My CEO Life

I have been thinking about the role of HR in a business and a question that goes through my mind is “do you really need an HR team”.  Now i can hear the chorous of “of course you do” – however the question is what is it that HR does that a line manager cant do themselves?

Lets think through the key people issues of hiring, firing, remuneration, motivation, feedback, culture and development.

Hiring

Now this is the obvious area where a manager will say to an HR person “please find me a new sales person” for example.  Well that is great – but the reality is if the successful candidate is not someone that the manager wants working for them, then the candidate shouldnt get the job.  In many cases the HR team act as a gate keeper – a filter – the problem with this is that often only the people HR like get through and unless HR truly understand the business and the culture, the wrong people can be placed in front of the line manager to select from.  When i was at McKinsey and Co, the consultants did the filtering of resumes, the interviewing and the selection.  Like hiring like! Therefore an arguement can be mounted that at best, HR should act as a process manager for the recruitment process.

Firing

OK – a tough one.  I know a number of managers who defer the firing of people to HR.  Now this is a weak way of managing a business and the firing of people is something that should be done by the line manager.  HR can be there to help and make sure that the correct procedures are followed, however they should not be any more than that.

Remuneration

In many businesses, HR is responsible for setting the pay scales. Well i dont agree with this.  THe market should be setting the pay scales and people should be paid for performance not pay for position.  When a manager is doing their budget, they need to think about the people, understand what the market is paying and then make recommendations within the budget framework as to what someone should be paid.  The finance team can then look at the salary costs in total and make recommendations back to the line management as to what the overall salary line item should look like.

Motivation and Rewards

Well i think that this goes without saying.  Often motivation is tied to culture and to the intrinsic rewards of the job.  This is something that HR can not affect as only the line manager can.  Line managers should also think about non-financial rewards as motivators – such as employee of the month, on the spot awards etc.  Often these are overlooked by HR and it is the line manager who is best positioned to understand the effectiveness of these rewards and the awarding of them.  Once again, the role HR can play here is a process one, of making sure that rewards occur.

Feedback

How often do you hear that it is “performance review time”.  Well i think that if a line manager is really doing their job well, they will be providing constant feedback to staff members on how they are going and the formal review process is simply the documentation of this feedback.  Too many manager dont provide constant feedback and use the performance review process as a way of unloading their issues all at once – often with unexpected results.  The role HR should provide here is process management (again) in ensuring that there is consistent approach to performance reviews and that they get done.  All of which an “on the ball” line manager can do themselves.

Culture

Now dont get me started.  A fish rots from the head and therefore it is the senior management and line managers who must take responsibility for managing and developing the culture.  Employees watch everything that a manager does and this gives them signals as to what is right and what is wrong in the organisation.  The role an HR team might be able to play is in surveying the staff to understand attitudes across a business however these often get unweildly and provide little true insight into the business.  Perhaps the best thing to do is just go and chat with the staff – it is amazing what they will tell you.

Development and Training

The final area is development and training.  Well the requirements across a business for this are many and varied and it is only the line manager and the employee that truly knows what is important for their long term development.  The line manager should take on the responsibility for developing their people and use the training budget allocated to them.  Perhaps the role that HR can play is to ensure that compliance training – like OH&S – are undertaken.  Once again, this is something that is very process driven.

I guess having written this, the answer that i come to is that there is a role for HR in the business however in top businesses it is probably more process management and clearly in support to the line management.  I think it is up to the line managers to truly take control of the HR and people management part of their business.

The more a line manager uses HR as a crutch, the more they lose touch with their number one asset – their people!

In many of my discussions with staff over the years, there seems to be an inbuilt expectation that a business is going to actively train and educate you with your long term career in mind.  Well i hate to break it to you, but that is probably not the case.  If a business is offering training and education, it is probably because they have an immediate skills shortage or they have a statutory obligation to ensure that everyone has good OH&S training (for example).

So what should you do?  Well the first step is to take charge of your career.  Perhaps a good way to think about yourself is as a business.  So what are the things a business needs to be successful?  A vision of where it wants to be, finance to make sure it gets there, the right skills and capabilities to achieve the vision, good sales and marketing of tyhe business, and of course a great product.

So lets apply these to yourself.  What is your vision in life?  When they are chiseling your tombstone, what will they write on it?  The vision may be to have a lasting impact on those around you or perhaps something far greater, to change the world.  What ever that vision is, that should be your guiding light and everything you do should be building towards delivering that vision.

Now to achieve the vision, you need a product to sell – you.  When you think about a product, what is the product that you are offering a potential employer?  How do you package it up and how do you continue to improve it?  That is where education and training come into play.  You need to actively think about what improvements are needed and then just do it.  It is always good to package them into something that is attractive to the business and try to get them to fund it but at the end of the day, you just have to do it – even if you have to pay for it yourself!

Now the last thing i want to talk about is how you market yourself.  Now this is an interesting topic.  Firstly – this is NOT about being political.  That is just about short term gains – does anyone know of many politicians that truly stands the test of time? 

So this is about how you market yourself (the product) externally and internally within an organisation.  

