The Value Equation

Core Components of Strategic HR

Executives Are Using Outsourcing to Improve Their Workforce  Performance and Effectiveness through all of the following Strategic HR programs and initiatives: 

1. Building and Maintaining Leaders >>“In the end, all business operations can be reduced to three words: people, product and profits. Unless you’ve got a good team, you can’t do much with the other two.” – Jack Welch. 
   
2. Enabling Profitability Drivers >> “Creating operating scale in the business to drive growth is the #1 driver of wealth.” –Garry Meier 
   
3. Building a ‘Perform’ Culture >> “In 2009 and beyond, wealth will be created for ‘perform businesses’ that are the most productive and cost efficient, promote and excel at change management, and focus on being REALLY good at a few things i.e. customer satisfaction.” - Garry Meier
   
4. Facilitating “Integrated Talent Management” >> “50 percent of companies are now implementing some form of “Talent Management; and the value-add is 26 percent higher revenue-per-employee than companies with no integrated processes.” –Bersin research analyst group.
   
5. Team Building >> “The team with the best players wins. Giving people self-confidence is by far the most important thing that I can do. Because then they will act.” – Jack Welch
   
6. Strategic Workforce Management (Planning, measuring, benchmarking) >> “If you pick the right people and give them the opportunity to spread their wings and put compensation as a carrier behind it you almost don't have to manage them.” – Jack Welch.

The Value of Strategic HR

‘Ineffective people = ineffective businesses’; it is that simple, and that complex because every business depends on its’ people to effectively perform as a team to achieve its organizational goals and objectives.

Unfortunately, “Traditional HR” (which has historically been administratively focused) provides little value to financial goals and does not manage the people issues that keep executives up at night.  

The move to adopt human capital best practices, also commonly referred to as ‘Strategic HR Capabilities” or implement a “High Performance Workforce” has been occurring at the Fortune 500 level since the mid 90’s. 

The recent financial hardships, changes in laws and regulations, and a fundamental shift in small business economics has mandated that top performing companies invest in their workforce like never before. 

With the growing demands and challenges placed on small business executives, those that adopt best practices, utilize effective external help/support and business partners, and rethink their current approach to HR have a chance to preserve and create wealth. 

Numerous studies by “Great Places to Work Institute”, consulting firms like McKinsey and Towers Wyatt, and business thought-leaders like Jack Welch and Warren Buffet all agree: the investment and alignment of a company’s workforce directly impacts profitability and financial success. 

Need further proof of the value of Strategic HR?  Here is the Business Case for Strategic HR:

1. Time Savings and Focus for Executives: Within small businesses, organizational leaders are themselves often responsible for HR (i.e. the workforce’s engagement, productivity, and development), an area where they typically have limited training and experience.

2. Workforce Scale:

• Highly engaged employees are on average 26% more productive, have lower turnover, and greater shareholder return (see findings in Watson Wyatt’s 2008/2009 WorkUSA Report). 
• Talent Management Practices power engaged companies to achieve higher profit per employee by nearly 40% (McKinsey).
• “Imagine if your employees enjoyed coming to work. Great Places to Work have outperformed the market 2:1”  (Great Place to Work Institute)
• “Nearly 40 percent had no formal measures to gauge the impact of their HR and training efforts on the performance of their top three workforces, and nearly another 40 percent said they have only limited measures.” Accenture ‘High Performance Workforce Summary’ 2006.
• “HR equals constant upgrading.  100% transparency into performance. Take care of the best and move up the averages, much like a GM/ player personnel director in sports. The only way to win is to have a great team.” “Enormous chance [for businesses] to change and reset, but takes a culture of innovation. The one thing you have to do in a time like this is communicate like hell… so your people know every move that is going on. You don’t go in and just slash positions and they don’t know why. HR defines a company in bad times.” Jack Welch @ 2009 SHRM Conference New Orleans, LA.

