Eliminate HR? No problem? Not so fast.

Eliminate HR? No problem? Not so fast.	“Sometimes, the only thing worse than having an HR department is not having one.”

So begins a recent article published in the Careers section of the Wall Street Journal.

“Companies Say No to Having an HR Department”

“Employers Come Up With New Ways to Manage Hiring, Firing and Benefits”

There have been many articles written about the effectiveness of HR departments across the nation, the main criticism being that they have become inefficient in nature.

Yet, if HR has lost some of its appeal in eyes of line managers, the answer shouldn’t be to rid companies of its intrinsic value, but rather to identify the causes of this downfall. After all, when sales are down quarter over quarter, does a board choose to eliminate the sales department?

Why HR’s success is everyone’s business

One of the biggest challenges with some organizations is that HR is seen as a freestanding entity, controlling every facet of workforce management almost in an outsourced manner. Typically, when a manager obtains a green light to hire a new employee, he/she turns to HR with the expectation that it’ll know what to do to find that ideal candidate to fulfill the newly opened position.

But HR is no crystal ball. To do its job as intended, it requires input from those who know the company’s reality most: managers and executives. How can one reasonably expect anyone, regardless of their expertise in their given field, to have the ability to fill a position with no concrete knowledge of what success entails in this role?

The truth is, painting Human Resources as a silo at the service of the entire corporation is bound to lead to inefficiencies and excessive wastes of money… and talent. It is common knowledge that silos, in any part of the organization, should be eliminated, and HR should be invited to sit at the table regularly, if only to get a better pulse of where the company is heading and what it is lacking to get there.

If a company’s success depends on the quality and motivation of its employees, HR’s participation in your everyday processes means it can provide much needed expertise in terms of workforce planning, performance incentives and talent management to help ensure that every one of your projects accomplishes their intended objectives.

Without a HR Department….

To do without a Human Resources department, companies would need to first make sure they can accurately evaluate the cost of managers and other employees taking control of HR-related functions.

Granted, such a structure may promote accountability amongst your staff in charge and should, in theory, help optimize some of your talent management processes, but there is more to eliminating HR than what meets the eye.

Just think about potential liabilities and legalities, financial and managerial risks, missed opportunities with strategic deployments, conflict resolutions, etc. These are issues that no company can afford to neglect. If your organization has determined that it would best be served by cutting out ‘the middle man’ and attributing HR functions, such as recruiting, outsourcing, and succession planning, to its executives, there’s an important opportunity cost that must also be taken into consideration.

It may seem more efficient to let your existing managers handle the basic tasks that are often relayed to HR, but there’s a much bigger reason for the existence of a department dedicated to the expert management of your workforce.

A neglected source of profitability

Because it rarely deals directly with business development, HR is often perceived as an administrative cost center. Yet, when we consider that the cost of recruiting for a new position in this day and age has been reported to be approximately $3,500, wouldn’t it be important for your business’ profitability to ensure that you have the right experts working to minimize these costs?

And this is only one aspect of HR’s functions within an organization.

The HR Difference website describes HR’s true purpose as helping “make effective continues: “HR’s orientation is one of responsiveness to both immediate and long-term business needs, providing both operational excellence and strategic insight.”

In more specific terms, Human Resources deals with:

  • Recruiting and employment
  • Training and professional development
  • Remuneration and benefits
  • Internal policies and legalities
  • Culture and philosophy
  • Equality and diversity
  • Disciplinary and rewards programs
  • Corporate alignment and vision

This list is not exhaustive, but taking a good look at it may help you understand why relying on your managers to handle these tasks can be of great cost to your productivity. Do you really want your best executives to allocate so much of their time to these duties, for which they may not possess the right expertise and training?

In an upcoming article, we will discuss how you can streamline these processes to ensure profitability and value in your HR department.

In the meantime, we invite you to sign up to our newsletter to receive other materials designed to help you better understand, analyze and optimize your talent management processes.

BNA Guide to HR Benchmarks

http://www.bna.com/HR-Benchmarks-27417/

http://www.bna.com/uploadedFiles/Content/Products/Human_Resources/Reports/Guide%20to%20HR%20Benchmarks%202013_Web%20preview.pdf

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Benchmarking is not Competency Modeling

Human capital management is a relatively new science, but there is no denying that this practice has made tremendous progress over the past few decades, particularly in terms of recognition and efficiency within a greater organizational context.

Modern scientific advances, namely within the fields of behavioral and cognitive psychology, have helped support the development of many human resources theories that sought to establish a pattern to building and managing a workforce in a manner that sought to produce continuously superior results.

