—doing work in the community outside the individual’s assigned job

Contingent Assessment Methods   Job offers can be made contingent upon the applicant succeeding in an assessment exercise. That may be a visit to the job site and interaction with current employees or successful participation in a formal assessment process structured for the job in question.

Cross-Cultural Assessment Tools   This can be a self-assessment tool used extensively in training, consulting, and program evaluation, as well as employment screening, that is designed to address a person’s ability to adapt to different cultures. The assessment process should be designed to respond to several needs or practical concerns that are expressed by both culturally diverse and cross-culturally oriented populations.

Criteria for Selecting and Evaluating Selection Methods   There are four important criteria for selecting and evaluating selection methods.

•   Validity The extent to which the assessment can predict job behavior (performance)

•   Adverse impact The extent to which protected group members (race, gender, age, national origin, disabled, veteran, and other minority groups) score lower on the assessment than those in majority groups

•   Cost The cost to develop and administer

•   Applicant reactions The extent to which applicants react positively rather than negatively to the assessment process

Establishing Reliability   Reliability is important in the face of an observation or assessment being made by multiple people within the same circumstances.

•   Inter-rater or inter-observer reliability Assesses the degree to which different raters/observers give consistent estimates of the same phenomenon

•   Test-retest reliability Assesses the consistency of measurements from one time to another

Establishing Validity   Since 1978, the government has had specific expectations for employers to offer validation of their employment selection devices. An employment selection device can be a written or oral test, job interview, assessment center participation, or job skill demonstration requirement. Regulations were established by the Equal Employment Opportunity Commission (EEOC) and are published at 41 CFR 60-3. They are known as the Uniform Guidelines on Employee Selection Procedures. Validity can be processed in several ways.

•   Construct validity The extent to which a test actually measures what it claims to measure

•   Content validity The extent to which a test measures all facets of a job

•   Test-retest or stability The extent to which a test produces stable and reliable results and the results remain consistent from test to retest

Establishing Equity   Determination that the employment test treats people equally, regardless of their personal group membership. Groups include race, gender, age, pregnancy, mental and physical disability, national origin, veteran status, religion, sexual orientation, and additional state-protected groupings.

Establishing Cost-Effectiveness   Cost-effectiveness is the relationship between the cost to develop and administer a test and the benefit derived by it.

Background Investigations and Reference Checks   Job offers are often conditioned upon successful completion of background checks, reference checks, and sometimes even credit checks. In some instances, a job offer could be conditioned on passing a medical evaluation or drug screen.

Before conducting background checks or credit checks, review the current legal limitations on their use. The EEOC has issued guidelines on consideration of conviction records because the population of convicted felons is so heavily skewed with Blacks and Hispanics. Considering conviction records⁶⁰ has a disparate impact on those two racial/ethnic groups. Thus, only if the conviction has a direct relationship to the job content will considering it in the hiring decision be permitted by the EEOC.⁶¹

International Background Checks   Employers will typically use international background checks only if a candidate has lived abroad or if the company has facilities abroad.

Employment, Education, and Reference Checks   Résumés and job applications usually contain information about educational background and employment history. While not always successful, verification calls should be made to the organizations on the résumé or job application to confirm the accuracy of the claims.

Select and Offer

Once all screening has been done, a decision must be made. When the best qualified candidate has been selected, a job offer should be made.

Decision Process   There are several steps in the employment decision process.

1.   Summarize information Use a summary sheet or matrix to pull together comparative key points about each finalist.

2.   ID and rank candidates Using a tool such as the Candidate Selection Factors Chart, it is possible to summarize and rank each candidate against the others.

3.   Collect additional information Additional information can include the candidate’s willingness to accept the standard benefit package, verification of a professional license, or a pending certification. They all are the loose ends that need to get tied up.

4.   Make an offer Offers can be made verbally or in writing. Many employment attorneys counsel their clients to put a job offer in writing.

Contingent Job Offer   A job offer can be made contingent upon any number of conditions.

•   Legal right to work in the United States

•   Verification of educational degrees

•   Verification of professional licensing (medical doctor, lawyer, accountant)

•   Confirmation of certification for the job duties (highway flagger, elevator repair technician, HR professional, certified professional accountant)

•   Receipt of national security clearance

Employment Offer   An employment offer should include start date, wage, or salary (in weekly or monthly amount⁶²), benefits, job title, work location, name of supervisor, restatement that the offer is made under an “employment at will” understanding, and any other pertinent information. In practical terms, phone calls are made to the applicant for confirmation that they are still available and interested in the job. Then, a written offer can be sent to confirm all of the details. A written offer should have a provision for the applicant to sign, accepting the offer and acknowledging the conditions specified. The offer is not considered completed until the signed acceptance is received and any contingency is met.

Employment Contract   You will recall that the alternative to employment at will is an employment contract. A contract can be either oral or written, express or implied. Oral contracts can be created even inadvertently if the employer isn’t careful. When a hiring manager tells the newly hired employee something like, “This is a great company. You can spend your whole career here without worry of getting laid off,” you run the risk of creating an implied oral contract.

Handing Nonselected Candidates   There may be a few or there may be many job candidates who did not receive a job offer. What do you do with them? Some employers just ignore them. Best HR practices, however, suggests that it is courteous to notify each individual who did not receive a job offer. You do not need to be specific about the reason each person was not selected, but a kind letter can go a long way to boosting your organization’s reputation in the marketplace. People will remember for a long time how they felt about their application experience with you and your organization. You can make that a positive memory for them.

Special Considerations: Reasonable Accommodation   According to the U.S. Department of Labor’s Office of Disability Employment Policy (ODEP)⁶³ “A reasonable accommodation is any change in the work environment or in the way things are usually done that enables an individual with a disability to participate in the application process, to perform the essential functions (or fundamental duties) of a job, or to enjoy equal benefits and privileges of employment that are available to individuals without disabilities.”

Applicants and employees must make their request for accommodation in writing, explaining how the accommodation will help them accomplish the duties of the job or the application process. Then the employer is obligated to review the request, enter into a dialogue about the request, and explore any other accommodations that may be more appealing to the employer (e.g., less expensive) while still permitting the applicant or employee to accomplish the tasks involved in the job or the application process. If the employer feels it cannot make the accommodation requested, it is permitted to decline the request and notify the applicant or employee of the decision.