3. Risk Mitigation: 1 in 4 privately held companies has been sued by an employee The average litigation and settlement costs are nearly $190.000. (Chub Insurance).

4. Cost Efficiencies: The average company saves 20% to 60% per year (HRO Association).

Did you know than only a third of companies tailor their people policies and development to align with their workforces needs?

The primary objective of Strategic HR is to align the Workforce Capabilities to the Business Objectives of the organization. This includes: creating a strong pipeline of leaders that will drive business growth, installing workplace programs that ensure engaged, motivated, and productive and employees as well as implementing scale and risk operating measures.

Garry Meier Unveils Small Business Playbook for the New Economy

At an event earlier this week at the UT Club in Austin, TX Garry Meier presented “Small Business Playbook for the New Economy” to business advisors and small business executives.

Garry’s presentation highlighted the current affect of the Stimulus Bill on small business (Garry participated in the US Senate Small Business Advisory Panel back in Feb 2009 when the Stimulus Bill was being created), and forecasted the state of the union for small business. 

Garry also shared his “required actions” that executives must take to protect and create wealth in the new economy.

Memorable Quotes:

“In 2009 and beyond, wealth will be created for ‘perform businesses’ that are the most productive, cost efficient, promote and excel at change management, and focus on being REALLY good at a few things.”

“Prosperity and economic growth has no doubt been suspended for the near future. Small businesses that are and will prosper illustrate unique business models that add significant value to the consumer... change is upon us and those that embrace it and make it an asset will enjoy opportunistic times”

Download the full presentation: Small Business Playbook for the New Economy.

Hiring ‘A’ Players: Take Action Now to Upgrade Your Team

In your town right at this exact moment in time, a comment is being made by a business owner saying: “We are not hiring right now.”   

My reply, “But you should be because ‘A’ Players are readily available.” 

The actions and messages companies send their employees in this economy of uncertainty, restructurings, pay freezes and salary reductions dictates how top performers in your organization perceive your company. 

It may be true that employees cannot easily change jobs today in this economic environment, but how your workforce is treated means whether they are fully engaged (engaged employees are on average 25% more productive according to numerous research studies) or whether your employees will jump ship at the first opportunity 6 or 9 months down the road. 

Now is THE opportune time to hire ‘A’ players.   Many firms are distressed and have not done any of the following to retain their top performers:

• Adequately communicated with employees;
• Implemented motivation, employee engagement, and retention programs;
• Changed rewards and incentives to reflect this new economy.

The economy of 2009 and 2010 will be led by the organizations that innovate, adapt to a “Perform” economy, and embrace change.  A Players are needed. 

The following is a brief description of the ‘A Player’ concept according to Brad Smart, author of TopGrading: 

The cornerstone of Brad Smart's TopGrading recruiting and evaluation system is ranking candidates and employees through letter grades. "A" and "B" players are assets; "C" players will kill off your company. "A Players” are the top 10% of talent available in the marketplace. Defining an "A" player sounds simple, but it is not. The person's skills, motivations, and personality traits  will vary depending on the job description. (Your "C" player in one job could be your "A" player in another.) While all must have rock-solid integrity and a sterling job-performance track record, not all will have to be team leaders or long-term visionaries, though that surely helps. They all must be quick studies.

Technorati Tags: A player,a players,recruiting,workforce planning,hiring,retention,perform economy,topgrading

Why You Need Strategic Workforce Planning

Whether your organization is hiring this year or not, knowing the current skill and capability gaps of your workforce as well as the market availability of talent (and the cost-to-acquire!) is critical for any executive to make informed management decisions.

When to Utilize Strategic Workforce Planning?
Do any of these scenarios apply to you?

1. Your organization lacks sufficient number of Leaders and/or ‘A’ Players;
2. Even with rising unemployment, or perhaps because of it, it has become even more difficult to find quality talent as job boards are plagued with bottom feeders;
3. Currently in the process of evaluating whether to promote employees, supervisors, or leaders; or
4. Currently evaluating a new product line or business venture.
   

