If not HR/recruiting, then who?

Most HR/recruiting execs would suggest hiring managers themselves as the likely assignee. Others would contend that HR/recruiting is responsible for the quality of the candidates, but managers are responsible for the quality of hire. Others would suggest there are too many variables to assign it to anyone.

Further confusing the issue is determining when quality of hire should be measured. If you do it before the person starts, you’re measuring the sourcing and selection process. After the hire, you’re measuring the hiring manager’s management and leadership abilities as much as you are the candidate’s ability to perform the job needs. Compounding the time variable is the measurement standard. If you use a different measurement technique for before and after, then you’re left with a comparison between oranges and cell phones, or more likely, experience and qualifications vs. performance.

It’s because of these complex issues that I believe that HR/recruiting must take responsibility for quality of hire. If not HR/recruiting, then who?

Here’s my rationale behind the nomination.

1. Maximizing quality of hire is the most important strategic role HR/recruiting can play. Other than maximizing on-the-job performance and retention, there is no more important role for the HR/recruiting department. Not wanting responsibility for this seems odd to an old recruiter like me. All the executives I’ve placed thrive on this type of challenge. Why would HR/recruiting be reluctant to take on — even demand — this responsibility?
2. The CFO is responsible for the capital acquisition process, so why shouldn’t HR/recruiting be responsible for the talent acquisition process? While the financial department doesn’t select, install, and run the capital equipment it approves, it still manages the approval process and strongly influences the ultimate decision. This parallels the role HR/recruiting should play in the talent acquisition process.
3. Having responsibility means the process is adhered to, not the decision itself. Developing and monitoring the hiring/selection process is the role of HR/recruiting. This means developing and implementing processes that ensure that the best candidates are seen and hired. There should be an audit process as part of this to ensure that the best decision has been made, and that if it has not been, the process is modified.
4. There is a huge tactical and strategic cost to making mistakes. HR/recruiting needs to deal with all the mistakes, including finding replacements and dealing with the legal and employee relations issues. The opportunity costs of bad hires alone provides the rationale for some type of vigorous and auditable selection process. Who else could possibly lead this type of cross-functional effort?
5. If not HR/recruiting, then who? Hiring managers should police themselves on quality of hire. Some do it, most don’t, and even those that do, don’t do it well. Regardless, there should be one standardized process that works and is used company-wide. This is the primary reason why hiring managers can only be held responsible for the successful performance of the person hired, not the process used. If some managers want to use their own process, they need to be held 100% responsible for mistakes, including the costs associated with this. This is one way to convince them they should use the approved process.

Of course, if HR/recruiting is given the responsibility for maximizing and measuring quality of hire, there comes some programs that need to be implemented to pull it off. Here are some quick recommendations:

1. Stop using job descriptions to source and select candidates. If you describe the work that needs to be done and assess candidates on this, before and after the hire, you’ll solve the dual measurement problem and reduce turnover dramatically. The primary reasons new hires underperform and/or leave is lack of understanding of real job needs and a poor fit with their hiring manager.
2. Develop sourcing programs that target high-quality candidates, rather than eliminating the worst to see who’s left. This is not insignificant. It means you must stop asking knockout questions and stop posting boring ads. The only reason companies ask knockout questions is to eliminate weak candidates who apply. If you change the sourcing paradigm to target great candidates, rather than hoping great candidates fall through the cracks, you eliminate the “eliminate the weak candidates” problem at the strategic level.
3. Use a performance-based talent scorecard and evidence-based assessment system to measure pre-hire quality. Competency models and behavioral interviews are too generic and do not measure a candidate’s ability and motivation to perform the actual tasks required for success. Instead, candidates should be evaluated across all real jobs, including their ability to work effectively with the hiring manager. Quantifiable evidence of consistent and comparable past performance needs to be the basis of the yes/no decision.

With this type of process in place, HR/recruiting’s role then becomes one of ensuring that the process for maximizing quality of hire is being followed — not making the hiring decision. This is comparable to the authority given, or taken, by the CFO, in ensuring that capital expenditures are justified in some reasonable fashion. Maximizing the quality of every single hiring decision is the primary strategic role of the HR/recruiting department. If HR/recruiting wants a seat at the strategic table it should demand this responsibility.

According to the survey conducted by Monster and Human Capital Institute, 84 percent of employers indicated they thought their were workers content because they were working. However, only 58 percent of workers said that.

For workers, the disconnect extends to their feelings about their workload, the longer hours required of them, and their willingness to give their employer the benefit of the doubt for layoffs.

“Today’s employers feel that employees are loyal due to the economic times, but the reality is they are not,” said Katherine Jones, HCI Research Fellow. “Because of this, there is a strong likelihood that when the economy turns for the better, employers could find themselves with valued employees jumping ship. This places pressure on them to put retention measures in place now.”

Monster and HCI conducted the survey in May and June to assess the impact of the recession on workers and companies. More than 700 companies and almost 5,000 passive and active job seekers participated, responding to questions about their attitudes to work, employees, their post-recession expectations, and purchasing plans.

The three-part report examines the recession’s impact from the worker’s and employer’s perspective and how the government’s stimulus program may change the workplace.

While the survey showed employers understood their workforce morale has slipped and stress is up because of the recession, it also shows that employees believe their bosses are taking advantage of the situation. Among the findings:

• 57  percent of workers believe employers are exploiting the recession to drive longer hours and lower pay from their workforces;
• Only 26 percent excuse their employers for requiring layoffs and longer hours because they believe their employer’s hands were forced by the recession;
• 58 percent believe employers are less concerned about employee retention, and 50 percent of workers are more concerned about top performers leaving than before the recession;
• 53 percent have a decreased company loyalty;
• 79 percent are more likely to be seeking jobs elsewhere.

Each of the three parts offers insights and conclusions drawn from the survey results. Equally as important is the glimpse the overall report offers of the future: Boomers won’t be retiring in the numbers once thought, thus offsetting, at least partially, the worker shortage; younger people are likely to be more inclined to seek recession-proof or at least recession-resistant jobs or self-employment, and; the general skepticism of Gen Y toward corporate America may be passed down to the following generation.

Perhaps most immediately, there may be a mass turnover of employees, especially of top performers, once companies begin hiring again.

However, while many will work as advertised, getting budget for them is a different matter entirely. In the past, the only way to get any significant new expenditures past the CFO was with some type of rigorous cost-savings analysis. However, this approach ignored any improvements in candidate quality as possible justification due to its “intangible” nature.

But as Dr. John Sullivan has been ably pointing out for these past 10 years, improvements in candidate quality dwarf potential cost savings. In fact, one could easily justify a cost increase if quality of hire could be proven.

In this article, I’m going to introduce a means to calculate the ROI of any new recruiting program on a quality-of-hire basis. Further, I’m going to suggest that once you have a means to measure quality of hire, you’ll shift your focus toward improving it, and consider cost per hire a secondary priority.

While cost per hire is not unimportant, it’s far less important than quality of hire. In the HR field, ROI has traditionally been calculated based on the cost savings a new process generates in comparison to the investment. These savings traditionally involve recruiter productivity opportunities, the use of lower-cost advertising techniques, or the elimination of outside services like search agencies.

ROIs calculated on this basis only have value if the quality of the candidates seen and hired are the same. If quality declines, the associated cost savings are meaningless.

To get some perspective here, let’s look from a slightly different angle at the financial decisions of hiring — the amount of money your company will be spending on direct compensation for new hires in 2010. For example, if your company will be hiring 1,000 additional people next year at an average compensation of $60,000, you’ll be spending $60 million in additional annual compensation.

While this is a huge amount, most companies don’t look at the financial implications of each of these individual 1,000 hiring decisions from a quality standpoint, relying instead on the transaction costs involved in bringing these people on board. By incorporating quality of hire into the ROI analysis, the strategic consequences of this huge expenditure is more appropriately considered.