External marketing is important as you want to make sure that you are constantly on people’s radar in case they are looking for someone just like you.  This is where sites like linkedin and facebook are excellent.  Recruiters today are scouring them for great candidates and it is important that you manage your brand on these pages. 

Internal marketing is about getting on and doing your job, delivering each and every time, making sure that you lead where you can and most importantly making sure you, the product, shines through.  Internal marketing is NOT about politics, sucking up, taking credit for other people’s work, big noting yourself and so on – you will be found out!

The bottom line – its your career – take charge and make the most of it!

More tomorrow

I received the following question the other day

“Would you say there was one single concern that topped the list of concerns for CEO’s of large companies (e.g., Fortune 1000 size)?  In other words, while I know there are a lot of issues, and they vary depending on company, industry and location, but would you say there was one challenge that of all the CEO’s of large corporations face that is greater than any other?”

The first thing that popped into my head was all about finding and retaining great people. Then after thinking about it for a while, i still came to the same conclusion.

I dont think it matters how big or how small the business is, hiring great people and then keeping them in the business is always the greatest challenge.

Hiring is all about getting the marketing message right.  The product is the business and its culture and the best way to market the opportunity to join the business is by targeting where the employee is and then getting the offer right.  We have a person in our business who is specifically tasked with poaching staff from competitors.  We know their organisation structures, their staff and most importantly who is good and who is not.

When retaining people, we implement a balance of salary based initiatives (shares / cash etc) and other benefits.  We offer programmers a day a week to work on their projects.  We offer education and training based on the development plan put in place for an employee (by the employee) and we work hard a creating a culture that is hard to say good bye too.

The bottom line – an employee is a customer.  Most businesses dont get this simple message.

Often when you join a new business in a senior role, you will have people reporting to you that have been there a while.  I recently (OK a little while ago but i have been busy) received the following email and i thought i might have a crack at answering it …

I spent a couple of years asking them to leave so I could move my own team into place.  Most crawled away quietly, but one filed an EEOC age discrimination complaint against me.  Since all my top managers depend on me for their incomes they agreed to sign false affidavits, so the problem went away, I think.  However, it did take an inordinate amount of my time and that of some of my staff to gather defense records together and redact whatever didn’t look good. My question would be, how to fire all the old guys without opening myself up to this irritation again?

Firstly i think that this is not the best way to approach the problem.  You should not be manufacturing evidence to cover your arse!

First and foremost, the shareholders are going to measure you on what you do with the business moving forward not necessarily how well you handle the departure of the old guard.  Unless the old guard is now loyal to you and is adding value, they must go.  Make short work of it.

I see legal costs as sometimes being the cost of removing someone from the business.  We have been sued by a number of people and we always settle.  Usually it is not for too much and most people don’t even sue.  It is just a cost of business.

Therefore the simple answer to the question is dont get stuck in the past – fire them and move on.  Lawyers and HR can handle the clean up if needed.

Now this is an interesting question that got me thinking about how to interview …

I am taking course “Employment Practices” as part of my curriculum requirements for Human Resource Management at a local community college.  We are studying about interviews at the present time.  We have two resumes with almost the same qualifications and requirements.  We have to decide what five criteria are most important and what questions to ask for the position of Chief Executive Officer of a Hospital.  Do you have any recommendations or questions that really could distinguish the better candidate.

Apart from doing someone else’s homework, the real question here is how do you sort through the b.s. to really understand how someone thinks and whether they would be a good candidate for a role.

Well the approach i take is to make them work for their interview not just ask them questions.  Questions often tell you nothing.  People often lie and they are never going to tell you the  information you REALLY want to know about them.

So what i do is set them a problem.   For sales people i say “sell yourself to me” … if they don’t ask me 100 questions before talking about themselves, then they are not a good sales person.  The same can be done for a CEO.  Set them a real business problem.  Ask them to think strategically about a real life issue a hospital may face and then ask them to solve the problem.  How do they approach it?  Do they think strategically, shoot from the hip, etc … it is not what they say, but how they approach it.

As they are going, probe various areas – people / leadership etc … ask them how they would do something and see what they say.  There are no right answers … just  how they approach it.

Finally the other killer question is the one that is “so what questions do you have for me?” … this shows how much they really know and how hard they have thought about it.  This uncovers passion / leadership and general smarts. No questions – no job.  Crap questions – no job.  Dumb questions – no job.  Smart, insightful questions – a great start.

So – this is not a simple approach but one that delivers the results.

I am not sure about many of you out there but finding great employees is extremely hard.  I can run ads in papers and online and get flooded with results but how do you wade through the emails from around the world, how do you know that you have found the right person and how do you avoid those recruiter fees?

Well a tool we use alot in the business in internal referral.  We have a $1500 reward for any employee who recommends someone else to join and that person survives their probation period.  We are looking modifying this so that it is scalable – $1000 for first person, $1500 for second, $2500 for third etc …

I reckon we have employed 30% of our staff using this method and it works.  The best thing is that one of the key success measures in employing a person is cultural fit.  Having those inside help employ ensures cultural fit (well most of the time!)

