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Five Outdated Human Resource Policies That Need To Go, Now!

Five Outdated Human Resource Policies That Need To Go, Now!

We spend between 8 to 12 hours of our waking time at a place we call “work”. Some of us have chosen our career options, some of us didn’t really have any choice. Whichever category you may fall into, the one thing common between employees from both categories is that both are “governed” by the Human Resource policies your company subscribes to. The HR policies your company believes in and enforces speaks volumes about how they treat or intend to treat their employees. As an employee, you would ideally want to work in an environment which is respectful and put quite curtly, treats you like a responsible adult. Unfortunately, many of the HR policies which are in practice are extremely unnecessary and outdated. The World of Work has made progress by leaps and bounds, however, it is policies like these that hinder the pace of this progress. If only every organization, every company followed two things J.W. Marriott said, like their bible, and shaped all their HR Policies around them, the World of Work would be such a happier place.  We continue our post on outdated HR Policies that need to be scrapped, in the spirit of these words, by one of the greatest entrepreneurs ever:

“Take care of your people and they will take care of your customers”

“Treat your employees the way you would like to be treated – provide them every avenue to success. Get their confidence and respect. Have them like and be interested in their job.”

These Five Outdated Human Resource Policies need to go and need to go now:

1. The Tedious No Reference Policy: For those of you who have been at the receiving end of this extremely frustrating policy, and have no idea why most companies across the globe follow this as a rule, the story goes like this: “Not very long ago, in the United States, an anesthesiologist was dismissed after he was caught using narcotics at work. After firing him, the company gave him a positive reference, but later, at his next job, he came to work doped, which almost cost a patient’s life. The patient’s family, who sued the new employer, was awarded $8-million USD. That company then turned around and sued the anesthesiologist’s former company, which provided the reference, and won”.

Hence, in order to avoid complications arising from references which can later be used against the company, and also to avoid defamation lawsuits (in case the company gives the employee a brutally honest reference the employee disagrees with), companies prefer giving no references at all. This HR policy is not only outdated in today’s world where networking is crucial, it also means that there is absolutely no trust in the employee-employer relationship. While it is only fair for an employee to get a reference from his/her former employer stating his/her potential, it is equally beneficial for the future employer to have knowledge of the same.

2. The Insensitive Bereavement Pay Policy: This particular policy is outright insensitive. Losing someone close to you is difficult enough, without having to fill in bereavement applications categorizing whether the deceased was an immediate family member or a non-family member, based upon which the companies issue paid leaves. It is these occasions that you as an employer, or the person responsible for the well-being of the employees at the organization, have to be extremely sensitive about. And it is precisely these occasions that characterize employee-employer relationships, which have a direct impact on productivity. However, when your employee loses someone dear, put yourself in his/her shoes and think how you would feel if the place you go to work at objectifies it, in a manner so insensitive. Being human will take you a much longer way than being a capitalist in these situations. Life, after all, is not a balance sheet. Take care of your employees and they will take care of your business.

3. The School-like Attendance Policy: We thought we left school eons ago, however, we were so wrong. Old school attendance policies haunt us to this day, even at work, where we thought we would be treated as responsible adults. Not allowing work from remote location as a rule and clocking arrival and departure time (which then goes on to affect the pay) stringently indicate a deep-rooted lack of trust and  only result in demotivating the employees. How about moving from time-based management to goal-based management ?

4. The Draconian Bell Curve Performance Reviews Policy: One wonders if this is a particularly Indian phenomenon. As Indian kids, we were constantly compared to the metaphorical (and sometimes literal) “Sharmaji ka beta” (the neighbour’s son for our international readers). So we get a job and are finally ready to taste freedom, only to realize, “Sharmaji ka beta” has followed us to our workplace too! Bell curve performance reviews segregate employees according to their performances (high, average and low) by a comparison between the employees, and are completely based on the discretion of the manager. The ones ending up at the bottom of the curve end up being fired to accommodate fresh recruits to make up for the lost performance. This may not only result in unfair evaluation but also in high attrition rates thus having a direct negative impact on the goodwill of the company. Moreover, this format of a performance review makes for an extremely competitive and pressured environment, which any good manager knows, are huge road blocks for productivity. It is imperative to avoid such a divide and conquer strategy in the workplace. On the brighter side, Infosys having made a change, hopefully more Indian companies will follow in scrapping this draconian policy!

5. The Regressive Dress Code Policy: Once again, let’s just try not to keep reinforcing what we all went through at school. Yes, of course there should be some kind of dress code or at least some definition of clothing which may be considered offensive by others, hence to be avoided. However, micromanaging what your employees can and cannot wear is twisting and bending their identities out of shape in a lot of ways. For example, the still ongoing debate on Muslim women wearing head scarfs in France. Let your employees be, let them breathe easy. How one dresses is how one feels, how one feels is how one creates, and every individual has the right to decide that for oneself.

It is indeed sad that in a world as globalized as the one we currently inhabit, we still need to negotiate, on a daily basis, these outdated policies which regulate and control our every day at work. In the longer run, a business which is sustainable and scalable is one which provides an environment to nurture and respect its employees. Like we said earlier, all you need to do is, take care of your employees and they will take care of your business! It has been so long since we have been ‘profit’ oriented, let’s strive for a change to be more ‘people’ oriented. Trust us (and some of the world’s best business leaders) – the profits will soon follow.

