8/18/2019 A New Vision for Human Resources
1/16
VII.
LoorrNc
AUEAD
E MENTIoNED
EARLIER
hat
staffdepartrnents
have
typically
been
üewed
as
expense
centers.
Y
Y
This
view
developed
as
everyone
bought
the idea
and
began
to
ru¡nage
staff
functions
that
way.
Cutting
the
cost of
sta{Ifunctions
has
ong
been
a primary
objective.With every dor¡mturn in the business ycle, staff
groups
are
decimated.
n
many
cases his
has
been
proven
to
be
penny-wise
and
pound-foolish.
Staffdepartrnents
play
a
vital role
when they
connect
themselves
o the
SQP
objectives
of their
line
customers.
A
better
way to manage
Staff
s to
view
them
as
potential
contributors to profit. If you askedyourself what could we
do in human
resources
o
contribute
to
profit,
you would
think
of several
ways
ro
do
that.
This
book
has
described
many
tools
and
processes
or
contributing
tangible
value
to
the
entelprise.
99
8/18/2019 A New Vision for Human Resources
2/16
8/18/2019 A New Vision for Human Resources
3/16
Looxt¡¡c AuEAD
began
to
wonder
how
in the
world
they were
going
to
competewhen they didn't haveenough of the necessary
skills
resident
n the
workforce.
As the
economy
boomed,
recruiting
heated
up
and competition
for
technical
skills
became
a pitched
battle.
Over
time,
a shortage
of reliable
workers at
all levels
became
a central
problem. The
more
farsighted
ooked
up
from
the daily
srruggle
and decided
they had to coruider the future aswell as the present.This
led
them
back to
workforce
planning (\MFP).
Let's face
t,
WFP is
redious.
t requires
developing
a vast amount
of data
on the competencies
f the
current
workforce.Just
setting
up the
system
and getting
agree-
ment
on definitions
and levels
of
skills
can be
drudgery.
A small number of
companies
have
persevered
and
developed
a thorough
description
of their
skills
profile.
Others
are studying
ways to do
it
that
won't
be so
time-consuming.
No matter
what
size
your organization
s,
you
have
to look
ahead
to your future skills profile. If you devore
a reasonable
amount
of
time
to
planning,
you
will have
it returned
in
reduced
hiring
time
and
cost, ower
training
costs or
new
employees,
and
probably
higher
productiüty
through
a more
stable
and motivated
workforce.
Stf f ing
Hiring
during
periods
of
sustained
high
growth
becomes
an
all-consuming
ask.
The
only
thing
that
will
make
it
easier s
having
good data
on the results
of your
current
practices.
Doesn't
it
make
sense
hat
if you
know
how
much it
costs,
how long
it
takes,
and the
quality
and
8/18/2019 A New Vision for Human Resources
4/16
A
Nzw Wstou on Huu,sN
REso(mcES
availabfity of
each of your major
sources,you can do a
better ob? The classic xcuse s, "I don't have ime to
arralyzewhat I
am
doing;
I'm too
busy."
As
they say, hose
who ignore history are condemned
o
repeat ts
mistakes.
The same
s
true here. A little time
devoted now
to
mea-
surement
and analysiswill pay
back later in reduced
work-
load
and
lower
stress or all-not
to mention reducedcost.
Poyi"g
Pay
coverswages,salaries
and
benefits-the
total
cash
investment n human assets.
We can do a
better
ob
of
managing that investrnent
f we look
at
it
from a resource
üewpoint. First, we should determinewhat percentof
revenue he business
onditions dictate to
be üe most
efficient
level
of pay. That is, how
much of
every dollar
we take
in should
we
invest
in
human assets?This is
a,nalyzedhrough a pyramid model,
shown in Figure 12.
Figttre 12. Pay
uram.id.
Productivity
8/18/2019 A New Vision for Human Resources
5/16
Looxtyc
ATTEAD
How
much
of your total compensationdolla¡ can
and should
you invest in initial
pay levels for new
hires,
to maintain
and
retain skilled
personnel, and
to motivate
them to
be productive? There
are
many
options here.
The
decision should
be basedon management's
philosophy
regarding human
value added
and the
company's abfity
to pay. By looking at the question from üe standpointof
the pyramid
you might get new insights.
Deueloping
Employee
development
s no longer
an option. There
simply aren't
enough
skills in the national
labor
pool
to support
the
growth curve into
the next
decade.The
make/buy
decision
has been
preempted
by a
lack
of
sup-
ply.
