Competency Model Construction, Retro-Fit

Thursday, March 25, 2010

We briefly reviewed how you might construct a competency model from the ground floor up for a single job in the example of a long distance truck driver. It was clear that such an effort would require a significant amount of resources in time and manpower, which translates into financial demands. Many organizations would not be welling to investment the required level of assets into developing a brand new competency model for one job much less for several jobs. It is possible to obtain a readymade competency model that may fit 70%-80% of an organization’s needs, while allowing for customization of the remaining 30%-20%. A quick search of the internet finds numerous sites offering consulting services related to competency models. Many web-based model-building tools use interactive wizards to allow the user to construct a model online in real time. A similar search at Amazon.com, found a number of books on competency models that would help the HR profession gain insight into how competency models would be useful to their organization.

While I will not endorse any specific website, vendor or book, I am listing a few here as examples of what is available. The reader should exercise their own due diligence in selecting the materials and tools best suited for their unique situation.

Websites:

American Society for Training & Development: http://www.astd.org/content/research/competency/

Halogen Software Inc.: http://www.halogensoftware.com/

Workitect, Inc.: http://www.workitect.com/competency_systems.html

CareerOneStop: http://www.careeronestop.org/competencymodel/

ThinkWise, Inc.: http://www.thinkwiseinc.com/Solution/CompetencyModels.aspx

Books:

The Art and Science of Competency Models: Pinpointing Critical Success Factors in Organizations by Anntoinette D. Lucia and Richard Lepsinger (Hardcover - Mar. 5, 1999)

The Handbook of Competency Mapping: Understanding, Designing and Implementing Competency Models in Organizations (Response Books) by Seema Sanghi (Hardcover - Dec. 2003)

Competence at Work: Models for Superior Performance by Signe M. Spencer and Lyle M. Spencer (Hardcover - Mar. 1993)

Using Competency Models to Manage Firm Talent by Heather Bock (Paperback - Jan. 25, 2007)

Leadership competency models [An article from: The Leadership Quarterly] by G.P. Hollenbeck, M.W. McCall, and R.F. Silzer (Digital - Aug. 1, 2006) – HTML

Constructing Core Competencies: Using Competency Models to Manage Firm Talent by Heather Bock and Robert Ruyak (Kindle Edition - Aug. 11, 2009)

There are potential trade offs in one of more of a competency model’s features, effectiveness, reliability or validity when applied to an unintended job or function. A model developed for a sales team in the food and beverage industry may be adapted for a sales team in software sales, but how valid could it be? Furthermore, a competency model does not stand alone within the organization. Sustaining it are the reward, recognition, training, development, and management support systems. Competency model development is an ongoing, evolutionary process rather than a fire and forget, check it off the list, one time accomplishment.

Competency Model Construction, New

Wednesday, March 24, 2010

 

There are two ways to approach the creation of almost anything, build new from the foundation up or purchase something already created and modify it to meet your needs. This is true for houses, organizations, software systems, and competency models. What would be required to build a new fully functional, validated competency model for, let us say for a long distance truck driver? We would need to know what a long distance truck driver does, when, where, how, why, and who does the work. Furthermore, we would want to know the frequency of the work and the importance of the work to the overall success of driving a truck. As a designer, we would want to talk to drivers, their managers, their mechanics, and others. A good idea may be to ride along with drivers and observe them in various situations, times of day, locations, and weather conditions. Lastly, all of this “data” would require analysis and formulation into an initial and tentative model, with preliminary testing for reliability and validation with subject matter experts.

 

Using the example of a long distance truck driver we would collect data on the type of truck, engine and transmission specifications, trailer type, number of drive axles and non-drive axles, mileage driven, tonnage delivered, geographical area driven, type of driver assignment, i.e., single or team, typical weather and traffic conditions, number of stops or trailer drops, hazardous vs. non-hazardous cargos, safety records, and types of cargo. It is possible that much of this data is available from the organization’s data management system(s).

 

Interviewing drivers could prove to be challenging as many may be on the road and inaccessible for long periods. Some type of online (many drivers now file their logs electronically) questionnaires could prove to be helpful when interviewees are not housed in a central location. Interviewing drivers after returning to their home depot might be an alternative, if you allow for the drivers to rest after driving 5,000 miles in five days. As with any job, managers would be a key subject for interviewing. Mechanics could be useful in identifying the types of drivers who take better care of their trucks, i.e., lower maintenance cost, down times, repairs … etc. Interviewing hundreds of drivers could be time communing and expensive, requiring a team of interviewers. The very nature of an interview could alter the behaviors of the drivers, for the better or for the worst. The option of hosting focus groups with drivers could be as much of a challenge as interviewing individual drivers. Job diaries and journaling might be an alternative means to collect specific details about examples of certain events, traffic, accidents, weather … etc.

