The Critical Recruitment of Excellent Staff

‘Take our twenty best people away, and I can tell you that Microsoft would become an unimportant company’ - Bill Gates, Chairman Microsoft.

In today’s lightning fast business environment the competition is smart, tough and coming from every direction. Those who succeed will do so because of the talent they put on the field. The problem: that critical talent is in short supply. As a result, recruitment has never had a more significant upside – or a more devastating downside! So how does a company do it right? The answer is hardly mysterious: The answer is commitment. The tools are out there – using them to achieve excellent results just takes time and focus. As time is a precious commodity these days you need to focus on recruitment, do it right the first time and do not take short cuts. They can save time occasionally but in the end they will cost you more time, money and your reputation. There are a number of actions that you and your company can take to improve the recruitment and selection process: -

• Make sure your interviewers are trained in selection interviews – knowing what questions to ask and how to go about asking them is essential – especially with all the legal traps regarding what you can and cannot ask.
• Learn and practise competency based selection interviews based on the criteria: Past performance is the best indicator of future performance.
• Draft a simple profile of the vacant position in order that all involved know what they are looking for and that the most important requirements are being taken care of.
• Know the culture of your company and identify the best candidates, who suit your culture and have the right attitude to progress your company.
• Involve fellow employees in the recruitment process as co-workers know what it takes to succeed in their area and furthermore they have to pick up the pieces if the wrong person is hired.
• Make sure your company is known to be a great place to work – otherwise you will fail to attract the right candidates and end up with the duds no one else would hire.
• Time your recruitment correctly – if you wish to recruit graduates for next year, now is the time to start the recruitment process because by the summer of ’07 the best candidates are already hired.
• Do not become over dependent on recruitment agencies make sure you are strongly involved in the process and if you are not happy with the offer on hand from the agency send them back! Don’t think this is not an important role for any CEO. Remember that Bill Gates spends 50% of his time on recruitment.
• Take your time to find the right candidate do not rush the interviews and selection process. A wrong choice will cost you more in time and money and you want to avoid the courts at all cost.

Finding the right people can make or break your company. The right people will drive your company forward and create the environment that determines success. Organise your process in such a way that you are in control of who gets hired and set clear criteria which a new recruit has to fulfil. The selection of new staff members is one of the most important business decisions a company will make. An average selection decision is an investment of at least €25,000 per annum each time and possibly more.  It is a costly game which you have to take very seriously to survive!

The Essence of Human Resources

Jack Welsh, the former GE Chief Executive, stated recently that Human Resources should be every company’s ‘killer app’. What could possibly be more important than who gets hired, developed, promoted or moved out the door? After all business is a game, and as with all games, the team who puts the best people on the field and gets them playing together, wins. It’s that simple!

According to Jack, this rarely is the case, though, looking at companies today where the Chief Financial Officer reigns supreme and the HR manger is relegated to the background. According to Jack this doesn’t make sense. If you owned Manchester United for instance would you hang around with the team accountant or the director of player personnel? Sure the accountant can tell you the financials. But the director of player knows what takes to win i.e. how each player is doing and where to find strong recruits to fill the weak positions.

That is what HR should be all about, but in reality how often is this not the case and is HR the Cinderella of the company forgotten in the basement.

As owner / manager there are a number of simple things you can do to improve on this situation. You should review your team regularly. Starting with your management team, review them and ask yourself: ’How is this particular team member contributing to the bottom line and what has he / she specifically done over the last twelve months which stands out’. If nothing comes to mind ask yourself why this is so. If you have two or more management team members where nothing specific comes to mind, ask yourself what does it say about me and my company.

Then look at the performance of all your staff and ask yourself who are in the top ten percent and who are in the bottom ten percent. I bet you can easily identify your worst employees, the ones who always give problems and are regularly in the limelight for the wrong reasons. In a bigger company it is more difficult to identify the top ten percent of your staff. But you should be able to come up with these names fairly quickly. If I asked you who are the best players of the football team you support you would be able to name them straight away!

The most important question after you have identified them is how are you treating them, what signals are you sending out to your staff. If for instance your worst staff members all have clean records - no warnings under the disciplinary procedure have been given to them at all you are making it extremely easy for them to keep messing around. “One can do anything here and get away with it!”

However, more important is what you have done with your top ten percent, the ones who go the extra mile for the company. Do they know that you have identified them and appreciate them? Do you have plans to further develop them and that you are going to invest in them?

Also are other employees aware that you have identified your best players and that you are seen to appreciate them, because most likely employees know what they have done for your company and how you have treated them. Staff do consider how you take care of your excellent and worst staff members and based on that information decide what kind of company they are working for.

If you have done this exercise and know how your management and staff operate give yourself a pat on the back. However, if you tried and find it difficult to come up with the names and achievements you need to think about this and find out who they are and what they have done. Then maybe you should think about a performance management system which can help you out.