Strategic workforce planning ensures employers have the right people in the right place at the right time and at the right price.

At its core, strategic workforce planning consists of three steps: 

1. Projecting future demand;
2. Assessing your internal supply (breadth and depth of people skills and capabilities), and lastly;
3. Developing your strategy to fill the gaps.

Benefits of Strategic Workforce Planning include:

1. Understand labor/employment and hiring patterns and trends
2. Position your firm to gain a people competitive advantage during a slower economy
3. Assess your people skill and capability deficiency against your financial objectives
4. Forecast hiring dates, costs, and resources
5. Make informed business decisions such as whether it is more cost effective to hire part-time contractors, outsource an activity, or add full-time salaried employees
6. Assess human-capital needs and risks against the opportunity landscape/ROI
7. Hire more than your share of ‘A’ Players
8. Improve career development and “promote-from-within” policies
9. Reduce long-term hiring and retention costs

Want more resources on Strategic Workforce Planning?  Try these thought-leaders:

• Aruspex > Helping Companies Plan and Build Their Best Future Workforce 
• Strategic Workforce Planning Blog
• InfoHRM > Global leader in workforce planning, analytics, and reporting
• Vemo > Strategic Workforce Planning
• Achilles Group > Strategic Workforce Planning for small business
• An Outline of a Strategic Workforce Plan
• TEDS > Talent Management Solution
• Solutions Advisor: Bersin
  

Technorati Tags: strategic workforce planning,workforce best practices,management best practices

 

2009 Small and Medium Best Places to Work Award Winners

Each year, the Great Place to Work^® Institute produces Best Companies to Work for lists in the United States including FORTUNE 100 Best Companies to Work For^® in America.

What Makes a Great Place to Work^®?

At the heart of the institute’s definition of a great place to work is a place where employees "trust the people they work for, have pride in what they do, and enjoy the people they work with." A great workplace is measured by the quality of the three, interconnected relationships that exist within any organization:

1. The relationship between employees and management.
2. The relationship between employees and their jobs/company.
3. The relationship between employees and other employees.

Enhancing the workplace delivers results including:

• Receive more qualified job applications (get more than your fair share of ‘A’ Players).
• Experience a lower level of turnover.
• Experience reductions in health care costs.
• Enjoy higher levels of customer satisfaction and customer loyalty.
• Foster greater innovation, creativity and risk taking.
• Benefit from higher productivity and profitability.

Best Companies Outperform Their Peers

When you invest in your people, you invest in your organization's success. A comprehensive review by the Department of Labor of more than 100 studies that examined the link between progressive people practices and improved bottom line results concluded that:

• There is a positive relationship between training, motivating, and empowering employees and improvements in productivity, employee satisfaction and financial performance.
• When developing and implementing a people strategy with progressive people practices, a combination of practices is more effective than a single practice
• The impact of progressive people practices is greater over the long term (3 plus years), indicating that practices need to be integrated into the work environment to provide benefits

· Fortune "100 Best" versus Stock Market 1998-2008

Any company can be a Great Place to Work^®!  For more information on Best Places to Work checkout:

• 2009 Top 25 Small Business Award Winners
  
• Best Places to Work Articles and Case Studies
  
• Best Small & Medium Companies to Work for in America Nomination and Application Process

Technorati Tags: Human Capital Best Practices,Strategic HR,Effective human resources management,great place to work,award,best place to work,best places to work

Top Operating Partner Pitfalls to Avoid

The Business Case for Operating Partner support is clear:

Today’s market and economic environment requires proven and experienced management expertise and a methodology that increases the probability of consistent success.  Wealth Creation occurs with Timely Strategic and Operational Execution coupled with consistent improvement.

Common Pitfalls Working with an Operating Partner:

1. Hiring single focused functional consultants as opposed to holistic advisors;
2. Divorcing the executive team from operational value enhancement;
3. Failure to respond to changing market dynamics including lack of commitment of resources to drive and manage change;
4. Confusing oversight and poor governance practices with effective management; and
5. Focusing on short-term targets.