 

Riding “shot-gun” with drivers could certainly add a personal perspective to the boredom, lonely hours, and monotonous conditions of driving thousands of miles each trip. It would further help to understand the issues associated with traffic stops, weight stations, inspections, accidents, city driving vs. interstate, weather conditions, trailer drops, cargo loading and unloading wait times. However, this could also alter the driver’s behavior. The use of remote video recordings could support the observation of drivers at their home depots as they enter, prepare for, and leave for another run.

 

Once all these data points and observations have been collected and organized, some form of analysis will follow to identify and separate outstanding, average, and poor performers. Following the initial data collection, organization, and initially analysis, preliminary validation of the data will require review by managers and other subject matter experts. “Others” might include individuals such as, driver recruiters, mechanics, diver trainers, dispatchers, depot managers, material handlers, forklift operators, and other drivers. The goal, at this point is to gain a consensus among the various groups as to what constitutes outstanding, average, and poor performance of a driver. With this consensus, we should have enough tentative information to construct a model of driver behaviors to support selecting, training, evaluating, rewarding, and managing drivers.

Project Planning Competency Modeling

Tuesday, March 23, 2010

It should not have to be said, but I will, “Plan Your Work, Work Your Plan”.

Developing and/or implementing a competency model demands a significant amount of resource preparation and requires basic project management skills, as would any other major organizational effort. In these times of limited resource availability and multiple duty assignments, no one has the luxury of unnecessary steps or wasted actions. Depending on the scope of your implementation someone will need to function as the project manager and coordinate, schedule, mange the interviews of dozens of individuals, review dozens of questionnaires, arrange meetings, perform analysis, draft proposals, develop communications materials, and follow-up with numerous individuals. To make all of this to happen in an orchestrated fashion, a plan of sufficient details is vital to the success of the undertaking. The goals and objectives of the implementation should be clear and concise as to the business justification for the endeavor, the impact on product lines, functions, jobs or locations, the methodology for the model’s creation, and identification of the roles and responsibilities of team members.

Many organizations have internal or even external guidelines, which dictate how any enterprise-wide project is developed, funded, and deployed. These guidelines may deal with the planning tools used, how resources are allocated, the use of steering committees, how outcomes are measured, and who or what has finial approval of the project. Detailed project plans that itemize every conceivable step during an implementation are the norm for many organizations. My own experience tells me that senior organizational leaders generally do not want a review of low-level detail. A summary of the major steps generally is acceptable for the C-team members with milestones and overall time periods clearly identified. Whatever level of detail is common in your organization is your target, however; it should clearly identify individual team members’ roles and responsibilities.

With any project plan, it is essential to identify possible roadblocks and alternatives to facilitate moving past any obstacles. These roadblocks could be include, the unavailability of key resources, an unanticipated competing organizational initiative, changes in the management team, and changes in the financial position of the company, to name but a few. A well-developed plan will help to identify potential barriers and allow for alternative planning steps, if encountered. Example, if a new member of management joins the organization, there should be a plan in place to provide background, bring then up to speed on the status of the project, their role and responsibility, and any impact on their functional unit(s). One planning technique is to build a small amount of “pad” time to allow for any project slippage caused by impediments. This will at least allow you to meet your overall plan deadline without a major work stoppage. One major subsection of the project plan is a communications plan. It is common for planners to under estimate the resources required to develop, gain approval, prepare, and fulfill communications materials. Since most large employers have some level of access to marketing and/or commications resources, either internally or externally, coordination of these resources requires significant efforts.

While the project manager of an enterprise-wide replacement of a Payroll-HRMS-Financial system, someone on my team came up with the idea to give everyone who completed the end-user training a pin-on button reading, “Mission Ready”. This sent the message to others that training was important and helped to “brand” the Payroll-HRMS-Financial system. While an e-mail, blast may pass as communications in some organizations, the success or failure of many projects hinge on your target audiences’ acceptance of a well-crafted message from creditable sources.

In these unpredictable times, priorities and plans must change to accommodate new demands from the market place. Any project must allow for a change in direction, reallocation of resources, and scope.