Of all the human resources theories to emerge over the years, competency modeling and benchmarking have probably been some of the most scrutinized. Strangely, it appears that the two schools of thought have grown to oppose each other, as if one couldn’t exist alongside the other.

But could it be that rather than taking sides, HR professionals – and consequently, organizations at large – could stand to gain by incorporating both approaches into their practices?

Let’s take a closer look.

Benchmarking, or the ‘grass is always greener’ theory

The Global Benchmarking Network characterizes benchmarking as “the systematic search for efficient procedures and better solutions for complicated problems and processes.”

Benchmarking ProcessUnder a more generic definition, benchmarking could be defined as the comparative study of processes within a precisely segmented group to identify best practices. Let’s remember that benchmarking can be external or internal, meaning that the group under review could range from an entire industry to an organization’s own branches, departments or teams.

Regardless of the group surveyed, the objective of benchmarking is to allow an organization to measure its ‘relative success’ as a means to improve and, ultimately, optimize its results.

Within an HR framework, we find that the most common metrics measured through benchmarking are recruitment costs, compensation, training expenses, and turnover. For example:

  • What is the lowest/average cost per hire within my industry?
  • How are my competitors achieving better results?

In this case, you are benchmarking your cost per hire to your competitors, and attempting to gather data to understand what they are doing to outperform you so that you can improve.

Looking inward: A customized approach to performance

Then, at what many believe to be the other end of the spectrum, we find competency modeling, which refers to the development of groups of related competencies that together describe successful performance, within a given job context – e.g., the competencies necessary to achieve superior performance in a senior production management role within the textile industry.

It is important to note that the term ‘competencies’ includes knowledge, skills, behavior, personal characteristics, interests and values – all of which combine to set the standard against which to measure an individual’s chances of success within a specific job role.

The fact that competency models can be used to assess a worker’s potential in a particular position has often led to the assumption that competency modeling mainly served recruiting purposes. Yet, in reality, these models carry a much broader definition, and can be applied to a variety of organizational processes (succession planning, performance management, training and development, compensation, etc.).

Much like benchmarking, the metrics obtained from competency modeling are the result of empirical and comparative studies based on a segmented group’s best practices; the exception being that competency models tend to be more focused on the performance metrics of the people behind the processes, rather than the processes themselves.

Understanding this difference is key to grasping the full potential of integrating competency models with a benchmarking approach.

Power to the people…or processes?  The chicken-egg paradox

While the intent of this article isn’t to argue which is more important: the process or the people implementing the process, it is nevertheless imperative to understand that even the most optimal process can fail if the people responsible for its execution do not possess the skills to implement it as intended. Similarly, even the most qualified executives may not deliver the intended results if the processes they must apply are not optimized for performance.

Acknowledging that both people and processes are instrumental to a company’s success makes it much easier to see how benchmarking and competency modeling can work together to provide an invaluable competitive edge for any organization.

Benchmarking can be an important component to optimizing organizational output, as it gathers data about the competitive landscape. But once you have become aware of your industry’s best practices, you need a strategic plan to not only replicate them internally, but hopefully also to build upon them to eventually set the bar within your sector.

Here’s where the input of benchmarking can be used.

Competency modeling can use the data gathered through benchmarking to develop models of superior performance that are customized to your organization’s unique descriptors, characteristics and goals.

Benchmarking is not Competency Modeling

In step 3 of Workitect’s competency modeling process*, it is necessary to identify the superior performers in a job for which the model is being developed, and then collect data to determine the skills, knowledge, and personal characteristics of those superior performers. One of the methods used to identify the top performers and collect data is a resource panel, also known as an expert panel.  In addition to studying people who are top performers today, the panel needs do a “future scan” to:

  • Identify ongoing or anticipated changes in the organization, industry, and relevant technology that may affect the job
  • Identify what each change implies, in terms of additional skills and personal characteristics that job incumbents will need

To illustrate more specifically to a job role, benchmarking would allow you to identify the best practices with respect to a CFO’s duties (key tasks and performance measures), while a job competency model will use the data gathered to identify the skills, knowledge, and personal characteristics required to perform these key tasks as intended, at the most cost-effective ratio for your organization, in accordance with your constraints.

*The building of job competency models, making use of benchmarking data, is included in Workitect’s Building Competency Models certification workshop.

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Competency-based performance management to reward top performers

Rewarding top performers through a behavior-based performance management processCountless books and articles have been written on the subject of performance management and performance appraisal. “New and improved” systems have been launched in most companies and yet, the same cynicism and dissatisfaction exists, particularly at the employee and lower management levels.

It is a constant battle for employers to find and properly implement an efficient performance management process by which valuable and accurate data can be used to assess the true ROI and potential ROI of your workforce.

