Effective Employees

Recently a manager said to me in passing, ‘You say you create effective employees don’t you?’ I replied, ‘Yes I do’. ‘Well’, he said, ‘I need a few of them. Where can I get them?’ I wish that life was only that easy, that I could create effective employees with a stroke of my wand and a spell out the world of Harry Potter. Unfortunately it isn’t that easy, you need to find and nurture effective employees. But effective and efficient employees are worth their weight in gold.

To explain both concepts simply:  ‘Efficiency is doing things right, while effectiveness is doing the right things.’

I would consider that creating effective employees is one of the important deliverables of human resources. Creating effective and efficient employees adds value to the human resource function.

It starts with the search and recruitment of good employees. By this I mean having a clear description of what kind of people you need, what knowledge they require for their position and what competencies are necessary to be successful. Then of course you need to look in the rights direction when you are searching for employees. You will be more successful if you look for certain employees in different ways. Then you have to select employees by using a competence based interview technique.  Through using the right recruitment techniques you will hire better employees.

This doesn’t end our quest for effective employees’ it is only the start of it. Next the manager needs to induce and train the employee into the company to ensure that the new employee understands what is expected of him, how the company operates and its culture of the company. Furthermore the employee needs to understand how the teams work in the company, how he fits into his team and what his team expects from him. After the induction and training the new employee needs to be regularly reviewed and helped to meet the company standards. However if after several attempts the new employee fails to meet the company standards it is better to end the employment in the probation period. This is a difficult decision for both manager and employee. Difficult for the employee because he would have lost a job which he hoped would be there for life. It is difficult for the manager because their investment in the new employee is lost.

After a successful start to the employment the company needs to ensure that the employee is regularly trained regarding the requirements of the job and the company. Again any changes in the organisation and position need to be discussed and understood to become effective. The company will have regular reviews with the employee and he will receive constructive feedback on how he is doing. High achievers need to be rewarded and underachievers need to be tackled.

To really create effective employees, the manager needs to engage with the employees. This means to keep talking with the employee and find out how the employee gets on in his job and where he needs support. There needs to be regular communication about what both sides expect from each other what the employee expects from the company and his colleagues and what his colleagues and company expect from him. There needs to be a balance between employee remuneration and the capacity of the company to pay. Any misunderstandings between employee and manager need to be resolved as quickly as possible.

As you can see it is difficult to create effective and efficient employees but the reward of creating a cohort of them is extremely valuable for any company.

Your Human Resources department should be able to deliver the required instruments and outcomes in order for your company to be able to create effective employees. Your HR people should be able to deliver excellent recruitment tools, ways to objectively review people, induce and train staff members, knowledge on how to engage staff members, how to handle company communication, advise managers and employees on how to perform their jobs and how to handle underperformers and find solutions for them.   

Wage Negotiations

Recently The Irish Times published an article which predicted a 10 percent wage increase for 2016! Hard to believe but unions will be delighted reading this. However the article was based on the experiences one of the major recruitment agencies in Ireland. Now recruitment agencies have an interested to get wages increased as their fees are normally a percentage of the wage of the selected candidate. A ten percent wage increase would increase their fees with ten percent as well.

The economic growth of 6.5 percent in 2015 indicates that the economy is strongly growing and in 2015 the majority of companies increased their wages with an average of 2.5 percent. With the economy growing again in 2016 pressure to give further wage increases is growing.

Since the collapse of the National Wage Agreements and it is back to local bargaining. A lot of managers would have little experience in local bargaining. Here are some golden rules to apply if wage bargaining is to be an issue: -

1.       Do not negotiate if you do not have to. In most small and medium size companies there is no union recognition and no agreement with the union that new salaries have to be negotiated. So if you do not have an agreement with a union, your industry is not under Employment Regulation Orders or Registered Employment Agreements do not negotiate even if the unions would like to have a place at the table.

