The Presentation

But don’t take my word for it, of course; ask the participants who I invited to this-here  blog  to review the details of our Human Resource Planning (HRP) Strategy and to download the slide presentation (also available @ www.GVFHRA.org. And here it is– the PowerPoint presentation, I mean! Don’t be afraid to hit the link, it is not going evoke a web form or ask  you to input any information, click a disclaimer box or otherwise try to collect your personal data for marketing purposes.  No, no.  Leader-readers of a prior post–Don’t Buy the Lie on ROI–already know how I feel about those gimmicks.

Sooo… this GVFHRA outfit seemed to  bring together a very enthusiastic group when it comes to real talent building.  So engaged, many of my esteemed HR colleagues asked a lot great questions.  But a one hour presentation just ain’t enough time to do justice to this momentous topic on how to use  talent building to move your company from good to great.  That’s why I also promised to direct today’s participants to the devil-details via  blog posts as follows:

The Blog Series

I have written six posts on HRP to date—an Introduction, HRP 1, 2 and 3 an Interim post and HRP 4 as follows:

• INTRO: Seven Tenets to Talent Building
• HRP 1: Talent Building is Not Recruiting;
• HRP 2: Inventory Your Talent Base
• HRP 3: High Performance Leadership
• HRP 1, 2, 3 Halfway There (Interim Post)
• HRP 4: The Talent Pipeline
• HRP 5: Focus on Top Notch Performance
• HRP 6: Strategic Communications Infrastructure
• HRP 7: Knowledge Sharing as Universal Requirement

Three more to go to complete the Series!  Stay Tuned.

Finally, I want to thank GFVHR President, Anita Dombrowski (nice sneaks!) and Maureen Glassman for bringing together the program and giving me the opportunity to share.  Participant’s at this morning’s forum are especially encouraged to comment below about the presentation and the value it may offer your company or not.

What happens?—Nothing—they say “Thanks” and a sales person will call to discuss. No output from the calculator. I am duped. I hate online marketing gimmicks like that. It said it was a “calculator” and it was not—that’s a lie—my very first experience with them as a potential corporate buyer. Now a kindly salesperson is going to call.  Think I should trust him?

In fairness, I knew up-front that I was asking for a lie, it just wasn’t the one that I expected.  The lie I expected was some bogus ROI number like those plastered all around the calculator on their web site:

• Reduce time and money… 85%
• 120% return on investment
• Annual savings $300,000.00

These extravagant claims are backed-up in “Customer ROI Case Studies” to give Halogen credibility by dragging  their poor customers into the sham.  One tall-tale purports to reduce a client-company’s 2200-employee count by 10 to 15 people, saving $300,000.00. The magic– time saved not filling out paper appraisals forms—direct return, they say, for investing a mere $40,000* per year in Halogen’s eAppraisal software.  Of course, it seems counter-intuitive that a dozen or so full-time jobs were eliminated because the layoff survivors now complete performance appraisals electronically. If we were talking enterprise supply chain systems here, well then maybe a modest-sized company can shave a few staffers with automation —but performance reviews? Give me a break.

ROI Lies

It’s a harsh accusation to accuse of a “lie” isn’t it?  “Marketing” is the preferred way to justify false advertising these days.  Technically, these tricksters didn’t really lie to me after all—reading it again carefully—it says, To request access to our…Software ROI Calculator, please fill out the form below.”  But then I don’t get that either– no calculator; instead a PDF marketing brochure (a “white paper” they call it)– so that’s the lie.  Hey, check it out yourself to see if I exaggerate. Here’s a link to the “ROI Calculator” of the offending web site that happily invites to “Discover for yourself how quickly our blah, blah, software can provide your organization with a measurable return on your investment.”  What’s the fine print on those case studies—“Actual results vary?” No kidding.

Personally, I find that kind of thing more offensive than outright false information—it shows that the deception was carefully crafted to bait and switch the consumer while leaving wiggle room to rationalize the fudging. Vendors who craft their lies and concoct false metrics to support them in the name of “marketing” teach consumers to be more cynical and less likely to buy. And when those metrics defy common sense, it turns cynicism into disdain.  That’s a lot of hurdles to overcome to sell a product. The real sad-side of the business story is that these games are so commonplace today that it’s expected, almost acceptable.  And, sorriest of all, it sometimes sells.

ROI and Money

Not me. You can trick me into wasting five minutes filling out a web form, but it’s preposterous to buy your lie on ROI—poetry, I know.   Let’s look a little closer at these confetti ROI models. Vendors and pundits go through pains to demonstrate ROI using various metrics of every shape, size, speed and opportunity cost.  This practice defies business 101. In fact—and this may surprise—you cannot measure ROI with any denomination other than money. ROI is a financial indicator, you see, and a pretty basic one at that—the amount of money returned for the amount of money invested. It’s about greenbacks. Money is the metric, nothing else. Nothing! I shout.

No where in the HR space is ROI more cockamamie than in the training and development arena. Infinite models abound—all of them chock full of holes. Most mention the famous Kirkpatrick Model created by Dr. Don Kirkpatrick in the late 1950s. His “Four Level Evaluation Model” wasn’t even devised to demonstrate financial impact, so a guy named Phillips has since added a “Fifth Level” that spits out counterfeit money (Jack Phillips Center for Research, part of the Franklin Covey Company). I have no qualm with these academics and they both publish interesting stuff. But the ridiculous applications that spawn from their good work defy business and common sense.

Here’s a link to examples of three such stupid models put out by “Knowledge Advisers” don’t you know: 1.) Human Capital ROI Model; 2.) Business Result ROI Model; and 3.) The Impact Study Model.  Note in each model, the intervening variables between dollar signs, including “estimating performance improvements”, “isolating relative time spent”, and—my personal favorite—”adjusting for bias, confidence and conservatism.” Dear reader, you don’t know what the hell I’m talking about, do you?  That’s because it doesn’t make any sense.  The tell tale is that each model poops different financial results, which doesn’t usually happen with basic arithmetic.  If it is not about money-in and money-out, it’s babble in and babbles out and it ain’t ROI. No exceptions, no return.

Time is Time

Employee time is money, you say? Smarty-pants HR types go for ROI gusto with the “payroll-saved” argument. In fact, most models try to go there one way or the other. And if indeed your software gizmo automates a process that reduces actual hours worked, then it may be valid, but almost always not. Why? Because if it saves an employee one hour a day to do something else, it doesn’t save payroll money—the employee is still working 40 hours per week, not 35.

I’m all for workplace efficiencies or training that free people up to do more important things. Who isn’t?  But even that doesn’t happen as the inflated “model” reports because employee minutes on the clock are usually not managed closely enough to ensure it. Are they doing more value-work now or longer smoke breaks?  Accumulating a bunch of payroll hours to demonstrate ROI at 15-minutes saved per person, per day across hundreds of people—makes the calculation all the more ludicrous.

