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Five Human Resource Management Must-Dos to boost Productivity and Profits in Global Organizations – Business Management

Five Human Resource Management Must-Dos to boost Productivity and Profits in Global Organizations – Business Management

Trawling through the web today, I chanced upon this gem of a story:

Buddha, one day, was in deep thought about the worldly activities and the ways of instilling goodness in human beings. One of his disciples approached him and said humbly – Oh my teacher! While you are so concerned about the world and others, why don’t you look into the welfare and needs of your own disciples too?

Buddha:   OK.. Tell me how can I help you?
Disciple:   Master! My attire is worn out. Can I get a new one, please?
Buddha found the robe indeed was in a bad condition and needed replacement. He asked the store keeper to give the disciple a new robe to wear on. The disciple thanked Buddha and retired to his room. A while later, Buddha went to his disciple’s place and asked him – Is your new attire comfortable? Do you need anything more?
Disciple:   Thank you my Master. The attire is indeed very comfortable. I need nothing more.
Buddha:   Having got the new one, what did you do with your old attire?
Disciple:   I am using it as my bed spread.
Buddha:   Then.. hope you have disposed off your old bed spread?
Disciple:   No.. no.. master. I am using my old bed spread as my window curtain?
Buddha:   What about your old curtain?
Disciple:   That is being used to hold hot utensils in the kitchen.
Buddha :   Oh.. I see.. Can you tell me what they did with the old cloth they were using in the kitchen?
Disciple:   It is being used to wash the floor.
Buddha:   Then, the old rag being used to wash the floor…?
Disciple:   Master, since the rag was all torn, we could not find any better use, but to use as a wick in the oil lamp, which is right now lighting your study room….
Buddha smiled in contentment and left for his room.

This story struck home – all the more because I am working on an assignment to improve the resource utilization of the unit in various centers across the globe. And isn’t that what resource utilization is all about – connecting the dots in terms of skills, availability, requirements and time frames ?

Given the pressures of the talent shortage prevalent in the market today, resource management has become a business critical function to explore every option and implement strategy to leverage the talent within our organizations to boost productivity and profits. So how do we utilize our best assets optimally in our organizations?

Here are five short-term and long-term approaches that I have seen work and believe are must-dos to build the talent advantage:

Must-Do #1 – Demand forecasting – There needs to be a robust budgeting and forecasting process established to accurately predict resource requirements in line with the business needs. The success of resource management lies in the ability to manage spikes and dips in resource requirements so that there is no impact to revenue or profits due to lack or excess of skilled staff. This can only be done if we have a process in place to arrive at fair estimate of our pipeline into the future (not just for the current quarter but also for the next three quarters) and tie the sales forecasts with the resource planning on a regular basis through smart use of business metrics.

Must-Do #2 – Supply planning – Once you have the demand forecast in place, the supply chain needs to vetted to ensure that we have the right hiring engines to meet short-term as well as long-term needs. For example, hiring of permanent employees and the hiring of contract employees will need different strategies and engines. The supply chain needs to be aware of the demand forecast and the current priorities on a regular basis to effectively plan the sourcing channels as well as capacity building in terms of recruiters, infrastructure and training needs. These two must-dos will go a long way in arriving at a solution to this challenging question:  ‘What skills are needed to deliver on strategic objectives and how to ensure that the right people in the right places at the right time are available?’

Must-Do #3 – Competency development – Look into any HR trends or surveys in the past year and you will find the recurring theme of skills shortage as the top threat to growth and profitability. Lack of available talent means the delay or disbanding of strategic initiatives critical to pursuing new market opportunities or innovative offers. It is extremely difficult to find the “perfect” fits in terms of resources for your important requirements. A fool-proof plan is needed instead to hire or internally source “best” fits and then put them through a skill building plan based on your demand forecast and supply gaps. Any new offer or initiative should only be pursued after vetting the demand-supply gaps and having a competency building plan in place.

Must-Do #4 – Lateral career development – This one is about investing in “your own” workforce – companies need to refocus efforts and investments on first identifying their key talent and then providing them a platform to increase their ability in different areas and stay relevant in this rapidly changing (technology and business models) world. The complexities of a global business environment and the pressing need of trying to do more with less provides the business case of allowing and empowering employees to move laterally across different functions, locations and positions.  Through this, companies can create a core team of multi-cultural, multi-functional generalists who could then become the pivot around which new teams can be built with greater agility. Deloitte terms this model as the “Corporate Lattice” which reframes workplace suppositions, providing a framework to organize and advance a company’s existing incremental efforts into a comprehensive, strategic response—and mindset shift—to the changing world of work.