Measuring quality of hire starts with having some basic tools: first, a talent scorecard to measure incoming candidate quality and, second, a means to convert this into financial impact. With these tools, calculating quality of hire ROI is relatively straightforward. This is demonstrated graphically in the accompanying figure.

The graph represents the current mix of recent hires, assuming some type of normal distribution across all talent levels from A to F. As the economy recovers, there will be a natural tendency to push this mix to the right, reducing the quality. This can be offset by new programs which will improve the mix, pushing the curve to the left. In this case, the average is somewhere between a B and C level, typical of most companies.

An impact multiplier needs to be assigned for each quality group in order to assess the financial contribution each level makes. In this case, it has been assumed that an A-level person makes a positive business contribution that’s equivalent to four times the person’s total compensation. The impact multiplier for a B-level is two times compensation; a C-level is considered break-even; hiring a D-level person results in a loss equivalent to their compensation; and the F-level cost is five times the compensation.

Developing the impact multipliers is the big assumption in this quality-of-hire ROI calculation, but for staff-level positions, the ones shown in the table are quite reasonable. (Click here for more background on this, including some charts, graphs, and a webinar podcast.) Theses multipliers increase dramatically for senior management, and are a bit lower for hourly and entry-level positions, but probably not much.

While you could use short-term performance reviews to determine quality levels post-hire, some type of talent scorecard needs to be used to evaluate candidates on a pre-hire basis. Logically, from a validation standpoint, it’s best to use the same evaluation process pre- and post-hire. Not having linkage pre- and post-hire has been one of the big problems in using quality of hire for developing ROIs for recruiting initiative.

More important, since most hiring mistakes are associated with hiring a good person for the wrong job, these “grades” must be based on performance, not generic quality descriptions. For example, a brilliant person who needs to be pushed to do the work is at best a C-level. Problems associated with these classic mismatches prevent companies from improving quality of hire, regardless of any great sourcing and employer branding programs. This is why I suggest measuring pre- and post-hire quality based on real job needs using a tool like the performance profile instead of a job description in combination with a multi-factor talent scorecard to measure end-to-end quality of hire.

Using these tools, calculating hire-quality ROI involves a number of steps:

First, calculate the average talent mix for your current hiring processes. To do this, take a sample of your recent hires, assigning each person a realistic quality grade. Then using some weighted average approach, determine your average talent mix. It’s probably somewhat below a B level, with a corresponding multiplier of 1.5X to 1.75X. (Email me if you’d like to participate in a quick SWAG assessment.)

Next, determine the financial contribution of this current talent mix. Multiply your current talent mix multiplier by the total compensation for the group to determine the financial contribution they collectively make to your company. In the example of 1,000 hires at $60 million at a B- mix and a 1.5X multiplier, this would be $90 million, for a net contribution of $30 million.

Now the fun begins. Now you need to determine how a new recruiting initiative improves your current talent mix. Any proposed recruiting initiative should be assessed on how well it improves the overall talent mix, not just how much it reduces costs. Graphically, this means moving the normal curve shown earlier to the left, meaning more As and Bs and less Cs, Ds, and Fs. To obtain a 10% quality of hire improvement, you’d need to hire 10% fewer below-average candidates, replacing them all with above-average candidates. Due to the weighting, a 10% quality shift like this increases the multiplier more than 10%. In the example above, this shift increases the multiplier from 1.5X to 1.75X. (Email me if you’d like to see the model and the math.)

Finally, calculate the quality-of-hire ROI by comparing the improvement in contribution to the cost of the initiative. As shown above, a 10% improvement in talent mix increases the multiplier from 1.5X total compensation to 1.75X. In the example, this means the net contribution of the 1,000 new hires increases from $90 million to $105 million, for a net increase of $15 million. This is an enormous impact, and indicates why quality of hire should be a far more important driver than cost per hire when evaluating new recruiting initiatives. Consider the ROI implications. If you spend $500,000 to obtain this quality improvement, you’d have a first-year quality-of-hire ROI of 2,900% ($15mm- $.5mm/$.5mm)!

Now for the good/bad news. Once the economy recovers, improving quality of hire will be more difficult, as the demand for talent exceeds the supply. As shown in the figure, these economic forces will have a tendency to worsen the talent mix as your best people are aggressively sought by the more aggressive recruiters, or they leave on their own for greener pastures.

Under improving economic conditions, preserving your current talent mix will become more challenging. In this case, preventing the impact of a reduction in talent mix should be used to calculate your quality-of-hire ROI.

Recruiting departments should be measured on how well they improve quality of hire, rather than a single-minded focus on cost/hire. The discussion should start by figuring out who’s responsible for it: recruiting, hiring managers, or both. Regardless, the impact of a minor improvement in quality of hire has such an enormous business impact that it’s irresponsible not to directly consider it in every hiring decision.

Having related business units working closely together, rather than operating as independent silos, almost always increases efficiency, reduces errors, and improves overall results.

There’s no better example of what integration can accomplish than the modern-day supply-chain organization, which used to operate as four independent functions (purchasing; inventory management; warehousing; and shipping).

The integration of these functions into a single function with cross-activity analytics and shared goals turned an “overhead function” into a profit center at companies like Wal-Mart, Toyota, and Dell. The customer-service function also demonstrated the value of integration when it created single points of contact for customers using “customer contact centers” capable of addressing a wide range of customer needs from technical support to warranty registration and billing inquiries.

The result of all these innovations was a dramatic increase in customer satisfaction and loyalty/retention. City governments also strive to increase capacity, reduce errors, and save scarce resources when they closely coordinate police, fire, ambulance, and hospital services for handling emergencies.

When executives contemplate what function would benefit the most from breaking down silos and driving integration next, talent acquisition is almost always on their list. Given that numerous organizations are currently engaged in process reengineering efforts and that the budgeting cycle for 2010 is just around the corner, what better time could there be to start integration efforts?

While recruiting continues, requisition loads per recruiter are down and non-essential programs are on hold in many organizations.

Despite the temporary relief from massive requisition loads, executives are crying out for strategic moves and the application of new technologies seen by nearly everyone as relevant to talent acquisition. Growth of social networks and past experience with employee referral programs have led several executives in high-growth Fortune 200 firms to question whether traditional talent acquisition functions even make sense anymore.

One progressive CFO worked with talent acquisition leaders to develop a finance function-specific ERP with aggressive features that produced 80%+ of the function’s hires last year.

The Definition of Integrated Talent Acquisition

Integrated talent acquisition is an organizational design strategy whose primary goal is to break down barriers between like activities and bring economies of scale and quality management to the function.

It emphasizes the coordination of efforts, increased sharing of information, and group communications across several functions to increase speed, quality, and to reduce costs. The coordinated functions often include a mix of corporate functions including HR, finance, operations, business development, and outsourced service providers. In some cases, when the business itself is largely dependent upon the organization’s ability to acquire, develop, motivate, and retain talent, organizations have fully integrated activities across all functional boundaries into a single seamless process with accountability, shared analytics, and shared rewards.

Talent Acquisition Is Mostly Uncoordinated

It’s hard to make a strong argument against integration because working more closely together is so obviously a good thing, but that doesn’t make it common!

All too often, HR leaders are selected who rose to power vertically through a single function, most often training and development or HR operations, but occasionally talent acquisition.

The bias of said leaders creates a highly political environment where survival pretty much depends on “building your own empire” and masking reality to prevent easy replacement.

(I’ve even heard HR referred to as “Balkanized” – which is certainly not a compliment.)