Investments that result in actual workforce reduction—not hours, but entire jobs—are far more appealing to ROI pundits. “Reducing headcount,” they brutally call it, demonstrating mucho savings one head at a time.  But unless you know for sure exactly who was fired and when as a direct result of utilizing the software investment and nothing else, then it is not a valid ROI. Does any company employ 10 to 15 people who work full time just completing paper job performance reviews?  I hope not. If 50 unit managers save 20-minutes in paperwork every day for a year—that equates to only two jobs (unless, of course there are still 50 units to manage, then, sorry, it’s zero).  How did Halogen come up with 15?  So tell us about these layoff victims. What positions  did they hold? What are their names?  The truth is people’s time is usually not money. Time is time; money is money.  I’m so glad we had this little chat on business fundamentals, aren’t you?  If you want to know a little more, check out my posts of many moons ago about Business Value 101 and 102.  HR-types will especially benefit.

Money for Good Stuff

Some things cost money as the necessary price of the ticket and some things are smart to have—neither of these offer cash return, but are good in their own right nevertheless.  An Intranet for employee communication and knowledge sharing is good stuff, even if it cost a little money—that’s why we sell them! Training at reasonable cost for assimilating meaningful information doesn’t’ need an ROI model to be the smart thing to do—that’s why we offer it. Valid, candid, developmental feedback for employees is a good idea too, especially when keeping it simple and not investing tons of money in monster web-based versions of the same useless appraisal forms. You pay a few greenbacks for Switch HR’s feedback systems too, but beware of liar, liar pants on fire ROI models offered by the expensive competition. We don’t pitch ROI, we just sell good stuff.

Getting new hires trained up fast to interface with customers is very important and certainly “worth the money.” You don’t need a model to know that.  Training employees to saving customers’ time and make their transactional experience more appealing are real important too; even though you can’t substantiate the dollar benefits with anything more than a wild ass guess. Well structured leadership development initiatives, business planning facilitation, project management and process improvement training—all good, good, good.  No ROI projections needed there either; just common sense.

Invest to be Nice

Moreover, a lot of company’s actually invest in customers and employees to be nice of all things and because it’s the right thing to do.  And to be consistent with their values and to care about their fellows as we all collectively scramble for a few extra bucks meantime. In these nice-to-have cases the money-ROI is non-existent; yet the investment can be at the very core of the company’s long term success.  Certainly, companies that spend kindly are more appealing to employees and customers alike compared to organizations that don’t bother.

Do most companies treat people with dignity and ensure a safe place to work merely to avoid lawsuits and reduce insurance premiums? I think not.  If monetary ROI were always required to justify your programs, then where’s that leave the age-old human values practiced routinely by good companies everywhere—to pitch in for the sake of contributing; and to hit goals for the sake of achieving; to win for the sake of the team; to teach and learn for the sake of knowledge, career opportunities and professional development; and—most important—to lead for the sake of all of the above. Successful businesses promote these values far more potently than any non-profit, government agency or institution of higher learning, mostly because they have the money to do it, invested in employees, customers and the community with no return required.

And do spare me the party line that it’s all about profit. How witty to say, that without a profit there would be no company and no jobs and no employees and no customers.  What’s the point?—that breathing is required to live?—very insightful.  Business is not all about money—it just sounds good to say it is, especially for spinsters who smell a marketing opportunity to communicate their wares with business-bite conviction–so they lie ROI. There’s that refrain. And dare I say that there are some things that money can’t buy — we learned that one in kindergarten; we concocted ROI models long after—sometime in college or graduate school, I think. What was the name of that course?  Fool’s Tools 101 for Business, maybe?  I can’t remember.

Good for me.

*Halogen Software has a pricing model on their web site, which was used to estimate the cost of their  eAppraiser application for 2200 employees per the case study.

Here’s a link to their new website now under mucho construction. By the way, did I mention that Switch HR does web sites?  Sorry, back to the pin-point:  It has been a while since I addressed a local HR audience and, I must say, they seemed most receptive to the nontraditional, unconventional, some-say radical approach to workplace management that I espouse with much conviction.  It was a true pleasure to see my HR colleagues so engaged and a real honor to be asked to speak before them.  In recent time my speaking engagements  had gravitated away from HR groups and more toward top company leaders via Vistage (formerly TEC) forums and like President Groups. But, now so impressed by DCHRA,  I think I’m going to throw my speakers hat back into the HR ring for a while and take the Switch HR message out for a new spin.

The Presentation

The topic of yesterday’s forum was Seven Tenets to Talent Building–our tried and true Human Resource Planning (HRP) methodology. Our most ardent leader-readers know that I have a detailed blog series in the making on the entire process, which, to remind, is referenced below.  But you know you have something good, when the presenter can’t get past the third Powerpoint slide because of audience participation, curiosity and enthusiasm.  That’s what happened yesterday and we had a lot fun. The PowerPoint presentation offered (but mostly unseen!) at the meeting is re-offered here.  I believe the DCHRA also intends to have it on their web site.  In any case, I want to thank Garrick Weaver, Michelle Bitzberger, Jennifer Sosa and the rest of the DCHRA gang for a pleasant afternoon at Maris Grove in beautiful Glen Mills, Delaware County, PA. Participants at yesterday’s meeting are most encouraged to comment by Reply below on what you thought of the topic and the presentation in general.  I value feedback very much so.

The Blog Series

And here’s the blog series so far.  I have written six posts on it to date—an Introduction, HRP 1, 2 and 3 an Interim post and HRP 4 as follows:

• INTRO: Seven Tenets to Talent Building
• HRP 1: Talent Building is Not Recruiting;
• HRP 2: Inventory Your Talent Base
• HRP 3: High Performance Leadership
• HRP 1, 2, 3 Halfway There (Interim Post)
• HRP 4: The Talent Pipeline
• HRP 5: Focus on Top Notch Performance
• HRP 6: Strategic Communications Infrastructure
• HRP 7: Knowledge Sharing as Universal Requirement

Three more to go to complete the Series!  Stay Tuned.

But I digress.  It is the article that blows my mind.  In fact, I stumbled on the preposterous  “peanut butter” thing, after shaking off BrightMove’s insights on another voodoo piece about the value of hand writing analysis to help screen job candidates.  Here you have a company using a blog in an attempt to engage adult, presumably rational, human resources professionals and employment experts to buy their web-software product. And what do they do?  They add ludicrous to their marketing pitch. But the more interesting question is, Why did they do it? Sad to say, the answer is in the audience, not the writer.  As incredible as this might sound to the normal earthling, some Human Resource professionals–including some in leading companies—think hand writing analysis and peanut butter questions help screen and select better qualified candidates vs. if you don’t practice such silly putty.

Yep, kind of embarrassing, ain’t it. Let’s see if I have this right, because I still, can’t quite, you know, grasp the absurd. To save you, dear reader, the head-explosive agony of going back to it, here’s what the dumb-dumb post says:

Many years ago, a good friend who manages a fair-sized CSM team shared his favorite interview question with me, and its simplicity is only surpassed by its brilliance. The question is, “Your client needs a peanut butter and jelly sandwich. Pretend I’m your client, and role-play with me as you take me through your conversation.”