Even here, at Workitect, we have discussed the topic of performance management in several articles, supporting companies in their search for bar raisers and top performers. But what is top performance anyway? How can a manager identify and properly reward those individuals who exemplify the qualities and attributes needed to continuously increase a company’s efficiency, competitiveness and future chances of success?

Debunking the myths of performance in the workplace

One of the most common myths of performance management is that the best employees should get all the glory. After all, they not only deliver, but rewarding them gives an incentive to others.

While this strategy may help you retain your best employees, it can also create an unbalanced work environment, which could in turn lead to demotivation and high turnover rates. Remember that approximately ¾ of your workforce is made up of “average” performers; those very workers who, day in and day out, do what is asked of them. They may not exceed expectations, but they nevertheless are committed to doing what is required, and doing it well.

Neglecting to nurture or develop these individuals’ competencies so that they may derive satisfaction from their work and achieve their career objectives is the equivalent of setting roadblocks to your company’s success. A top performer may possess the will or drive to excel, but an average performer still delivers on the work that matters.

What’s more, by recognizing good performers, rather than just the top 5%, you are investing in their potential and motive to improve their performance. Your average workers may be average today, but it is your responsibility to give them the tools they need to become bar raisers.

Let’s however note that this doesn’t mean you should reward poor performers, nor that you should reward good and top performers the same. There is an important distinction to be made, but more on that later.

Step by step: understanding performance management as a behavioral tool

Performance management is much more than periodic performance appraisals; it aligns individual professional development to overall corporate results. In an interview given to Performance Management Magazine, the father of performance management, Dr. Aubrey C. Daniels, describes performance management as:

A scientifically based, data-oriented management system [consisting] of three primary elements – measurement, feedback and positive reinforcement. Although each of these three elements can exist alone, all three must be present [implemented systematically and in sequence] before you have true Performance Management.

In this definition, measurement refers to collected and anticipated performance data; feedback is the discussion between employer and employee on said data; and positive reinforcement is the reward or recognition of improvement in performance.

By Dr. Daniels’ definition, successful performance management takes a page out of behavioral theories, confirming the power of positive reinforcement in behavior modification. He indeed suggests that to promote a culture of top performers, companies must avoid two unfortunately all-too-common practices:

  1. Generalized rewards, such as an extra week of vacation every 5 years of employment or an x% raise every year, as this sort of incentive program rewards good, bad and top performers equally. “The good ones will conclude that it doesn’t pay to perform well, and the poor ones will conclude that it does pay to perform poorly. After a while, the extra week will just be taken for granted anyway.”
  2. Negative reinforcement – “No one works up to his/her potential unless he or she is positively motivated. For example, if you threaten an employee with being fired, chances are he’ll do just enough to keep his job, but no more. And, if jobs are plentiful, he might pull a Johnny Paycheck and tell you to “take this job and shove it.”

So what should a performance manager do to promote performance? Reward good performers with something (tangible or not) that is meaningful to them and 100% contingent on improved performance. Once again, understanding your employees’ motives to performance is a crucial tool in adapting your performance management reward system to yield the right results. Employers should make good use of the feedback session with their employees to understand their drive in the workplace – not just to read and explain the comments on the performance appraisal review.

Remember that not everyone aspires to become a leader. Success is subjective, and assuming that you can motivate your team simply by dangling the reward or promotion carrot is ludicrous. To succeed, a person must not only want to, but he/she must also be motivated to invest in developing the competencies that matter. In other words, if you want top performers, you need to know your team and give them the tools to succeed in accordance with their individual motives.

Measurement: It all goes (down or up)hill from here!

If finding the right reward is important to the success of your performance management system, identifying the right behaviors is even more crucial to the process. If you have difficulty recognizing good or outstanding performance from average or poor performance, even the best performance management system cannot be sustained efficiently.

Some organizations have found that managers should be evaluating employee behaviors and competencies demonstrated, in addition to organizational results achieved. Just as acquired skills and education cannot predict a person’s performance in a given job role, vague or subjective measurement points cannot support a healthy and future-oriented performance management process.

In an article published last month, we mentioned that one of the most common flaws of performance appraisals is that they focus on evaluating workers’ quantitative output, rather than their competencies and potential for outstanding performance. By focusing on purely quantitative results achieved (e.g., number of sales, revenue generated, etc.), you are overlooking several other elements of performance (e.g., leadership, team work, availability, etc) that may be impacting your business more than you think.

Many organizations shy away from a competency-based performance management system simply because it is easier to hold employees accountable for hitting or missing quantitative targets, rather than attempting to measure their qualitative input and planning for their future development. In a way, companies primarily use performance management to determine compensation and meet certain professional development targets, rather than using them as strategies to create bar raisers.