It’s rare to find a talent acquisition function that’s truly integrated. In most cases, the “sub-functions” of talent management operate as semi-autonomous units, while in other more extreme cases the sub-functions operate as completely independent silos. I can’t begin to tell you how often I am met with blank stares when I ask talent acquisition professionals in companies with a formal talent management function to tell me what the function does!

You can quickly tell whether talent acquisition functions are currently integrated by simply looking for the signs of close integration, which include shared metrics, interdependent rewards, cross-departmental rotations, cross-functional teams, and periodic joint meetings.

Problems Caused By Lack of Coordination

Few talent-acquisition functions are closely integrated. Some of the problems caused by this lack of integration include:

• Lost during handoffs. With independent functions all handling a small piece of what it takes to find, court, hire, and onboard a new hire, it is very plausible that candidates may be inadvertently “lost” when they move from one phase of the process into another (for example, when finalists are handed off to a background vendor, some may be lost at either end of the transfer process).
• No way to identify the origin of errors. When a macro level process is broken up into many smaller pieces, each owned by someone else, identifying the source of errors or delays in the overall process is nearly impossible. An example might focus on delays in time to fill. Without an integrated process, shared analytics, and single-point accountability, determining which sub-process (sourcing, assessment, background verification, or offer generation/presentation) produced a delay could be impossible.
• Mixed terminology. As candidates are passed off between sub-functions, they are confused with different terminology and confusing acronyms, not to mention differing levels of service and an array of contacts.
• Lack of understanding or knowledge. Because one function doesn’t trust or even know what goes on within another function, certain activities may be needlessly repeated, increasing recruiting costs and time to hire. Other activities may unknowingly contradict with each other. (For example, references may be called more than once, or two business units may make totally different offers to the same candidate).
• Sabotage. It’s not unusual for some sub-functions to actually despise or even “hate” other talent-management functions. Some individuals can try to proactively hurt or sabotage other functions, while others just try to make them look bad (so that their function looks relatively better).

Talent Acquisition Activities That Should Be Coordinated/Integrated

There are many arguments that can be made for including or excluding talent-acquisition activities from the integration process.

The following list represents those activities that, at a bare minimum, should be coordinated (more formal criteria comes later in this article):

• Employer branding
• Workforce planning and forecasting
• Requisition management
• Experienced recruiting
• College recruiting
• Compensation (offer generation)
• Background verification (reference checking)
• Employment marketing
• Internal movement and job-posting programs
• Relocation
• Onboarding
• Retention and performance management

What Are the Keys to Integration?

If you are going to coordinate related activities, there are certain impactful things to “encourage” the different functions to work more closely together:

1. Joint reporting relationships. When you integrate, all the functions report directly to the same manager. When you coordinate, the reporting lines may be advisory or a dotted-line relationship.
2. Cross-training. Individuals are cross-trained to do multiple jobs. In addition, this training allows them to be redeployed for either short- or long-term assignments in other areas of talent acquisition or HR. Webinars and training sessions from every function in the overall process are available to all.
3. Shared communications. Shared newsletters, memos, and websites allow every function to know what’s happening in other related functions.
4. Cross-functional teams. Requiring inter-related teams to form cross-functional management and problem-solving teams can dramatically improve the workflow. Jointly funded projects can also improve cooperation.
5. Build influence skills. A great deal of HR work is now done by individuals who do not report directly to you … so the ability to influence others becomes critical. As a result, team leaders need to be trained in how to influence individuals who can’t be “forced” to cooperate.
6. Joint meetings. Periodic joint meetings (in-person and virtual) improve mutual understanding and increase the number of discussions about problems created by “other” sub-functions.
7. Inter-departmental rotations. Periodically rotating talent among interdependent departments improves communications, understanding, and cooperation. The rotations can be short-term or permanent.
8. Shared rewards. Performance rewards tied to the success of related functions can dramatically increase cooperation. For example, part of one function’s bonus pool is tied to offer acceptance rates so there is an incentive to provide reasonable offers to the recruiting function.
9. Common metrics. If all related functions in the hiring process are measured on their contribution to “time to fill,” they are all likely to focus on it and to work together with others to improve the overall metric. An integrated error reporting system would ensure that process errors could be assigned to the appropriate owner of that step in the process. Survey a sample of hiring managers and new hires to get their experience of what process parts were integrated and which ones were disjointed.
10. Wiki best-practice sharing. Providing in-house wikis that allow individuals from different functions to help build a shared talent-acquisition knowledge base helps increase ownership in talent acquisition by all. It also leverages the power of the crowd to ensure processes consistent with goals from every perspective. Individuals should be recognized and rewarded for facilitating the sharing of best practices between the different functions.
11. Shared forecasting and planning. When related units share forecasts and plans, they are much more likely to see the same upcoming problems and opportunities.
12. Shared database. Requiring the different sub-functions to use (and add to) the same database can dramatically improve understanding and information flow. Requiring all sub-functions to shift to databased decision-making can also improve quality and consistency.

Indicators That Disparate Functions Should Be Integrated

Integrating every function can actually be counterproductive, in that you can end up with a large, unwieldy bureaucracy. Instead, you should carefully select, using predetermined criteria, which activities should be closely integrated. There are several criteria that, when present, indicate that related sub-functions should be integrated.

Those criteria include:

1. Customer expectations. The first criteria for determining when functions should be integrated is whether the customer or user expects “a continuous process.” For example, when asked, hiring managers universally agreed that the requisition, recruiting, hiring, and onboarding processes should all be integrated. Candidates would also agree that it’s frustrating to be continually “handed off” to a different function throughout the process of becoming an employee. What this means is that whenever the customer expects “a seamless process,” senior managers need to work to provide that integrated process.
2. Significant “handoff” errors. When poorly coordinated functions “handoff” a user to the next step or function in the process, there is a markedly increased chance of errors occurring during the transition. If errors are costly, the inter-functional communication must be nearly perfect (like at the handoff point between the recruiter and the compensation offer specialist, where miscommunication can lead to extremely low offers that have no chance of acceptance). Independent functions with different terminologies and unique acronyms can dramatically increase misunderstandings. Formal integration certainly improves communications and makes handoffs smoother because a single manager oversees the inter-related functions.
3. Significant inter-dependencies. If the output of any particular sub-function is highly dependent on the quality of the inputs from the function that precedes them in the process, they are dependent. For example, sourcers depend heavily on accurate position descriptions that outline all criteria that will be used to screen candidates.
4. The need for simultaneous operations. When related operations are “linear” (meaning that a follow-up step doesn’t begin until the previous step is completed), there is less need for integration. However, when you want to minimize “slack time” and keep your workforce fully occupied, it’s critical that several functions operate simultaneously. For example, when you’re processing the firing of one employee, you can begin sourcing a replacement. Obviously, it’s hard to manage overlapping, simultaneous operations without close coordination.
5. The need for speed. In any case where speed is essential for process success, coordination can certainly help to identify roadblocks and unnecessary delays. Wherever speed and responsiveness are important (as they are in hiring), at the very least, a coordinated effort is necessary.
6. The need for cost efficiencies. Operating numerous independent sub-functions is simply more expensive because each must have its own manager, metrics, and policies. Overall process costs also increase when two functions unknowingly repeat the same task because of poor communication. If you want administrative cost-savings, eliminate duplication and overlap through integration and coordination.
7. Physical separation. If the interdependent functions are physically located away from each other, the distance will cause less-natural interaction. The reduced frequency of interactions among employees means that lower levels of trust and understanding develop among the employees of these separate functions. Obviously, effective coordination and integration can help to prevent any “us vs. them” mentality from developing.
8. Shared technology. Whenever two separate functions share the same database or software, integration ensures more consistent data-entry and database maintenance.

Final Thoughts

The concepts of coordination and integration have a proven track-record. Merely spending a few hours with managers of the supply-chain or customer-service function can get you all the insights and tools that you need. Yet some will fight because of their insecurities or political agendas.