Five Human Resource Metrics that link People to Business Strategy – Business Operations Performance Metrics

Five Human Resource Metrics that link People to Business Strategy – Business Operations Performance Metrics

The abundance of information – from both internal and external sources – is the richest possible mine when it comes to understanding the employer brand, employee engagement and what employees want and need from the organization. The vital, and apparently missing, step is to transform the data collected into strategic advantage. The use of analytics, seems to be focused on external stakeholders and is yet to be used to its full effect when it comes to talent management. Only under half of CEOs (46%) use analytics to provide insight into how effectively skills are being deployed in their organizations.

This was a key finding in PwC’s 18th Annual Global CEO Survey, “People strategy for the digital age: A new take on talent”, which seeks to understand how businesses are preparing for the wholesale redesign of the world of work.

Clearly the standard HR metrics of Cost per resource, HR efficiency (no. of HR employees to total no. of employees), etc. which primarily help in driving down the costs are no longer sufficient in an environment where talent is the competitive edge for organizations. The need of the hour is HR metrics that are aligned to the current and the future business plans to ensure that not only is there no shortage of talent when we need it but also that we have processes and programs in place to create the right talent for our business.

When we create budgets for the year, we spend a significant amount of time planning where the revenue will come from and how the spend will be distributed across cost headers. In services organization, labour is the biggest component of both income and expenditure. Do we spend the same amount of time in planning how we would attract, retain and develop this big-ticket item so that the business objectives are met? Annual talent strategy planning is a must to develop and harness the potential of human capital – to proactively drive business outcomes instead of reactively responding to whatever the latest talent shortage crisis is. Based on my experiences in resource management and operations, here are the five human resource metrics that I think can help link your people strategy to your business strategy:

Human Resource Metrics #1: Competency Development Spend % – This one starts with identifying the key skills and talents that are necessary to execute on the company’s strategy for the year and create the competitive advantage while providing a platform for internal employees to learn and grow in their chosen career ladders. These could be technical (specialized software or hardware skills), functional (customer service, selling, tools and technology training) or managerial (leadership development, communication, succession planning, mentoring). Assess the current skill levels and the gap from where it needs to be and then draw up the competency development plan with budgets, timelines and desired outcomes for the year. Monitor the spend against the budget periodically (maybe monthly or quarterly) to ensure that there is focus on developing the right competencies that are needed for business success and that the plan is relevant to the current business scenarios.

Human Resource Metrics #2: Employee Engagement – This is the HR Mantra and enough research has been done to show that the EE figures of an organization are directly proportional to its business performance. Falling engagement levels are the precursor to higher attrition, lower productivity and increasing costs per hire. But an employee engagement survey just for the sake of measuring engagement is a waste of time and energy. The survey should be used as a tool to collect information that helps drive better results. Analysis should be done to isolate sincere actionable feedback from the “noise”. For example – what do your best performers think about your organization – does it allow them to perform to their optimum levels and get better every day? Invest and prioritize the engagement feedback that will really have an impact on key employee retention and overall employee performance and build this into your annual plan.

Human Resource Metrics #3: Quality of Hiring – This amounts to determining how a new hire’s abilities and performance varies from pre-hire requirements and expectations and is a metric that is generally calculated from 3-6 months after the hiring. Combined with the cost of hire (external recruitment spend+ internal labor costs) and the speed of hire (time taken to fulfill an open position), the quality of hire metric forms a great basis to measure the overall efficiency of your recruitment function and its processes (targeted sourcing,  speedy reaction time, consistent screening process and continuous improvement). The impact of a wrong hire is huge on the business outcome and we definitely need to spend some time here to ensure we have the right data points and methodologies to ensure that we hire the right people for the right jobs. Some excellent data on this metric here : http://www.ere.net/2009/10/02/quality-of-hire-the-missing-link-in-calculating-roi-part-i-of-a-series/

Human Resource Metrics #4: Resource Utilization % – This is the most common metric used in human resource management and for a good reason. It is the ratio of the resource’s billable work to the total amount of work and hence has a visible and direct impact on a company’s revenue and margins. What I want to highlight here is the need to go beyond this number and look at the underlying reasons for variations in the numbers and focus on them for improvement.  Numerous factors can change utilization rates, including inconsistency in calculations of what constitutes work and billable work, late and cancelled projects, increased training and ramp –up times and ancillary job demands, such as paperwork. Keep track of employee expertise areas and availability status in a central skill database, so that you can the quickly move people into a project and maximize utilization. Cross-train technical staff to respond quickly to changes in client demand. Developing a versatile and flexible workforce keeping in mind future customer requirements reduces idle time. Develop a bench strategy and a robust demand and supply forecasting process to stay on top of the target utilization numbers.

Human Resource Metrics #5: Revenue per Employee – This is a simple metric but the most important one to gauge and measure the success of all the plans and initiatives as outlined above – quarter on quarter and year on year. It also helps to compare the performance of your organization with similar organizations and set benchmarks internally for your HR and resource management functions, the data on total revenue and total headcount of companies being easily available. The revenue per employee should steadily increase leading to expanding margins and improved profitability. This is a number that must feature on all management reviews as it helps keep focus not only on the denominator (costs – and there is only so much cutting that you can do) but also on the numerator (revenue – where are we getting maximum value out of our labour and why – to drive strategy in the directions where it is working).

One size definitely does not fit all when it comes to metrics  – and you may have your own views on what metrics are best suited to drive the talent advantage for your organization. One thing is common though – we need to collect consistent information on our resources, use metrics that enable decision-making and ensure that talent management strategy remains relevant with overall business strategy and contributes actively to business growth. We need to choose the metrics that help the management to make quick and sound business decisions that are based on facts rather than feeling. What has worked for you in this area – I would love to hear and learn from you.