The national
investrnent n training
has
been increas-
ing at a
steady
50/o er year, compounded
since
the early
years
of the
decade.The
key
business ssuenow
is
where
to spenddevelopmentdollars. Basicskills, management
competencies
nd executivedevelopment
are all priorities.
Despite
the obüous
basic skills shortage,
we
would sug-
gest hat
the
biggest opportunity
is in executive
eadership
development.
A study of
600 companies
acrossmany
industries revealed
a belief that leadership
n the twenty-
first century will requirenew skills and insights.* In the
final
analysis,
f
we
don't develop
effective eaders,
we
won't have to
wony about basic skills
because
we will
be out of business.
8/18/2019 A New Vision for Human Resources
6/16
A NnwWstoN
ton Huu¿N RnsouRCES
Retaining
\Arhen
the supply
is limited,
a
wise
strategy
s to pay
attention
to keeping
what you
have.
Consider
what
it costs
to
lose a sklled employee:
he direct costs
of termination,
hiring
a
replacement,vacancy
costsand
learning
curve
loss.These
add up to
more than one year's
pay
and bene-
fits for an exemptperson.Add to that the externalcosts n
unhappy
and
lost customers,
and the number
goesout
of
sight. One
study
claims
that the
costs
of
losing
an effective
salesperson
an
take up
to three years to
recover.tn
The most
coflrmon
causeof voluntary
termination
is
not pay
or opportunity
elsewhere.
That only tips
the scale
in favor of leaving.An ongoing study now covering over
20,000 cases
of voluntary
turnover has revealed
hat
800/o
of
the caseswere
triggered
by problems
with
a supervisor,
working
conditions,
and perceived
ack of career
opportu-
nities. Work
conditions
related to
flexibfiry and
respect or
the worker's
personal
needs.
Acnrally, this is good
news.
Youmight not be able to outbid someone or your valued
employee,
but you
certainly
can do something
about
supervisory
skills,
working
conditions, and
career
oPportunity.
Working C ross-Functionally
In our
cornbined
forty years
of
human resources
experi-
ence,
we
have seldom
seen
HR departments
n
which
all
the sections
work
as one unit.
The intention
might
be
there, but
few HR directors
have developed
management
systems hat induce everyoneto work
for the gteater
good
of
HR.
8/18/2019 A New Vision for Human Resources
7/16
Loortt¡c
ArnAD
There
are
natural
connections
across
sections
of HR
that areoften ignored.Following
¿re some
examples:
.
Hiring
and
taining:
The
buy it
or make
it
question
should
be
discussed
mong
all
HR sections
nd,
most
import*tly,
the
staffing
and
development
people.
. Payingand Retaining:Employee-relatiorspeople,
if they
are
doing
their
job,
can feed
a good
deal
of
information
to
the compensation
and
benefits
Soup
about
employee
amiq¡des
oward
pay
and benefits.
.
Paying
and
Benefits:
:r many
large
comparries
he
compensationand benefitspeoplearedisconnected.
If they
communicate
effectively
they
can find
ways
to
maximize
the total
return
on investrnent
n
human
assets.
.
Planning-Statrng-Paying-Developing-Retaining:
The
human
assets
of the
organization
need
to
be
reviewedholistically.Peoplecareas much about
personal
growth
as
pay.Th.y
are turned
on
and
off
by
policies
n all
five
areas
of the
HR
star.
The
best
solution
is usually
found
in
a
fivepoint
view.
Monitoring
the
Effects
of a Collaborative Approach
When
HR
professionals
work
with
their
managers,
cus-
tomers
and
their
professional
colleagues,
üe results
are
8/18/2019 A New Vision for Human Resources
8/16
A Now VtstoN
on Huu¡N RtsoLncns
usually
measurable.Th.y can trace the effectsof their
work
in severalways:
.
Lower
hiring costs
.
Faster ime
fillingjobs
.
Higher-quality
hires
.
Higher levels of
retention
.
Lower development costs
.
Higher levels of productivity
To set up a valid
and reliable measurement
program,
all
you need to do
is have
clear targets
n mind
at
the
beginning of
the process.
Then,
you
build a case
or the
relationship between
your
recornmended
action steps
and
effectson business
nit
processes.
t is much easier han
you think.
This book
has
provided many examples
o
guide you.
The
Top
Ten Measures
of
HR's Effectiveness
There is
no
end
to the number
of actions
and results that
can be
measured.
What
to measuredependson what
is
important
to the organization. As a generalization,
we
would
say that the
following
¿ueamong
the most impor-
tant for most companies:
10. Healtlrcareost
er
n
flqu.