Job Previewing

A job preview is a way for candidates to see how the job is actually performed. The preview itself can be presented in several different ways.

•   Video preview Incumbents can express their thoughts about what they like and dislike about the job.

•   Simulation Workstation mock-ups and task processing that can last 8 hours or longer can provide the candidate with a feel for how the job is actually accomplished.

•   Shadowing Candidates can spend time on the job with an incumbent to see what happens during the course of a normal workday.

Characteristics of Realistic Job Previews   Job previews must provide an honest picture of the job content. What physical and mental effort is required? What skills are used? What happens when something goes wrong? Honest representation of the job in all respects will give the candidate an opportunity to accept or not accept your invitation to go further in the process. Job previewing can be done after a contingent job offer is made, or it can be done earlier in the employment process. Simulation and shadowing can both be expensive if there are more than a few candidates. Video previews can be much more cost-effective, but they lack the “hands-on” view that a live presence on the job site can provide.

Benefits of a Job Preview   The candidate gets to experience the next best thing to actually performing the job. Seeing incumbents working on the tasks, having a chance to ask questions, and even doing parts of the job can be a great way to gain exposure to how it feels to do that work. It can give candidates the chance to determine whether they will like doing that work. If not, they can resign from further consideration. It also gives the employer a chance to observe each candidate in the working environment and judge their reactions to the work’s demands.

Orientation and Onboarding

Orientation and onboarding are two activities that will set the tone for the balance of an employee’s line on the job with this employer. If we get off on the right foot with people, the chance for retention success goes up. If we skip this step, we miss the opportunity to define the new employee’s image of us as an employer. And, we miss the opportunity to establish the employee’s expectations for the rest of their experience with this employer.

It is a common belief that the first 90 days of a worker’s experience on a new job will determine how the relationship goes for the balance of their employment. One way to get off on the right foot is to provide a quality orientation program (also referred to as onboarding) to every new employee.

A strong orientation program will include such things as follows:

•   Welcome by the CEO/senior executive This shows a new hire that senior management cares about employees. Senior executives who believe it isn’t worth their time convey a strong message also.

•   Discussion about culture An opportunity to discuss “the way we do things around here.” What does the employer value? What gets rewarded in the organization? What type of image does the employer want to project to the world? What are expectations of ethics? Assimilating and socializing the new hire into the culture and expectations of behavior that is expected of them while working in the organization is a necessary and important step for orientation and onboarding.

•   Enrollment in benefit programs This is an opportunity to complete payroll tax forms, benefit enrollment forms, and self-identification forms for race, sex, disability, and veteran status.

•   Tour of employee common areas This can include the cafeteria or break room, the location for labor law compliance posters, and restrooms.

•   Safety equipment and emergency exits This is often overlooked when it should be on the orientation agenda. If there are emergency breathing apparatus, eye wash stations, emergency shutdown switches, first-aid stations, or other important safety points of interest, this is the time to show each new worker where they are. Safety training in how to use emergency equipment will come later.

•   Introduction to co-workers and supervisors Guide the employees to their new work locations and introduce them to their new co-workers and supervisors, even if they may have met some of them during the interviewing process. Have someone designated to explain where to get office supplies, how to access computer terminals, and whom to ask when questions come up. These things are just common employment courtesy.

Onboarding

Onboarding new employees is the process of integrating them to the organization and its specific culture, as well as getting a new hire the tools and information needed to become a productive contributing member of the organization. Onboarding should be a strategic process that lasts at least 1 year because how employers handle the first few days and months of a new employee’s experience is crucial to ensuring a smooth transition into the organization and high retention.

Getting Started with the Onboarding Process   The process of onboarding new employees can be one of the most critical factors in ensuring recently hired talent will be productive and happy workers. Not to be confused with orientation, onboarding is quite different. Orientation involves paperwork and routine tasks to place new hires in the organization’s payroll and organization chart. Onboarding is a more comprehensive process involving management and other employees that normally lasts up to a year. An effective onboarding program helps assimilate new hires and addresses the following:

•   What impression do you want new hires to walk away with at the end of the first day? First month? First quarter? First year?

•   What do new employees need to know about the culture and work environment?

•   What role will HR play in the process? What about direct managers? Co-workers?

•   What kind of expectations, especially behavioral, do you want to set for new employees?

•   Who will be the new employee’s sponsor (generally someone out of the direct line of command)?

•   How will you gather feedback on the program and measure its success?

Once these questions have been addressed, HR professionals and upper management can devise a plan of action to help new employees quickly assimilate company policies and workflow while getting fully acquainted with the organization’s culture.

Functional Area 3—Employee Engagement & Retention

Here is SHRM’s BoCK definition: “Employee Engagement and Retention refers to activities aimed at retaining high-performing talent, solidifying and improving the relationship between employees and the organization, creating a thriving and energized workforce, and developing effective strategies to address appropriate performance expectations from employees at all levels.”⁶⁴

Key Concepts

•   Approaches to developing and maintaining a positive organizational culture (e.g., learning strategies, communication strategies, building values)

•   Approaches to recognition (e.g., performance or service awards)

•   Creation, administration, analysis, and interpretation of employee attitude surveys

•   Creation, planning, and management of employee engagement activities

•   Employee lifecycle phases (e.g., recruitment, integration, development, departure)

•   Employee retention concepts (e.g., causes of turnover) and best practices (e.g., realistic job previews [RJP])

•   Influence of culture on organizational outcomes (e.g., organizational performance, organizational learning, innovation)

•   Interventions for improving job attitudes

•   Job attitude theories and basic principles (e.g., engagement, satisfaction, commitment)

•   Job enrichment/enlargement principles and techniques

•   Key components of, and best practices associated with, performance management systems

•   Methods for assessing employee attitudes (e.g., focus groups, stay interviews, surveys)

•   Principles of effective performance appraisal (e.g., goal setting, giving feedback)

•   Retention and turnover metrics (e.g., voluntary turnover rate)

•   Types of organizational cultures (e.g., authoritarian, mechanistic, participative, learning, high performance)

•   Workplace flexibility programs (e.g., telecommuting, alternative work schedules)

The following are the proficiency indicators that SHRM has identified as key concepts:

Maintaining an engaged and satisfied workforce and a culture that employees perceive to be positive is an important function for HR. Employee turnover, along with poor performance, is costly and also disruptive. HR’s practices can mitigate these potential problems by monitoring and improving organizational performance and the retention of key talent.