The Role of Competency Modeling in HRM

Monday, March 22, 2010

It continues to be evident, even in the current economic times, acquiring and retaining the “right” talent is fundamental to the success of every organization. The role of competency modeling is to help organizations find and manage the “right” mix of strategic management and professional talent required for that success. Competency modeling provides that support by linking talent acquisition, training, appraisal, reward, and succession planning to the short and long-term goals of businesses by identifying the key critical success factors for specific roles. While it is possible to apply competency modeling to an entire organization, it is also feasible to apply it to specific units, product lines, locations or a select few essential functions.

During the selection process, the right candidate must be selected for the right reasons. Seldom do organizations have the luxury of hiring an employee just because they “look good” or they have the correct pedigree. In these times of lean and leaner staffs, every member of the business unit must often perform multiple functions, usually starting on day one. Therefore, it is vital that all members of the interviewing team be on the same page when looking for those factors that will allow the new hire to be successful or point to immediate failure. Through the discovery process, competency modeling identifies those factors central to the success of the candidate and provides a road map to link the right candidate to the right role during the interviewing phase.

While employers expect the new hire to be fully trained prior to joining the organization, ongoing training and development is still an essential function in the continuing growth of high potential members of a business’s leadership team. Since competency modeling has identified the key success factors for the role and has helped to select the right candidate, those same factors need to be reinforced in the behavior of the leadership team member. Furthermore, should developmental issues be noticed in a key team member, competency modeling will help to identify them and provide a means to correct them effectively and efficiently? Competency modeling does this by allowing the organization to focus its limited training, development, and coaching resources on those skills and behaviors that are vital to the individual’s organizational success.

Employee performance appraisal is often an uncomfortable time for the employee as well as the manager. At appraisal time, competency modeling again provides the organization and incumbent with a clear picture of what performance behaviors will be scrutinized and considered as a means of measuring success or failure. It also provides for a means of focusing the appraisal conversation around issues that are significant to both the organization and incumbent. Should the organization uncover any training, developmental, and coaching needs of the incumbent during the appraisal process, competency modeling will validate whether those needs are critical to the incumbent’s success.

Regardless of how it takes place, voluntarily, involuntarily, promotion, demotion or reassignment; all employees eventually exit their current roles. Succession planning is fundamental to a robust HRM system and the continuation of business activities. By now, the role of competency modeling should be clear. It illuminates those key knowledges, skills, abilities, and personality traits vital to identifying a replacement as well as the assessment of an incumbent for their next organizational role in the case of demotion, promotion or reassignment. Moreover, it provides for a means to assess the strength and weaknesses of the incumbent’s prior direct reports and their readiness for their next move.

Although competency modeling is but a single tool in the organization’s toolkit, nevertheless it is critical in the HRM system of talent acquisition, development, appraisal, reward, and succession planning for organizations who wish to participate in today’s aggressive business environment.

Basics of Competency Modeling

Friday, March 19, 2010

As organizations continue to struggle with increased competition, shortages of strategic management and professional talent, and pressure from shareholders to produce tangible returns, some organizations are beginning to rethink all aspects of their talent management system. While “competency models” were once thought of as the purview of academicians and scholarly work, human resource professional are reconsider the role competency modeling plays in the acquisition, retention, and succession planning of key managers and professionals. In these times of economic downturn, it is easy for the HR professional to assume that high quality strategic talent is abundant on every street corner. As businesses emerge from “The Great Recession”, many are looking to grow new and re-build lost or diminished markets. The identification and formalization of those knowledges, skills, abilities, and personality traits necessary to achieve sustained success and growth is essential to a talent acquisition system founded on competency modeling.

The identification of core knowledges, skills, abilities, and personality traits possessed by top, average, and low performers must be identified and built into an organization’s talent management system as a means of binding the success of both parties. Talent management is as much about selecting the right candidate for the right job as it about de-selecting the wrong candidate for the right reasons. While there are numerous methods available for the collection and building of a skill’s database, i.e., knowledges, skills, abilities, and personality traits, it is the validation of those skills and their association with job performance success or failure that is essential. Depending on the size of the organization, the size of the talent pool sampled, and the financial and time resources available, the organization may choose personal incumbent and manager interviews, focus groups, job shadowing, questionnaires or even video/tele-conferencing as a means of data collection. The key is to capture and validate via position managers examples of work performance at all three levels that will allow those critical factors to be built into the talent management system.