The best way to overcome resistance is to identify the biggest complainers and whiners; keep the ones who put the good of the organization ahead of their own private agendas. After integrating talent management, don’t stop there.

Work with the rest of HR to integrate the three primary areas (buy talent, build talent, and increasing productivity) so that all aspects of talent management and the business act as one.

• Does your top HR leader report to the CEO?

• Are HR reports and metrics reviewed and analyzed? Do they drive the company’s talent strategy?

• Do you have a compensation philosophy? Was it driven internally?

• Is the top HR leader involved in decision-making for C-level searches?

Carroll was speaking at ERE’s Fall conference today. She also spoke at ERE’s Spring conference (those Spring slides are online, by the way. And let me know if you want her slides from today). She also has a good article about succession planning, full of handy tools to tear out, coming up in the November Journal of Corporate Recruiting Leadership.

Here are some of the characteristics that Carroll says are associated with a human resources department that is healthy, influential, and if we can use an overused word, strategic.

• The human resources professionals and particularly the department head identifies solutions, not just problems.
• They understand and helps drive business goals and financial objectives.
• They’re a mentor to senior leaders.
• They don’t just implement changes, but create them.
• The department head is an effective, strong, determined leader.

In fact, the best way I know to learn about radical new approaches and innovations is to examine the best practices from organizations operating completely outside your industry. I call this practice of adapting “unheard of” practices from other industries parallel benchmarking.

It is known as parallel benchmarking because you are learning from completely different industries that still, however, share a parallel problem. The practice that I am suggesting that your firm consider is from baseball and involves “trading” surplus talent with other firms.

If you want to make dramatic improvements in business practice, you need to study how best-performing firms in completely different industries attack your problem.

If you want to go beyond merely talking about outside-the-box solutions, consider changing your approach and focus on “likely to be laughed at” talent-management solutions like those emerging around Twitter and YouTube, and developing a “talent trading” program.

Almost all firms at some point have a surplus of employees that results from changing business conditions. Unfortunately, the typical approaches for getting rid of surplus employees are cost-containment approaches that provide no payback to the firm.

The most common approach, where corporations lay off surplus talent, is a lose-lose approach. You release talent and get no remuneration for it, despite having invested in it for years via salaries and training. At the same time, you also incur huge costs because you pay for severance, outplacement services, and damage to your employer brand reputation.

But what if there was a solution where instead of releasing talent, you could exchange or “trade” talent with other firms and get something of value in return? Now that would be a talent-management breakthrough that would make any CFO smile.

Trading Employees Is Not Uncommon

Firms routinely loan employees to initiatives with their strategic partners and joint ventures; not-for-profits periodically exchange talent when their funding priorities or levels change; and federal agencies exchange employees on both a short-term and permanent basis using interagency exchanges and loans.

The military also periodically exchanges talent among the different branches of the services in order to fill talent needs or to acquire knowledge or best practices.

While the practice is common in each of these instances, the benchmark industries to study with regards to the practice are professional sports and entertainment, where trading is a required business practice.

Sports Trading Is a Perfect Model

If you managed the Yankees or Manchester United and you had an excess of skilled players in a particular position, you would make a deal and trade that talent to another club for players in a skill area where you had a significant need (or for cash). In professional sports, managers who simply release talent are considered as failures because they got nothing in return.

In Major League Baseball, for example, trading between teams in the same league and between different leagues is such an integral part of the talent-management process that trading isn’t given a second thought. Incidentally, the most desirable and high-impact trades don’t involve “losers,” but rather, top performers. These sports franchises are just like any business enterprise — they are for-profit corporations striving to maximize their talent ROI by always getting something of value … for something of value.

A Business Example: The Value of Trading Employees

Let’s assume you were a computer firm like Apple, and you wanted to get into the music business by developing a music player. You could train your current employees who have computer backgrounds, but that would be time-consuming, expensive, and difficult because no one at your firm really knows the music industry.

At the same time, another firm, like Sony, that was going through tough times might have surplus talent with extensive knowledge of the music industry. Because Sony might be interested in gaining a better understanding of Internet video transfer and the process of innovation at Apple, Sony might be willing to trade some of its excess music talent for individuals involved in the Internet video transfer or innovation process at Apple.

Because the traded employees from Apple’s video-on-demand set-top box division would be going into a high-priority area at Sony, they might be excited and willing to accept the trade. The Sony employees facing a layoff would probably be thrilled, both with the chance to be sought out by experts and with their renewed job security at Apple.

Advantages to the Corporation

In addition to the obviously higher-talent ROI, there are other benefits that can accrue to an organization that develops a trading process, including:

• Expanded talent acquisition opportunities – mutually agreed-upon trades can be easily made with large customers or strategic partners. In contrast, direct recruiting from them is simply out of the question because it would damage the relationship. As a result, trading gives you an opportunity to acquire talent from organizations that were previously off-limits.
• You may get the entire team – in recruiting, you acquire individuals who are independent and haven’t worked together as a team. However, in cases where a company is closing down a facility or a particular area of business, trading might provide you with an opportunity to acquire or “lift out” an entire intact team. Bringing on a cohesive unit might enable them to get up to speed almost immediately.
• Acquiring best practices – because you’re trading with high-performing firms, not only do you get talented individuals but with them, you also get the opportunity to better understand and learn the best practices of the “sending” firm.
• High-quality talent – because poor performers are generally excluded from trades, if you make accurate trade assessments, you will be getting quality, trained talent. This talent’s shortcoming is that the firm has a surplus of talent or skills in that particular area (using a basketball analogy, you’re getting a talented seven-foot center merely because the team already had one more seven-foot center than they could carry on their roster). Trades can also include a “return” clause or a penalty if the traded employee turns out to be less than they were billed as.
• Delaying is possible – in the case where an organization doesn’t currently need more talent of any kind, the two exchanges of employees need not be simultaneous. The “sending” firm can delay their selection and receipt of their talent to a more opportune date (an employee to be named later).
• Fewer negatives – there are fewer retaliation issues and legal problems associated with trades because they are negotiated and all of the parties involved have agreed. In contrast, direct recruiting from competitor firms can result in back-and-forth raiding, which can generate lawsuits and drive up salaries.
• Fewer turnover surprises – employees may see layoffs coming and go to another firm with little notice. In contrast, if they see that you’re actually trying to help them find a better opportunity at another firm, they may be a little less active in their job search. And with a trading process, you have sufficient advance notice of who is leaving and when, which makes it easier to prepare for any vacancies as a result of lost talent. When large-scale raiding is going on, corporations need to put significant resources into retention.

Questions about the Process

If you’re skeptical, you probably have some questions about the trading process.