First of all, I’m not sure there is even an actual question there. But that English-language misstep aside, it pales in comparison to the utter folly of broaching such psychobabble in a serious job interview.  The author is Nanci Lamborn, a “Writer/Blogger/HR Practitioner” for BrightMove. Obviously no slouch, Nanci is well aware that some readers may not at first appreciate why the question’s simplicity is only surpassed by its brilliance. Sooo… Nanci explains herself that the peanut butter question some how ferrets out technical jargon that she admittedly wouldn’t understand anyway while testing the candidate’s communication skills:

…you’ll see where this question begins to uncover the presence or the absence of critical process communication ability.

Anyone out there know what “critical process communication ability” looks like?  Assuming that’s the bona fide name of an actual human skill, I’m entirely baffled as to how one will demonstrate such baloney (pun intended) by explaining how to pull together all the complex elements of a peanut butter and jelly sandwich. (Man, I can’t believe I’m writing about this).

Well, at least thank goodness Nanci keeps it short and in the end candidly admits that the silly peanut butter question is born from her own lack of knowledge about the actual job specifications; in this case a Client Service Manager (CSM) job. Now she is screening candidates mind you for a job that she plainly does not understand and so using the peanut butter thing to accommodate:

So since I know my gifts and abilities are not the same as those on the list of required essentials for the CSM, if that means I have to be unconventional in my recruiting techniques in order to find the very best, so be it. When the first response from a candidate is, “Wow, I’ve never had that question before,” then I know that I’m getting ready to see underneath the façade, and that’s where all the good stuff is. So where’s your peanut butter?

Actually, I think poor Nanci is misinterpreting events during her own interviews because, everything happening in those moments, are so, you know, indescribably ridiculous and all. When the candidate observed, “Wow, I’ve never had that question before,” what he was far more likely thinking was, “Wow that’s the stupidest, most irrelevant,  outrageous moronic question that anyone ever asked me in a job interview—you must be crazy or on drugs or in the personnel profession.”  And perhaps the skills “underneath the facade” that are being tested and demonstrated in those moments are things like a) not laughing out loud at silly people until you know whether they are kidding or not; or b) patience with HR psycho babblers who don’t understand the job being screened and yet make judgments about your competency as they  actually believe in their own dribble; or c) courtesy and concern for fellow humans who my need to go to the hospital after work today to get their head examined.

Granted these skills may be relevant to a CSM job, so maybe Nanci and BrightMove have their own form of brilliance after all! Let’s check underneath the facade:  So Nanci, BrightMove, tell us—where’s your peanut butter?

Of course, we all calm down a bit when age kicks in and reason turns to wisdom and mistakes transform to lessons learned.  People love to say that, if they had to do it all over again, they wouldn’t change a thing—that of course, isn’t true of anyone.  But it does sound good in the biography section.  Taking the opposite position ain’t all that remarkable either.  Sure, I would change a thing or two or three of course, but why lament?  In fact, such humility—while popular in the genre of honest John’s and candid self-reflectors—is not at all impressive to me and comes off in itself as quite irrelevant. Yeah, we all have flaws and scars and make mistakes, don’t know everything and all that yap, but simply saying so adds nothing to the cause.

Why, for example, do people ask forgiveness right before they say something worth saying or actually do something worth doing?  Of course, this is just one man’s view, they say. I could be totally wrong about this, but … I can’t pretend to understand your dilemma, however…, This is just my opinion and I’m no expert, but…. Disclaimers, disclaimers. Yuk.  People who do that may as well just say, Hey, I have no idea what the hell I’m talking about right now, but I am going to speak anyway and give you an uninformed opinion that you shouldn’t consider because it’s ignorant. Wow, glad you shared that. Jeez…

Apologize Not

There is a lot to be said about conviction.  I was in “sales mode” at a recent prospect engagement and was in that exhilarating groove where I knew my services were a perfect fit for the client-to-be.  Tell me why you wouldn’t buy from me, I thought.  Make a decision! I have been told more than once to calm down the rhetoric in my blog posts, as it threatens to turn off more people than it attracts.  No reason to offend people, I’m told.  The good stuff gets lost when people get their back up.

Maybe so.  But I post on my blog in order to create a response and to attract a certain type of person—leaders.  Granted, I may occasionally annoy some people in the process.  And if, instead, I exaggerate (aka lie) to make you like me, what does that say about the integrity of what I offer?

I began stumping my pitch to “switch HR” over a decade ago by speaking to local SHRM chapter audiences.  I wasn’t selling anything at the time, except my passion and experience with a particularly great employer.  There I was able to rebuild a much-broken personnel shop and launch a change and talent build strategy that was unconventional in every way.  I loved telling the story to any audience willing to listen.  The reaction was consistent with each HR-crowd—Half seemed to love what I had to say; the other half hated it.  Almost nobody was humdrum in between.  My message was divisive. That’s when I knew I had something worth shouting about. That’s when I stopped apologizing.  As I was turning people away, I was forming a bond with other people who shared my passion.  And it’s the bond that builds the business, not to mention character.

Leadership, not salesmanship

One of the things I love about my current employer is that we are the hands-down leader in our industry niche.  Not just in the brochure, but really.   Therefore, we get the privilege to educate and lead; not sell.  Our marketing literature tells the truth with passion, not spin. We explain, rather than persuade; we attract, rather than promote.   It’s a good place to be.

Let’s face it, there are thousands of posts in the HR blogosphere that look just like the next. Many, take the “unconventional” approach and growing legions of HR-bloggers resonate with a distinctive “anti-HR” and presumably pro-business message. Yes, there are a lot of us.  But very few are truly different.  Rare, does the content stray to points that truly engage innovators and enrage dissenters.  Instead, HR-marketers strive to differentiate themselves with snappy HTML pages, neato flash programs, smart design templates, and succinct bullet point messages. Keep it short and crisp, they say, people don’t have time to read all this….

Sure it’s easy to do the same; but that doesn’t work for me.  And it won’t work for my clients who are thoughtful, passionate, reflective and discerning.  If you don’t have the time to read my stuff, make the time.  It’s good stuff.  Sound arrogant?  It is.  Winston Churchill famously remarked, History will be kind to me because I intend to write it. I love that and use it in my motivational lectures.  It resonates with people who love and appreciate leadership. See, Churchill didn’t write the book– he was the book. He had conviction and, yes, definitely arrogance.  He believed in his own stuff and he had a passion for it.  As a result, a lot of other people believed it too.

So yes, we do make an enemy or two because of our rebellious bent and highly critical perspective.  We don’t want to fit in to a profession that is not living up to it’s potential.   At Switch HR, it is our very love for the human resources profession and the good souls who we serve that drives our passion– in favor of the things we can do well; and against the things that waste our HR-time and have no value.  Helping people succeed in business and in life is as worthy a profession as any other on the planet.  However,  we don’t want to just fit in. We don’t want to be SHRM Certified.  Leaders don’t want to conform. Instead, you can demonstrate that it’s okay not to conform.  When they see you are willing to be first into the fray–better yet, when you create the fray– they will be thrilled, even honored, to follow you into battle.

