I’d like to start this week’s blog with a bit of “Family Guy humor”. Click on the Link: “Family Guy Humor” and smile first before we get down to business!
Although funny, the clip certainly holds true in one way, which in essence is the core message of my blog this week. Human Resources as one of several business processes is probably the last thing that comes to mind for any business leader starting up his/her business or even a medium sized company tinkering with the thought of HR, but haven’t really done much in the way of making it real.
Over the years, I have had the opportunity to work with some outstanding companies…small, medium and large corporations. This week’s blog reaches out specifically to small business emphasizing the need to start thinking about people management strategies and the fact that you can indeed “kill 2 birds with 1 stone” which is going to make life a lot easier at the end of the day for you!
First off…why do we have so many small and medium sized businesses leaving one of the most important business functions to the last minute or when it becomes a crisis? Here are a few I’ve experienced over the last several years:
- “Trying to manage the employees I have, is not at the forefront of my mind when I’m trying to grow my business”. Trust me, this is certainly the case for me…as a passionate HR guy trying to grow his business!
- “Human Resources really becomes a priority for me when I have more than 50 employees”. Don’t ask me why the number “50” is applicable here…
- “Employing full-time HR professionals is too expensive”. True, but hiring full-time staff is not the only way.
- “I don’t need to make unnecessary work for myself…we go with the flow…as long as we make money and satisfy our customers, who needs to add on more complexity!” Suffice to say, the person I was chatting to was not having a good day, but her comments were certainly telling.
The final one I remember has always been burnt to my memory and is probably a motivator for me writing this blog: “HR is way above me…I’m not ready to deal with it at this stage…I’ll get to it when I get to it.”
Whether these comments are applicable to you or not, the point is that Human Resources uses almost the same processes, methodologies and concepts as any other important business process would use. As a business leader, why not consider “killing 2 birds with 1 stone”? If you are investing all your money, time and energy into building your company through business functions like Marketing, Finance, Sales, Inventory, Engineering etc., why not utilize the same processes to build your Human Resource functions in parallel or use this process to initially build and get a head start on people processes so you’re not surprised and scrambling to do so when you have no other choice in the matter?
To illustrate the above, let’s use two common business processes to create some potential scenarios:
Scenario 1: Using Engineering workflow principles and Performance management
- Identify the system constraint
Consider a remanufacturing environment; the product is initially cleaned and disassembled so parts may be refinished and salvaged. Imagine two out of three machining tools (i.e. fixed capital assets) typically supporting 66% of production demand, are slowing down and not producing the quality standard required causing constant rework and subsequent bottlenecks. This leaves the third and final machining tool (which would typically support 33% of production demand) picking up the slack but can’t work fast enough to compensate for delays and rework. Not managing the performance of the two machines and leaving the third machine with the extra capacity/volume is foolhardy to say the least. What would a responsible business manager do in this case? Well it would seem obvious to most…he/she would ensure the machines that are not producing are repaired; used in other areas that are less demanding or discarded due to costing the company more than what they’re worth.
Then why do many business leaders treat the performance management of its “human capital asset” any differently? You may be saying“Bruce…give me a break!”…but trust me, this happens more often than not. The exact same principle applies to managing the performance of your employees. You would most certainly identify the system constraint in relation to machines that are not working and do something about it. The only difference here is that you are dealing with a human being, but the same Engineering principle applies i.e. identifying the system constraint.
- Exploit the constraint
Once understanding the cause of the constraint, attempt to repair the equipment or consider investing additional capital into replacing the equipment. Other options may be to consider using the equipment in another less demanding area that is not critical as it relates to your highest area of production demand, ultimately realizing an improved return on your investment for that particular piece of equipment
The same applies to your employees…identify the sources of the constraint and do something about it. Make the decision to either:
- Correct the employee’s deficiency by working with the employee to improve. This may include training costs…very similar if repairs had to be made to production equipment.
- Consider moving the employee into less “mission critical areas” of your business. Yes…I know…every part of your business is mission critical…maybe not folks…this is not realistic just like not everything can be a number one priority…it just doesn’t exists. Instead of continuously replacing “less than perfect employees”, rather find ways to optimize your operation.
- In the same vein as point 2, know that every employee has their respective strengths and weaknesses. Consider transferring the employee to an alternative area of the operation to exploit a strength/s that the employee possesses so you realize a return on investment
- Should you exhaust all options, replace the employee sooner than later which is going to probably cost you additional capital you may have not planned for.