Here are some typical questions and their answers:

• Who would want these surplus employees? – in baseball for example, the highest quality talent are the most frequent trade targets. Surplus in this case merely means you have too much of it, not that there’s anything wrong with it. In almost all cases, these are valuable employees with important skills; they just happen to have skills (or work in a job) where the firm has more than enough labor available. In the case of a facility closing, these may be exceptional individuals who are just not willing to relocate.
• Why not just recruit them away? – traditionally when a firm sees “talent” that it wants at a firm, it merely attempts to recruit that individual or team away. Unfortunately, recruiting can be expensive and time-consuming. If your firm has a weak recruiting team, it won’t be able to acquire the same quality of talent as it could get from trading. It’s also important to remember that if you focus exclusively on recruiting individual talent, you still have done nothing to limit the millions in losses that occur when you lay off surplus talent that you’ve invested in over the years, without getting a penny in return.
• Won’t employees refuse the trade? – obviously your employees could refuse the trade because employees cannot be “owned” by their employer. But it’s important to note that it’s fairly common for key baseball players to have formal “no trade clauses.” However, all that these restrictive causes really mean is that you have the burden to make a convincing case to the employee that the new situation will be better for them. In other cases, obviously employees who are facing layoffs wouldn’t require much convincing, while others could be given a bonus for accepting the trade. Incidentally, traditional recruiting of “currently employed individuals” always includes a significant “convincing” element (to convince them to leave one firm for another), so that same convincing process just needs to be adapted to this trading approach.
• Who should be involved in the trading effort? – normally the trading process should be managed by the recruiting function. You should start by making the business case to get managers and the CFO on board. The trading process itself requires managers and a personnel function that can accurately identify surplus talent within your own organization. It also requires a trading team with the capabilities of assessing the quality and the value of talent that is located within other organizations. The head negotiator must be capable of putting together a “win-win” trade, where both teams and the player are clearly convinced of their direct benefit. Managers should be rewarded for successfully trading away surplus talent and for acquiring excellent talent in trades.
• Who should we offer in trade? – firms should develop surplus talent or redeployment lists that “look forward” at the firm’s talent needs at least one year out. In addition, a component needs to be added both to the workforce planning and to the performance appraisal processes to identify individuals who we cannot afford to keep or retrain. The retention, redeployment, and development teams should also be asked to identify individuals that are likely to leave (and thus offered for trade) because of the restricted opportunities within our firm.
• What should we ask for in return? – obviously the key to a great trade is that both sides perceive that they are getting great value (and this is even more important when trading with customers or strategic partners). The key to success here is to work with your trading partner to get them to pre-identify what they would consider to be the most desirable talent and skills. If you target firms that are in trouble and they can’t handle more employees, the trade might include a significant cash settlement rather than an equal “talent for talent” trade.
• Which firms should we trade with? – start by looking at “best practice firms” within your own industry. Then look at “parallel industries” that use similar technologies, that have similar customers, or that have equal or faster innovation and growth rates. Also target firms that are seeking to expand into your industry.
• Are there typical “sports trading” options that I should utilize? – many managers are big sports fans, so they almost instantly understand the “sports trading” mentality, and because sports coaches are experienced in arranging difficult “trades” for outsiders, it’s a good idea to try some “sports” trading options to improve your trading success. Here are eight ideas to consider:

1. 2 for 1 exchange – propose a two “B” players for one “A” player exchange.
2. For a player to be named later – propose accepting a surplus employee now in exchange for an opportunity to have one of equal value (but unnamed) at a later date.
3. Offer a slate – instead of offering a single employee trade, instead offer a slate of candidates from both firms.
4. Pay a fee – offer to accept a fee in cases where the firm is willing to accept your talent but it has little desirable talent to offer in return.
5. Delay the transfer – offer to keep the traded employee on your payroll for a limited period of time until the “receiving firm” is ready to orient and train them.
6. From major league to AAA – if you are a well-known firm, seek out second-tier firms or smaller sized firms that would be thrilled to get anyone from a top firm for the prestige or in order to learn their best practices.
7. Ask for deal sweeteners – when negotiations are stuck, directly ask their team to propose a list of potential “deal sweeteners” to move the negotiations on. Also try to identify in advance any deal-breakers.
8. Best practice for talent – offer the firm the opportunity to learn one or more of your firm’s “best practices” in exchange for their surplus talent.

Final Thoughts

Large-scale layoffs are a negative ROI business practice because you are giving away a resource in which you have invested millions. Not only are you giving them away, but you have no control over where they go.

In fact, released employees might go directly to your competitors, further compounding your losses. A better approach would first provide you with some control over where they go, as well as provide your firm with a direct quid pro quo for this released investment.

Initially, the idea of trading surplus talent with other companies might seem outrageous, but the practice has proven to be a winner. If you want to make a quantum leap in performance, it only makes sense that you need to make a quantum change in your business practices.

As crazy as it might initially sound, if you’re in a labor-reduction mode, a formal talent-trading process may be the highest ROI activity available to you!

Organizations worry about being perceived as offering a good balance between work and personal time.

Many career sites and recruiters stress the ways the organization addresses this through flexible work policies, family-friendly HR polices, child care, and so on. And, for many job seekers, finding a company that offers this magic blend is the Holy Grail.

While Jack was addressing women specifically and speaking about their opportunities for promotion and growth within traditional corporate America, he was reinforcing this assumption. He was heavily criticized for talking to women in this way, even though it is an accurate reflection of the thinking in most of traditional corporate America.

My problem is not with Jack as much as it is with the assumptions that work/life balance is based on.

We assume that work and family should be separated and that there should somehow be an equal division between the two, which is implied in the word “balance.”

The concept of work and life being somehow distinct from each other is a recent construct. There was no work/life balance in the 17th, 18th, 19th, or for most of the 20th centuries. Work and life were integrated and no one would have even thought to separate out what portion of farm life, for example, was “life” and what portion was “work.” Wives and husbands and children worked together as family units, producing food, clothing, or operating a small family business. Roles were assumed and cast off as needed and whoever had the ability or skill needed at a particular time did what was needed to be done.

In most of the world this is still the case. It is only in developed nations that these artificial distinctions arose to meet the needs of factories where everyone had to be in a physical place for certain time frames in order for things to be made. It took England and the United States decades to get people accustomed to going to work at a particular time and staying for a fixed amount of time. The way we work today has never been an organic or natural way, and our fixation recently on work/life balance is only the latest manifestation of an old issue.

Where I think Jack was misguided was in not recognizing how rapidly the traditional corporate world is crumbling. Organizations like Facebook, Mozilla, and hundreds of other emerging firms are organizing in radically different ways. They are focusing on interdependence, on building networks and fostering relations between workers, vendors, and customers. Innovative firms realize that flat structures and open communication improve creativity.

So the good news is that many organizations are moving back into the world where work and life are integrated and where entire families may be part of the “team.” Technology makes this possible, and as high definition video, faster connections, and touch capabilities improve it will be easier and easier. At the most exciting startups, people are already seamlessly integrated into projects where roles frequently change as needs change and leadership rotates as project requirements evolve. Workers are able to be at home with their kids or spouse. They can be outdoors or indoors. And very often they can be physically far removed from the “office” whatever that is coming to mean. The emerging concept is that being in a certain place for a specific time is less important than achieving results and accomplishing goals.

While Baby Boomer managers are locked into the concept of physical space and time as keys to assessing contribution, younger workers have a different view. They realize that for personal as well as environmental and energy reasons, working from home is going to become the norm.

I am not downplaying how difficult it is to change the Baby Boomer attitude, but I am optimistic that as younger managers appear, as environmental pressures increase, and as younger organizations begin to generate significant revenue and employ more people, attitudes about work will change rapidly.

There will always remain work that requires physical presence — whether it is making something, caring for an ill person, or fixing your drainpipe. But less and less work requires a physical presence, and what remains may be done with greater flexibility and personalization than it is today. Our entire world rotates around an 80+ year-old concept that work is something done away from home, for a set amount of time, and should not be fun. Work is assumed to be only the means to have another life and as little of it as possible is good. The flip side to that is an assumption that work is what makes life meaningful and to do it with your partner, friends, or family is good. How many hours it takes to do it or where it gets done are far less important than the engagement and accomplishment.

Jack Welch was absolutely right if we are thinking about 20th century corporate life. However, Gen Y and those who follow are forging new territory and reinventing work — making it the engaging experience it should be where friends and families interact together all the time, teach each other, share workloads, and find emotional connections that have been purged from corporate life as we have known it.

The following options address those circumstances and are grouped into options for moderate cost reduction and small cost reduction.