Why Human Resource Management?

In the current economic climate we need to improve our performance as individuals, organisations and as a country. Whoever we are, we need to take stock and assess how and what we could do to improve our performance. As individuals we have to be realistic and see what actions we need to develop in order to better ourselves. This might bring us in unchartered waters and test our comfort zones but life as we know it has changed so radically that we can no longer sit back.

Also as organisations we need to re-evaluate ourselves and assess what we can do better. Human Resources management when properly implemented and executed can add value to our organisation. Your employees are an essential part of your organisation and provide you with the workforce to execute your work and services.

Studies claim that Human Resource Management impacts on your company’s performance. The effects of high performance management practices are real, economically significant and general – and thus should be adopted by your organisation (Pfeffer, 1998). In the UK, several reports have argued that an economic and business case for good people management has now been proven: for example, CIPD (2004) notes that more than 30 studies carried out in the UK and US since the early 1990s leave no room to doubt that the relationship is positive and that it is cumulative. There is a growing consensus that high performance is linked with high quality in practice in such areas as recruitment, skill development and training, remuneration, job design and organisational culture (Marchington, 2005).

Taking this all in what should you do as an Irish SME organisation to use Human Resource Management for your benefit?

·         Recruitment – hiring the right employees is essential for any company. Ensure that you are trained in conducting interviews and that you know what skill set and competencies you are looking for. Too often managers have no training or skills in selecting the right candidates and are just hoping they are doing the right thing. With the cost associated with a misplaced recruitment, you can’t afford to take recruitment that casual anymore.

·         Skill Development and Training – you need to find out what training is necessary and need to be creative on how you train staff members in the necessary skills either through on the job training by co-workers or through short seminars by more experienced staff members. Internal coaching of your high potentials by experienced managers is a cost effective way of ensuring development in difficult times. Try to keep even a small training budget because it will show that your company believes it has a future. The most important message is that the organisation is willing to keep investing in people as employees are the biggest asset a company has. Furthermore, due to your investment in training and development you will be able to respond faster when the economy recovers.

·         Remuneration - We live in very insecure times, there are many economic factors which can change very quickly leaving companies exposed who overstretched their salary budgets. For most companies there needs to be a salary freeze for the coming period. Looking at the competitive position of Irish salaries there is a need for a re-alignment in the coming years. We can’t afford higher salaries than our main export markets even with the reduction of our minimum wage our salaries are still higher than our competitors. However with the exposure, especially of young people, to high levels of debt, the re-alignment needs to be handled very carefully. For SME companies a salary freeze would be very much on the cards with if possible only discretionary bonus payments given when possible.

·         Job Design – In the coming years jobs in the SME sector will be determined by Flexibility and Performance. The SME sector is the main driver of employment and with our high levels of unemployment it is imperative to get as many people working again as possible. As companies need to respond quickly to changing markets and changing circumstances we need to be flexible. Furthermore, we need to be focussed on performance not only on organisational performance but also on a personal level. We all need to increase our own personal performance in order to really increase the performance of our companies and economy. It is difficult but necessary to get employees to honestly look at their own performance and make improvements on this.

·   Organisational Culture – Organisational Culture are the specific collection of values and norms that are shared by people and groups in an organization and that control the way they interact with each other and with stakeholders outside the organization. This is where Ireland in the last number of years really fell foul. We need to assess what values and norms will assist your company to grow and develop themselves and get all your employees to understand this and keep adhering to this during good, difficult and bad times.

We have great potential in our country, organisations and ourselves which are still undiscovered. We need to reach out to this potential and get it working for us.

Business Is A Performance Sport

Business is a performance sport. That was a slogan I read while buying new shoes. I can’t see the relationship between this slogan and shoes, but I do agree with this statement. If business is a performance sport then only the organisations with the best performance will survive. We have seen many non performing organisations bite the dust in the last two years.

How to increase the performance of your organisation? Laurie Bassi, professor of economics at Georgetown University has shown that organisations whose leaders eliminate barriers, provide feedback, inspire confidence, share information and welcome new ideas outperform those that don’t. In comparing the average three-year annual growth rate in income for high versus low sales offices in a major business, Bassi found that growth rate for the higher-scoring offices ranged from 60% to 130% higher than the growth rate for offices with low human resources management scores.

In a study of nearly 1,000 firms, Mark Huselid of Rutgers University found a statistically significant correlation between high-performance work practices and intermediate employee outcomes such as turnover, productivity, and overall corporate financial performance. The factors that impact employee productivity include selection, performance management and appraisal processes, as well as development strategies that include training, coaching and mentoring. Providing employees with tools, resources, direction and support they need to perform at their best are some of the factors that lead to a high-performance work environment.