- Close the gap caused by the constraint – The production flow continues as expected.
Once understanding the cause of the constraint, exploiting what you can exploit, close the gap in order to continue the production process. The same applies to employees. The sooner you close the gap, the sooner things will return to their original state…but only if managed correctly. Like machinery that is not managed correctly, not managing employee performance correctly will lead to a copious amount of damage that in many cases takes years to correct if at all!
This said, when managing employee performance, please remember the following critical points:
- Like any capital asset you have in your business, the human capital asset is a significant investment. Managing its performance and ensuring this performance is sustained (just like any other asset in your business), is critical and the responsible thing to do. Not doing this and realizing unnecessary expenditure to your business is certainly not what responsible business leaders do.
- Your employees are the only growing capital asset you have in your business. As the old industry cliché continues – “our employees are our most important asset” – your employees are exactly that…they are your biggest and most important asset. Not just because you have to say this because it’s the “thing to do” and “many other companies say the same thing”, but also because it makes business sense. Not doing so poses significant risk to your business today and years to come.
Scenario 2: Using Sales and Marketing principles and Recruitment and Selection strategies to fill vacancies
Understanding your market niche first by conducting appropriate market research is probably the first bit of common business sense to come into the equation before a business leader jumps into producing a product for a customer. Assuming the above is done correctly, making sure the market is aware of the product and /or services provided is probably the next step. This takes some good marketing strategies being built and put into action to ensure the market understands the value of what the business has to offer.
To bring this point home, let’s consider McCarthy’s four Ps Marketing mix model: Although a basic model with various advancements over the years, it serves as a good reference and foundation when considering a Talent acquisition strategy.
- Product -A product is seen as an item that satisfies what a consumer demands. It is a tangible good or an intangible service.
- Price – The amount a customer pays for the product. The price is very important as it determines the company’s profit and hence, survival.
- Place – All of the methods of communication that a marketer may use to provide information to different parties about the product. Promotion comprises elements such as: advertising, public relations, sales organization and sales promotion.
- Promotion – Advertising covers any communication that is paid for, from cinema commercials, radio and Internet advertisements through print media and billboards. Public relations is where the communication is not directly paid for and includes press releases, sponsorship deals, exhibitions, conferences, seminars or trade fairs and events. McCarthy’s four Ps Marketing mix model
If we consider drawing a parallel with Talent acquisition strategy the following can be drawn:
- Product – This refers to what the labour market has to offer in terms of skill-set to the business i.e. “employee value proposition”. This also presents what the company has to offer as it relates to its “employer value proposition” i.e. is the company presenting a suitable value proposition to the labour market? In both cases simply having a valuable product or service that the “customer” desires is critical for survival on both sides of the spectrum.
- Price – This would refer to the cost to the business of acquiring a particular “skill-set”. Like any market demand/supply scenario, either the company or the labour market may have the upper hand as it relates to cost of talent. For example, in a skill-set shortage market a company may have to sacrifice something in order to pay and afford the skill-set. Conversely, in a skill-set surplus scenario, the labour market may have to sacrifice based on its perceived skill-set value in the market. Either way, ensuring the business understands the market price, the implication of doing business in the market and managing price strategy when it comes to human capital, is critical for business success.
- Place and Promotion – It’s an eye-opening experience to see how many companies place very little stock into a well thought-out recruitment strategy relative to “Place” and “Promotion”. As in Marketing, this represents all of the methods of communication that the hiring manager uses to provide information to the labour market about the position and company. Again, creating an employee value proposition with this in mind requires solid investment into promoting this product’s value proposition. This may include advertising, how the labour market perceives the company to be and of course ensuring that what the business promotes/advertises is the same as what is realized when an employee starts to work for the company. A final and probably critical point to make here, is to keep focused on the intangibles that must be managed at all times. Managing what and how the market perceives your company to be is critical. Not focusing on how your company is perceived or not perceived as it relates to being the product, employment and investment of choice is outright business suicide!
With all this said, there are many other business functions that can be incredibly helpful to you in ensuring your HR needs don’t catch you by surprise…be it today or tomorrow. Either way, you will eventually be forced to invest in human capital strategies in order for your business to survive and if you’re lucky, grow.
“Killing 2 birds with 1 stone” is the benefit you can realize by literally “copying” what you have already done or will do when building other business processes. This will, without a doubt, naturally support your thinking in building people related strategies for your business to thrive.
Until our next blog…may the business force be with you all!