2.   Setting the agenda. Many companies have been caught out by starting talks and not sorting out the agenda and procedure. You could be making a far reaching deal with the union officials only to be confronted with the fact that the union members have the final say on it and reject it. The already far reaching deal has to be renegotiated to include even more concessions. Set up and organise a clear agenda and procedure under which the negotiations take place. Make it clear that what happens when a deal is negotiated and if the union insists that their members have the final vote before it can be accepted, maybe your management board has to have the final vote on it as well and can reject it as well as too far reaching. 

3.   Setting your own objectives. Establish what wages increases you can afford and define three possible settlements from your company’s point of view: the ideal or best possible deal, a realistic or best possible settlement and the worst, though still acceptable settlement. Before setting these objectives make sure you know where your company’s stands compared to other companies in areas such as salary, benefits, compensation, economic growth etc. Know your salary levels compared to your industrial sector and regional salary levels. Is your company paying above or below the average salary levels in your industrial sector and region? Are your benefits and compensation par with other industries? Most likely unions will start negotiating with companies they perceive as easy targets to set a trend in wage negations. Always focus on your own situation and make it clear to the union that your company cannot be compared to these easy targets.

4.   Preparing the case. Once the objectives have been defined, it is necessary to put a case for negotiation together. The bargaining process is one in which attitudes are swayed by a complex mixture of facts, logic, interest, fears and pride. Preparation involves consideration of the information which will be needed to support the case being made. It is essential to consider this from the other party’s view point. Try to establish the unions and employees objectives at the wage negotiations. Try to find out what they negotiated at other companies. Hold a mock bargaining round and let some managers play devil’s advocate, examining your company’s position and probing the company’s arguments for weak points and prepare your answers for the real event.

5.   Communicate. Before, during and after the wage negotiation keep communicating with your staff, in particular your managers, supervisors and team leaders regarding the company’s point of view and needs. Make sure that your managers and supervisors are all aware of these essential points which will ensure the company’s survival. I do not mean to give away the bargaining plan, however, keep them abreast of what you can do regarding wages and benefits and if union objectives are in the interest of the company. Very often only the union communicates effectively with employees during this phase and this will lead to high and unrealistic expectations and difficulties with staff once an agreement is reached.

These are just a few of the practical personnel solutions regarding wage negotiations. There are many more issues to address and many pitfalls to watch out for.

Recruitment - A Major Investment

SME companies want employees with excellent skills with a great attitude to work. It is as simple as that. They want employees who can help them to grow and improve their business, who can work on their own without too much checking and correction. Who have initiative and come up with simple ideas on how to improve their work and their output. They want employees who make things easier and not more difficult. And they are right. Life is difficult enough at the moment for SME companies and any assistance employees can give to make the life of the Owner/Manager easier is much appreciated. If only employees performed their job well that would be a great help. The truth is that getting it wrong and hiring the wrong candidate can be very costly and no company can afford this in these economic challenging times.

How do you get those employees with the right skills and attitude? One method is to look for them when you are recruiting for new staff members. The selection of new recruits is an important moment when you are deciding does this employee have the right skill set and the right attitude to work. Many SME managers miss that opportunity. Why? Because they haven’t really thought about what they are looking for. They haven’t identified the skills set and attitudes are which are required to be successful in their job. They are busy and just hope they will meet the right candidate at the interview. Well it takes more than that to be successful in recruiting new employees.

A HR consultant who specialises in SME companies can be very helpful in putting a recruitment process in place which solves your recruitment of new employees. At the end you have a process in place which delivers you the right candidates for the right investment while you have been trained on how to interview candidates and decide which are the best for your company. Campbell International can help you to organise your recruitment process and find those candidates which will help to develop your company.

Recruitment is a major investment in any company. The average industrial wages in Ireland is €36,000 and multiply that by 10 years. As you could expect that an employee would stay with you for at least 10 years and you are talking about a major investment of €360,000. A lot of Owners / Managers would seriously deliberate before making such an investment and look at it from all sides. Yet I know managers who would hire an employee in an afternoon without giving it much thought. Human Resources is a serious business which can develop your company into a serious player on the market. 

Ignoring human resources can fatally harm your company and send the company to the graveyard...