It’s about leadership, not salesmanship.  And in our tiny HR-world, we will keep plugging and offending and delighting as the case may be—knowing that a good leader inspires people to have confidence in the leader; but a great leader inspires people to have confidence in themselves.

So get out there and Switch HR. Be the real deal.  And don’t you dare apologize.

The Talent Pipeline is open wide when forward thinking companies do several basic things.  First, they inventory their talent base and identify the best-of-the-best on the top-side and not so stellar on the bottom rank. Next, they proactively address mediocrity and job-to-people mismatches across the enterprise, especially early on when new-hires begin to show their true colors on the job.  In stark contrast to traditional HR thinking, measured high turnover in most organizations can be a very good thing as long as its the right people coming, going and staying as the case may be. In fact, it is critical to engage higher-than-normal, faster-than-average turnover of very select personnel to move your company from good to great. Let’s go there now.

Proactive Hires

Hiring people when there is no vacancy is counter intuitive to budget conscious manpower planners.  An overlap by paying two salaries at the same time–1.) the incoming new trainee who is not yet fully producing; and, 2.) the outgoing low-performance  incumbent being replaced–seems a bit expensive.  And, while pundits love to pontificate the “high cost” of turnover, there is usually, in fact, a real cost savings in unpaid salary between the time a job is vacated and filled.   Moreover, it feels subversive, in fact, almost dishonest to be interacting with a person every day who you know darn well is going to get fired shortly, as soon as this good soul fully trains his replacement without even knowing it.   It would also surely be a morale bummer over time as other employees witness this plot unfold. It wouldn’t take long for your staff to figure out the game that whenever there is so-called “add” to the team, some one else–Maybe even me, they fear–is about to get the boot can.   These touchy dynamics and real costs are the very reasons why companies do not hire in proactively to fire out eventually.

It’s a dilemma to be sure. Here’s a way to handle it:

TOUGH ONE-TIME DECISIONS: If it is going to be hard, get it over with. Do NOT put your people through painful one-at-a-time firing transactions.  Instead, tough as it may be, do a one-time staff building move whereby you identify once and for all everyone in the department who has to go. Let’s say that’s 4 people among a staff of 22. Knowing the hard day is coming, proactively hire in the minimum number of new people needed to fill the immediate void–say two new hires. Proactively hire in two and train them up fast. Then pull the trigger on all four, preferably on the same day. Then hire in another and, maybe another.

SPEED TO HIRE-FIRE: On a go-forward, speed is the issue. Be very decisive and quick to get rid of that one in five miss-hire as described below. A hiring mistake should be recognized and dealt with in less than 90 days. On the uptake, hire in people fast and get them trained quickly.  Speed is what you need.

BETTER AND LESS: One of the obvious benefits of new, better talent is the amazing human capacity to do more with less. It is absolutely realistic to expect that three new very good hires can replace the four marginal people recently dismissed. That’s the payoff of aggressive HRP!

BENCH STRENGTH DEPARTMENT: There’s a whole other solution to proactively filling the talent pipeline that probably deserves it’s own post.  It involves setting up a “Bench Strength” Department of paid trainees who are ever ready to fill in multiple position vacancies and/or pick up select tasks while vacancies are being filled.

Depending on the type of work, these “generalists” are put through intense training and performance scrutiny to ensure they have what it takes to jump into a department job at a moments notice.  For example, an administrative generalist can be prepared to aspire to either a customer service, collections, billing or accounts payable role.  While each of these  functions certainly has it’s niche and specialty, all such jobs have a lot in common– great organizational skills, rapid service response, detail orientation, PC proficiency, superior phone etiquette, etc.

I have set up such “talent pipeline” functions successfully with several clients.  In essence, it is a sub-department to the HR function where skilled and close management oversight ensures incoming talent is meticulously on boarded, well trained, tested and contributing real work via overflow and special project tasks.
If the incumbent in this role is any less than exceptional, then HR pulls the quick-over trigger aggressively. This takes a lot of pressure off other department supervision and ensures a strong bench strength team to plug into where needed most at a moment’s notice.  It works well when other departments tap this additional valued resource regularly.  It, of course, adds payroll expense, but it’s worth it in the long run.

Quick to Churn

There are two kinds of talent churn in any organization: 1.) Quick-over and, 2.) regular turnover.  Quick-over is about decisive early intervention when you miss-hire that one in five who—upon seeing early how they really perform on the job—you would not rehire.  Regular-turnover is about people who have been around for a while who quit unexpectedly or—as is far rarer—you fire after a long battle with mediocrity and useless performance improvement plans (PIPs).  The one-time hard-decision day described above where four marginal people are let go all at once, is an example of aggressive regular turnover.  If, from that difficult-decision point,  you follow the rest of the HRP formula described below, quick-over covers the rest.

Now about quick-over: Ut-oh, you say 30-days in, Something don’t feel right. The new employee  hasn’t done anything really bad yet. And he’s a nice guy to be sure. Still, it irked a little when he asked for that day off when only the third week on the job. And he was at lunch for an awful long time last week—twice in fact, now that you’re counting. He picks up the phone less than his peers too and he was trained on the standard twice. Then there’s the HR-observation that he didn’t take a single note during new hire orientation. He wasn’t listening when we showed him how to use the out-of-office e-mail functionality either.  And still haven’t heard back on that question about the lost form. Now he has been late three times this week because his kid was sick and his wife had to leave town for a family emergency. Nice guy, though. We’ll see.

We already see. Are these early warning signs and “minor” infractions enough to make a judgment to fire your new hire? Absolutely yes. The statistical chances that this early behavior is going to suddenly cease, turn around and go positive—at a time when making a good impression should be at its peak—is almost zero. In fact, if you study the behavior patterns so far, it’s getting worse, not better.  Only the excuses are getting better.

Remember, this kind of thing is going to occur with your new-hires about one in five times.  In a bad (particularly unlucky) hiring month, it may happen three in five times. It’s a reality, not a rare exception. It happens frequently. And you don’t need a lot of time to figure it out either—all you need is a pattern. Human behavioral patterns emerge for observation in days, not weeks. And it is all very predictable. All you have to do is look!

Decisive Data

Dealing decisively with an employee who appears marginal early-on is completely within the employer’s right.  Despite all we learn in HR school, piles of warnings, endless second chances and lengthy PIP documentation are not required. Every good recruiter knows that the best predictors of future behavior are past and current behavior. So don’t wait to count your lumps after the fact. Do it now. Okay, he’s been here only a month and he has been absent once already (that’s 12 call outs per year), late five times so far that you know of (a 25% lateness rate), three  occasions he was unauthorized over-the normal break time (on mark for 36 infractions annually there); he is unremarkable in response to retraining and 90% of the time when he is on task, he doesn’t appear to pull his weight. What’s not to fire?