As the Chief Executive Officer, I have personally introduced some key people to the business – and often they are from other countries.  My CFO i have known for 10 years and was recruited from Germany, my CIO i have know for 6 years and was recruited from San Francisco, and our internal process improvement manager is also from Germany and someone i have known for ages.  And the list goes on.  It is not about jobs for friends, as i have some of my Senior management or the Board interview them too.

What is interesting is that our CFO has introduced another 3 people to the business – 2 from Germany.  This approach can also broaden your recruitment market from your local market to the world.

I am working on the theory that great people know great people and so on.

Without employees we don’t have a business – a pretty obvious statement. However it is the level of connectedness to the business that will determine how successful a business really is.

Happy, connected employees will go above and beyond to deliver great projects and service. Unhappy, disconnect employees will turn up at 9 and go home at 5.

So the challenge for management is how do you build a connected workforce?

Yes, most of us will reward managers and project leaders who have clearly lead great projects or delivered great results. However we often miss the little things. The 1 percenters (in football parlance) that really help build the business. It is often the unsung heroes that go unnoticed.
So what can be done to recognised the unsung heroes?

Some of the initiatives we have implemented are

• Employee of the month awards – these are nominted by their fellow workmates and selected by me. To be nominated, a fellow employee must actually write a paragraph or two expounding the virtues of the nominee. It is a great way for me to find out who is doing a great job in the business.
• Spot awards – these are usually for those that have really put in big time. We will occasionally send an employee and their partner away for a weekend or a dinner for two.
• Bonuses – while all employees have a bonus component to their package, we often pay above and beyond when employees have done a great job over the half year.
• Walking around – this is a simple thing but one that is as important as the above. I spend a chunk of time in the head office and other offices, walking around, chatting to folk, listening to what they are doing and relating it back to where the business is going as a whole. This is priceless.

My HR manager recently sent me an article called Recognizing Unsung Heroes by Matthew Gilbert in Workforce Management, November 2004. It talks about KeySpan Corp and how the CEO approaches recognition of unsung heroes. A must read.

Here is another question that i recently received

My question for you is … I would like to know the circumstances in which you would walk out of an interview with a potential employee, and have no doubt that you will hire the candidate. In short, what catches your eye and make you think “I HAVE to hire him/her. I can’t possibly NOT hire him/her after that brilliant interview”.

Most of the time i think interviewing is more of an art than a science.  The question is more about what is the role that you are asking the person to fill and how do they handle themselves in an interview.

For example, if i am employing sales related people, i am employing them to sell.  I therefore don’t go into their background (with them) as i take what they have written on their resume as being truthful.  Also, i also don’t spend too much time on asking them simple questions about what they have done as no one is realistically going to tell you a bad story.

What i rather do is set up the meeting as if they are selling something to me.  The object is them and they have to get me to say yes to signing them up as a sales person.  If you cant truly sell yourself, then what can you sell.  I expect them to ask me qualifying questions (to understand what i am looking for), to position themselves as the answer to my issues, to clearly articulate any concerns i have and to ask for the order.  It is amazing how many sales people do not ask for the order – ie can i have the job!

I also give people the chance to ask questions of me.  No questions = no preparation = no job.  The quality of the questions also leads me to understand if i should say yes / no to them.

For management and leadership roles it is all about how they drive the interview and not me.  Leaders will make it happen and will get the role.

I usually can form an opinion in about 5 min and spend the rest of the time confirming that opinion.

Finally, we put all new employes on a 3 month probation period.  They sorts out the contenders from the pretenders.

I recently has the following comment on my site

Curious whether you have any  leadership development requirements at your company? Thinking about the idea of implementing Six Sigma, getting prepared to suggest.  Something like all managers required to become green belts, senior managers black belts.  Thoughts?

We don’t have any generic management or leadership training in the business.  However, what we do do is require all staff to develop their own personal development plan.  Once these plans have been developed by the employee, they are reviewed with their manager.  Those that we have identified as future leaders, are then encouraged to add some management training to their personal development plans.

For management training, we have two types – external and internal.  We pay for employees to do their MBA’s (on a part time basis) so that they get a good view of the formal way to approach management training.  In addition, i am a firm fan of informal, on the job training.  By this i mean that we give them constant clear direction, feedback.  I think there is nothing better than clearly letting people know how they go.

In the execution of personal development plans, we tend to pay for their development as long as it is related (even indirectly) to the business.

We have just launched a new site and the tech team has been working 24/7 to make it happen.  With them moving heaven and earth, it would not have occurred so we decided to do something fun and different with the team to reward them for all their efforts.

We decided to ask the team into a room and we decided to give them a day off.  However, to make it a little more exciting for them, we gave each an envelope with a note with a sum of money on it.  They were each told that they had 24 hours to spend the money and once they had reported back on what they wanted to buy, we would transfer the amount to their account.

This had a great effect on the team and they were acting like it was Christmas.  They all went out, identified what they wanted to buy and reported back.  Some booked holidays, some bought new computers (they are techo’s), some bought shares (love ‘em) and some just put it on their home loans.

All in all, they had a fun time and remembered the day fondly.  So much better than just more $ in their accounts.

The amounts given where between $1000 and $5000.