Chapter 7, Retaining Your Human Assets
Research indicates that workers have three prime needs: Interesting work, recognition for doing a good job, and being let in on things that are going on in the company.
- Zig Ziglar, US author, speaker and salesman (1926-2012)
Employees engage with employers and brands when they’re treated as human beings worthy of respect.
- Meghan Biro, founder of TalentCulture, author of Who Owns the Brand You?
The story: Not a happy company.
In 1986 a corporation with its head office in Johannesburg (let's call it "AmCon") bought out a company I am going to call "Convex". Convex were the manufacturers of a product for which there was, without doubt, a market: an interlinking paving block that was suitable for both private housing and industrial properties.
In spite of the demand for their product, for the past three years, Convex had been losing market share to smaller startups. The smaller, newer companies constantly outperformed them in both product quality and innovation. Convex had been running at a loss for the past three years and their share price had been plummeting – hence the takeover. The problems they had been having ranged across the board from Production through Sales and Marketing.
My prime task was to help them become more competitive in the market. I was also asked to start improving their terrible track record in innovation, starting on the shop floor. In addition to this, I was required to introduce the parent company’s policies and procedures.
Most of the top management at Convex were traditional "operations" people – that is, they had spent most of their working life with machines, not people; they valued precision, showed great attention to detail and preferred to have rules to follow, rather than having to decide each case according to its particular circumstances.
My first two weeks were spent reviewing Convex's existing rules and regulations, but at the same time, I started looking at how they recruited, trained and rewarded their staff. This included plenty of cross-checking with the Accounts department.
I was not hugely surprised to find that they were penny-pinching in some areas while spending lavishly in others, like entertaining certain customers even though this practice had never been shown to create greater customer satisfaction or better sales figures.
Among other things, my research showed that staff turnover at Convex was close to 60%, something I had to report during the monthly management meeting with the parent company's CEO. The General Manager of Convex was also present, and his explanation for this high percentage was: "We don’t put up with any nonsense and we get rid of the rubbish when they don't perform." He could not, however, explain why these people had ever been recruited in the first place.
My analyses had also shown that in the area of recruitment alone, around 17% of what was being spent was going right down the drain – and this was a conservative estimate. Naturally, the boss of Convex contested this finding. Rather than embarrass him in front of the rest of the senior management team, I offered to show him how I had arrived at these figures after the meeting.
My informal presentation after the management meeting did not take long. It boiled down to looking at how much money has already been spent on one person's recruitment by the time Newby Z arrives for his/her first day at work. At this point, the money spent on recruitment is money lost, because Newby Z has not yet provided any value to the hiring company.
Here is an example, using random figures.
As you can see from the example if by the end of Month #1 Newby Z has not started to provide value to the company, the amount spent has increased, because now, added to the cost of recruitment are the costs of training, coaching, tools, and equipment for the new hire … and the company has lost even more.
If Newby Z does not make it through his/her probationary period, then even more money (training etcetera, plus their monthly salary) has been lost. In other words, the person who leaves at this point, without having added any value to the organization that hired them, represents a net loss to the company.
One of the logical conclusions one can draw is that any training the company offers is wasted unless the trainee shows an improvement in performance (and/or behaviour). If training does not result in an improvement in the person's ability to do their job, this is money down the drain. And if you never measure the effect of training, then that too is probably money down the drain, but you're not even aware of it!
Not surprising, our first employee engagement survey (which we called the "happiness index" in those days) showed the lowest figures we had ever seen.
This was not a happy company.
Getting around the old recruitment habits
We decided to start at the beginning, addressing the recruitment of shop floor staff. The subject of recruitment included, as always, promotions within the company. (The systems we had set up for recruitment and promotion were the forerunners of those I talk about in some detail in Chapter 9.)
This meant we had to create an accurate profile of the kind of person who was already successful in the job (see The ideal candidate profile in chapter 3) and then try to get the closest possible match when interviewing the people applying for the job. In this case, our emphasis was more on personality factors (the will do factors) than on knowledge and skill, because, for this kind of position, we were sure that the knowledge and skill could be learned on the job. We needed personality to match company culture as much as possible.
(Another example of how important the will do factors will be given in Chapter 9, in the section Choosing the new management team.)
We stopped the old practice of having the Production Manager interview the candidates for jobs in his department. Instead, the HR department gave candidates a few practice tests, then invited them to attend an informal interview with the team they would be joining, if successful.
Within three months of adopting these changes, staff turnover in Production had dropped from nearly 60% to less than 7%.
The Production Manager, who was a product of the old command-and-control school of management, was naturally not happy about no longer having the final say in the selection of his direct reports … but he also had to agree that the new methods led to a better quality of the person being hired.
He also had to agree – albeit very reluctantly – that placing more importance on a candidate's character (beliefs and attitudes) than on their education and prior work experience – the so-called can do factors – had also contributed to the huge improvement they were seeing.
Teaching the employee how to do the job better
In parallel with the new methods we were introducing in the recruitment process, we started coaching the existing employees – both the new hires and those who had been there for a while. Coaching is part of what we now refer to as Development, and I talk about this at length in Chapter 4.
The coaching we started consisted of two levels: Level 1, Instructing and Level 2, Mentoring.
If a new employee does not know the equipment and needs to be shown how to use it, the method we use is instructing. Once they understand and can do these basic things, we move on to Level 2.