Moreover, if your standard is that an employee must demonstrate high-performance behaviors—coming in early, doing more than is requested, and responding immediately to every request, having near-perfect accuracy upon training, telling people what he will do (not ‘I’ll try’), assimilating information quickly and demonstrating knowledge by paraphrase and example—if that’s the job description, then your prospect described above ain’t even close. He is an obvious mismatch. You would not rehire.  Let him go now.  Quick-over should happen decisively within 90-days of hire at least 20% of the time. That alone will virtually guarantee a perpetual talent pipeline.

The Big Bad Choice

Admittedly, it also makes being a new hire at your company hazardous for one’s career health. But that’s as it should be for companies truly committed to going from good to great.

For many fair and square, all this decisiveness sounds too Machiavellian. It seems harsh.  If corporate culture is more akin to second chances, coaching patiently, kindly reminders, repeatable training and all that nice stuff, then I respect it with all sincerity. However, this kinder, gentler way will not take your company from good to great.  Keeping people around as good-enough for the long haul is an easy choice. It’s a bad choice, but it is easy. And that’s how most companies do it to be sure. But it turns off the talent pipeline to a trickle.

Look at this way: for every mediocre nice staffer retained, there is a great would-be employee in the job market held back who deserves to work at your company.  Just because you have not yet discovered this diamond in the rough, doesn’t mean the person isn’t there. And your nice manners with the marginal-person who you know, ain’t all that kindly to the good strangers out there who want to contribute exponentially more if you would just let him and her in the door.  My recommendation: Be nice to the high-performance masses in the job market. Don’t shut off the talent pipeline. Open it.

Objective Not

The business-bite tough guy applauds. He likes the quick-over idea.  Very decisive. Maybe. Meanwhile we all love to boast how “objective” our management practices are.  But our actual behavior (being humans and all) is not so.  Managers, for example, are far more inclined to jump on the quick-over bandwagon so described rather than deal decisively with a longer-term problem that has arguably cost the company a lot more. Why is that?  Emotion pure and simple.  We can fire a good soul a lot easier if we don’t know her.  So that’s what we do.  Let’s go again to the VP Client Services example.  Guess what he decides to do now?

Remember that new hire from the Initial HRP Assessment? Link to it again now and take a quick look.  Her name is Jennifer Jenkins, the newest Service Coordinator hired on December 22, 2009. Listed originally as “Too New to Tell” in color-code Yellow, the VP Client Services, after being challenged by the President, now reconsiders and decides that poor Jennifer has to go.  The VP knows that the President wants decisive action and Jennifer is an “unknown.” She hasn’t the critical on-the-job knowledge and experience of so many others.  So our VP Client Services selects Jennifer over other employees with more time, even when others have negative behavioral patterns that far exceed Jennifer’s short-lived track record.

See, this is another problem with weak leaders—he makes decisions about people based on the ease of the decision in terms of how it affects him, not based on the correctness of the decision.  Now, as it turns out, Jennifer Jenkins is not stellar by any means.  In fact, she has shown early to be marginal at best.  And, now that our esteemed VP knows he can go out to the hiring market proactively and try his luck again, Jennifer is a goner. Bye-bye.

The typical Human Resources function, meanwhile, would normally step in right here and stop the injustice of it all by protecting just-ok Jennifer from getting the boot.  That’s the knee-jerk HR-to-the-rescue people loving thing to do after all. But that’s not the correct thing to do either.  The correct thing to do is to challenge our wimpy VP Client Services to demonstrate the same intolerance for mediocrity with the people who have more service time, yet fall to the bottom of the performance distribution list. Yes, Jennifer has to go; but so should a few others who demonstrate the same patterns of mediocrity.  That’s objective. That’s fair. It’s also decisive. And, most important, it opens the new talent pipeline far and wide. The truth is, there are at least four people who are marginal performers on the VP Client Services team.  One of them is Jennifer. The rest are being protected and are stopping the company from discovering far greater talent that the world has to offer right now.

Speed to Hire

Opening the talent pipeline is a good start. The more critical step, of course, is to fill it.  Here again, traditional HR and headhunting firms miss the mark in spades. They market their unique abilities to magically produce quality candidates by proffering to have the best crystal ball in town.  Nonsense.  There are some times when quantity is as important as quality and filling the new talent pipeline is definitely one of them.  As described above, the all important quality screen happens far more effectively upon hire when you can see daily your prospect’s ability or inability to produce one-the-job.  So if you are indeed decisive about quick-over, you have that one covered.

Now about bringing in new talent: The same rule applies, of course. One in five is a hit! A real-good employee to be sure comes your lucky way about 20% of the time.    The game then is to get as many of these good people in the door as fast as possible. Speed to hire (recruiting cycle time) is the metric that matters.  Speed to competency (learning curve completion) is real important too.  For HR-types who love their little metrics, speed to hire and speed to competency is worth tracking and continuously improving.  It’s all about the talent pipeline—get them in quick and get them up to snuff in short order.  The real-good new hires want that; the great new-hires demand it.

Hire Process Excellence

Unfortunately, most HR people are not well trained or experienced in process improvement discipline.  Regardless of flavor—Lean, Theory of Constraints (TOC), Sigma-whatever, etc. you need to have a methodology to map and analyze your current pipeline from “vacancy to hire” and from “new hire to proficient” and continuously, measure and improve each.   Remember, talent intake is a pipeline—a process flow—that has definite steps and motion between steps. The goals are to constantly improve talent throughput by speeding it up.

Explaining process excellence methods here is far beyond the scope of the current post. Suffice it to say that Switch HR has developed a definite and effective methodology to apply process excellence across your HR-enterprise (and company wide for that matter) with speed and simplicity.

However, for this post, we do have a  starter quick list of actions and goals that can get you to the end game and that we are happy to clarify in future posts or by direct inquiry.   Here goes:

Offer an aggressive employee referral rewards program—not just as a recruiting tool—as a compensation program.  Make referring qualified candidates a centerpiece to your above and beyond performance award system. Offer, for example, $1000 for every successful referral hire that makes it in the door and lasts for 90 days. If you do it right, 70% or more of your new hires will be gotten this way.

Teach employees how to use social networks to refer friends. Linked In is good one for professional positions and executive hires and Facebook is the latest, greatest entrant to pick up recruiting steam for many rank and file and entry jobs.   However, probably the best source is local, professional networks in the industry space and job market that you are tapping.

Switch HR has gotten away from pay job boards and we are not fans of Career Builder or Monster.com—they cost too much and produce too little value.  We do recommend the many job board freebies out there and have an entire program to offer our clients on job search engine optimization and online recruitment advertising landing pages.  Take a look see here if interested.

Hold your recruitment team accountable to speed to hire and speed to competency metrics—this includes the HR staff and the hiring manager.  It is easy to measure and easy to reward.  Again, it takes another post in itself to show you how. But get it on your list and Switch HR is happy to address for you.