Technorati Tags: Operating Partner,management best practices,wealth creation checklist,strategic effectiveness

Maximizing Value Checklist: Sizing Your Potential for Wealth Creation

New businesses are created for a variety of reasons (more than 600,000 each year according to the SBA!), but less than 1% reach $10M in annual revenues in less than ten years.  This is often because most companies have multiple daily challenges that mask the root barriers to value-creation and growth. 

The checklist questionnaire below is based on a learned set of “attributes” that all high-performance, fast-growth technology-enabled business services possess. 

Each question below is worth 5 points.  If you can answer YES to the question, add five (5) points. (Maximum score is 100 points.)

Positioning Issues Checklist

1. Have you verified that the target market is of sufficient size? (This includes creating a database of contacts)
2. Are you in a red ocean (blood cutting intensely competitive market) or blue ocean (open sea of opportunity)? (If in blue ocean marketplace then sail on and add 5 points)
3. Are you the dominant player in your market or niche currently?
4. Is the business model of such nature that it has the potential to be a “branded” model in the sector?
5. Have strategic alternatives and alternative distribution (alliances, joint ventures, partners, channels) been identified and created?

Management Discipline Checklist

1. Is operational performance in the top quartile?  (Benchmarking performance is key to justifying above average market valuation)
2. Does your organization administer and achieve corporate targets and rely on forecasting?
3. Are the business processes scalable and can they stand the test of exponential growth?
4. Does your organization provide a dashboard of eight to twelve metrics for top management and the Board of Directors?
5. Do you have the functional support (in-house or outsourced relationships) that is needed at each position?
6. Are there current incentive programs aligning all stakeholders?
7. Have leadership and training programs been implemented?

Tactical & Operational Checklist

1. Do you know the effect customer satisfaction leads to referrals and cross sell opportunities?
2. Does each team member from the executive team to front-line staff have a clear “definition of success”?
3. Does the business have monthly, quarterly and annual corporate targets broken down to daily activity metrics for each location, department, and team member?
4. Do you regularly identify classes of performers?
5. Are IT/MIS and HR (Human Resources) both contributing to the strategy and financial performance of the business?

Financial Engine Checklist

1. Is your capital structure adequate to ensure growth?
2. Does the capital structure motivate management and facilitate additional funding needs?
3. Does the capital structure support the long-term strategy of the company? (Versus settling for “good for now”)

Total Score: _________________

Evaluating Your Score: Checklist for Assessing Potential for Wealth Creation

Anything below an ‘A’ highlights the room for improvement.

Score: 40 – 71 Percent: Opportunity For Rapid Improvement

Your organization is clearly not living up to its potential and the opportunity for improvement is sizable.  The fix starts with tackling your root-cause deficiencies while enabling your key executives and employees to focus on improving daily performance.

A full assessment and analysis should be completed immediately by an outside firm. By first analyzing the business holistically including strategy, operations, and financial, and unbiased from what the opinions of management, board members, or other stakeholder’s believe ensures that the right issues are identified and resolved.

Often, strategic issues are affecting the effectiveness of the organization and execution flaws are impeding strategy.  Since one is caused by the other, the issues cannot be resolved without first identifying the underlying root cause issues.  Improving performance starts with solving the real issues, not the perceived!

Score: 71 – 89 Percent: Rising All-Star

Your organization is well on its way to creating exponential wealth and shareholder value. While many processes and systems are in place there appears to be some areas that need attention and improvement.

Many times organizations pinpoint a singular barrier, but ninety percent of the time the solution needs a combination of strategic guidance, operational improvement, management augmentation, or capital in order to solve the root underlying issues. Shore up your deficient areas and your organization will be well on its way.

Score: 90 Percent Plus: Superior Performing Organization

Your organization is in an elite group! Congratulations on building such a refined and robust organization. Superior processes and systems are in place and generating above average returns.

