Wednesday, April 30, 2008

People and Profit: Not Even the Same Language

You say HR, I say "Processors."

You want to talk about "developing human resources" in a company?

We can't talk. We can't even begin to have a conversation. I'll tell you why: your HR isn't. It's just not about humans or resources, it's about pushing paper and filing and keeping track of benefits and numbers of people.

When you get your head wrapped around the idea that your employees' creative discretionary effort is the only thing that's going to act as a buffer between you and the grinding wheel of costs and competition in today's market, then we can talk about creating an HR department - a real one.

I suppose that you're going to have to hit the wall before you let go of your balance sheets and realize that your intangible assets are the only real assets you have. When that happens we can sit down and have a conversation about human resources and channeling them into continuous profit cycles.

Until then, don't talk to me.

Friday, April 18, 2008

Warning: Bottom-Line Management May be Hazardous to Your Health

If you were to ask a room full of top American business executives to describe their management styles, most would probably say they were “bottom-line oriented” – as if that were a good thing.

But financial statements are nothing more than static markers that become obsolete the moment they are printed; and trying to run a company by them is akin to barreling down the highway in a Buick with your head out the window looking back at where you’ve been. Neither will get you to where you want to go.

So how did we arrive at this lowly estate? In a nutshell: It was expedient. If the multi-billion dollar patent medicine industry has taught us anything, it is that it is much easier to treat the symptom than to cure the cold. Feeling sluggish? Take a pill. Sluggish earnings? Take a layoff. At least cold medicine comes with a warning label.

Check out the side effects of these everyday corporate cures:

l LAYOFFS – May cause elevated stress levels on remaining staff leading to increased absenteeism and loss of productivity. Customer service may suffer due to increased workload, leading to possible loss of revenue. Extremely habit-forming. May lead to death if used in large doses.

l SALES BLITZES – Initial euphoria followed by despair as top producers find themselves penalized for their own productivity as they struggle to top the incentive-inflated successes of prior periods. Customer service may suffer due to temporary swelling of work in progress. May cause feelings of inadequacy. Use in moderation.

As Dr. McCoy used to say on Star Trek: “Barbaric!”

Progressive physicians have come to advocate a more holistic approach to medicine: The prevention of disease through “wellness,” a multi-disciplinary approach aligning body, mind and spirit through a healthy lifestyle. And the diagnosis of physical harm through the use of powerful non-invasive tools, such as Magnetic Resonance Imaging (MRI). Studies have shown this to be the most effective model for long-term, sustainable health and growth.

It’s about time for progressive companies to do the same. I work with companies to a help them achieve both of these goals by measuring the alignment of their systems – organizational culture, strengths and weaknesses – and the physical health of their processes – capacity, performance, communications and training.

Let's face it; there's only so much you can cut out but there's an unlimited increase in profits that comes from tapping into your employees' creativity. Creative discretionary effort is the answer to spiraling costs. Managing intangible assets gets you where you're going.

So quit covering up your corporate colds with the same old ineffective remedies. Unlock your company's potential. Align body, mind and spirit. And bask in the long-term sustainable profitability that only a truly healthy organization can provide.

Thursday, April 17, 2008

Wanna keep struggling, or maybe become a loser? Then keep using your internal HR departments.

What's wrong with building an internal HR department? What's wrong with hiring HR professionals to manage people processes in your company? Nothing, really.

  • It just won't help you get the best out of your most leverageable asset.
  • And it certainly won't help you build a dynasty.

A great illustration of this counter-intuitive reality came from a CEO friend of mine who had done research into profitability and employee alignment. He was not happy. His company had a well-functioning HR department. He had always been satisfied and proud of this. They had good HR professionals on staff, and believed that they were doing a good job. Turns out, they were – as far as internal HR groups can do a good job. But it wasn't much good at increasing his profitability.

He told a story to communicate the dissatisfaction he was experiencing.