Consider a Pediatric Nurse providing care in the patient’s residential home rather than a hospital setting. No massive hospital staff to back them up in an emergency, maybe the parents are home, maybe not; maybe the home is many miles from 911 assistance. The knowledges, skills, abilities, and personality traits required in this setting are entirely different from those needed in an institutional environment. A competency model can be used to vet out those skills of a superior, average or not so average nurse and link those skills into the selection, retention, training, and succession talent management process for that position. Getting at those key skills means looking at examples of job related performance and determining situations when it leads to success or failure. This requires input from both the nurse and their managers, only they are able to validate the skills required in the various environmental settings the nurses may find themselves.

During the discovery process, it may be uncovered that a home based Pediatric Nurse requires knowledges, skills, abilities, and personality traits not commonly associated with their hospital based counterparts. Many skills thought to be critical for job success or failure are based on the anecdotal assumptions by employees themselves as well as their managers. Competency modeling provides a means to either validate those assumptions or discard them in favor of skills found to be truly essential to the success of the employee and the organization.

Status of Health Care Reform

Thursday, March 11, 2010

Within the last few days, the heat on health care reforms appears to be picking up steam.

A recent Associated Press poll reported on March 9, 2010 found that 50% of those polled want health care reformed, however 68% say they want change supported by both parties and that President Obama and Democrats should work with Republicans.

Results of an Investor's Business Daily (IBD) released on March 8, 2010 found that 61% of those surveyed want Congress start over and not rely on "reconciliation" to pass unilaterally any health care reform measures. The poll, conducted by TechnoMetrica Market Intelligence, for IBD, found that most polled “are dismayed with the way the debate has played out”.

As reported by Margaret Talev and David Lightman, for the McClatchy-Tribune News Service on March 9, 2010 health care reform is drawing actions from both supporters and protesters. Public-option groups are pushing Congress to pass reform including a public option while members of the Tea Party are seeking a rejection of health care legislation. While Democrats report they may not be able to pass any final measure by March 26, Republicans are attempting stall any further action on reform. The U.S. Chamber of Commerce reports it plans to spend upwards of $10 million to convince the public and others that the current plan is bad for the economy and jobs.

Alan Fram, an Associated Press writer, reported on March 10, 2010 that Republicans might have a difficult time defeating efforts by the Democrats to pass health care reform via the reconciliation procedures. In hopes of fast tracking reform, Democrats in the Senate could use “reconciliation” to block any Republican efforts to filibuster reform to a standstill. With reconciliation, Democrats would only need 41 of the Senate’s 100 votes to fend off a Republican filibuster. Latest reports indicate that Democrats have 59 votes in the Senate to counter the Republicans 41.

Erica Werner, of The Associated Press on March 10, 2010, reported that President Obama plans to continue to push up the pressure on “skittish Democrats” to act quickly on his health care reform agenda. During a planned speech in St. Louis on Wednesday, he plans to urge Congress to move and move quickly on health care reform. The St. Louis speech is the second address on health care the President has made within three days.

The Targeted News Service on March 9, 2010, reported that Governor Bill Richardson of New Mexico signed two state health care bills into law.

HB 12 - Health Insurer Service Reimbursement: Requires insurance companies to spend 85% of premiums or more on direct member services and not on administration or profit.

SB 148 - No use of Gender for Health Insurance Rating: Requires the use of unisex insurance rate tables for the individual market, prohibiting the use of separate premium tables for males and females.

It remains to be seen whether President Obama and Democrats have the ability or will to pass health care reform in the face of strong oppression from Republicans, business and public groups, and many voters.

Manager-Employee Relationship and Performance

Wednesday, March 10, 2010

Other than our families, we spend more time and focus more energy interacting with our managers than any other single individual person in our daily lives. This degree of intimacy between the manager and employee creates a relationship that closely resembles that of other relationships in our lives and like those other relationships contains a degree of trust. This relationship, between the manager and the employee forms one of the essential bases for employee job performance.

While a well-written job description may tell managers and employees the what, when, how, and even where the work is done, it is the manager that creates the performance environment of the job. It is within this performance environment that the employee has to perform their duties and to the expected level. As with any other relationship, to be successful, the trust relationship must be a two-way bond between the manager and the employee. Moreover, it is within this performance environment that trust between the manager and employee must exist if both are to achieve their mutual performance goals.

