Good people management makes organizations more profitable and successful
Jack Welch, the legendary former CEO of General Electric, has been quoted many times saying the HR director should be just as important — if not more important — than the CFO. He often uses the analogy of a baseball coach putting more value on the team accountant than the talent recruiter. So why does the typical CEO spend a lot more time with the CFO than with the HR director?
The financial state of a company is the result of the efforts of its people. Based on this understanding, wouldn’t it make sense to spend more time focused on developing people than analysing financial results? This is where HR comes in. Having the right team doing the right things in the HR 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 cut. To prevent this from occurring, here are six ways HR can add more value to an organization and receive the recognition and budget it deserves:
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.”
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. This type of program is beneficial as the teachers learn the subject matter on a deeper level through preparation for the class, and their experience and expertise are seamlessly transferred to others.
Implement retention solutions: One of the most innovative strategies I have encountered for improving employee retention is very simple and can cost the company as little as 35 cents per hour. Imagine if you announced, starting tomorrow, every employee with good performance will earn an annual free flight that can be redeemed anytime for travel anywhere within the country. Employees could fly a relative in for the holidays or accumulate flights for a family holiday. One might think this would cost the company a fortune but based on average flight prices and volume-travel discounts, it would cost a company about $700 per person — based on 2,000 hours per year. Offering an employee 35 cents more pay per hour won’t have them jumping out of bed, but offering them a free flight each year will really motivate them.
It doesn’t have to be a flight — it could be a golf club or fitness membership. The key is determining a reward that is appealing to the people within your organization.
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. One-half of the time at the retreat is for training while the balance is for enjoying the location.
These types of training incentive programs help the 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 in additional profit as a direct result of the HR department’s incentive program.
Implement a mentorship program: Develop a mentorship program that matches 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 it’s properly designed. A list of objectives and actions for both the mentor and protegé must be established. These programs are incredibly valuable and cost little to maintain, yet the effect on the organization can be profound.
Let unsuitable people go: This is probably one of the most difficult, yet necessary, actions for an organization to take. But in terms of the health of a company, it’s always better to remove employees who have a negative impact on the people around them. Employees who are underperforming or have a negative attitude seem to carry a grey rain cloud over their heads. When these individuals are finally let go, it seems as if the sun has come out and life is better for everyone.
Optimize the organization: This involves listing all the things each department does on a regular basis and working with them to identify what activities should be dropped. As Michael Dell, founder of the computer giant that bears his name, 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. It’s also important to determine what should be done to ensure everyone is focused on valuable tasks that advance the organization.