“Suppose that our company was a football team. Success, then, could be characterized as winning football games. Then, suppose that, of our 11 players on the field at any time, only 4 knew which end zone was theirs. Suppose only 2 actually care. Suppose only 2 know their positions. Only 2 know what their position is supposed to do? Then, what if only 2 trust their coaches, and fully support the plays that were called. What if 8 of the 11 were, somehow, actually helping the opposition? To make matters worse, suppose 10 of the 11 aren’t even committed to finishing the game. This team, so composed, will be hard pressed to win a single game.”

Then, he applied the story to his business, and what he had learned about profitability and employee alignment.

Well produced, traditional, internal HR departments have yielded the following results when employees are surveyed. These results come from case studies of 25,000 workers from all kinds of industries. The best, traditional HR practices yield less-than-stellar results.

37% know what the company’s trying to achieve and why.
20% are enthusiastic about their team objectives and organizational goals.
20% know how their job contributes to the company’s organizational goals.
20% know how their individual tasks affect those objectives.
20% believe that the organization enables them to execute key goals.
20% trust the organization and their leadership.
15% feel engaged enough to want to continue doing their job.

85% are ready to bolt if and when a better opportunity presents itself.

This CEO ran some internal surveys of his own, and although his results were a little better than these averages, he could see just how much more effective and inefficient his organization could be if he knew how to handle things differently.

He hired an outsource HR company, not to reduce costs, or to provide standard HR services, but for expertise at employee engagement and alignment. This group of non-internal specialists immediately went to work. Their fresh, external approaches suggested by multiple experts (he could not have afforded for himself alone) changed many of the dynamics within 3 months. Employee attitudes were improved, and his alignment survey results also started up. The result: Creativity, innovation, contributions by employees skyrocketed. So did his profits.

What excites him more is that he sees so much more happening in the future. He actually believes that his people can accomplish anything. He knows that he can create a sustainable competitive advantage, a "dynasty."

It's all good, now. The NE Patriots have nothing on him. Move over Bill Belichik. Step aside, Tom Brady. Well-aligned employees can do the impossible.

Don't be lulled into pseudo-satisfaction by traditional HR in your organization.

Check out CJ's professional profile at

Wednesday, April 16, 2008

Frustrated Bosses - Under Contributing Employees

"Employees are my company's most valuable assets."

Business owners and management-types say it all the time, but they don't really mean it. It's one of those meaningless catch phrases to make them feel better about what they're doing. They really don't know what they're talking about.

What's an asset?

  • A resource controlled by the enterprise as a result of past events from which future economic benefits are expected to flow to the enterprise. (International Accounting Standards Board)

How do you handle assets?

  • Accumulate them
  • Invest to increase their value

What's a liability?

  • Anything that is a hindrance, or puts an enterprise at a disadvantage. An obligation of an entity arising from past transactions or events, at a sacrifice of economic gain. (IASB)
How do you handle liabilities?
  • Minimize them
  • Decrease their value

Now, what's an expense?

  • The outflow of money to pay for an item or service which decreases economic benefits and equity, other than those relating to distributions to equity participants. (IASB)
How do you handle expenses?
  • Minimize them
  • Decrease their value

So, which is an employee?

Call them what you like, but I have interviewed thousands of business owners over 30 years, and I could count on one hand the number of them who desire to accumulate more employees, or who ask me how they can invest to increase their employees' value.

The most common question frustrated business owners ask me is, "How can I reduce my employee expenses?" Doesn't sound like a question you would ask of an asset.

Abraham Lincoln once asked his cabinet,

“Counting a tail as a leg, how many legs does a sheep have?”

“Five,” came the answer.

Lincoln responded, “No. A sheep always has 4 legs. Pretending a tail is a leg won't make it one.”

When you treat your employees like liabilities and expenses, which most business owners do, you might as well accept the truth: You think they are liabilities and expenses.

  • No wonder you're frustrated.
  • No wonder your employees don't contribute more to your company.
  • No wonder you feel like you have all the worries.
  • No wonder you can't seem to find, or keep enough good employees.
Well, if it'll make you feel any better, you're not alone.

No consolation? Then you'll have to do something about it.