The Manager-Employee Relationship is not a zero-sum game, rather it is highly probable that all parties can and often do win in their efforts to reach their mutual goals. The degree of the “win” for each party may not always be 100%, thus it is possible for one party to win 75% and the other 50% of their respective goals. While those goals may be different for each party involved, nethertheless, they are not necessarily mutually exclusive. Consider the situation of a Call Center Manager and a Customer Service Representative; we assume that both have the common goal to remain employed. Beyond that initial assumption, the manager’s goal may be to demonstrate their managerial effectiveness, achieve a higher degree of responsibility, and thus a promotion. Whereas the CSR may wish to handle efficiently the day’s calls, get to their evening undergraduate class, graduate, and pursue a teaching career.

Within the Manager-Employee Relationship, trust is one of several catalysts that promote employee performance. The Call Center Manager cannot and should not monitor every call taken by the CSR’s under their supervision, that action would not be an effective use of the manager’s time. Nevertheless, the manager has to monitor enough calls to reach a trust level with each individual CSR. Our manager may not have a choice in how many calls to monitor, since that decision is often established by the organization for all CSR teams. However, very quickly, our manager will learn which CSR’s are performing and which are not, thus building a degree of trust or not in the CSR’s performance. Here, trust is another word for reliability.

Since we have declared that trust, i.e., reliability, is a two-way relationship feature, our CSR will quickly learn to trust their manager or not. As with the manager, the CSR’s trust is earned through their day-to-day interactions with their immediate manager. In the same way that our manager monitors the actions of the CSR’s, the CSR’s are observing how our manager interacts with our future teacher and their fellow CSR’s. If our manger deals fairly with our CSR’s, even on disciplinary issues, trust will be built between the manager and individual CSR’s. This increases the likilhood that individual CSR performance will reach or even exceed the desired levels. As will all relationships, ongoing maintenance of trust is vital to the continued achievement of our manager’s and CSR’s mutual goals.

Employee Performance Appraisals

Tuesday, March 09, 2010

 

What do employee performance appraisals and report cards have in common? No one looks forward to them.

Virtually all employers have some form of periodic employee performance appraisals or evaluations. Some are complex, written, and detailed others are simple, some gather input from a 360 range of peers, subordinates, and supervisors, others do not. Managers do not enjoy delivering them and employees do not enjoy receiving them. And why is that?

For many managers and employees the “annual” review is one of a very few times when they both sit down and talk about expectations and performance. In a typical day, managers and employees often deal with each other in attempting to put out some fire, deliver a report on time or deal with some crisis. However, there needs to be time dedicated to discussing performance throughout the year. While I am personally in favor of short informal monthly “discussion” sessions throughout the year, others may prefer something more formal and on a more or less frequent basis. For me, these are two-way conversations where I am coaching the employee, understanding what barriers the employee encounters, and getting feedback on how I am doing as a supervisor.

We have all had managers who had no business being in a supervisory role. I always used these situations as an opportunity to learn what NOT to do and add them to my own supervisory toolkit. I found that an understanding of the employee’s life, their situation, their family, and their environment allow me to build a relationship that promotes trust. That trust provides me with an opportunity to coach the employee on a daily basis and shape their behavior in the direction I want. Moreover, since this is done within an environment of trust, the employee generally perceives it in a non-threatening manner. Furthermore, by laying groundwork of my expectations through coaching early on in our relationship, the employee was less likely to find themselves is an “I got you” situation in the future.

Rather than deliver a barrage of expectations after the fact or in the middle of some crisis, setting my expectations up front, in advance, and then coaching the employee daily, results in the desired outcome. Borrowing a phrase from Richard Finnegan’s “Rethinking Retention in Good Times and Bad”, I “scripted” the employee’s experience in a manner that delivers “value” to both the company and the employee. This approach allows me to quickly develop an understanding of the employee’s performance capabilities and build a relationship with the employee. If an issue with the employee’s performance develops early on, it is easier to deal with while it is small and manageable, rather than a year later when it is a serious problem.

Certainly, the formal annual employee performance process is an essential part of managing the supervisor-employee relationship. However, the outcome of that process should not come as a surprise to the employee. All too often employees learn of a performance issue for the first time during their annual review rather than when it occurred six months earlier. If we are coaching and managing the employee’s performance throughout the first 30, 60, 90, and 180 days of their employment; the employee is going to have a clear understanding of where their performance stands long before their annual review. Something is wrong if we, as supervisors, are sitting down with the employee at their first annual review time explaining that they are being let go. If a performance issue arose and we failed to address it six months earlier, then someone has to question why we are in a supervisory role.

