Surviving and Thriving in this economy

An economist admitted,

“Economists are often wrong, but never in doubt.”

The amazing central issue about this economy is that the economists blame it on the mortgage crisis, the cost of fuel, and the banking collapse. The rest of us know that the real challenge was a long decaying job market and a shift to a service economy from a production economy. Simply put, we need to put people to work. We need to increase productivity. We need to start by increasing the productivity of our current work force and as production increases and prices become competitive, demand will follow and we will need more people to produce. We cannot rely on the bailout and a recovered economy. We need to make our own economy; our own economy for our company, our city, and eventually our state. From there it will spread across the country and around the world.

Sounds lofty, but I believe that each of us can be the catalyst to get the economy in motion. Where do we start? How about with a new paradigm and some new rules? Let’s start with a new paradigm.

Business is not a family and business management is not a bunch of mommies and daddies. If you have this attitude, you are destroying your company. You do not exist to take care of your employees. Your employees exist to take care of the company and in turn the company exists to take care of the all important Customers. Essentially, your employees protect you and the other assets of your organization. Business should be more like a professional sports team. The scoreboard is the Profit and Loss Statement and the players are your employees. If you watch professional sports, you see each year players being let go because they can no longer play their position effectively. This does not mean the coach and the players suffer damage in their relationship. Everyone knows on a professional team, you perform or parish. That is the paradigm that every existing player on your team and every potential player on your team must understand.
You are their coach. Your job is to set strategy, ensure the best players are on the field and ensure each is educated and empowered to perform their job to the best of their ability, which should be the best in their field. If you have been living under the “Family” paradigm, you need a transformation to survive in this economy. You can’t be the mommy or daddy that will save your family. You need players on your team that will step up to not only survive, but to thrive in this economy.

It is not a matter of giving them power to make decision. It is a matter of making them make decisions. If they are incapable of making good decisions at their level AND yours, you need to look for replacements. Ouch, you say, that hurts! You know what hurts worse? Having to close your doors and lay them ALL off. The weak bring down the strong on a team. Just watch professional sports and you will see firsthand how the poor play of one individual helps the other team score. Without empowering the employees, any business will be limited to the abilities of the decision makers and not be able to grow any further. By allowing the weak to stay, your strongest player will not be able to play to the best of their ability and your whole team will suffer.

If you want a winning team you need to make winning decisions. No one said they would be easy. To shift your company from a management philosophy to a coaching philosophy, you will need some new rules. And here they are….

I am going to share with you 5 rules for coaching your staff to a new level of productivity. They will be controversial. You will most likely not hear another HR professional share these concepts as they go against “Business is a Family” paradigm.

1. Hire the Best
2. Overpay them
3. Two Nasty Surprises – Terminate Them
4. Don’t Fall in Love with Them
5. Don’t Treat Them Like Children

1. To hire the best you have to test!
You have to test for competency and skills that relate to the job. You have to test for a perfect fit into the team. You have to test for decision making skills. You have to test for interpersonal relationship development skills. And you have to test for flexibility, stability, reliability and most importantly work ethics. To become a member on your elite team, candidates will be put through the wringer. To hire the best, you will probably interview 100 people to fill a single slot. By taking the time to hire the best you actually reduce costs over time. The benefit of hiring the best is that you will have employees who are pragmatic, practiced, practical, loyal, reliable and strong decision makers. I know it seems logical. However, as an HR professional, I find myself solving challenges, almost daily, that are caused because companies ignore this basic first rule.

Many people are hired because the hiring manager “likes them better” or “knows them as friend”, or because hiring a particular person is politically advantageous. Or an even better one: “He walked in when the job becomes open. These reasons are all wrong.

When you don’t hire the best, you will have counter-productive behaviors, accidents, injuries, increased customer complaints, lost customers, decreasing revenues and even law suits.

2. Overpay Them - Superstars are paid more than the Coach!
As an HR professional, I know how challenging it is these days for organizations when they try to balance the costs of salary increases with the need to recognize employees’ performance. Like many of you, I have faced the challenge of getting caught in the middle and feeling like the two sides of the issue are mutually exclusive. The fact is they don’t have to be.

We all agree that if labor costs are too high, it will impede on your organization’s financial health. The rising costs of labor, especially in the U.S. is a major concern to organizations that find it more and more difficult to earn the margins that were achieved in prior years – not to mention the fact that customers are looking for deals and that means lower prices. There are other means to compensate or pay the employees other than base pay.

You may have heard of Non-Monetary Compensation and Pay for Performance Program Options.
Non-Monetary Compensation options include flex time, tele-commute, discount – gym, food, drinks, casual Fridays, company picnic, party or camping. I once setup a one-night company camping event for a client. For very minimum cost, the employees and their families love it so much, they didn’t stop talking about it for months. It was so successful that they did it again the next few years.

Pay for Performance Programs include profit sharing, gain sharing, business unit bonuses, performance bonuses, retention bonuses and other discretionary bonuses. Many organizations already have or have used some type of pay for performance programs. In this economy, they can be cost effective tools for accomplishing retention and recognition. The added benefit of pay for performance programs is that they can be more directly tied to corporate performance objectives and only be paid out if corporate goals are achieved. I have watched organizations struggle with how to provide base salary increases to employees in a way that can be directly correlated to business performance. But, things get in the way. Factors such as inflation, crucial importance of skills, or compression from new hires can all impede a performance-based pay program.