Understanding Employee Engagement

Employee engagement is a broad outcome-driven concept that recognizes certain characteristics that contribute to behaviors that will positively influence employee job performance. HR authorities often define employee engagement in terms of “commitment,” that is, the identification with an organization and the commitment to active participation in its future. Engagement is the degree to which employees are psychologically invested in the organization and motivated to contribute to it success. It can also be described as the discretionary effort toward attaining organizational goals.⁶⁵

There are three types of professional HR engagement.

•   Trait engagement The personality-based elements that make an individual be inclined to be involved, to have a natural curiosity, and to have an interest in addressing and solving problems.

•   Stage engagement The influence of the workplace environment on an individual’s inclination to become involved. Organizational interventions can directly influence this type of engagement.

•   Behavioral engagement The effect of individual effort that creates the satisfaction from a job well done. Behavioral engagement can occur in cases when both trait and stage engagement are present.

Employee Engagement Levels

While individual surveys differ to some degree, all indicate that the U.S. workforce is typically less engaged than employers expect or hope for. Most results show a relatively low level of employee engagement of about 30 to 40 percent. Other parts of the world show even less engagement.

Benefits of Employee Engagement

A 2013 Gallup study⁶⁶ on employee engagement involving 142 countries indicates only 13 percent of employees worldwide are engaged at work; further, 63 percent are not engaged, while 24 percent are actively disengaged. At a regional level, the United States and Canada have the highest proportion of workers who are engaged, 29 percent, followed by Australia and New Zealand. Significant observations indicate that actively disengaged employees outnumber engaged employees by nearly two to one. Gallup describes engaged employees as those employees who work with a passion and feel a profound connection to their company. They drive innovation and move their company forward. Not engaged employees are essentially “checked out.” They’re “sleepwalking” through their workday, putting in time but not energy or passion into their work. Active disengaged employees are just unhappy at work; they’re busy acting out their unhappiness. Every day, these workers undermine what their engaged co-workers accomplish.

In 2012, Gallup conducted a meta-analysis of its research data across 192 organizations, 49 industries, and 34 countries. This study confirmed a well-established connection between employee engagement and a number of performance outcomes. The median differences between top-quartile and bottom-quartile units were as follows:

•   10 percent in customer ratings

•   22 percent in profitability

•   21 percent in productivity

•   25 percent in turnover (high-turnover organizations)

•   65 percent in turnover (low-turnover organizations)

•   48 percent in safety incidents

•   37 percent in absenteeism

•   41 percent in quality defects

Drivers and Role of Organizational Culture in Engagement

Organizational culture is a system of shared assumptions, values, and beliefs that govern how people behave in organizations. These shared values have a significant influence on people in the organization and dictate how they dress, act, and perform their jobs. An organization’s ultimate goal is to align its culture and strategy.

Global Engagement Drivers

There are four drivers of engagement from an international perspective.

•   The work itself as well as the development opportunities the work provides

•   Stability and the confidence that is placed in an organization’s leadership

•   Rewards and recognition

•   The upward and downward flow of communications

These drivers vary from country to country in a global context. Whereas the confidence that career interests can be met, a sense of personal satisfaction, and confidence in the organization’s success are primary in the United States, top drivers in Canada include a good work-life balance and being respectfully treated. Other countries value other drivers.

Some international drivers include the need for achievement and competence, but difference occurs between individualist cultures and collectivist cultures. Individualist cultures prefer personal feedback, whereas collectivist cultures prefer group feedback. A need for control is universal, but personal control is preferred in an individualist culture, whereas collective control is preferred in collectivist cultures.

Effective Management and Employee Engagement

Management’s behavior is critical to employee engagement and to an employee’s well-being. Managers who manage in ways that encourage employee engagement are essential to the engagement of their employees. Recent studies conclude that there is a link between employee engagement and leadership practices that encourage and support employee performance rather than dictate employee performance. The following are three leadership practices that encourage and support employee performance:

•   Transformational leadership This is a style of leadership where the leader is charged with identifying the needed change, creating a vision to guide the change through inspiration, and executing the change in tandem with committed members of the group.

•   Authentic leadership This is an approach to leadership that emphasizes building the leader’s legitimacy through honest relationships with followers who value their input and that is built on an ethical foundation.

•   Supportive leadership This is one of the leadership styles found in path-goal theory (a theory based on specifying a leader’s style or behavior that best fits the employee and work environment to achieve goals). A supportive leader attempts to reduce employee stress and frustration in the workplace.

Challenges to Employee Engagement

Many external factors present obstacles to effective employee engagement, including global competition, economic conditions, continuous innovation, and new technology. In addition, the blurred line between work and nonwork conditions exacerbates the difficulties faced by employers whose goal is to maximize conditions that support effective employee engagement.

Global competition coupled to less-than-ideal economic conditions places significant pressure on organizational managers to aggressively target production goals. Along with this, continuous innovation and new technology add another layer of pressure on work performance even as they offer new capabilities to the workplace. Further, technology in the form of the Internet and mobile interconnectivity creates a new gray area as to where work time ends and nonwork time begins.

All of this places a new role for HR to create a business case for the need now, more than ever, for managers to invest in the issue of employee engagement.

HR’s Employee Engagement Strategy

As part of its strategic management role, HR is tasked with developing effective strategies incorporating good employee engagement practices designed to best achieve the organization’s business goals.

Assessing Employee Engagement

Employee engagement is the level of personal investment an employee has in his or her work. According to the Harvard Business Review, “Much has been studied about the impact of employee engagement on company performance, and there is general agreement that increased engagement drives results: Gallup, for example, suggests a 20% or better boost to productivity and profitability for companies with high engagement. Such companies, however, may be few and far between: Gallup also reports that only 30% of American workers, and 13% of global workers, are engaged in their jobs.”⁶⁷

Gathering Information About Employee Engagement

If you want to measure employee engagement, consider employee surveys or focus groups. Both can produce a great deal of information about how people feel about their jobs and their contributions to the organization.