The Multi-Dimensionality of Retention

Friday, March 05, 2010

Which is the proper question to ask about employee retention? Why do employees stay? Alternatively, why do employees leave?

In his 2010 "Rethinking Retention in Good Times and Bad", Richard Finnegan lays the groundwork for retention by reexamining the three “P’s”: People, Products, and Processes. In doing so he concludes that Processes, not People and not Products, are the key to retaining the organization’s best talent. The “Processes” that he focuses on are those dealing with the acquisition and retention of talent. Certainly some of those Processes are concerned with how talent is rewarded. However, Finnegan goes deeper by looking at the work environment by asking why employees “stay”. His answer is that employees stay, “for things they get uniquely from you”, the employer. While this may sound like a simple and all too obvious answer, upon introspection a multi-dimensionality of reasons become apparent, “unique” to each employee.

Consider the working mom who wants to be near her young child’s school and her home and accepts a job in a nearby office to avoid a long commute. Maybe she gives up a higher salary, better benefits, and peer recognition for what she can uniquely get from this employer. Examine why a young IT staffer accepts employment at a small, innovative software company. It wasn’t for the pay and benefits. Was it for the exposure to the leading edge technology being developed? Why would a top 1% Ivy League graduate turn down numerous job offers from the Fortune 100 to work for a small public policy think tank? Was it because of only what that small public policy think tank could offer her?

So if employees stay, for those things they can only get from their employers, why do they leave? According to Finnegan, employees quit “because they can”! Even during a down economy, good performers have opportunities. Some of those opportunities are self-generated, i.e., they open their own business. Competitors, looking to gain a strategic advantage may generate opportunities. I once worked with a bright co-worker who when passed over for a promotion jumped ship and went to a direct competitor who gave her the promotion and used her skills to help build market share. Market share that my employer lost. What did my employer lose? They lost a 20-year veteran employee, a mid-level manager with technical skills, and an individual with intimate knowledge of the interworkings of her former employer’s business operations.

Is there a catalyst in retaining the organization’s best and brightest? Finnegan believes that supervisors should be held accountable for turnover. Assuming supervisors have hiring authority, they are responsible for selecting the right or wrong candidates. They are also the focual point of contact between the employee and the organization. While Finnegan states that retention should be driven from the “top down”, supervisors shape the opinions of employees more than any other person in the organization. Supervisors are also the persons who should be conducting both the “exit” and the “stay” interviews with employees. It is often reported that a military unit runs on its non-commissioned officers, then businesses must run on its supervisors.

Employee retention is not just about the tangible aspects of the employer-employee relationship; rather it is enveloped in what Finnegan refers to as the concept of the “Employee Value Proposition”. The Employee Value Proposition is a concept very much akin to product branding. Moreover, the Employee Value Proposition is a holistic concept driven by “things they get uniquely from you” and only from you, the employer!

Employee Goodwill, Engagement, and Retention

Thursday, March 04, 2010

Why should any organization be concerned with employee retention during a period when the labor market is rich with talent? First, nothing will last forever, even a talent pool as deep as today’s. Only a few years ago that talent pool was not so deep. There are still skill sets in short supply, even in todays down economy. Second, an organization expends significant and scarce resources to locate, acquire, and train the talent it has today. Now that the organization has invested in the acquisition of that talent, all other things being equal, it will want to realize a return on that investment. An organization’s talent hosts a wealth of knowledge concerning the inner workings of any organization, knowledge that could be useful to a competitor.

The U.S. Bureau of Labor Statistics (BLS) reported employers completed 1,761 layoffs in January 2010, resulting in 182,261 worker separations. At the same time, the BLS reported that the number of layoffs, which peaked at a high of 2,913 in March 2009, has been declining month over month. The payroll-processing firm ADP reports an upturn in employment given a 1st quarter GDP 5.9% growth rate. Kohl's Department Stores announced the opening of 30 new stores and adding more than 1,500 employees in 2010. Advantage Direct Communications Inc.’s new Reno call center operation added 150 jobs in February 2010. Talgo, a Spanish train-maker, is bringing 125 new jobs to Milwaukee in June 2010 with the reopening of a former automotive site. While most economic watchers predict the jobs recovery to be slow and long, recovery is within the near future.

