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In 1984 McGraw-Hill was preparing to publish my first book. We discussed various titles until my editor said something I never forgot. He told me that people want to know more than a theory or model. They want to know how to do it. So, we titled the book, How to Measure Human Resource Management. Now in its third edition it is still selling strongly. The following are five tips on how to cope with the challenges you face in today’s market.
How to Make HR Processes More Cost Effective
Processes are costly activities. Hiring, onboarding, training and paying cost money, sometimes thousands of dollars per person. But these processes can actually be turned into structural capital assets when they are organized properly. Just like software when the process is codified you create a valuable asset. Through simple predictive analysis you bring out the connections between process inputs, throughputs and outputs. From that you discover the most cost effective combinations to achieve high value at reasonable costs.
How to Reward, Engage and Retain Talent
It is generally acknowledged that long term success depends on building the best talent base. After someone is hired and assigned a position how do you pay, involve and keep talent? Logic tells me there is a connection between these three processes.
Compensation is slowly being recognized as more than just pay. An employee is compensated in many ways beyond a paycheck. Benefits add another 30 percent to pay. Recognition and reward programs designed to stimulate performance can be expensive in terms of not only cash outlay but supervisory time; another expense. Retention programs now include employee surveys; still another expense. The singular goal of all these expenditures is to build and sustain the best talent possible. When they are managed as a cohesive program you get the best results.
How to Ensure Your Future
Over the past 40 years workforce planning has waxed and waned based on current market conditions. Since its inception workforce planning has been basically gap analysis. However, with market transformations and organizational restructurings industrial era gap analysis is obsolescent. The new world forces us to think in terms of capabilities. The workforce can be broken down into four levels:
1. Mission critical – that which is imperative for survival
2. Differentiating – unique skills that generate competitive advantage
3. Operational necessities – those which keep the organization running
4. Movable – obsolete skills that can be retrained, outsourced or eliminated
Begin your planning with mission critical capabilities. Then, gradually move downward until you have covered the field. After this you can begin to design a succession planning program and a general employee development system.
How to Manage Risk and Avoid Costly Mistakes
The last thing that management wants is a surprise. Planning helps avoid surprises, but plans don’t always work out because unforeseeable changes pop up. If you want to fireproof your talent management plans you need to assess and manage risk.
Risk management starts with a thorough picture of all external and internal factors that can affect talent acquisition, management and retention. Then, you speculate on the likelihood of something unforeseen happening in the job market; i.e., the introduction of new products or services, new leadership, business slowdown, new competition, or changes in the labor pool. This leads to scenario analysis and development of a playbook. A playbook is a set of contingent “plays”. You can anticipate, develop and practice a series of possible strategic moves. Then, depending on what happens tomorrow you have a play to counteract that contingency.
How to Integrate Strategic, Operational and Leading Indicators
Measurement systems, like most organizational structures, are fragmented. They are also backward looking. These are called lagging indicators. In order to deal with the complexities of the future we need to combine strategic and operational lagging metrics with leading indicators and measures of intangibles.
This can be done with a reasonably short list of macro measures including things like, revenue per FTE, compensation as a percent of revenue and mission critical turnover rates. Secondly, the usual cost, time and quantity measures of HR activities such as hiring, training and HR functional metrics make up the operational indicators. Finally, leading indicators include leadership, engagement, readiness and employer brand. When you put all these into one report management has a clear idea of HR’s worth.
How to survive and prosper is a function of taking care of fundamentals. Fads come and go but the basics always apply. If you want more details on the above, or other how to’s, send me a note at
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