Employee Surveys

Perhaps the most frequently used device for gathering information about employee engagement is the employee survey. It can be used to work on issues in the entire employer organization or in only a small part like a department or division. When the accounting department is having problems and a new manager is appointed to manage the department, an employee survey of accounting personnel could be helpful to identify the issues employees want to see improved. Help your employees with the issues they believe are important, and they will react by being nicer to the customers they contact and other employees within the company.

Benefits of Conducting Employee Surveys   Why use an employee survey to measure employee engagement? Well, they are reasonable in cost, can be done fairly quickly, and can provide some great insights into the thinking of your employees. Surveys are versatile and can be done anonymously.

Survey Questions   Questions are constructed so there are no right or wrong answers (unlike the SHRM certification exam). Here are a few examples:

•   On a scale of 1 to 10, where 10 is the best, please rate the quality of supervision in your work group.

•   What word would you use to describe the company’s strategy?

•   On a scale of Strongly Agree to Strongly Disagree, how would you rate your views of this statement? The company executive team is open and accessible to all employees.

•   Please rank order the following five things on a scale of 1 to 5. Use each number only once.

Developing Surveys   To begin a survey project, you should identify the goals you want to meet by having a survey. If it is to determine levels of employee satisfaction with the new company headquarters building, that would be worthwhile. If it is to see what employees thought of the new office binder supplier, there may be less value to be gained. Once you have the goal in mind, identify the population that you want to invite to participate in the survey. Is it the entire employee body or only the group that is working at a given location? Then determine whether you want to build and implement the survey internally or hire an outside vendor to build and implement the survey for you. Construct the survey questions and test them with your HR staff (and even executives). Once all edits have been made, finalize the survey document and plan for its dissemination to your target audience. Gather and summarize the responses. Prepare a report on results.

Guidelines for Employee Engagement Surveys   Table 4-8 describes the critical drivers to consider when building an employee engagement survey, according to Qualtrics.com.⁶⁸

Table 4-8     Employee Engagement Survey

Online Survey Method   Turn on your computer and start cruising the World Wide Web, and you will be presented with a great many opportunities to participate in customer surveys. There are an equal number of companies that are willing to help you prepare your online survey. Survey fraud is likely the greatest disadvantage of online surveys. You can’t be positively sure about who is completing the survey. It could be someone who wants to distort your results, such as a competitor or unscrupulous employee. Yet the costs are low for using online surveys. If you can be sure that only specific people are able to participate, then you may find that this is a survey method you can use in your organization.

Managing Effective Employee Survey Projects   Aside from being careful in the construction of your survey, the most important part of the process is to get senior executive support both for the survey process and for taking actions that are necessary once results have been tabulated. Employee trust can be lost as quickly as you can blink if you ask people for their opinions and then do nothing to fix problems that are unveiled in the process.

Using Focus Groups and Interviews to Gather Engagement Information

When surveying employees, the last question should generally be, “May we contact you to discuss your responses?” Those people who say “yes” become candidates for follow-up interviews or participation in focus groups. Focus groups are designed to gain input from people who meet certain criteria such as more than 2 months of service, working in the engineering department, and within the past 2 years working for one of [named] competitive companies. The focus group can discuss any subject and is highly structured, led by a facilitator who presents questions to get responses from group participants. Sometimes the sessions are recorded for later study. Participants need to be told that to avoid legal complications. There are consulting firms that specialize in focus group facilitation. They assist with designing the questions, the photos or written slogans, advertising, or other company options, and they run the focus group sessions.

One-on-One Interviews   This is a technique for delving more deeply into the opinions expressed by individuals who responded to the employee survey. It can also be used to explore comments and opinions expressed during a focus group session. Someone who has a strong belief that the company benefit program should include paid parental leave could have some valuable input if discussed in a personal interview.

Analyzing Data on Employee Engagement

How do you feel when you are asked for your opinion and then ignored when you give it? That is what happens when employees sense the survey was just an exercise for show, in other words, a PR stunt. When the results are compiled and analyzed and action plans developed based on those results, employees will sense that their opinions actually matter.

Communicating Survey Results   One common failing of employee survey projects is that employees don’t get any feedback about what the survey showed. Remember the communication cycle? We must complete the cycle by providing feedback to the employees about the survey results. How that is done can be quite creative. Or, it can be simple. Just be sure to do it. And, let employees know before sending out a press release explaining the results to the world. That sends the message to employees that their input is just being used for a publicity stunt.

Determining Actions from Survey Results   How do you determine what should be done with the survey results? First, summarize the responses so there is a composite view of employee thoughts. Then, analyze those composites to determine what they are saying. Separate them into “urgent,” “important,” and “later” categories to reflect how quickly the issues should be addressed by the employer. Finally, build an action plan to determine what is to be done, who is assigned the tasks, and when those tasks should be completed. Follow up to check on progress and eventually resurvey the workforce to see how they feel after you have taken the action based on their first input.

Selecting Employee Engagement Initiatives   It is sometimes difficult to know where to start fixing employee engagement problems. Using employee survey results, you can analyze areas of need and then build some plans to address them. Rank ordering the problems is a way to set priorities. And, involving employees in the action plan is a way to further their involvement and engagement. Start with the most important priority and work your way down the list, no matter how long it may take. Keep at it, and tell employees what you are doing from time to time.

Business Case for Engagement

Employee engagement affects nine performance outcomes. Compared with bottom-quartile units, top-quartile units have the following:⁶⁹

•   37 percent lower absenteeism

•   25 percent lower turnover (in high-turnover organizations)

•   65 percent lower turnover (in low-turnover organizations)

•   28 percent less shrinkage

•   48 percent fewer safety incidents

•   41 percent fewer patient safety incidents

•   41 percent fewer quality incidents (defects)

•   10 percent higher customer metrics

•   21 percent higher productivity

•   22 percent higher profitability

It should be rather easy to convert these percentages to dollars in your organizational impact statement. Once that is done, a cost analysis to determine the budget requirements for spending to accomplish those results will help you prove the impact that your employee engagement project will have on the financial bottom line.

Engaging Employees from Hiring to Separation

Employee engagement is not only integral to your organization’s workforce satisfaction, it’s also imperative to the bottom line. According to the 2015 Journal of Corporate Finance, organizations with employee engagement programs saw a 26 percent year-over-year increase in annual company revenue, compared to those that did not have formal programs. Making employees feel like their contribution makes an impact, facilitating opportunities for them to form relationships, and collecting feedback are ways to engage employees.