Moderate Cost-Reduction Options

Reducing hours: this is another “pay reduction” approach where you reduce the hours of work for selected non-exempt workers. The percentage of hours reduced might vary by individual; it’s similar to short-term furloughs, but hours are reduced as opposed to whole days.
• Effectiveness — medium if focused on poor performers and low-impact jobs.
• Benefits — workers might view it as OK because it’s a stopgap to avoid layoffs.
• Potential problems — hourly employees often live on the edge, so this might result in higher turnover. Employees “fighting” over available hours may cause work disruption. Top performers who have choices may go elsewhere unless the need to reduce costs is an industry-wide phenomenon.

Cut benefits: reducing corporate contributions to pensions/401k or increasing employee-paid health care costs. Sick leave or vacation can also be cut.
• Effectiveness — medium
• Benefits — most employees don’t notice the reduction in the short-term. The key is to identify high-cost benefits that few use and most wouldn’t miss.
• Potential problems — if it gets media coverage, it can hurt your brand image. It disproportionately hurts families and older employees. If you cut sick leave, it may cause sick employees to come to work and spread diseases.

Hiring freezes: where you eliminate the hiring of new employees into vacant jobs.
• Effectiveness — medium with many negative consequences
• Benefits — if you have lots of open positions, this can result in significant salary and benefits savings. Less business impact if only surplus positions go unfilled.
• Potential problems — it will lead to major income reduction if revenue generating jobs are not filled quickly. Major workforce disruptions can occur if the vacancies are in key and non-”surplus” positions. Top talent opportunities may be missed and managers may keep poor performers who they were considering releasing because they are better than having no one. Many freezes are really sieves where the hiring freeze is frequently circumvented. Some managers hire the same candidates under contract, resulting in no net cost savings.

Pay cuts: where you cut employee or executive salaries by a certain percentage but you do not reduce the days that they work.
• Effectiveness — medium if you focus on managers and executives
• Benefits — managers and executives will usually tolerate these cuts because they are more highly paid.
• Potential problems — it may lead to major workforce disruptions, especially if layoffs occur anyway. It may drive top performers the way because everyone was treated equally. It may not be possible under union contracts. Most will have an expectation that at some point these cuts will be restored. In tight economic times, any reduction in income may cause families living on the edge to lose their house, and so on.

Small Cost-Reduction Options

Forced vacation: where employees are forced to take accrued vacation in the short-term to convert to balance sheet costs.
• Effectiveness — medium
• Benefits — because of accounting rules, it reduces corporate liabilities.
• Potential problems — The dollar impact may be low if employees don’t accrue large amounts of vacation. Can result in work disruption when many employees take vacation simultaneously. May disrupt families by forcing vacations during unusual time periods.

Pay freeze: under this approach, salary increases are eliminated.
• Effectiveness — low with negative top-performer impacts
• Benefits — since not all individuals expect a pay increase each year, it might have less effect on employee morale.
• Potential problems — the amount of labor cost reduction might be small. Top performers (those most likely to get a pay raise) may become frustrated and look elsewhere because they feel they’ve earned a pay increase.

Promotion freeze: where all promotions are frozen.
• Effectiveness — low with significant negative top-performer impacts.
• Benefits — in companies with few promotions, cost reduction will be minimal.
• Potential problems — it will frustrate and likely cause turnover among top performers.

Other Cost Reductions

Many firms use a misguided “save people first” approach to cost cutting, so they attempt to reduce travel, subscriptions, conferences, equipment, telephone costs, etc., before they try any of the above approaches. That may seem like a good idea, but reducing the salesperson’s minutes on a mobile phone might reduce sales more than the initial cost-savings.

In addition, a carpenter can’t really do his job without a sharp saw, nor can a programmer without her latest software tools.

The key is to use reduction approaches where the impact on productivity and innovation is considered and measured along with initial cost reduction.

Final Thoughts

As you can see from this checklist, the highest-impact approaches with the least-negative impacts on top performers are reducing contingent workers, surgical layoffs focused on poor performers, expanded use of productivity improvement tools, better use of technology, and the long-term outsourcing of work where the level of work fluctuates significantly.

On the other end of the spectrum, voluntary buyouts and furloughs to reduce salary costs have the most negatives associated with them.

The most important thing to remember is that you should set specific measurable goals before each action relative to both the short and long term, then check to see if those goals were actually met. In many cases, you’ll be surprised to find that some of the approaches have so many negative unintended consequences that you will not have decreased cost due to negative impacts on productivity and top-performer turnover.

After taking a whirlwind tour through some of the things OrcaEyes can do, I have no hesitancy in admitting that “I’m not smarter than those 4th graders.”

Of course the significance of those reports was lost on the kids. Hilbert just wanted to make sure the navigation was easy to use and the red-yellow-green alert system easy to understand. And they are.

But it’s those reports that make the $200k a 20,000-employee firm can spend on OrcaEyes seem like a bargain.

Before I get into how, here’s a bit about the what, as in just what is OrcaEyes? Hilbert describes it as HR System Management Software. You can think of it as ERP for HR. Either way, the system provides an overarching view of how human capital impacts the enterprise. It does this by connecting to a company’s existing business systems — hooking into finance, sales, operations, supply chain, or an ERP (if there is one), the HRIS, HRMS, and whatever others may be there.

OrcaEyes crunches the data it extracts from these systems and combines it — for certain uses, like recruiting and salary setting — with data Hilbert obtains from such external sources as the U.S. Bureau of Labor Statistics, Census, and private data providers. Thus, in an instant, literally, an HR recruiter and a division VP can tell the cost in lost business for staffing shortages in the North Sea unit of Exult Energy’s refining and petrochemical division.

I thought that was nice information to have, but no special feat since any CFO can do revenue averages per year-end headcount. But as every CFO and line manager knows, being down one position doesn’t translate into a direct or immediate loss of revenue. Depending on the size of the unit, other workers will pick up the load.

Here’s where the magic of OrcaEyes comes in. The system is too smart to simply say you’re in danger of losing $1 million in revenue just because that’s the average. Nope. It knows, because you’ve told it during the setup, that losing one worker for a short period will have a minimal impact. But as the number of vacancies increases and the vacancy time lengthens, the bigger the effect and more bars on the OrcaEyes report turn red.

This is also a modeling program, not just a “what is” program. So OrcaEyes knows that besides the current vacancy, the attrition rate is such that there’s a high probability of losing more employees in the unit soon. And retirements will add a few more. Now OrcaEyes can tell you what the impact of all those things occurring — or some of them — will be.

That’s but one example of what this data-based analytics program can do. Even though OrcaEyes has only just recently come out of the incubator, there are plenty of other examples of its value from the 10 Fortune list companies that have been testing it now for several months.

I asked Hilbert for a sampler and here’s what he sent:

• A global manufacturing company discovered that when overtime for operators, maintenance, and skill trade workers exceeds 12.5 hours for three weeks, accidents increase by 105 percent. When the company added staffing to reduce the OT, the savings from fewer accidents came to $370 million in just two quarters;
• A retail company discovered there is a correlation between store clerk overtime and theft and customer complaints. When OT begins to exceed an average of 11.8 hours for three consecutive  weeks, thefts increased by 41 percent and customer service complaints increased 52 percent. The retailer loses one customer for every 2.6 complaints.
• That a manager with poor ratings by their staff affects bottom line performance is not an “Aha” moment. But just how much? Hilbert tell us that a retailer found store sales revenue dropped by 1.2- 1.8 percent for each 10 points below a 75 percent manager approval rating.

OrcaEyes, says Hilbert, provides “just about every metric you can imagine.” And many you might not have thought of.  Another example: Our mythical oil company Exult Energy needs chemical engineers. Where in the U.S. are prospects the best for finding engineers who are most likely to come to work for Exult? Would you believe Bay City, Michigan?