The problem with any recovery is the unpredictability of the jobs created, the skill sets needed, and where those jobs are located. The BLS reports that demand for nurses (RN’s) is expected to grow at an annual rate of 22% through the year 2018. Engineering employment is expected to grow at 11% annually from 2008 to 2018, however, certain industrial sections may actually see a decline, i.e., manufacturing. The top five jobs, as reported by the BLS, with the highest growth potential are biomedical engineers, Network systems and data analysts, Home health and Personal care aides, financial examiners, and Medical scientists. With last month’s announcement that the government would provide loan guarantees for two nuclear reactors and up to 18 nuclear projects in the planning phase, the industry may need to hire upwards of 25,000 workers over the next five years according to the Nuclear Energy Institute.

While industrial espionage may have visions of James Bond like covert activities, sometimes it is nothing more than the organization’s top sales person departing with the top account. A former employee’s knowledge of the organization’s customers, clients, internal workings, methods, and practices can give their new employer certain advantages. “Credit Suisse Securities USA offered the group of investment managers “tens of millions of dollars” to leave Goldman Sachs in an act of “pirating,” according to the complaint filed Feb. 17. Several of the managers immediately began soliciting former clients in violation of their Goldman Sachs contracts, the investment bank said.” “Microsoft says a startup founder took a job at the Redmond company under false pretenses, then used his inside access to download confidential documents for a patent complaint his company has since filed against major computer makers.”

The relationship an organization builds and maintains with employees during the bad times is going to shape the employees’ opinions once the economy turns around and may well determine whether they stay or go. Moreover, if they do go, what will the organization lose in addition to an employee?

Building Employee Goodwill and Engagement

Wednesday, March 03, 2010

How does an organization go about building employee Goodwill and Engagement? While there is no one single or simple answer, employee Goodwill and Engagement is built using some of the same techniques used to build customer loyalty. The customer has to be aware of the product, its value, uses, and the product has to provide quality at a fair price. So too must current and future employees be aware of the employment opportunities the organization offers and the value of those opportunities. This does not imply that salary ranges are posted on the Internet, besides; the “value” proposition here is the total rewards the organization is offering.

A common practice in Marketing is to identify and segment an organization’s customer markets based on the products used and the conditions under which those products are applied to the customer’s needs. Then a strategy is developed to inform the customer of the product’s value and its applications. As a component of that strategy, the organization may employ “incentives” to encourage the consumer to initially or continually purchase the product. Once the consumer buys the product and uses it, there is an increased likelihood they will become a steady customer, if the product meets the consumer’s expectations. While working for a large southern bank, I learned that if we could “engage” our customers with three or more of our services, the customers were highly unlikely to move to another bank. At a large health insurance company, we applied that same thinking to employee engagement by enrolling employees in voluntary benefits such as 401(k) and supplemental life and disability coverage.

Employees, like customers value transparency and honesty. Consider when a leading computer chip manufacturer down played a fault in one of its chips, when a SUV maker blamed rollovers on low tire pressure or a software developer ignored customer’s complaints of it operating system. How much "goodwill" was earned with these approaches? Employees want to be heard and want someone to listen to them and their concerns. That does not mean that an organization has to double every employee’s salary, increase the number or holidays or provide free health care. It does mean that organizations should have an active method in place to collect and analyze employee feedback, e. g., satisfaction and exit surveys, open door policies or even lunch with the “boss”. Employees are going to be far more receptive to bad news if goodwill has been developed through a history of openness, trust, transparency, and honesty.

Most individuals spend upwards of eight hours daily employed. Whether that “employment” is piloting a multimillion-dollar aircraft or flipping burgers at the comer fast food outlet; those employees are delivering customer products and services every day. How engaged do you think Capt. Chesley "Sully" Sullenberger was when he safely landed his US Airways plane in New York's Hudson River? How engaged was that fast food service worker when they got that order wrong? After purchasing four new tires from a national tire company and finding that the lug nuts had not been tightened, I never purchased another product from that company. How engaged was the mechanic who installed the tires, the mechanic’s supervisor or store manager?

Like a warehouse, employee goodwill and engagement must be built and maintained. As with that warehouse, goodwill and engagement are investments that facilitates delivery of the organization’s products. What was the level of goodwill and how engaged was your best salesperson when they left for your major competitor and took one of your top accounts? What are the other members of the sales staff thinking with the loss of one of your top accounts?