If you’ve been tasked with implementing employee engagement initiatives at your organization with a large number of employees, or a company with multiple locations, the task may seem daunting. Start with feedback. Collecting feedback is a great place to start engaging your employees because you can use this feedback to inform the rest of your employee engagement strategy moving forward. For example, new hires are an important group to gather feedback from so you can refine your onboarding process, as are employees who are exiting the organization; they can give you insight into how you can better retain your current employees, if they will be candid with you. There are many different tools you can use to collect feedback. Using Glassdoor to collect feedback gives you a forum by which you can collect and respond to feedback.

Engaging Employees Throughout the Employee Lifecycle

There are critical key points in an employee lifecycle with the organization. Engagement begins with the first contact with the new employee and continues throughout their employment. HR plays an important role in increasing employee overall satisfaction and engagement for the get go.

Engagement Practices During Hiring and Onboarding

HR professionals have a great amount of influence with employee engagement, beginning with the hiring and onboarding phase. The period that begins with the hiring is an important opportunity to begin the engagement process. Gallup’s report “State of the American Workplace: Employee Engagement Insights for U.S. Business Leaders” clearly points out that new hires are more engaged in their first 6 months on the job than they are at any other time during their employment. There are five practices that can be employed and used by HR during the hiring and onboarding processes.

•   Make the job application process simple and yet informative.

•   First impressions count—create an accurate first impression.

•   Make the first day on the job organized and meaningful.

•   Have a structured onboarding process to provide new hires with 90 days of orientation and fitting in.

•   Define and communicate a path to success for the new hires so they are aware of the career advancement paths.

Engagement Practices During an Employee’s Career

In the same Gallup report cited earlier, after the first 6 months are done, the honeymoon is over. Gallup stated that engagement fell to 44 percent by the tenth year of employment. There is plenty of opportunity for HR to shift those percentages by developing programs and leadership training that are specifically focused on employee engagement throughout the lifecycle of an employee’s career. We address some of the approaches in the functional areas of Learning and Development and Total Rewards in this chapter. They include the topics of job enrichment, compensation, noncompensatory rewards, and career management.

Developing Policies and Procedures to Promote Engagement   By helping to create policies, HR professionals are supporting how the organization defines roles and explains what actions and behaviors are acceptable and those that are not. Policies are meant to cover the majority of situations, and yet there will always be an exception to a policy that will occur. Policies lead to the creation of procedures and processes for implementing the policy. HR needs to regularly assess its current policies and how they impact employee engagement. Work-life balance policies are an example of a type of policy that has great impact on employee engagement and that requires review on at least an annual basis.

Work-Life Balance   Because of technology growth and social pressures/changes within the family or community, work-life balance (WLB) is growing as an engagement issue for employees and organizations alike. Many organizations offer a number of WLB programs and policies that greatly enhance employee engagement. Telecommuting, child care on-site, gym memberships or gyms on-site, concierge services, and PTO flexibility—the list is growing in innovation.

Developing Policies   When developing policies associated with work-life balance, the HR professional can rely on other organizations’ best practices. These include having clear guidelines for management to apply and addressing a variety of situations (employee positions/roles) that they will apply to. Policies are created to address a “real need”—be sure that the work-life balance policies do just that in the business unit of the organization. First, identify the “need” for the WLB policy. Next, determine what the policy’s content will be in simple language. Avoid rigid rules that must be followed exactly in all circumstances. Move to the next phase of development, which is to obtain stakeholder support. Share the draft with those who will need to apply the policy and look to see where refinement may be needed. Now that the policy is ready to be implemented, go to your communication plan—the when, who, what, where, and how for the policy’s launch. As mentioned earlier, keep an eye on the policy to determine when it needs refinement, refreshment, and/or revision.

How Policies Can Affect Employee Engagement   Policies can be one of the greatest sources of disenchantment for employee engagement. Notice what is brought up on the list of enhancements during labor relationship and contract negotiations. Pay attention to the exit interviews and preferable the “stay interviews” that provide feedback pointing to ineffective or behind-the-times policies. When it comes to employee engagement, HR can be the keeper of the keys when it comes to policies that affect employee satisfaction.

Using Motivation Theories to Increase Engagement   Motivation is essential for engaging employees in their work. Three underlying principles of human behavior are directly linked to motivation.

•   All human behavior is caused. This means people have a reason for doing what they do.

•   All behavior is focused on achieving an end result or goal. People do things to attain something tangible or intangible. Their behavior is not random, though it could be unconscious.

•   Every person has a unique fingerprint and is unique in that no one has the exact experience, heredity, or environmental/relationship influences.

Understanding these principles of human behavior will assist you as an HR professional with motivational pursuits, not just in the learning process but in all matters related to the work and employment relationship, especially engagement.

Motivation is like a shower; it washes off, and you need another in a couple of days. It puts a smiley face on an empty gas tank signal. Inspiration, however, lights up like a fire and grows—it comes from deep within people. Transformational leaders cause people to be inspired, inspiring their employees to take action and providing them with self-esteem versus “shelf-esteem.” As an HR professional and one who trains organizational leaders, try to seek the authentic inspirational skills to motivate and engage employees. The event will be lasting and sustained.

There are several other long-standing motivational theories, and we will briefly review them to refresh your memory about what you most likely learned in your secondary educational endeavors.

Maslow’s Hierarchy of Needs   In Maslow’s theory, there are five basic human needs arranged in a pyramid, necessitating that the first level (bottom of the pyramid) must be met first before moving up the pyramid. Figure 4-12 shows Maslow’s hierarchy of needs. Lower-level needs on the pyramid will always have some influence on behavior.⁷⁰

Figure 4-12     Maslow’s hierarchy of needs

You can fulfill these needs in the workplace through the following:

•   Safety and security Employment security such as an employment contract, pay and benefits, working conditions

•   Belonging and love Teams, good leadership, participation in groups, employee associations, customer base assignments

•   Esteem Training, recognition, awards, special assignments

•   Self-actualization Job growth opportunities, project team participation, becoming a mentor

Herzberg’s Motivation-Hygiene Theory   This theory asserts that employees have two different categories of needs and that they are essentially independent of each other, but they affect behavior in differing ways: hygiene factors, which are considered extrinsic, and motivational factors, which are considered intrinsic. The latter is associated with recognition, achievement, and personal growth–related events in the job, whereas hygiene factors are associated with job security, pay, working conditions, supervision, and co-worker relations that can quickly lead to job dissatisfaction.

