What has happened?

I had a discussion with a manager recently which might be of interest to you.

“In the last couple of months I noticed something happening with my staff”; he said. “The mood is sombre. Absenteeism has gone up and in the past we didn’t have any problems with people staying at home sick. There is also less commitment. What is happening?” I looked at him as his clear eyes stared at me in confusion. I asked:”Did you go through any big changes in the company recently?” “Yes, unfortunately we had to close down one department and had to make some people redundant. It was a hard thing to do but it didn’t make economic sense to keep going on as we were. Some of the people who we had to let go were with us for 20 years. It made a huge impact on the place, but I think we have moved on from that and that people are glad that they still have a job.”

I explained to him that what might have happened was that the psychological contract between employees and company was seen to be broken. His reply was that he didn’t know he had a psychological contract with his people.

A psychological contract is what employees and employers believe are the terms and conditions between them. These beliefs are not written down but are expectations between staff and management over what they thought they could expect from each other regarding being employed by his company. You might not be fully aware what these beliefs and expectations exactly are but they are set in the mind of your staff and if then something happens what they did think was going to take place the psychological contract is broken and the symptoms mentioned at the start might occur.

Probably making staff redundant, who were employed here for more than 20 years changed the expectation that staff had lifelong employment with the company. When they realised that this was no longer the case they recognised that this could happen to them as well and a strong belief they had regarding the company was gone. As a result their attitude towards the company changed.

Over the last number of years the psychological contract between staff and companies has taken a hammering in companies. During the recession Life-long employment is no longer the norm. What companies now offer is a job and in a lot of cases for less money than before. Promotions are few and rare. Annual wage increases are rare and this can even include a reduction in wages as well. Recession fatigue has set in.

These companies are not just doing this to spite their workers but because competition has increased, money is scarce and the market demands that companies become flexible and agile to react to changing market demands.

If the psychological contract has changed in your company and employees are reacting in the manner described then you need to take action to prevent this from further escalating. It is important to establish if there is still a matter of trust between management and employees, because if the trust is gone then it will take some time to re-establish trust. Furthermore it is important to communicate what staff members can expect from the company, if they give their commitment what they can expect in return. Listening to staff members and find out what they regard as important at work. Of course wages and benefits are still important but also training to learn new skills. This can be training on the job as long as employees have a reasonable chance to make it on their own if the company can’t support them any longer.

But above all employees expect that management treat them with fairness and respect even during this economic crisis and at the end of their employment.

Benefits of Human Resource Management

Regularly I am asked the same question, ‘Why should I use human resources for my company?’ It is a simple and yet astonishing question. It has been asked by many managers in various companies. In this day and age of the most serious recession since ‘30s one cannot but take human resource management seriously. It is essential for the survival of any company to genuinely engage in personnel management. People are the most essential asset any company has, without people there could not be a vibrant company. People are at the core of every business and as such human resource management is essential for managing business performance.  If your human resource management department does not add value to your business and only engages in paper pushing start questioning what they are about! Personnel Management should add value and drive your business forward!

There are a number of activities in which HRM can add value to your business. Here are some HR activities you should engage in: -

Ø  Recruitment

In these days of labour oversupply it is essential to recruit the right people for your company. You need people who give your company a competitive edge and add value to their activities. It takes skilled interviewers to assess these candidates and it takes professionals to know where to search for these people.

Ø  Training Development

In the fast changing economic, technological and business environment you need to train your staff to keep ahead of the competition and to keep up with recent developments. An experienced person who can assess your training needs and who can set up training plans tailor made for your organisation’s needs is indispensable for any successful organisation. Training and development is essential in developing your staff  to be able to more with less.

Ø  Labour Productivity

You need to measure annually the labour productivity of your labour force. Compare your labour cost with market rates and organise flexible reward strategies, which suit the financial restrictions of your company.

Ø  Performance Management

Every top performing team has a strategy on how to keep improving the performance of every team and staff member in its organisation. Performance management is not about appraisal forms but about engaging members in how to increase their output and improve company revenue.

Ø  Equal Opportunities

Modern organisations source their talent through diversity and have a mixture of nationalities and backgrounds. Working together these people come up with more creative answers to contemporary business dilemmas. Organising diversity and equal opportunities are not just fancy ideas they give business a deeper understanding of the global business environment and an extended pool of talent and resources.

Ø  Disciplinary Matters

Effective management of a workforce also includes weeding out the underperformers. Too many organisations are ineffective at this and create costly and complicated management structures to avoid the mistakes of a few. However, some organisations are too strict in discipline and scare the hell out of a good workforce. A balanced and effective approach is essential which you should achieve with the professional support of HR.

Ø  Social Legitimacy

These are the simple but important little things such as compliance with all legislation: employment, social, H&S, finance and corporate governance. It is about the importance of your company’s reputation with the people in the region where you operate and in the business world.  It about the trust you instil in your workers and the fairness by which you treat them. These are little things but if they are done well they will yield your company large benefits in the long term.