The
aging workforce
will
put added pressureon
healthcare
cost con-
8/18/2019 A New Vision for Human Resources
9/16
Loot
8/18/2019 A New Vision for Human Resources
10/16
A Naw Wstou
ron HuwtdN
RnsouRCES
5 .
4.
3 .
furnnuer
cost.The
ey issue
n
turnover
is
not
only that skills are lost, but so is a lot of money.
There
are four
components
of
turnover
cost:
termination,
replacement,
vac¿Incy,
nd
learning
curve
loss.
Losing
as few
as
six skilled
exempt
persons
can cost
a company
over
$1,000,000
fímz to
tt
¡ás.
Filling
jobs quickly-with qualiry
people-is
a
critical
need.
HR
has more
opportu-
nity
to influence
this result
than
any
other
func-
tion.
Time
should
be measured
n calendar
days.
R.enm
on
humnn
Pituf inuested.
or
decades
he
question
of
the value of
an
employee
has
been
debated.
Here
is
a
simple
solution:
Take
rev-
enue
and
subtract
operating
expense
ess he
cost
of
pay
and benefits.
This
"adjusted
profit"
figure diüded by the costof pay and benefits
shows
he
rate of
return
on
PeoPle.
Ifunnn
aalueadded.
Do the
same
calculation
as
Return
on
Human Capital
Lrvested,
but
divide
that
adjusted
profit
fig*. by
the number
of
firll-time equivalentemployeesand conffact
workers.
This shows
the
leverage
hat people
have
on profitabfity
expressed
as
adjusted
profit
dollars
per person.
flu sn¿
ltnt
meansfu
most
o
yot'tr
áar.
Be
honest:
Your
survival
and
advancement
are argely
dependent
on
your
boss.
It
makes
sense
o show
2.
1 .
8/18/2019 A New Vision for Human Resources
11/16
Looxnvc
ArnAD
Human
resources
departrnent
costsand staff ratiosarenot included
in
the
Top
Ten.
That
is
because
hev
are
of lesser
mportance.
triorm
ollows
function.
yo,,
establi.h
the
size
and
cost
of
the
HR
function
based
on
the
organi_
zation's
needs
and expectations
rom
HR.
Budget
urrá
rt
ff
l:ol
the
driving
force
of
an
effecrive,
businesslartnering
HR departrnent.A clearvision of a value addingp.rlporJ
separates
he
best
rom
the
rest.
How
To
Contribute
Tomorrow
Anticipation
is
a
much-appreciated
kill
in
an'ncertain
world. HR must developthe insightsneeded o tell its
management
customers
what
is
coming
tomorrow.
This
is
not
magic.
Two
actions
"*
pr.pur.lro,r,
1.
Maintain
a
broad-based
iew
of
rhe
world.
The
important,
dtiri"g
forces
of the
marketplace
are
outside
of
HR.
Information
technology,socialtrends,financial
news
and
competitors,
actions
are
the
stuffof
prediction.
Scan
he
media
and
subscribe
o
an
Internet
news
page.
n
the
space
of
frfteen
minutes
a
day,
you
can
catch
the
most
important
events
hat
will
affect
the
investrnent
in human capital.
2.
kepare
the
HR
staflwith
business
kills.
Forget
HR
sklls
for
the
moment
and
concentrate
n
rhree
areas:
anulyhc
abiliry
selling
skills
and
intelpersonal
competence.
8/18/2019 A New Vision for Human Resources
12/16
A
N¡l¡v
VwoN
on
Huntax
farsotnr¡r
*:*:*:,,,,ül"l : #:::.", h.w,he
uman
resources
unction
is
on
üe
ascendancy,
laiminq
that
because
humar
ogruzedasrheúü;',','#"*Unn:'lt*J:,
human
esources
ri.roio.,
i,
,iri.i.
.ilr"t
is
true.
Alhat
is
also
ffue
is
the
eüdence
tf."t
"fy ",*¿
percentage
of human resources
{orp.
are taking aclvantage
of
this
opportunity.
Wi¡ress
the
fact
thut
*áy
HRrri*"g*,
are
now
coming
roalnance,
_urketiág
and
op.ririo*,
not
from
wirhin
he
HR
prof.rriorr.
ThJ_.rrug.
should
beclear.
The
opportuniqg
pf"/ir't.rJ*a
now.
But
n
rder
ro
make
he
team,
HR
prár.rrl""i,
have obecomebusinessrofessional, , well.
8/18/2019 A New Vision for Human Resources
13/16
Rn
rn
RE
NCE
s
1.
Rifkin,Jeremy.
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of
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2.
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