Theory X, Y, and Z   McGregor’s theories X and Y offer two approaches to motivating employees. Theory X suggests an authoritative management style because it assumes that employees inherently do not like to work and must be controlled and closely monitored. Theory Y suggests a participative style of management, under the belief that employees dislike controls and inherently want to do their best. It is obvious to see that a theory Y type of supervisor will provide better leadership and produce greater satisfaction.

Theory Y is a participative style of management that “assumes that people will exercise self-direction and self-control in the achievement of organizational objectives to the degree that they are committed to those objectives.” It is management’s main task in such a system to maximize that commitment.

Theory Z management tends to promote stable employment, high productivity, and high employee morale and satisfaction. Theory Z is Dr. William Ouchi’s⁷¹ theory called Japanese management style popularized during the Japan economic boom of the 1980s. In the 1980s there was a huge demand for Japanese products and imports in America, mostly with the automotive industry. Why were U.S. consumers clambering for cars, televisions, stereos, and electronics from Japan? It was because of two reasons: high-quality products and low prices. The Japanese had discovered something that was giving them the competitive edge. The secret to their success was not what they were producing but how they were managing their people—Japanese employees were engaged, empowered, and highly productive. Ouchi studied Japan’s approach to workplace teamwork and participative management. The result was his theory Z: a development beyond McGregor’s theory X and theory Y that blended the best of Eastern and Western management practices. For Ouchi, theory Z focused on increasing employee loyalty to the company by providing a job for life with a strong focus on the well-being of the employee, both on and off the job.

Theory Z makes certain assumptions about workers. One assumption is that they seek to build cooperative and intimate working relationships with their co-workers. In other words, employees have a strong desire for affiliation. Another assumption is that workers expect reciprocity and support from the organization. According to theory Z, employees want to maintain a work-life balance, and they value a working environment in which things like family, culture, and traditions are considered to be just as important as the work they do. Under theory Z leadership, not only do workers have a sense of affiliation with their fellow workers, but they also develop a sense of order, discipline, and a moral obligation to work hard. Finally, theory Z assumes that given the right leadership, workers can be trusted to do their jobs and look after their own and their co-workers’ well-being.

Skinner’s Behavioral Reinforcement Theory   One of the most influential American psychologists, B. F. Skinner, developed the theory of behavioral reinforcement that deals with shaping behavior. In Skinner’s theory he found that behavior modification has four intervention strategies that are reactions to eventually shape behavior. There is positive reinforcement, negative reinforcement, punishment, and extinction.

•   Positive reinforcement involves providing an employee with a desired or appreciated reward to encourage the desired behavior.

•   Negative reinforcement involves avoiding an undesirable consequence by giving the employee an appreciated reward when they exhibit a desired behavior.

•   Punishment is just as it sounds—something negative occurs when an undesirable behavior occurs by the employee.

•   Extinction involves no response. When the behavior is not reinforced through positive, negative reinforcement, or punishment, the employee’s behavior will diminish and become nonexistent.

Intrinsic Motivation   Intrinsic motivation is behavior that is driven by internal rewards. The motivation to engage in a behavior arises from within the employee because it is satisfying to them. Author Daniel Pink writes about the research that has been done globally on the topic of motivation. In his book Drive: The Surprising Truth About What Motivates Us, Pink states that if-then rewards (pay-for-performance) work well for tasks where there is a simple set of rules and a clear destination, such as accounting and computer programming (the left-brain work).⁷² For the tasks that exercise more right-brain, which would be creative, research, and conceptual, a pay-for-performance leads to poorer performance. Science has determined that intrinsic motivation is far more effective for the right-brain types because it is associated with doing tasks, work, and things that matter; because it is interesting; or because the employee likes it.

Using Rewards and Recognition to Increase Engagement   The purpose of having employee recognition and reward programs is to acknowledge the value of employees, their contributions, or some other identification. The intention is to show gratitude, appreciation, loyalty, and trust, as well as to continue engagement and motivation. An effective program highlights valued and desired behaviors. Of course, forms of recognition address the psychological needs of people.

Forms of Rewards and Recognition   There are financial rewards and nonfinancial rewards (explored in the Total Rewards functional area in this book). Rewards need to demonstrate appreciation and are more effective when they are customized to an individual employee, such as tickets to an interest or hobby they may have. HR can be highly effective with designing appropriate recognition rewards through innovation and creativity, looking to other organizations for their best practices, and simply getting to know the employees in their organization. Awards can run the gamut from plaques, jewelry, and certificates to flex time off, conference attendance, tickets to events, and opportunities to fill in for an advanced position on a temporary/interim basis.

Recognition in Multinational Organizations   SHRM conducted research in 2006 that linked performance management and employee engagement in multinational enterprises operating across developed and developing economies. This research had the following key findings:⁷³

•   Having a broad range of performance appraisal outcomes was positively linked to engagement.

•   Key elements of high levels of job/company resources were linked to employee engagement.

•   Employee involvement in setting goals is linked positively to engagement.

Consistency and transparency in HR practices were highlighted as being critical.

Role of HR in Employee Recognition   In the 2016 SHRM/Globoforce Employee Recognition Survey,⁷⁴ the following findings were reported by HR professionals:

•   Organizations that had strategic recognition programs reported less frustrated and more engaged employees.

•   Programs tied to the organization’s values were more effective than programs without ties.

•   Empowering employees to give and receive formal recognition had good results.

•   When more than 1 percent of payroll was spent on employee recognition, employee engagement was better.

Engagement Practices During Separation

Employee separations happen; it’s a fact of the employment cycle. Be it for reasons that are positively focused such as retirement or for reasons that are unpleasant such as terminations for cause or reductions in workforce (RIF). How these separations happen can have a positive or negative effect on employee engagement for those remaining in the workforce. HR can support fair, humane, and yet compliant processes with regard to separation. Exit interviews, as mentioned earlier, can be helpful for feedback on employee engagement. And well-done separations for cause can actually attract better employees capable of engagement and contribution where the departing employee could not. In many organizations, especially in the tech industries, it is not uncommon for former employees to return to the organization with new skills, providing new value at higher-level positions. The level of engagement and treatment at the separation can influence the possibility of key valued employees returning to the organization.

