Former CEO of General Electric Jack Welch has been quoted many timesstating that the human resource director should be just as important ifnot more important than the chief financial officer of a company. Heoften uses the analogy of a baseball coach putting more value on theteam accountant than the team talent recruiter. Doing so doesn’t makesense. So why does the typical CEO spend a lot more time with the CFOthan with the HR director?
If you really think about it, the financial state of a company is the result of the efforts of their people. People determine the company’s financial state. Based on this understanding, wouldn’t it make sense to spend more time focused on developing your people than analyzing the financial results? Though financial information is necessary, the quality of a company’s people is what will determine its long-term viability.
This is where human resources come in. Having the right team doing the right things in the human resource department can positively affect an entire organization. Proper management of human capital can help an organization take giant strides towards a more profitable and successful future.
Unfortunately during economic downturns, the HR budget is often the first to be cut. To prevent this from occurring, here are seven ways that HR can add more value to an organization and get the recognition and budget it deserves:
1. Improve internal communication – Effective, timely internal communication is critical to any organization. No organization can survive without it. To add further value to a company, the human resources department could play a more active role in improving communication. HR can improve communication flow by utilizing an online system not only to send a consistent and accurate message to everyone at every level of an organization but also to check to ensure that the message has been received. BIStrainer (www.bistrainer.ca) is an example of an excellent online system that can be used to deliver text or video based information to every member of an organization. Systems like this one can revolutionize your internal communication.
2. Foster a learning organization – One of the greatest opportunities for growth for any business is to become a learning organization. According to Fifth Discipline author Peter Senge, learning organizations are, “organizations where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning to see the whole together.” One of the greatest benefits of a learning organization is that it is flexible, adaptive and productive.
To help create a learning organization, company leaders should be encouraged to teach classes or make presentations on topics from their field of expertise to others within the company. Encouraging people to sign up for these classes and presentations is an important part of making these programs work. This type of program is very beneficial as the teachers learn the subject matter on a deeper level through preparation for the class and their experience and expertise is seamlessly transferred to others within your organization. These types of programs can be developed across the organization with very little cost to the company.
3. Implement innovative retention solutions – One of the most innovative strategies that I have encountered for improving employee retention is very simple and can cost the company as little as 35 cents per hour. Imagine the effect on your organization if you announced that starting tomorrow every employee with good performance will earn an annual free flight that can be redeemed anytime for anyone for travel anywhere within the country. Some reasonable conditions would apply of course but imagine the impact this would have. Your employees could fly a relative in for the holidays each year or accumulate fights for a family holiday. One might think that this would cost the company a fortune, but in reality it’s very affordable.
Based on average flight prices and volume travel discounts it would cost a company approximately $700 per person. When this amount is divided by 2,000 hours per year the cost would be just 35 cents per hour. Offering an employee 35 more cents per hour won’t have them jumping out of bed but offering them a free flight each year can really motivate them even though it’s the same cost to the company.
The great thing about a program like this is you can choose any incentive in this price range that would have broad appeal to members of your organization. It could be a golf club or fitness membership. The key is determining a reward that is appealing to the people within your organization. By offering perks that have mass appeal you can increase retention and attract the people your company wants.
4. Make training desirable – Some of the most successful companies in the world offer training retreats in desirable travel destinations as rewards for top performing department heads, sales teams, or operational managers. The awarding of these trips is dependent on the achievement of specific organizational profit goals. When these goals are achieved the top performers attend a three to seven day training retreat in a tropical destination. Half the time is for training while the other half is for enjoying the location. Everyone benefits: the company, the employees, and the HR department.
These types of training incentive programs help the human resources department obtain a much bigger budget. Any reasonable CEO would sign off on a $150,000 training travel budget if the company makes $2.8 million dollars in additional profit as a direct result of the HR department’s incentive program. These programs are easy to develop and can inspire amazing performance when executed properly. Over time these events can inspire great performance by all as they vie for a spot in the training travel excursion.
5. Implement a mentorship program – Develop a company wide mentorship program that matches up senior executives with junior managers who demonstrate leadership potential. Most of the effort involved in running mentorship programs is required at the outset to ensure that it is properly designed. A list of objectives and actions for both the mentor and the protégé must be established. Once established these programs are incredibly valuable and cost little to maintain yet their effect on the organization can be profound.
6. Let unsuitable people go – Letting unsuitable people go is probably one of the most difficult yet necessary actions for any organization to take. Often times you’ll hear someone list many reasons why you cannot let someone go or why it’s bad for a company to do so, but in terms of the health of a company it’s always better to remove employees that have a negative impact on the people around them then it is to keep them in the organization.
In my research I constantly hear of companies that have employees who are underperforming or have a negative attitude. We all know these types of employees. They seem to carry a grey raincloud over their head. Sometimes companies allow these employees to stay with them for years. Instead of removing them from the company, they move them to a new position. This process can go on for years. When these individuals are finally let go, it seems as if the sun has come out and life is better for everyone. We have found that often times the colleagues asks, “Why did that take so long?” It’s always better to remove negative employees then it is to allow them to adversely impact others.
When a friend of mine was promoted to a management position she was given the gift of a negative team member with a personal file a mile high. No one before her had the strength to let this person go, instead allowing them to become more and more bitter and negative as the years went on. Unfortunately, bureaucratic company policies and the fear of negative press have kept this employee in the company for years where they continued to cause discomfort to everyone around them.
7. Optimize the organization – Optimizing the organization involves listing all the things that each department does on a regular basis and working with them to identify what activities should be dropped. As Michael Dell once said, “It’s deciding what not to do that’s important.” In most organizations about 20 per cent of people’s activities can be completely eliminated. This simple act will allow for a substantial increase in productivity. In addition to identifying what not to do, it’s important to determine what should be done. This helps ensure that everyone is focused on valuable tasks that advance the organization.
The cost for optimizing the organization can be very little. Even if consultants are brought in to assist you, your company can likely save 10 to 20 times more than it will pay in consultant fees.
These seven strategies can profoundly affect the health and performance of any organization if implemented properly. By using these valuable strategies, the human resource department can effectively get the stature and respect it rightfully deserves.
Daniel R. MacDonald is the president of Business Improvement Solutions, a performance management training and development company with locations in both western and eastern Canada. For more information, visit www.bisconsulting.ca. To learn more strategies for improving your organization read “Management” by Dan MacDonald available at www.chapters.ca.