There are several guidelines for effective performance management, but the human factor is critical. Once you lose sight of the fact that you are dealing with individuals, each of whom have personal goals, interests, motives and competencies, evolving over time, no matter how brilliant your performance management process, you are bound to continue experiencing the same results.

For more information on performance management, browse our free resources or contact us for personalized advice!

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The power of customization in competency modeling

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Over the years, competency modeling has been the subject of its share of criticism, particularly with respect to their level of complexity. Many have indeed argued that in addition to the fact that developing customized models that can be applied across the multitude of job roles within an organization is an arduous challenge, competency modeling is a language that most managers don’t speak. Rather, a great deal of HR professionals and line managers prefer to talk about skills and experience when assessing and selecting internal or external candidates for open positions

But can acquired skills and past experience really support an organization’s need to remain in constant movement, to evolve, to adapt to a rapidly changing environment?

As groundbreaking technologies make their way into our professional lives at a pace faster than most companies can adapt to, can the simple fact of having learned a certain skill guarantee a company’s future success?

A skill is a skill is… not a competency

There is an important difference between skills and competencies, although both terms are unfortunately often used interchangeably.

A skill is an ability an individual learns in order to accomplish a task. In an organizational context, this may be, for example, programming, translating, writing, etc. Skills are acquired through education and hard work, and can be regarded as somewhat tangible.

A competency extends a bit further on this definition to include the behaviors, motives and knowledge required to utilize that skill to produce the desired results. In the context of workforce planning and talent management, competencies can therefore be defined as a group of measurable traits that allow an organization to assess an individual’s probability of superior performance, in addition to the skills he/she already possesses.

In other words, competencies do include the underlying skills needed to produce a given outcome, but they also involve a lot more than the ‘technical’ abilities an individual has acquired over the years, to include what employees possess in the way of personal characteristics that enable them to produce superior results.

The bottom line: Why competencies matter

Typically, when companies realize they need an employee to fill a new or newly opened position, they begin the search for a candidate who ‘knows what they’re doing’, i.e., who can perform the task based on their educational and/or professional record. In doing so, the organization is evaluating the value of this candidate based on previously demonstrated skills, overlooking the person’s future contribution. Yet, in our current environment, successful companies must be a step ahead of the current trends to win the game.

We’ve recently discussed how it is ludicrous for an employer to assume that all employees aspire to be boss one day. Many are very content with fewer responsibilities in their careers, placing more emphasis on achieving success elsewhere in their life. As a result, a company in the staffing process may now be placed in a situation where it must choose between a candidate with 15 years’ experience in the field with no career advancement motive, and a candidate with 5 years’ experience with a great inclination for acquiring new skills.

This desire to learn is not a skill, but part of a competency cluster that is crucial to companies. In general, competencies at the motive or trait level (e.g., initiative) are more difficult to develop than competencies that resemble skills (e.g., persuasiveness, communications). It is those harder-to-develop competencies that should be the criteria for selection, rather than ‘skills’ that can be learned.

Customization: Looking inward to play your strengths

Building a competency model for future success requires more than listing the traits or motives desired within a certain job role. In fact, a 2011 article mentions that if competency models have fallen short of their goals, it is because too many organizations decide to create just one model or buy an “off-the-shelf” model for the entire organization, thereby failing to recognize the unique aspects of their own strategy, culture and values.

The article then goes a step further, comparing this method to taking another company’s logo, tweaking it a bit, and calling it your own. Competency models defined in this way will provide clear direction on how to be successful in another company and will result in poor linkage to results and poor alignment with strategy.”

We cannot deny that generic tools are critical to the competency modeling process, as they serve as a guideline, a starting point in your development process. After all, by utilizing the tools at your disposal, you save considerable time and money. But the competency modeling process involves more than listing ‘desirables’ on paper. It entails looking inward, at where your organization is, what it intends to accomplish, your competitive landscape, and the obstacles that may stand in your way over time.

There are as many ways to learn to build a truly valuable and viable customized competency model for your organization as there are applications to modeling:  succession planning, performance management, recruiting, training and development, etc.

You may want to take advantage of onsite workshops, which tailor for you generic competency models to the needs of your organization, or attend public workshops, where small groups gather to learn the techniques required to develop and implement their own models, with the support of an array of already-available tools.

What’s more, Workitect also offers webinars and white papers to further guide you in the process, so that you may derive the best value from the tools we have developed over our decades of experience.

We invite you to contact one of our consultants to discuss the best solutions for your situation.

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