OrcaEyes was born out of Hilbert’s years with the much lauded Valero Energy. He was Global Planning and Talent Lead for the fast-growing oil company, landing the job with almost no direct HR experience, but a broad business knowledge from having CEO’d tech firms. During his four years at Valero Hilbert won award after award for his programs, including five from ERE alone.

It was during those years he came to appreciate the integration of HR and business purpose and metrics. In the process, he turned Valero into a poster child for data-driven recruitment. Dr. John Sullivan, a recruiting thought leader, industry consultant, and proponent of scientific recruiting, wrote of Hilbert and Valero:

“its primary differentiator is that the company takes a business-like, almost scientific, approach to recruiting. Most recruiting departments treat recruiting as an art. Valero, in direct contrast, utilizes and directly borrows from other successful business systems like supply chain, IT, Six Sigma, and process reengineering to craft a function whose performance can be measured (and improved) down to the minutest degree.”

Some two years in the making and months in the testing, OrcaEyes is Hilbert’s effort to bring the same principles and discipline he used to transform Valero’s recruiting to the rest of the world.

Because of its price tag and the system’s hunger for business data, OrcaEyes is clearly not a tool every company can afford or can use. But if you get a chance to do an OrcaEyes demo, do it just for the chance to see what recruiting will be like in the future.

And to ask Hilbert how he came up with the name of the company. (Hint: He didn’t. A marketing acquaintance did. And it has something to do with the fact that orcas — killer whales, as they are often known — don’t ever completely sleep and have sonar vision, just like the program.  And it’s a name people don’t forget.)

The percentages below indicate how many people gave the item a 4, meaning “very important.”

The 601 full- or part-time employees were randomly selected from the U.S. telephone population.

Imagine if every single one of your employees, from front-line staff to senior management, was 100% engaged, doing the work they were cut out for, contributing to the success of your organization by focusing on their core competencies.

Can you envision the collective power you would unleash? No laggards … just a company filled with rising stars. Absenteeism would drop instantly, worker defections to your competitors would cease entirely. Entire departments would start exceeding quotas.

You would become a preferred employer, and employee recruitment would be an exercise in picking the talent you wanted. Better yet, what if I told you this can be achieved and without the tremendous cost and resource drain of investing in hard-to-measure training programs? That long-sought-after seat at the management table would suddenly materialize for you.

Does this sound too good to be true? Well, it’s not. There is a beautifully simple tool called a “human capital development audit” that you can implement immediately to achieve these results.

Here’s how it works: For each employee in your organization, you match the roles and responsibilities of the job they are employed in with their skills, core competencies, and experience. Be as expansive and broad as possible in identifying their skills. Consider their academic training, software skills, certifications, professional development, leadership, cultural diversity … everything!

The diagram above illustrates a human capital audit conducted for the fictitious customer service rep Jessica Rivera. After identifying all the roles and responsibilities she is tasked with accomplishing, you then detail her skills. Use a spreadsheet and simply line up the roles and skills along one another in facing columns.

These should be obtained through interviews with Jessica, her current (and any past) managers, her coaches/mentors, peers she has worked with, etc.

After that is accomplished you drill down to identify which skill sets that she possesses that are not being used. In order to maximize the positive impact to your organization from an ROI perspective, you should prioritize those skills that she is not currently using, based on her ability to generate revenues, reduce costs, improve your organization’s processes, etc.

Next, you must develop an action plan for all of the highest priority non-leveraged skills that Jessica possesses. For each untapped skill, set a time frame for completion and any contingencies, or potential barriers, that would prevent her (and her manager) from making those untapped skills part of her newly redesigned job description.

In Jessica’s case, she is adept at using her persuasive, good-natured personality to suggest complimentary products to cross-upsell to her company’s existing clients. It’s her nature to take care of her clients, and she naturally knows how to ask probing questions. She also has an uncanny knack for being a leader on her team. She’s the one who other customer service reps in her unit turn to for advice, even before they engage their own line managers. These are powerful skills to have in a customer care manager and yet, in this scenario, they are not being used.

For this human capital audit to work, it has to be embraced by your senior management, owned by human resources, and conducted for all departments and levels of your organization. It should be reviewed quarterly, and merit-based compensation plans should be developed for employees that integrate untapped core competencies into their new roles and responsibilities.

Having said that, most HR professionals that I work with and lecture indicate this is not possible. They claim it is a big-time commitment, and doesn’t seem to be something that can be quantified, in terms of impact to the organization.

I would offer that, in this challenging economic environment, even if you only achieve a 50% increase in each employee’s productivity, the positive potential impact to your company would be great. I guarantee that a 50% increase in your entire organization’s productivity will force senior management to take notice of human resource’s role as a strategic partner in driving value through the organization.

No matter how enthusiastic your employees are about participating in an internal movement program, they are bound to be somewhat frustrated if there aren’t a wide variety of assignments available for them to choose from. Even if you successfully excite your managers and other rotation program participants, you can’t automatically assume that they know how to identify or develop exciting assignments or rotations.

As a result, the rotation program manager needs to design a process and provide managers with a variety of suggestions and tips in order to make it easy for them to create internal movement projects, assignments, and rotations. This section highlights over 20 of the approaches that I have found to be effective in helping managers create more and better rotations.

Approaches to Help Managers Identify New Projects and Assignments

The various approaches that can help managers either identify or develop rotation projects can be classified into four broad categories that include:

1. Piggybacking off of existing business processes
2. Soliciting help from individuals and groups
3. Creating information sources and events
4. Other miscellaneous approaches

Category I — Piggybacking Off Of Existing Business Processes

The basic premise here is to take existing business processes and tools and to use them to identify potential short and medium-term projects. Some of the approaches to consider include:

A manager’s “to do” list — every manager creates some variation of a “things to do list,” so this list is a great place to start when looking for projects. Encourage managers to go over their list once a month. They should identify the things that need to be done that employees from other areas or functions might be able to carry out — things that they simply do not have the resources to complete. By providing managers with a checklist of factors for identifying potential projects, it will make it easier for them to “visualize” the projects that are most likely to help them achieve their business goals. The factor list for identifying new rotation projects should include:

• Projects related to their high-priority goals
• “Things that are not getting done” and that will likely languish without outside help
• Problems that require a relatively small number of hours to complete
• Projects that can be done by outsiders with less experience or knowledge of the function
• Projects that can be done remotely
• Assignments that require few resources or budget dollars
• Projects or assignments where “outside thinking” (that would more likely come from an outside the function person) would be most beneficial
• Planning and research-related projects that are almost always “put off” until there is adequate time to begin them

Goals, budgets, and strategic plans — managers should be periodically encouraged to review their list of yearly goals and their budget in order to identify potential problems or opportunities that might be amenable to rotation assignments. They should also be encouraged to look at plans and forecasts to identify upcoming opportunities that could be “started on” by outside individuals participating in a rotation assignment.

Converting contractor, part-time and internship projects — managers should be encouraged to periodically look at both their current and their past list of short-term projects that they have assigned to contractors, part-time individuals, or even interns. Managers should first consider reassigning some of these projects to rotatees. In addition, managers should be encouraged to look at these lists of previous projects in order to stimulate their thinking toward developing similar or even follow-up projects that can be done by current employees who need growth opportunities.

Teaching assignments — because one of the best ways to become an expert is to develop the capability for teaching others what you know, the development function should be asked to identify a number of teaching and coaching assignments each quarter for rotatees.

Category II — Soliciting Help from Individuals and Groups

Ideas and suggestions that fall under this category relate to providing direct help and support to managers.

Assignment development consultants or mentors — consider providing managers with a list of “assignment development consultants,” i.e. other managers who have volunteered to help others find and develop assignments. In my experience, most managers who have had success with job rotations are more than willing to help their peers develop similar assignments. The list might also include some individuals who have been trained to be peer mentors from the development function.