Sometimes traditional HR gets it right believe or not  and a sharp focus on a copious new-hire on-boarding (including high scrutiny of new hire performance and a plethora of  new-hire training opportunities) is a good idea that can be made far better with a few simple Switch HR twists.

Again, all these deserve posts of their own and we address them specifically with our clients and will blog about all this ardently in the near future.  In the meantime, get okay with quick-over, move out lingering mediocrity and speed up your hiring pipeline.

Next we get back on the high-performance bandwagon by showing you how to focus the vast majority of company training resources (including on-boarding), compensation strategies and material rewards on the top-notch.

Stay tuned.

The numbers are HR-concocted of course for illustration only; but not unreasonable in the common sense realm where a vast majority of the great work produced is pushed out by about 25% of the company’s best people. Take it down to the personal level and it is even easier to grasp the math. Ever hear the one about the new guy who came into a job and did three, four or even ten times the good work than did the prior incumbent who sat in the same chair? Yes, yes, I believe we all know that story. We’ve seen it. Some of you have lived it. Indeed, you don’t need a research study, engagement survey or a silly putty  ROI model to know that the people differentiators  are statistically significant.

So how exactly do you go about it? I have written four posts on it so far—the Introduction so referenced—and HRP 1, 2 and 3 as follows:

• INTRO: Seven Tenets to Talent Building
• HRP 1: Talent Building is Not Recruiting;
• HRP 2: Inventory Your Talent Base; and
• HRP 3: High Performance Leadership.

We are now at the halfway point. That leaves us with four more big ideas:

• HRP 4: The Talent Pipeline
• HRP 5: Focus on Top Notch Performance
• HRP 6: Strategic Communications Infrastructure
• HRP 7: Knowledge Sharing as Universal Requirement

Continuous Talent Flow

Half way there is a nice even place to summarize lessons learned so far and take stock.  This is especially relevant as we next proceed to chapter four about the Talent Pipeline. I alluded to this concept in HRP 1 by illustrating, first and foremost, that the recruiting gig is a numbers game of sorts– not an art, and hardly a science. Instead, it’s fortuitous.  Yep, when you are fortunate enough to land a great worker, it usually isn’t because of your recruiting wizardry. Instead, more often than not you discovered a good employee because you were lucky.  Good for you. This sunny side hire-up happens approximately 20% of the time.

On the down-flip, one in five conversely is not what you wanted.  No, not at all.  That is, you would not rehire about 20% of the people who you just employed.  But no need to lament your lack of people-placement-pedigree when you miss the mark. This unkind fate also occurs pretty much because you were unlucky, not because you are a dumb-dumb recruiter. What relief, huh?! Although approximate to be sure, the 20% good / 20% not-so-good theory is real world enough to those of us in the hiring world to be dubbed a doctrine of sorts—The One in Five Doctrine, I call it.  Pretty catchy, I know.

What matters here is the all important idea that you have a great opportunity and realistic shot at hiring successfully every time you have a job open.  The vacancy itself is the key that opens the good door to the Great Room. The trick is to keep the door open by perpetually having jobs to fill—each one representing a 20% or so chance of bringing in high-performance people.  It all  boils down to having a continuous flow of talent—a pipeline if you will— into your organization at all times, regardless of economic indicators, hiring budgets, current headcount and all the rest of the excuses.  By so doing you obviously increase your chances to bring in someone really good, maybe even super-lucky great. Wouldn’t that be nice? Yes indeed.

Taking Stock

The One in Five Doctrine thus presented a jumping off point to get a grip on just how lucky you need to be to move your company from good to great.  Put another way, how unlucky has the company been in the past  regarding your recruitment misfortune to attract and retain the wrong people. Loyal readers learned in HRP 2 to take a talent inventory of their entire team by force ranking each worker from best performer to worst.

Once prioritized you slotted each staffer  in categories and assigned a nifty color code to make the package pretty: Red means you are a High Potential; Blue means you have very good prospects for career Growth Potential; Green means you are an okay  performer in a key role–a Strategic Retain that is; and Orange means you are among the largest group of satisfactory performers who show up, Meets Requirements but otherwise don’t light the world on fire.  We tide things up in a pretty Yellow bow for anyone who we couldn’t yet judge cause they are  Too New to Tell; Finally, at the bottom of the box was an ugly Purple tone that denotes a person-to-job mismatch–Over and Out they go within defined time frames.   A rainbow matrix was offered that described all this and you can see it here now in Colorized PDF for your reference

Back to Our Story

Let’s now go back to where we left off in HRP 3 when discussing high performance leadership.  In that post we illustrated with story a certain Vice President of Client Services who embarked on a new journey in his own leadership development through Human Resource Planning (HRP).  An action plan lay before his VP-feet whereby the following occurred, leaving the star of our show a bit twisted:

1. VP Client Services submitted his staff’s first-time talent assessment to the President- all looks rosy in the VP’s eyes- no position is open and no one is scheduled to be fired.
2. President calls a meeting for  the VP  to explain and defend his staff inventory
3. President allows for exceptional treatment of the VP’s few top performers
4. President offers not budgeted additional headcount to replace the VP’s lowest ranking employees; but only if that’s what the VP ultimately chooses to do.
5. HR is directed to support, not hinder any of  the VP’s future termination decisions
6. President asks the VP  to reconsider his initial staff talent assessment, including whether-or-not he should let anyone go now or in the near future.
7. Actions taken to reward top ranked workers and remove lowest ranking
8. Process is drilled down one more level with VPs now driving it

These collective steps are the HRP implementation process in a nutshell. And step four—proactive hires to ultimately replace the status quo and step 5—aggressively supporting termination decisions;—are all about the Talent Pipeline. In stark contrast to traditional HR thinking, measured high turnover in most organizations can be a very good thing. In fact, it is critical to engage higher-than-normal, faster-than-average turnover to move your company from good to great. Who would have thought?

Switch HR, that’s who!  That’s where we are going next.

Onward now to HRP 4: The Pipeline. Keep coming back!

Facebook and recruiting

Almost everyone we know here at Switch HR has a Facebook page.  Hell, says my colleague, even my 86 year old Grandpa has one. And since recruiting is, you know, about people,  using Facebook for recruiting would seem an obvious application. Yet there are still the skeptics. Just a fad not worth your company’s time to invest in? Here are some stats on it that may make you think otherwise:

• More than 400 million active users
• 50% of our active users log on to Facebook in any given day
• More than 35 million users update their status each day
• More than 60 million status updates posted each day
• More than 3 billion photos uploaded to the site each month
• More than 5 billion pieces of content (web links, news stories, blog posts, notes, photo albums, etc.) shared each week
• More than 3.5 million events created each month
• More than 3 million active Pages on Facebook
• More than 1.5 million local businesses have active Pages on Facebook
• More than 20 million people become fans of Pages each day
• Pages have created more than 5.3 billion fans

Go where the people are

Given all of these mind blowing numbers there still seems to be some reluctance to use Facebook. Why?  In true conventional HR-fashion, the first corporate reaction to the Facebook craze  was to try to stop it and regulate it, at least in the workplace.  Okay, I don’t want my employees engaging in mindless, non-business conversation with friends and family  all day whether  on the phone, at the water cooler or on Facebook.  On the job absenteeism is a no no , regardless of the media used.  But that’s not the point.