Total Rewards, Good-Will, and Engagement

Tuesday, March 02, 2010

A total rewards philosophy sets the framework within which an organization manages its overall employee remuneration including direct and incentive pay, benefits, and rewards. Although not necessarily obvious, total rewards also includes the non-monetary aspects of the employer-employee working relationship. Employees often perceive value in a relationship with an organization that is well thought of in the local community, highly regarded among industry peers or recognized as a national or international leader in its field. Distinctions such as Fortune’s “100 Best Companies”, Forbes “America's 25 Fastest-Growing Tech Companies”, and U.S.News & World Report’s “Best Colleges 2010” convey a degree of value to the recipient’s employees by virtue of the employee’s association with the organization.

Organizations are often unaware of the advantage that “employee goodwill” can bring to attracting and retaining employees and fail to take full advantage of such leverage. This failure derives from the organization’s lack of direct line of sight between employee goodwill, current and prospective employees, and the organization’s skill-set needs. Many of these organizations have a far better understanding of their “brand” impact on target customers through extensive market analysis than an understanding of their own employees. This same type of “banding” and customer market analysis could be used to identify and create a strong linkage between the organization’s current and future employees and its skill-set needs.

As businesses continue to increase their degree of competition at all levels, employee organizational engagement becomes increasingly essential for the success of the organization in the global marketplace. It is easy to assume that increased application of technology, targeted marketing techniques, and communications that are more sophisticated can produce a winning product without considering the talent required to design and develop that product. To achieve engagement, the organization certainly has to compensate, reward, and recognize employees for their contribution towards the success of the parent organization. However, engagement goes beyond direct compensation and focuses on the holistic reasons that motivate the employee to remain with the employer and drive towards the goal of excellence.

Organizations such as: The Hay Group, Mercer, Buck Consultants, TalentKeepers, Hewitt Associates, Towers Perrin, Watson Wyatt, The Conference Board, and a host of others have been telling us for a number of years that employee engagement is key to sustained organizational productivity and growth. In an April 20th 2009 article in Management-Issues, the recruitment and outsourcing firm Kenexa reported engagement levels in India and Brazil ranked 1st and 2nd worldwide at 73% and 65% respectively. The US placed 3rd, while Britain and China tied for 12th place. http://www.management-issues.com

While employee engagement and satisfaction surveys will not cure what ails many US businesses, employee engagement is another effective tool in the organization’s toolbox when used correctly along with a total rewards philosophy.

Managing Limited Salary/Merit Budgets

Monday, March 01, 2010

Mechanically, a Merit Matrix is a simplistic way to manage an organization’s limited salary and merit budgets. It requires little creativity and very little in the way of negotiation with line managers and supervisors. Communications with employees is to the point, “your performance is here, your position in range is here, and this is your salary increase!” Of course, none of the above leaves any room for flexibility or for unforeseen events. HR could attempt mid-cycle changes to adjust for altered business conditions, However, unless the organization is willing to live with a very rigid formula, any positive deviation from the Merit model adopted results in being “over budget”. What other alternatives might be available to the organization?

One approach I observed while employed by our government was to have a budget for X% above and below revenue trends to allow for unforeseen changes in revenue streams. This allowed agencies to shift quickly from on target revenue levels to one below or one above the projected budget level. Once the on target Merit Budget is developed, it is very easy to increase or decrease the above and below target level Merit Budget to accommodate changes in the target Merit Budget percentages. The issue here is the assumption that Merit and Salary Budgets should be a reflection of the organization’s ability to pay via its increased or decreased level of revenue.

Another approach often put forth specifically by managers is that they should have the ability to allocate increases and mange to a budget for their individual department. Since they are observing performance on a daily basis, is it not reasonable to assume they are in a better position to determine which employees should or should not receive an increase, as well as the size of that increase. How can it be argued that they are less knowledgeable of the individual employee’s performance? After all, the manager is being held accountable for the performance of other aspects of their department, why would they not be allowed to manage Merit and Salary Budgets in the same manner they manage other departmental activities? It is not easy to argue that departmental manager should not have this level of control. In the end, it comes down to an organization decision on how HR and financial activities are managed by the business.

The approach I most question is one in which virtually all employees receive the same amount. Only the most significant deviation in performance would be given anything other than the same universal amount. Unless the employee walks on water or burns down the building, they receive the same increase as others. Even if the Merit and Salary Budgets are not officially communicated, it very quickly becomes known that everyone is getting X%. This not only demoralizes employees, but also constitutes an extremely ineffective and inefficient manner of managing the organization’s limited financial resources.

While no one solution fits all businesses, nor should any single solution be acceptable for sub-divisions of the same buniess, it does come back to the needs of the organization. The leadership of the organization must formulate that approach which is best suited for the business and/or its subdivisions at any given time and business condition.