Performance Management

Performance management is a systematic process that helps improve organizational effectiveness by providing feedback to employees on their performance results and improvement needs. Employee accomplishments and contributions drive the business results of an organization, so a regular feedback system discussing individual performance is at the core of a good performance management system. It ensures that employees are on course for the completion of tasks and goals that are aligned with the organization’s goals and that the resources and support are provided for the employee to perform such functions.

Employee performance management systems include the following:

•   Delegating and planning work

•   Setting expectations for performance results

•   Continually monitoring performance

•   Developing a capacity to perform to new levels for personal and professional growth

•   Periodically rating performance in a summary fashion

•   Providing recognition and rewarding good performance

Organizational Values and Goals

Creating and communicating the organization’s vision, mission, strategies, specific goals, and values form the foundation that is needed for the performance management system. Then performance standards are agreed upon by both the line management and the employee on what the job requires and what will be measured. At this stage, it is essential that employees clearly understand the standards, including expected behavior standards set forth for their jobs. Feedback is the next stage and can be both informal and formal. Formal feedback would entail a written performance appraisal.

When it comes to performance management within a global organization, there are additional considerations. Different cultural values and societal norms will affect the definition of standards and performance criteria as it relates to a global workforce. Different languages will also have to be considered for the interpretation of performance definitions and standards. Recognizing that there are differing behaviors for different cultures can be a challenge for setting the behavioral standards and expectations of individuals.

Performance Standards

Employees need to know and understand what specific performance is expected of them in performing their jobs and the acceptable behavior. This communication begins with the very first discussion in a job interview and certainly with the job offer and new-hire onboarding orientation. The discussion continues on a consistent basis both with the reinforcement of organizational standards that are outlined in employee handbooks and other written material and with performance appraisal review sessions. The clearer the expectations set for employees, the greater the success in having expectations met.

Employee Performance

Job performance means the extent to which an employee generates work output that meets expectations for quality and quantity.

Measurement and Feedback

Everything can be measured, even if it is inherently subjective. Once measured, feedback should be provided to the employees so they can know how they are doing in their job efforts.

Appraisal Methods   Performance appraisals satisfy three purposes.

•   Providing feedback and coaching

•   Justifying the allocation of rewards and career opportunities

•   Helping with employee career planning and development plans

For the organization, performance appraisals can foster commitment and align people to contribute to initiatives with their upcoming performance contributions. The most common performance appraisal method involves just two people: the employee and their direct supervisor. In some companies, others are asked to be involved in the appraisals such as peers, another level of management, and sometimes colleagues in the organization whose job function interacts with the employee. These are known as 360-degree appraisals.

Methods for rating the performance can be completely narrative, management by objectives (MBO), behaviorally anchored ratings (BARS), category rating, and comparative ratings with others in like functions.

The least complex of the methods is the category rating where the reviewer simply checks a level of rating on a form. These three types of rating formulas are typically used in category ratings:

•   Graphic scale The most common type, where the appraiser checks a place on the scale for the categories of tasks and behaviors that are listed. A typical scale is 5 points, where 1 means not meeting expectations or low, and 5 means exceeding expectations or high. These types of performance appraisals normally have a comments section that the appraiser completes that provides justification for the rating.

•   Checklist Another common appraisal rating in which the appraiser is provided with a set list of statements/words to describe performance. The appraiser selects the one word or statement that best describes the performance—for example, “Employee consistently meets all deadlines” or “Employee consistently misses deadlines.

•   Forced choice A variation of the checklist approach (but in the checklist method, the appraiser is required to check two of four statements). One check is for the statement that is most like the employee’s performance, and the other check is for the statement that is least like the employee’s performance—a combination of positive and negative statements. This method can be difficult to convey to employees and understand from an employee’s perspective.

With comparative methods, employee performance is compared directly with others in the same job. The appraiser will rank the employees in a group from highest to lowest in performance. This causes a forced distribution known as a bell curve. Ten percent will fall in the highest and lowest of the rating scale, another 20 percent will fall on either side, and then 40 percent will meet job standards and expectations. An obvious fault with this type of system is suggesting that a percentage of employees will fall below expectations. Figure 4-13 displays a bell curve distribution.

Figure 4-13     Bell curve distribution

Narrative evaluations are time-consuming for an appraiser to complete, yet they can be the most meaningful to the employee being evaluated. There are three methods that are the most common for the narrative appraisal.

•   Essay format The appraiser writes an essay describing each category of performance.

•   Critical incident The appraiser logs the dates and details of both good and not-so-good performance incidents. This method requires the appraiser to keep good, detailed notes on a routine basis during the appraisal period and not rely solely on an employee’s most recent performance.

•   Behaviorally anchored rating methods Referred to as BARS, this appraisal method describes desirable behavior and undesirable behavior. Examples are then compared with a scale of performance level for the rating. BARS works well in circumstances in which several employees perform the same function. A BARS appraisal system requires extensive time to develop and maintain to keep the performance dimensions up-to-date as the job functions change. However, the BARS methods offer a more accurate gauge of performance measurement, provide clearer standards to employees, and have more consistency in rating.

•   Self-assessment Coupled with the direct supervisory management evaluation, many employees are asked to self-assess their performance. This approach assists with creating a truly two-way dialogue in the evaluation interview and offers an opportunity for the employee to provide their own perception of performance. Additionally, it engages employees in a proactive means of creating goals and objectives, along with triggering a discussion about career development. Figure 4-14 provides an example of a self-assessment—both a category rating and open-ended questions to elicit a narrative commentary.

Figure 4-14     Self-assessment performance appraisal

Errors in Performance Appraisal   As with any subjective system, performance appraisals are subjective because they are based on people’s perceptions and opinions, so there can be shortcomings. Here are the most common errors made on the part of appraisers:

•   Halo This occurs when the employee is doing well in one area and is therefore rated high in all areas.