Turning Strategy into Great Performance

You have devised a great strategy for your company and all the indicators show that you should get a big return on investment. Yet when the year comes to end the results have brought not what the strategy suggested. What has happened? You spent so much time in getting the strategy right and now there is little to show for it. Unfortunately, this scenario is more common than you would think.

Companies only realise about 60% of their strategies potential because of defects and breakdowns in planning and execution. If you review the most common causes for the failure of strategic plans the findings are revealing and troubling.

Research into the strategy to performance gap published by the Harvard Business Review shows that virtually all companies surveyed struggled to produce the financial performance forecast in their long-range plans. Furthermore, the processes they used to develop plans and monitor performance make it difficult to determine whether the strategy to performance gap stems from poor planning, poor execution, both or neither. The biggest problems are: -

v  Companies rarely track performance against long-term plans – the research shows that less than 15% of companies compare the business results with the performance forecast, drill down to analyse why the performance was not achieved and take this information into account when making new plans.

v  Multiyear results rarely meet projections – This is demonstrated by a dynamic common to many companies. The 4 – year plan projects modest performance for the first year and a high rate of performance thereafter. Management meet its modest target for the first year and is recommended and prepares a new plan with a modest growth for the first year and a high rate of performance thereafter. The process is continued over the next years with only modest results over the projected years.

v  A lot of value is lost in translation – Given the poor quality of financial forecast in most strategic plans it is probably not surprising that most companies fail to realise the strategic potential value. What emerges from the research is sequence of events that goes something like this: strategies are approved but poorly communicated. This makes the translation of strategy into specific actions and resource plans all but impossible. The lower end of the organisation doesn’t know what they need to do and when they need to do it and as result the expected results don’t materialise. If no one is held responsible for the shortfall the cycle of underperformance gets repeated over and over again.

v  Performance bottlenecks are frequently invisible to top management – When plans are realistic and performance falls short, executives have few early warning signals. They have often no way of early detection whether actions were carried out as planned, resources were deployed on schedule, competitors responded as anticipated etc.  As result it is impossible to take corrective action on time.

v  The established gap fosters a culture of under performance – If the strategy underperformance becomes the norm over the years’ then commitment cease to be binding promises with real consequences. The organisation becomes less self – critical and less honest in its shortcomings. Consequently it loses its capacity to perform.

However, there is a way out as a number of high performance companies have dealt with above described problems. They have created clear links between planning and execution and raising the standards of both of them. There are seven rules to follow and these are: -

1. Keep it simple, make it concrete – Ensure that all staff member know the strategy and how it affects their day to day performance. Make certain that all employees know what they have to have delivered at the end of the year.

2. Debate assumptions not forecast – Strategies are often based on assumptions and to make them come true staff need to know what you are thinking in order to engage in the process. When they understand the fundamentals and performance drivers they understand what exactly is required and understand better how to deliver on the performance.

3. Use a rigorous framework, speak a common language – The specific framework a company uses to ground its strategic plans isn’t that important. What is critical is that the framework establishes a common language for dialogue between the management and employees one that strategy, marketing, finance and operations all understand and use!

4. Discuss resource deployment early – Companies can create more realistic forecast and more executable plans if they discuss up front the level and timing of critical resource deployments.

5. Clearly identify priorities – To deliver any strategy successfully managers must make thousands of tactical decisions and put them into action. Companies should agree on priorities, communicate relentlessly and hold managers accountable for executing against their commitments.

6. Continuously monitor performance – Continuous monitoring of performance is particularly important and proactively monitoring the primary drivers of performance. Putting the Key Performance Indicators on the agenda of every management meeting should ensure that all keep the eye on the ball.

7. Reward and develop execution capabilities – No list can be complete without a reminder that companies have to motivate and develop their staff, as at the end of the day no process can be any better than the people who have to make it work. This also includes development of staff members who have made it work.

The prize of closing the strategy to performance gap is huge – an increase of performance from 60% to 100%. However, the true benefit for companies who create tight links between their strategy, plans and performance is that will they experience a multiplier effect, as a result of their efforts they are willing and able to take on stretch commitments that inspire and transform companies.