The next step is for the entire executive team and all Board of Directors to complete this checklist to determine if there is agreement and alignment.

 

Where to start? Management augmentation is standard procedure for generating operating improvement, but first start with a business assessment and analysis to determine the underlying issues before throwing away resources on a singular functional challenge.

1. Assess people capabilities against performance goals;
2. Assess internal capabilities: process, system (software, technology, and tools);
3. Assess external opportunities and threats;
4. Create detailed change management action plan towards constituency alignment;
5. Collaboratively create roadmap of action items with RRM (Roles, Responsibilities, and Measurements). 

 

Technorati Tags: wealth creation checklist,management checklist,shareholder checklist,growth capital checklist,analysis and assessment checklist

Creating Scale: Playbooks Drive Employee Accountability and Improve Daily Performance

Playbooks are informative instruction manuals for employees that create scale in a business by improving new employee onboarding success rates and by ensuring that employees daily activities are aligned with a firm’s objectives.    

An effective Playbook ensures accountability of daily performance by providing a framework for onboarding, training, coaching, employee discipline and incentives.

An effective Playbook includes:

• The employee’s objectives and metrics.
• The approach, programs, and activities that will enable the employee to meet their near and long‐term activity and results goals.
• Clear how-to instructions for team members to  support the financial objectives of the company through their daily activities.
• Methodology for the functional aspect (sales, manufacturing, customer service, etc.) of the business model that pertains to the employee.
• Narrative and descriptive text as well as images, visuals, audio, assessments, checklists, and evaluation tests as needed.

Technorati Tags: playbook,employee playbook,creating scale,operational scale,operational best practices,management best practices

Creating Operating Scale

Have you ever wondered why Fortune 500 companies have significantly higher revenues and profits per employee? 

Creating operating scale in a business is one of the main responsibilities of effective managers (and a requirement for both growth and efficient use of capital).  

Methods for Creating Operating Scale:

1. Over-communicate corporate mission, vision, values, and both near and long-term financial objectives on a regular basis. 
2. Ensure transparency of corporate and individual performance.  Start by publishing monthly operating reports that detail the operating performance of the business including current gaps and bottlenecks.
3. Institute Playbooks for every role in your organization (Playbooks are instruction manuals that guide daily performance and hold the employee accountable.)
4. Implement a lock-step onboarding program for all new employees which details the first 30 and 90 days in granular detail including activities, goals, and the definition of success. 
5. Initiate regular department, function, and team communication rhythms (i.e. routine, scheduled meeting times) to ensure effective top-down AND bottom-up communication at the “team level.” Improvement of “Team” dynamics is always a requisite for improvement.
6. Create a Yearly Initiative.  Examples:
1. Implement a culture of “Service Excellence”
2. Productize all services
3. Validate and refine expansion economics including customer acquisition and service model
4. Implement company-wide reporting and dashboards
5. Start benchmarking against top competitors or substitutes
7. Have everyone sell.  Teach everyone how-to sell including having all employees be proficient at delivering the value-proposition, elevator pitch, and outline of core products and services.
8. Create Lifecycle “Productization” for your buyer so that at each stage of their business you make it easy to buy.  Both customer referrals and retention is enhanced with each and every additional product, service, or “tie-in” to the customer (technology for example).
9. Utilize Targeting (market segmentation) to increase your probabilities of success as well as cost-effectiveness of your sales and marketing efforts. 
10. Implement Human Capital Best Practices including: Strategic Workforce Planning, Screening and Assessments (Top-Grading and Birkman for example), Leadership Planning, Employer Branding, and Talent Management System (HRIS).

The business case for operating scale is simple: today’s market and economic environment requires effective management to survive; and wealth creation is achieved with timely operational execution coupled with consistent improvement. (Strategic effectiveness creates exponential wealth.)

Technorati Tags: operational scale,operating scale,management best practices,management scale