•   Horn This occurs when an employee is demonstrating a strong weakness and is thus rated low in all other areas.

•   Bias This happens when the evaluator’s bias (consciously or unconsciously) influences and distorts their perspective.

•   Recency A recency error occurs when more emphasis is placed on a recent occurrence and all earlier performances during the review period are discounted.

•   Primacy The opposite of recency. The evaluator gives more weight and emphasis to earlier performances, discounting more recent performance.

•   Strictness An evaluator is reluctant to give high ratings, and their standards are higher than other evaluators.

•   Leniency The evaluator does not provide low scores and instead gives all employees a high rating on their appraisals.

•   Central An evaluator rates all their employees in the same range and does not take into account differences of actual performance among the group rated.

•   Contrast The evaluator is providing an employee rating based solely on a comparison to that of another employee and not objective standards.

Appraisal Meeting   Once you have completed the written evaluation of your employee’s performance, there are some key factors to consider in planning for the success of your feedback session with the employee. Here is an agenda outline for that meeting:

•   Review the purpose of the feedback meeting and the importance of the appraisal process.

•   Review results or accomplishments achieved against objectives and explain how these contributed to the work group’s efforts.

•   Identify reasons for success and causes of problems.

•   Agree on action to be taken by you and by the employee, and discuss ideas for development.

•   Summarize the discussion and express confidence in the employee’s ability to succeed.

Documenting Employee Performance   Some performance evaluation systems have elaborate forms that must be filled in by the supervisor. Some require the employee to fill in forms because self-evaluation is part of their system of performance evaluation. Other documentation requirements are rather simple. A simple table with the information shown in Table 4-9 might suffice.

Table 4-9     Example of Simple Performance Documentation

Business Results and Employee Growth

Business results and employee success are tightly linked. Employee growth can occur with chances to increase knowledge (learn something new), develop new skills (practice welding), or develop abilities that are new (enhance ability to take off and land an airplane). When a flight school’s success depends on the ability of its instructors to help student pilots achieve their licenses, the level of business success cannot be separated from the level of instructor success.

Business Results   Business results can be measured in a host of possible ways. Some of the most common are profit and loss, ranking in the industry among competing companies, number of clients served during the year, and the return on investment for employee training.

Employee Growth and Rewards   In a 2013 Gallop poll,⁷⁵ it was discovered that 70 percent of American workers are “not engaged” or “actively disengaged” from their employer’s mission. The 30 percent positive result matched the all-time high measured by Gallop since it began the study in 2000. Currently, 52 percent of workers in this country are not engaged in their work. Worse, another 18 percent are actively disengaged in their work. The polling experts estimate that actively disengaged employees cost the United States between $450 billion and $550 billion each year in lost productivity. And, they are more likely to steal from their companies, negatively influence their co-workers, miss workdays, and drive customers away.

The solution harkens back to the basic motivational research results. People want recognition for their work and accomplishments. They want real responsibility, and they want a chance to feel they are achieving good things on their job. All of those are possible if first the basic working conditions, policies, supervisor relationships, and compensation/benefits are acceptable.

Rewarding employees by simply and sincerely thanking them for their contributions can go a long way toward their feeling engaged in their work.

Retention

Once hired, the best business outcome is for the new hire to stick around for a while. Depending on the level of the job in your organization’s structure, you can determine how long it will take for you to reach a “break-even” point for the organization to cover the cost of recruiting and hiring.

*Cost of recruiting and hiring includes things such as search fees, HR recruiter expense (salary for time involved), and hiring manager expense (salary for interviews, paper reviews, discussions about candidates)

Business Case for Retention

While many employers say “employees are our greatest asset,” in fact, actual business practices have often been inconsistent with this concept. With a relatively high unemployment rate, in many cases employers have adopted a casual attitude toward talent acquisition. In some cases, this has gone so far as to think that a focus on retention is not so important; after all, employees should be happy they are employed. This is a false premise. Companies that don’t continuously focus on attracting and retaining the very best talent are companies that will soon find themselves at the “back of the line” when it comes to being a competitive force in the marketplace.

Increasing employee engagement with the goal of keeping key talent on board is not just a matter of making employees feel good. It’s about challenging them, asking them to reach their peak productivity, and providing them with meaningful work in which they can take pride. In other words, a poor retention rate means that the business is losing money it could otherwise save.

Satya Radjasa, a reward practice lead with the Hay Group, outlined just how costly it can be when essential employees fly the coop. He noted that there is a series of four different expenses that come up when a valued staff member leaves. The first is the financial cost, which can be particularly high for people tasked with bringing in and keeping revenue streams, such as salespeople and account managers. The second layer of monetary impact, the cost of finding someone to fill the vacated role, can be even more dramatic. “Replacing an employee can cost from 30 to 200 percent of annual salary, depending on their level. So if 15 percent of your ‘critical’ people are leaving, what would the cost be?”⁷⁶

There is always a need for good talent regardless if there is a high unemployment rate or other adverse employment factors causing a large labor pool. Companies that don’t recognize this fact will soon find themselves uncompetitive in the market.

Why Retention Matters   Retention has some level of correlation with morale. If people are constantly coming and going from the payroll, lack of consistency can be a deterrent to productivity. When such things make doing a job more difficult, frustration builds, and people soon become unhappy. Having an organization where people stay for long periods of time means consistency is higher in all respects. Then there is the cost of turnover, which can be controlled or eliminated if the revolving door can be slowed or stopped altogether.

Retention Practices and Strategies

HR professionals don’t generally leave retention to chance. There is usually a written plan that describes how the organization will address retention issues.

Drivers of Retention   According to Robert Half, the following are some of the contributors to retention success:⁷⁷

•   Onboarding and orientation

•   Mentorship programs

•   Employee compensation

•   Recognition and reward systems

•   Work-life balance

•   Training and development

•   Communication and feedback

•   Dealing with change

•   Fostering teamwork

•   Team celebration

Retention Initiatives   Retention is something that can be addressed like other HR issues. It needs focus and definition. It needs content in business case terms. Then, it needs to be addressed with goals and action planning.

Other Retention Practices   Providing these things can go a long way toward producing better retention results:

•   Clear and consistent job expectations

•   Supervision

•   Training and development

•   Promotional opportunities

•   Recognition

•   Respect

•   Perceived equity