Pay for performance programs, on the other hand, can be more directly tied to some aspect of corporate performance such as profit, revenue, or labor efficiencies. They can also offset the negative response that your top performers may have after receiving a “small” salary increase.

As you seek to grow your business and keep your top performers engaged and loyal, here are some things to be aware of implementing any pay for performance program.

1. Be Real
2. Be Fair
3. STAR
4. No Nasty Surprises
5. Change Them Up

One is Be REAL. Keep in mind that giving out bonuses to employees who are not performing will be and should be hard to stomach, and will not go over well with your top performers. Good pay for performance programs ensure that there is a strong performance component to how the money gets allocated.

Two is be FAIR. It is also important to make sure that managers are adequately managing any employee performance issues. If you leave any employees out, you must have a defensible reason to do so including non-discriminatory practices.

Three is your pay for performance program must have STAR quality. (Specific, Timely, Achievable and Realized by all employees.) Each employee must be able to see the targets and understand how they can impact them. This way the managers are free to be coaches because every team members are keeping an eye on the business and other team members. Slackers either keep up or they will be spot lighted by everyone else on your team.

Four: No “Nasty Surprises” goes both ways. You must have a good communication plan. Employees are going to want to know how things are going on a regular basis. Acting with integrity from the top to the bottom of the organization and transparency are critical. Make sure that checks and balances are in place so that appropriate records are kept and there is good oversight.

Remember, superstars get pay more than their coaches.

Finally, don’t forget to change them up every two to three years to avoid the “entitlement” effect that can occur with long-standing bonus programs. Look at AIG…

AIG is to me an example of what can go wrong with bonuses that become part of base pay. Regardless of what you may have heard about AIG’s “performance bonuses,” I have a hard time accepting the concept that employees who supposedly performed so well had to have the government essentially buy 80% of the company. Not only was it hard to choke down the first time we heard about it as taxpayers and employers, now we find out they are given quarterly! If you think of this as an employer, it may aggravates you so much as to lose one of the tools you can use to legitimately to encourage higher employee performance levels.

Using a pay for performance compensation strategy to recognize organization and employee performance not only can have a positive effect on your employees, but it will also be well received by your executives and shareholders, since it requires that the organization achieves its stated financial and business goals first!

3. Two Nasty Surprises – Terminate Them!
That’s harsh!! You say, even in Baseball you get three strikes before you are out! But Nasty surprises are not just mistakes! We are talking about hiding the mistakes until they grew into catastrophic proportion. As I remember from my favorite movie “Meet the Robinsons” - “from mistakes you learn” and “keep moving forward”. When your employees take on more responsibilities and act on their decisions, they will make more mistakes. As their coach, it is your responsibilities to show them how and let them try.

For this rules to work, it is imperative that management live and breathe open door policy. Employees must feel safe to come to management when they make mistakes. Not to create a risk adverse environment. If you have a risk adverse environment, get rid of it! Those who are not honest about their mistakes or continuously fail to learn from them, they must be removed from the team as soon as possible.

MBWA or Management By Wondering Around is another tool to help create that coaching paradigm. A concept introduced by Tom Peters in his 1st best seller “In Search of Excellence” over 20 years ago. It is still as relevant and as powerful today. MBWA does not mean leaving your responsibilities behind as you stroll through the nearest shopping mall. However, even wandering through your organization can do more harm than good if it isn't executed properly. You want to listen to your employees and remember to get back to them, even if you don’t have an answer or can’t do anything. It does wonders to establish that trust relationship.

Another excellent way to improve communication and educate your employees is the Skip Level Meetings. Skip Level Meetings are regularly scheduled meetings between a boss and his/her directs’ directs. Directs’ directs are called Skips and Skip Level Meetings have 2 purposes. One is to allow the senior manager to communicate deeper within the organization and two is to allow Skips to ask questions. The in-between managers are not present during these meetings. A good Skip Level Meeting is scheduled and followed a specific agenda.

4. and 5. Don’t Fall in Love with Them and Don’t Treat Them Like Children
Don’t keep someone on you team just because you really like them. They may have the greatest personality but you have to let them go if they can’t produce results. Once again, Business is not a family and business managers are not mommies and daddies. If you treat your employees like children, management will work themselves to oblivion and employees will come to rely on management to make every decisions and basically – to take care of them. Like a professional sport team, managements are empowered as coaches and employees are empowered as sport professionals. Remember in a professional sport team, every player knows their position and how their play will affect the whole game. Most importantly, everyone knows low performer will be removed from the play and the team.

T.E.E.A.M.

At HRM101 we offer a concept called TEEAM. It stands for Test, Educate, Empower, Audit, and Motivate. You may have noticed that I mentioned part of the TEEAM concept in the coaching paradigms. If you are interested in learning more about how I may assist you and your company to survive and thrive in this economy, you may email me Alexandra@HRM101.com to schedule a free consultation.