HR would serve the company cause far better by focusing less on getting employees off Facebook and more on getting the company on it!  Regardless of what the HR-police think, if this is where your potential new talent spends their time online, isn’t this the one site you need to be on? Stop thinking with that old school HR mindset and start thinking more like an advertiser – GO WHERE THE PEOPLE ARE! Facebook can be used by the company to create  a Talent Pool and develop it as part of a longer term Recruitment Strategy.

It is about forming relationships.

Simply put, Facebook is a great way to engage with existing staff and also lets people find out about your company and culture. It is never what you say, it is what you do that counts in forming a company culture. Showing possible job candidates what a great place you have to work at is a lot easier if you engage with them and they can see it first hand. It is almost impossible to convey this on a static closed off web site by stating we are an “honest company and a fun place to work”. Simply stating these things is not the same as being these things. By being on Facebook you are showing your values.

What it ultimately comes down to is business is about relationships, it is about people. Social media is a tool that can help with those connections – why would you not want to connect with talent, with your staff? Social media has taken hold because the communications is genuine and in a world where everyone’s website says they are great people want authenticity.

Where do you go from here? Well we have included a few of our favorite tutorials to help you get started. So quit wasting time telling everyone what a dynamic workplace you have and show them:

How to Create a Facebook Group You Can be Proud Of
How to Make a Facebook Fan Page
40 Great Examples of Facebook Fan Page Designs

SHAMELESS PLUG – While you are on Facebook be sure to become a fan of Switch HR.

The Dark Side

There is, no doubt, a dark side to practicing human resource management.  So in the name of full disclosure, this post shines light on the unkind things that traditional HR types actually do to affront the precious workforce whom we boast to love.  Not so incidentally, this betrayal of word and deed is the reason why so many  people hate our HR-guts.

Despite the obvious good, the profession at large has perpetually suffered from a huge credibility gap between what HR says and what HR does. Many boast to be employee advocate, job enrichment expert and workplace champion of fairness, professional development and personal growth. Yet consider the true role that human resource professionals usually play in most organizations.   Here goes:

Getting Most from People for Least

HR is generally charged with getting the most sweat-equity from people for the least possible amount of money.  I’m not talking about improved worker productivity either.  True productivity gains almost always make the human effort less strenuous, not more.  That’s good stuff and HR usually has nothing to do with it.  Instead, HR’s traditional focus on people is in the take-away category:

• Keeping salary and raises at the lowest possible rate that the market can bear. It’s a discipline in itself called “Compensation” and it’s most effective weapon are “salary market studies” also known as collusion.
• Cutting back on medical and dental benefits, limiting employee services and putting conditions on perks. HR calls it “optimizing.”
• Forcing return from injury and maternity leave as soon as possible . “Family friendly” is the HR buzz word there.
• Budgeting back overtime and reducing hours. That’s called “group time management” or “efficiency management” in HR jargon. Everyone else calls it what it is: expecting people to work faster and harder with fewer breaks; pushing for the same or greater ouput in less time;  and paying people less money.
• Replacing commission formulas on great sales people just as they really start raking in the money under the old scheme. HR types call this takeaway “variable pay analysis and redesign.” The best sales people call it getting screwed and time to look for another job.

Firing People

We have all kinds of words for this one. The most understandable are “employment termination” and “getting rid of people” although these phrases are technically more akin to murder, not ending employment.  The words “layoffs” and “downsizing” are used most by business types while HR debates and revises the definition of these to suit their policy manual. In any case, it is HR’s traditional role to play grim reaper and hatchet person. And while I have heard stories where people report being happy to be fired, most describe it as a not-so-great experience.

The most insulting anti-people word used to explain this effort is “Rightsizing.”  So next time you get canned, don’t worry; HR says you have merely been “rightsized.”  Or is it the company that has been rightsized?  And why does a job termination have to sound right anyway? Either way it doesn’t feel right to the unemployed.  People who lose their jobs naturally feel screwed and we shouldn’t use a stupid word to describe it.

Punishing People at Work

Guess who is in charge of this well established company function?  Yep, good old HR!  Punishing people at work has been institutionalized by the human resources  profession.   This workplace legacy is, in my view, the biggest black eye to our vocation. I will blog on it more in future posts.  For now, suffice it to say that traditional HR misdirects roughly 80% of its people management programs targeted at five  percent of employees who do the wrong things.  This shameful folly–which is nothing more than spinning formal and legal methods to punish people at work–is known in HR speak as “progressive discipline.”

There is nothing progressive about it.  It typically restricts people with a lot of childish rules. “HR Guidelines” is the name.  The HR Police attempt to enforce administrative compliance to the kiddy rules with bureaucratic forms, legalese procedures  and disingenuous performance appraisal write-ups. This is called “helping people succeed” in HR school, but I’m not sure why.  Inherent in all this, off course, is documenting people out the door and calling it “coaching”. The most shameful subset, of which, is writing carefully crafted memos to the personnel file to protect the company and indict employees and then having  audacity to call the CYA-language “objective.”

A spin-off to progressive discipline is a less blatant, but even more damaging offense to mankind, whereby HR insists to treat greats and duds the same in the name of consistency. Thus creeps in terrible habits such as keeping all employee raises within one or two percentage points, regardless of far and wide variations in people’s actual job performance. Pay equity you know.   Of course, there is nothing fair and square about it if you are a top best job performer.  In fact, it’s punishing. See my recent post on pay-for-performance to learn more.

Advocate Not

So, in summary  that’s quite a list:

• Getting the most from people for the least and taking good things away
• Firing people and calling it by every other name
• Leading the long held tradition for punishing people at work

All the while claiming to be employee advocate!

It is no wonder why so many people hate HR.  But happily, any company can make the Switch to a far better way. In other posts I share our Human Resource Planning methodology that details how to build talent, share knowledge and drive out mediocrity with transparency and integrity.  Switching HR also requires a serious and true Golden Rule initiative that  demands positive treatment, service excellence and safe care of co-workers as a universal job requirement. That’s a future post too.  In the meantime, be careful out there my HR-friends.  You may have more enemies than you think!

No Merit

“Merit” is supposed to imply a reward for something good accomplished.  But that’s not what most companies do when it comes to annual raises.  Instead, in actual practice, these little bump-ups are nothing more than inflated cost of living increases that create a sense of entitlement. Mary Jane’s  annual pay  increase is less than last year.  She still gets a raise mind you, for doing the same work, but she is fuming nevertheless.  She actually feels punished as she takes the money. 

Okay then, let’s give her a little more this year — then she should be thrilled.  Not quite. Mary Jane may experience a fleeting moment of true gratitude upon learning about her above-average raise. This nice sensation will last about an hour.  But then she quickly retreats back to long-learned entitlement– Damn right I deserved it, she exclaims.  It’s about time. And because she was given a little more this time; she is certain to expect yet even more next time. That’s how humans are–all of us.