I hope it has become clear why it is indispensable to engage in personnel or human resource management and that good HR management will force your company forward. If you are not sure if your HR department is doing this for you, ask yourself why this is? Because HR should energise and vitalise your people and business!

HR Administration

One of the main functions of HR is to protect the company from unnecessary litigation. Any company is exposed to threats from employees who want to bring claims against the company for either valid or spurious reasons. A Chief Executive wants peace of mind that the foundation of the company is solid and that spurious claims have no chance and the valid claims against the company don’t happen because HR and management makes sure all policies are sound and that management and HR adhere to them. 

There is a need for companies to organise the administration of the human resources well. This doesn’t always happen, very often it is neglected, especially in Small and Medium Enterprises. What does it mean to organise the HR administration well? Make sure every employee has a valid signed Contract of Employment, has received an Employee Handbook, that employees understand and follow the HR policies and other policies of the company, that employees are made aware of the company pension arrangements and receive a company induction at the start of their tenure with the company.

It is a deliverable of human resources to ensure that companies do not get unnecessarily exposed to risks in the field of HR administration. However during my visits to small and medium enterprises I very often encounter situations where the company has contracts but unfortunately not every employee got one. This is a shame if you have good contracts and policies they should be distributed to all employees and you should be able to prove that the employees received them.

For human resources this is a basic requirement. There isn’t much glory in those tasks, but they are essential to achieving good HR management. Often when I audit big companies and ask to see the personnel files of a number of employees I notice that many files are not complete and that important forms and papers are missing. It is important to keep these files complete.

When visiting small and medium companies I am very often told all is well. However, for a reason I insist on seeing the Employee Handbooks because from experience I know that sometimes the unexpected happens. I once read an Employee handbook, which I was assured was ok only to notice Vietnam veterans and other issues mentioned which were not required under Irish law. This was an Irish SME and someone had just copied a US Employee Handbook from the internet and nobody had realised that it didn’t apply to their situation.

Sound HR Administration is a basic deliverable of HR but when it isn’t done right it can cause serious issues for your company and undermines HR. Executives want peace of mind and expect their HR people to get this right from the start.      

Effective Employees

Recently a manager said to me in passing, ‘You say you create effective employees don’t you?’ I replied, ‘Yes I do’. ‘Well’, he said, ‘I need a few of them. Where can I get them?’ I wish that life was only that easy, that I could create effective employees with a stroke of my wand and a spell out the world of Harry Potter. Unfortunately it isn’t that easy, you need to find and nurture effective employees. But effective and efficient employees are worth their weight in gold.

To explain both concepts simply:  ‘Efficiency is doing things right, while effectiveness is doing the right things.’

I would consider that creating effective employees is one of the important deliverables of human resources. Creating effective and efficient employees adds value to the human resource function.

It starts with the search and recruitment of good employees. By this I mean having a clear description of what kind of people you need, what knowledge they require for their position and what competencies are necessary to be successful. Then of course you need to look in the rights direction when you are searching for employees. You will be more successful if you look for certain employees in different ways. Then you have to select employees by using a competence based interview technique.  Through using the right recruitment techniques you will hire better employees.

This doesn’t end our quest for effective employees’ it is only the start of it. Next the manager needs to induce and train the employee into the company to ensure that the new employee understands what is expected of him, how the company operates and its culture of the company. Furthermore the employee needs to understand how the teams work in the company, how he fits into his team and what his team expects from him. After the induction and training the new employee needs to be regularly reviewed and helped to meet the company standards. However if after several attempts the new employee fails to meet the company standards it is better to end the employment in the probation period. This is a difficult decision for both manager and employee. Difficult for the employee because he would have lost a job which he hoped would be there for life. It is difficult for the manager because their investment in the new employee is lost.

After a successful start to the employment the company needs to ensure that the employee is regularly trained regarding the requirements of the job and the company. Again any changes in the organisation and position need to be discussed and understood to become effective. The company will have regular reviews with the employee and he will receive constructive feedback on how he is doing. High achievers need to be rewarded and underachievers need to be tackled.

To really create effective employees, the manager needs to engage with the employees. This means to keep talking with the employee and find out how the employee gets on in his job and where he needs support. There needs to be regular communication about what both sides expect from each other what the employee expects from the company and his colleagues and what his colleagues and company expect from him. There needs to be a balance between employee remuneration and the capacity of the company to pay. Any misunderstandings between employee and manager need to be resolved as quickly as possible.

As you can see it is difficult to create effective and efficient employees but the reward of creating a cohort of them is extremely valuable for any company.

Your Human Resources department should be able to deliver the required instruments and outcomes in order for your company to be able to create effective employees. Your HR people should be able to deliver excellent recruitment tools, ways to objectively review people, induce and train staff members, knowledge on how to engage staff members, how to handle company communication, advise managers and employees on how to perform their jobs and how to handle underperformers and find solutions for them.