Analysis by The Ken Blanchard Companies shows that the average organisations is forfeited over $ 1 million a year in untapped potential because of less than optimal leadership practices. In a recent article ‘How extraordinary Leaders double Profits’ authors Jack Zenger, Joe Folkman and Scott K. Edinger make the extraordinary claim that there is enormous potential for organisations to improve their bottom lines by developing leaders who, for example inspire people to perform at higher levels and who can recognise and remove obstacles to employee productivity. In fact their research shows that good leaders can double profits.

In a large survey of 1,300 private companies conducted by Proudfoot Consulting in 2002, conducted with companies from seven of the world’s leading economies, Proudfoot found that on average, only 59% of the work time is productive. What gets in the way of higher employee productivity? According to Proudfoot there are three major causes:

·         Insufficient planning and control (43%)

·         Inadequate management (23%)

·         Poor working morale (12%)

Tor Dahl, member of the Board of Directors for the American Productivity and Quality Center explains: ‘Although most people are working very hard these days, we have found that each individual in an organisation can still increase productivity by at least 30%. How can that be? The answer lies in the fact that most workers often of no fault of their own, are not working on the right things in the right way. The culprits are a variety of organisational ‘ills’ including lack of clear direction and goals, sub optimised processes, excessive paperwork and reporting requirements, unproductive meetings, inappropriate systems and tools.

Business is a performance sport! This is a serious wake up call for all managers and executives. No organisation can afford at any time but certainly not in today’s circumstances to miss around 30% of their productivity. Look at your own organisation and review the missed opportunities to seriously improve your organisations output, performance and future.

Observations on Industrial Relations

As you may know I am a Dutchman who is living and working in Ireland for the last 20 years. I have also worked in HR in the Netherlands for 12 years. Recently an Irish company was having difficulties in the Netherlands with some employment regulations and they asked me for advice. In their industry they had to comply with Dutch labour laws and one thing in particular a CAO for their industry. A CAO is a Collective Labour Agreement similar to a JLC the big difference was that the Dutch CAO ran into over 100 pages and the comparative JLC for the same industry in Ireland was around 10 pages. The Dutch CAO dealt with compulsive pay agreements, pension arrangements, Sick pay, and other issues applicable to this industry. It struck me that the Irish unions have achieved very little over the years due to their single focus on pay.

Furthermore looking at recent industrial disputes at the various CIE companies; Dublin Bus, Bus Eireann and Irish Rail, it was the militant unions who were setting the pace of change and they were delaying it as much as possible. In Ireland the more militant unions set the agenda and can delay any agreement between company and employees. In the Netherlands this would be impossible as when one union accepts the proposal of the company it applies to all workers of the company and the discussion is over.

You would expect that militant unions who are willing to go on strike would achieve more. However my analysis was that Dutch unions had achieved more than the Irish unions. How is this possible? There are many differences in industrial relations between the Netherlands and Ireland. The Netherlands has fewer unions. In Ireland there are over 50 unions which limit their effectiveness. The labour law that if one union agrees a deal with a company it applies to all unions and all workers doesn’t encourages having too many unions. Unions need to agree with each other an approach on how to handle any dispute and if one union is too militant other unions will not accept this and will make an agreement with the company which then applies to all. So there is already a mechanism which makes unions look at reasonable deals.

Another big difference is that there are unions in Ireland which only represent their profession compared to the Netherlands where unions represent a sector; like education. A deal would apply to all employees working in the education sector. In Ireland teachers’ unions do not represent education workers they only represent teachers. In the recent Haddington Agreement the INTO represented primary school teachers and were not interested in Special Needs Assistants or school secretaries. As a result SNAs and other school staff got a rough deal at the expense of teachers.

The nurses and midwives also have a union which only represent them. However as nurses don’t have such a predominate position as teachers in their sector and they find it harder to get concessions. There are other professions who have their own unions.

The biggest surprise to me as a Dutchman was that in such a Catholic country as Ireland an event such as the Lockout in 1913 could happen where employers exploited workers to such an extent that poverty was widespread. This goes completely against the philosophy of the Catholic Church as explained in Pope Leo XIII’s encyclical Rerum Novarum on the rights and duties of Capital and Labour, which supported the rights of Labour to form unions but also wanted to restrict Socialism.  Following the teachings of Rerum Novarum conditions which led to the Lockout should never have prevailed. But then during my Masters in HRM in Ireland philosophy to understand the different labour movements was never addressed. In the Netherlands where you would have had Christian, Catholic and Socialist unions and Christian, Catholic and Liberal employer organisations you have to understand their background to be able to deal with them.       

My observation is that in Ireland unions are too fragmented and that militant unions dominate the agenda too much.  This has not led to more concessions but in fact to fewer concessions from employers. The actions of some unions at CIE were not effective and this will hurt the workers in the long term more than the CIE Organisation.

Furthermore the non involvement of Christian or Catholic employers and workers has led to a more polarised industrial relations landscape which has proven to be less effective and as a result workers, employers and the whole country have been affected by this.

In my opinion a review and reform of Industrial Relations would be welcome.