With mentoring, we encourage them to achieve higher levels of proficiency by systematically asking them questions about hypothetical situations, getting them to think through each case and come up with their own solutions. This was far more effective than simply continuing to instruct!
This kind of mentoring increased the individual's self-confidence and self-esteem.
The result was to improve employees’ investment in the company's success to close to 100%. The teams became accountable for their own work outcomes – good, bad or indifferent. That was a big plus!
The SMART model, below, will guide to ensuring effective coaching and feedback to the employees
Recognizing and rewarding good ideas
(You can read more about this subject in Chapter 5.)
As the Production teams came to realize that they were being made responsible for their own performance – and being rewarded for good results – they started coming up with their own innovative ideas.
One of these was to have someone from Production present when a member of Sales visited the customer. They had realized that this was probably the only way they – the people who were actually creating the company's product – could find out first-hand what the customer really needed.
Until then, all they had had to go on was written reports issued by the Sales department, and these were too vague, imprecise and generally unhelpful to be of any use to them. Result: the Production teams had long since stopped reading them. But now the Production employees were actively seeking to understand the expectations of each customer.
For the Production team, having one of their own colleagues report back after a meeting with the customer was far more valuable and credible than any report written by Sales.
This innovation alone brought about a crucial improvement: there was, at last, a good fit between what the customer thought s/he was getting, and what Production was actually able to provide. This led to improved performance and better sales figures, and hence an improved financial situation for Convex.
The fact that management not only allowed but encouraged this initiative is yet another example of the participative management approach.
Five months after introducing the new recruitment and development systems, we were ahead of budget and well on the way to meeting the projected half-year figures. Six months in, we were able to award a small bonus to those high-performing teams and employees in recognition of how they had turned a loss into a break-even situation in only six months!
This may all sound too perfect to be true, but it was by no means plain sailing. There were also many problems in the Logistics, Administration and Finance departments, but these did not lead to the same high staff turnover we had discovered in Production.
How all this adds up to retaining your human assets?
We were never aiming for zero staff turnover: there needs to be some movement of people into and out of a company … but then again, this is only going to give good results if the company is doing well in the market. When it works the way it should, people who leave make way for promotions from within the company.
Ideally, there is a cascade effect when one person leaves, with insiders filling the positions just above them.
A supervisor gets promoted to department manager, a foreman gets promoted to supervisor, an operator gets promoted to foreman, and a new person has to be hired from outside to replace the operator.
Incidentally, there was never a three-level move like this while I was at Convex, but there were frequent two-level moves!
Before promoting from within the company, we were constantly testing the feasibility of such promotions, by regularly allowing an employee to try out a higher position for short periods (like when their superior was on holiday or on a training course). Of course, we made sure they had plenty of support from peers and subordinates – but it still gave us an idea of how well they would do in a position with more responsibility.
Three critical things you need to do
We learnt from our experience with Convex that retaining the best people depending on these key concepts:
Place people where they can "work to their strengths"
Focus on putting people into positions where they will be working to their strengths. (In Agile Management terms, "strengths" are those tasks for which a person shows a natural ability or affinity.) Spotting someone's strengths has to happen right from the start – at recruitment or on promotion to a higher position. (Strengths are not set in stone: someone may surprise you by revealing new strengths once they are given more responsibility.) For every strength we identified, we set out to develop that strength to the highest possible level for that employee.
People who are working to their strengths are far more likely to remain committed to doing a good job than those who are working to their weaknesses.
We used an ongoing test of employee strengths: the action plan. (You have already seen a detailed explanation of the action plan and how to use it in Chapter 4.) The action plan revealed from month to month how fast the employee was learning the job, and whether their performance continued to improve up to and beyond the required level.
Recognize and reward improvements early on
You need to provide recognition for a new hire's achievements – and this doesn't need to be monetary at all in the early stages. At Convex, we recognized three informal statuses: Explorer, Ambassador and Coach. Once an employee is mostly working to his/her strengths, it's time to move them from "Explorer" status to "Ambassador" status: this means that in recognition of their increasing expertise they can be asked to explain certain tasks to others.
In the case of Convex, it meant that Ambassador production workers had earned the right to go on-site visits, where they could engage to some degree with customers, especially the "end users", those who would actually be working with the final product created by the Production workers. Then, employees who sustained an above-average performance for more than three months received "Coach" status. This was a further level of recognition for their expertise, giving them the right to coach others when asked to do so. They also had the right to go on-site visits with the Ambassador.
Keep everyone informed, right down to the shop floor
Running a company does not consist of adopting one set of rules and applying it forever after. There need to be tweaked to policy and maybe changes of direction. And these must be shared with every single one of your human assets!
Once a month, each employee's action plan must go up the chain to the supervisor, from the supervisor to the production manager, and so on, all the way up to the member of the executive committee in charge of that aspect of the company's functioning. Then, the decisions made at the monthly executive committee meeting have to cascade back down into the action plans of managers, supervisors … down to the humblest operator on the shop floor.
When your selection, development and motivation systems are working as they should, your human assets will identify with your company and its values, and not be ready to jump ship as soon as something new turns up.
Copyright © 2018 Robert Bluett
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Publisher: People Plus (peopleplusco.com)
Third Edition: 2020
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