Must-Do #5 – Skill Repository and collaboration tools – This one is about making resource related information available throughout the important functions of the organization – where access is based on the potential value that people bring in and not on the hierarchy prevalent in the organization.  One of the things that I have found very useful in improving resource utilization is in building a company wide skill repository (a bank, so to say of the human assets) where anyone who has a resource requirement can tap into to see who is available where and when. This greatly improves resource deployment ability moving it from “pockets” to a more global arena. Add to that collaboration tools with some analytic tools thrown in, and soon you offer a space where managers and employees can “manage” themselves leading to tremendous productivity benefits (20% to 25% as per this piece of research from McKinsey)

Whatever the size of your organization, talent management is an area that needs huge attention, thought and planning. One size does not fit all as they say and it is important to create your strategy and build your implementation plan that best suits your nature of business. However, if you focus on aligning your sales plan to your resource plan, build in a process to forecast the future and plan for it, develop the right talent, make resource management a collaborative function instead of a silo and measure using the right metrics and analytics – you will be well on your way to creating the talent advantage for your organization.

 Image courtesy : http://www.flickr.com/photos/elpatojo/312519196/

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.

Five Steps to turn your Strategic Initiative into Execution Success

Five Steps to turn your Strategic Initiative into Execution Success

However beautiful the strategy, you should occasionally look at the results – this famous quote by Sir Winston Churchill often comes to my mind when I participate in strategy presentations. Beautiful slideware beautifully presented for maximum impact – but hey! Wasn’t this the vision a quarter back, a year back or two years back and essentially the same strategy couched in the latest business buzz words? You may have discovered the same yourself and experienced a sense of déjà-vu – and we are not alone. Multiple business surveys have revealed that more than 60% of corporate strategies never end up getting executed.  The best thinkers and strategists could come together and create a superb vision for an organization but it remains just that – a recurring dream – if not followed by flawless execution. But that is no easy job especially in the current turbulent business environment, globally spread and diverse employees and non-hierarchical organization structures. All the different threads that make up an organization has to be woven together to create an environment where every initiative achieves its objective and on time.

So, how do you take a single line objective or goal in a strategy (say, develop talent in niche areas or target accelerated growth in emerging markets or create a culture of innovation) and convert that into a reality? I have worked on or observed quite a few of these initiatives and the results have varied – some died a quick death, some petered out and a few gathered momentum and achieved the desired objectives successfully. Here are five steps that I believe contribute immensely to operational agility and are critical to turn your strategic initiative into execution success:

Step # 1: Get organized

Building an execution plan is the very first step. The plan has to be doable, well-defined, and realistic with clear objectives and time lines. Break up the strategy into four or five tactical goals (too many leads to dilution of efforts) and define the tasks, accountability and workflow for each of them. A structure and the process within the structure helps answer the how, what, who and where behind the high level strategy and goes a long way into making the strategy actionable.

Step # 2: Get Executive Sponsorship

Most often, implementing a strategy involves working across different functions in an organization and you may or may not have control over their actions. Office politics, inter-personal dynamics, conflicting priorities could ruin your plan even before it gets off the drawing board. So get the full support of the heavy weights behind you – you will definitely need it to enforce discipline and collaboration. Get the full buy-in of your top management to make sure that they support not only the strategy, but also the specific plan you have prepared to execute it. Don’t even bother to start without this – you will get nowhere.

Step #3: Get the Right Talent

Build cross-functional teams around each initiative selecting each team member very judiciously based on ability, personal interest and the special skills needed for the particular initiative. Through this, not only do you get the right talent but also create a shared sense of ownership and responsibility thus spreading the commitment with the organization. This will help in building momentum to sustain the initiative from the planning to execution phase.

Step #4: Communicate, Communicate and Communicate

Communication is the life-giving oxygen at every step of the process. The rationale behind the strategic initiative and the implementation plan, the benefits that are expected as outcomes from the initiative and the impact of failure of the plan all need to be made transparent to the teams. Provide information, invite feedback and conduct training sessions to increase engagement and improve collaboration. Turn passive detractors into active and enthusiastic drivers of the process by using this powerful tool.

Step #5: Track and Measure

Set up a steady state tracking mechanism and a schedule for review with the key stakeholders. Choose the performance metrics that best measure the progress (or regress) of the goals of your initiative. It is important to track and measure so that you know if you are winning to celebrate (publicly) or not winning to do course corrections on the execution plan (again publicly). This underlines the seriousness of the initiative and helps overcome the “this too shall pass” mentality in organizations. And of course, what gets measured gets improved, so you end up increasing your chances of execution success.

Transforming a dream into a reality in business or in life is not easy nor is it guaranteed. But then who said business operations was easy? I have seen initiatives succeed using the above steps (and all of them are important for successful execution) and as Marcel Telles said – A company can seize extra-ordinary opportunities only if it is very good at the ordinary operations. So the journey may be tough but the rewards would definitely be worth it – at the very least, you would not have to sit through the same strategy being presented for the umpteenth time in a new shape.

Tell me what I have missed out and where I might be wrong. How do you turn your strategic initiative into execution success? I would love to learn from you and get better.