And allocating this entitlement by splitting hairs has no merit whatsoever. HR practitioners have been stymied for decades on how to effectively  ration  limited  pay-raise budgets to the workforce. HR also gets  frustrated with managers’ notorious ineptness at offering constructive feedback to employees while explaining how and why raise amounts are determined. No matter how well trained or practiced most supervisors just can’t seem to deliver the merit message with credibility or confidence.  Why is that?

Because differentiating annual performance-based increases at 2% or 3% or 4% is stupid, that’s why. And training managers to honestly and rationally explain something stupid as if it were not–is impossible. Nor can  HR Specialists make inherently dumb ideas smart with feedback charts, appraisal checklists and compensation policies.  It simply can’t be done.

The Merit System

Decide for yourself if I exaggerate.  Let’s start with the process. The company allocates a “pool” for payroll increases to all—usually adding 2.5% to 4.5% annually to total base payroll. That can be a lot of money for an employer of even modest size, especially compounded year after year. But to the average wage earner who gets his 3% cut—it is, well, unremarkable. That’s why when raises are announced there is an immediate spike down in employee morale. The vast majority of workers are unhappy or indifferent about their dinky raise.

You think they would be grateful!  Of course, it doesn’t work that way. Three negative human inclinations are at play instead:

1. Entitlement as so described. I deserve at least 3% because I worked another year in America.
   
2. Disappointment.  I was hoping for more after doing so well.
3. Resenting Differences. I get only 1% more for picking up the other guy’s &@*%#! slack all year?!

Entitlement, Disappointment and Resenting Differences—traditional pay and reward systems actually create and fuel these negative dynamics and firmly root them in your work culture. That’s well, not good. Why do companies spend money on this?!

Fuel the Flames

Then these hard feelings are exasperated by classic management mistakes. The most common faux pas is igniting false expectations by inferring that a good raise is eminent. I’m optimistic that the company will reward your hard work, says the well-meaning supervisor. Then, when it doesn’t happen, the employee is crestfallen and the manager wonders why.

Sometimes managers actually state a dollar amount usually months before the raise is due and with a disclaimer: I can’t promise anything, but I hope to give you 5% or more if you keep up the good work. —That’s a huge mistake. The employee remembers such conversations precisely, except for the disclaimer which he didn’t hear at all.  When the raise doesn’t materialize on the due date, he feels duped, even betrayed.

Another common blunder is for the direct supervisor to wash his hands of any responsibility for the final raise amount.  I put you in for 5%, but the VP reduced it to 3%. She said 5% wasn’t in the budget.  This misstep happens far more often than understood and results in zero respect for the supervisor who is apparently powerless; plus mistrust and resentment for the top brass who are making money decisions about staffers with whom they rarely interact. They have no clue what I do yet decide my raise. What BS!

Yes it is. Especially when the direct supervisor is the one responsible for appraising job performance.  How can a company claim that salary increases are linked to job performance if the decision about the reward is separate from the decision about job performance? Employees make those connections (or disconnections) very astutely and it drives them crazy.  Even more frustrating is the out-right corporate lie about the limited increase budget.  Everyone knows that the company can choose to give any one individual a big bump in salary at any time. Such exceptions are common.  Supervisors who try to placate the disappointed worker by hiding  behind a budget  are wimpy and dishonest.  Employees hate that.

Misguided Equity

Dynamic # 3–Resenting Differences–applies to your top 20% of highest performing employees.  HR-types fuel this top-notch resentment in the name of “equity” by designing roadblocks and rules to keep the best performers’ salaries in line with the rest. That’s the function of pay grade structures; the increase matrix, and salary market studies that so consume HR bureaucrats.  In the end, it just makes things worse and arguably costs more money doled out to lesser performers at the expense of your best performers.

So why would HR do that? Because inequity is an affront to the heart and soul. Here’s how this peculiar human dynamic plays out:  John Smith inherits $2 million dollars unexpectedly from a distant relative and is set for life. His brother Charlie received $2.5 million from the same inheritance.  Yes, John may be overjoyed about his good fortune. Who wouldn’t? But it will torture John for life that his brother Charlie got more.  John will resent the inexplicable inequity until the day he dies. And you can be pretty sure John’s last will and testament  ain’t going leave a dime to that &%$# silver-spooned, unworthy brother Charlie.  That’s just how people are–all people. Even in the best of circumstances inequity breeds resentment. HR people know this, so they proceed with caution.

But here’s the workplace rub:  Monetary inequity is HR’s primary concern; but task inequity and performance inequity are just as real and just as hurtful to the human condition. Your best and brightest get resentful real quick when their output is 30% above the rest, but their raise is only 1% higher. Regulating monetary inequity favors mediocrity; promoting monetary inequity favors high performance.  Rewarding performance inequity proportionately to achievement and results is the way to go. It’s easy: Significantly higher performance should fetch significantly greater reward.  That’s as fair and square as you can get.

To pull it off, you have to allocate the money correctly and decisively, not in ½ percent increments linked to a bogus performance score.  When rewards are allocated in 2%-3%-4% fashion it’s a huge squandering of company funds which go into a performance management black hole every time you do it. I remain amazed that most established employers have been throwing away dollars like this for decades. It’s an astounding cash waste– budgeted, institutionalized and regularly scheduled year after year.

So that’s the business case: Encouraging entitlement + causing high-performance resentment + equity that drives mediocrity  + poorly allocated money with no return  = stupid.

A Better Way a Decision Away

You bet there is a better way to do it. I’ll list the solutions here and expand on them in detail in the next post. Here’s how you turn on the light and Switch HR when it comes to pay-for-performance:

• Drop your cumbersome performance appraisal system. Kill it dead and toss it.
• Certainly do not offer formal developmental feedback in timing or sync with an annual raise.
• Adjust to a common salary change date so everyone is eligible for a raise at the same time.
• However, do NOT set the same month or payroll week each year. Vary it.
• Force rank all employees by best performer to worst performer on a spreadsheet.  Readers learned about the forced ranking in my previous posts on Human Resource Planning.
• Now, lists in hand, highly differentiate merit rewards, giving top performers outstanding raises (8% to 10% ought to do it). Give “Just Okay” (and worse) 0% to fund higher raises for the best. Everyone else gets cost-of-living. I’ll give you a chart to illustrate how in the next post.
• Replace the antiquated appraisal system (the one you threw out) with Switch HR employee development tools, including voluntary self-assessment and simple 360 feedback– none of it linked to a raise.

If you can’t muster and rally the leadership courage required, there is another way that’s arguably even better: Bag the merit increase thing altogether and put your reward dollars in simple, but powerful innovations including spot bonuses, project milestone incentives, cost savings idea rewards, referral bonuses and more. That’s a pretty radical change too and requires a post of it own to explain.

A lot of solutions to be sure and next we tell you how.  Meanwhile, don’t be stupid.  Stay tuned.