Recently developed leaders — make it an integral part of all major job rotations for the individual in the rotation to look for additional assignments both for others and for themselves. Even after the rotation assignments are complete, these individuals should be asked to continually “scout” for future opportunities for others.

Mentor suggestions — mentors throughout the organization should be asked periodically to help identify or develop rotation assignments.

Affinity groups — solicit the support of corporate affinity and diversity groups in identifying both projects and individuals that could benefit significantly from participating in the rotation program.

Corporate alumni – if your organization has a corporate alumni group, ask them to help in identifying possible rotation assignments outside the organization.

Retiree groups — if your organization has a corporate retiree group, ask them to help in identifying possible rotation assignments both inside and outside the organization.

Senior executive projects — because working directly with the CEO or with other top executives is always stimulating and exciting, these individuals should be asked to provide a targeted number of assignments each quarter.

Employee-generated projects — in many cases, the best source for identifying projects are your employees. Encourage managers to hold periodic meetings with their employees in order to educate them about the availability of “help” from individuals on develop assignments. The employee should be provided with a list of previous projects and a template to help them understand the characteristics of a great rotation assignment. Employees should also be encouraged to network with their professional contacts at other firms to identify rotation assignments that they have found to be stimulating or impactful. In addition, managers should encourage their own employees to propose their ideal departmental or external rotation assignments.

Approach top performers — use “forced-ranking,” bonus lists, or performance appraisal results to identify your organization’s top-performing managers. Approach these top performers directly and ask them to help to identify and develop rotations.

Assign interns — hire more select current college interns from college academic programs that teach leadership development and train them how to seek out possible projects and rotations.

Category III — Creating Information Sources and Events

Suggestions that fall under this category cover creating rotation-related information sources.

Provide examples of previous assignments — providing managers with a list of past successful projects can help stimulate thinking. By looking through the list they might see a project that causes them to think “I need that.” When possible, this list should also include examples of projects from other firms (especially customer firms and strategic partners) that were identified through benchmarking.

Project availability website — some firms (Whirlpool and Google are leaders here) have developed internal processes that “market” available projects on an internal website, so that internal talent can “apply” (or even bid) to work on short-term projects. An “available project” marketing process and website can stimulate managers into action by reminding them that others are actively developing project assignments. This website can also provide them with a range of project examples that they can use as a basis for developing their own.

Job rotation help website — develop an internal website designed specifically for managers that provides education and tips on how to develop stretch into teaching assignments. Include frequently asked questions and web links to help resources both within and outside the firm.

Job rotation forum — develop an online forum or listserv that allows managers to bring up issues and ask questions. Encourage managers, mentors, and leadership development experts to participate in the forum. Internal social networks “groups” can also be used to exchange ideas and questions.

Rotation wiki — provide managers with the opportunity to develop an internal “wiki” knowledge site on developing rotation assignments. A wiki, following the Wikipedia model, allows managers to build a knowledge base. This knowledge base will likely be more usable and credible, because it is built and enhanced exclusively by managers.

Characteristics of a great assignment template — in addition to a template that outlines which projects would be best for the manager, there should also be a checklist of the factors that make a project exciting to an individual employee. That checklist can be used to develop or to improve projects so that they are exciting, challenging, and attractive to employees. The rotation program should include a process for stimulating the managers’ thinking relating to the characteristics of a possible project. The characteristics that interest employees looking for growth or development were highlighted in a previous section entitled “elements of a well-designed individual job rotation” but a shorthand version of that list includes:

• The length of the project (short-term duration).
• The quality of the coworkers that you will work with.
• The amount of flexibility or input that the person accepting the assignment will have.
• The skills to be learned, especially if they are leadership, organizational, or people-managerial skills or skills that make an individual more promotable.
• The high-level contacts the individual will make.
• Whether new technologies or tools will be used.
• The visibility of the assignment in the organization.
• The impact the assignment will have on the business.

Remind managers about “always impactful” rotations — the rotation program manager should provide managers with a list of typical “always impactful” job rotations. Some of these “can’t miss” rotations include:

• Rotating overhead professionals into line functions to improve understanding and cooperation.
• Rotating technical professionals into HR in order to develop their understanding of people-management issues and people skills.
• Rotating individuals between highly interdependent business functions in order to improve communications, cooperation, and understanding.
• Rotating tactical employees into strategic planning and forecasting functions in order to improve their “big picture” vision.

Rotation development workshops — the rotation manager should design and periodically offer both face-to-face and web-based workshops in order to provide managers with help in identifying potential rotations and stretch assignments.

Category IV — Other Miscellaneous Ideas

Internal competitions — the manager of job rotations should consider setting up an internal competition to generate new projects and assignments from all of your managers, with recognition for those departments that develop the best quality and the most rotations for development. Periodically posting the success record of each manager and department might help spur their collective competitive juices.

Focus on growth departments — because departments undergoing rapid growth are the most likely to have a significant need for project help, the rotation program manager should target these departments for developing new assignments.

Rewards — one of the most effective ways of increasing the number of rotations is recognizing and rewarding managers for identifying and developing high-quality rotations and stretch assignments for employees outside of their team. Identifying and developing assignments could also be made a key bonus or promotion criteria. Quotas for each manager could be set in order to encourage them to identify and develop a targeted number of assignments and rotations each quarter.

Final Thoughts
Throughout this series of articles, I’ve attempted to highlight some of the best and emerging practices in internal movement. In a time where most companies are focusing on “building talent” rather than “buying it,” it is important that those in talent management shift their focus towards efforts that positively impact redeployment, development, and retention. “On-the-job training” has been and always will be the most effective tool for both exciting and developing workers. Now is an ideal time to revisit and update your program for creating and filling development assignments, stretch assignments, and job rotations.

When corporate revenues are down or stagnant, talent managers typically shift their focus away from volume hiring to developing and improving existing employees. Executives are always challenged to make the correct “buy or build” decision, but when hiring is frozen (the buy option), obviously the only remaining tool available to drive change in organizational capability and capacity is to “build” your current employees.

Such efforts increase the emphasis organizations must place on project deployment for skill building, mentoring, leadership development, and succession planning to ensure that the organization’s capability and capacity evolve — not deteriorate — during the downturn.

The Goals of Internal Movement Programs

The broad goals of “building” your employees through internal movement generally fit into four categories:

1. Increasing employee impact. A primary goal of internal movement is proactively shifting current employees into areas where they can have a higher impact on corporate results. Generally, business results improve because you move a larger number of your highly skilled individuals into growth areas. This is often called “right job” movement because it emphasizes either temporarily or permanently putting the right people with the right skills into high-impact jobs that more directly impact the things that matter the most during slow business periods.
2. Motivation and retention. Periodically moving employees into new rotations or project assignments can increase their motivation and excitement levels. This in turn can lead to higher retention rates.
3. Leadership development. Identifying and developing high-potential individuals is a major goal for organizations that want to ensure talent is available for manager and leader roles when the need arises. A significant portion of leadership development can be done “on the job” through stretch assignments. Moving potential leaders into different jobs also serves as an assessment mechanism.
4. Skill improvement. Internal movement and stretch assignments among current employees can improve their skill levels or add new technical skill sets.

How Do “First Generation” and “Second Generation” Internal Movement Systems Differ?

Internal movement systems to drive employee development are not new. Most programs in existence today are variants of programs developed decades ago. They operate on tradition, have no direct alignment with business strategy, and are rarely called upon to demonstrate an impact on organizational performance.

These traditional “first generation” internal movement programs either rotate newly hired employees through a static group of rotations, push potential leaders through a series of available assignments, or rely upon self-nomination via internal job boards. Their goal is generally quite narrow: to provide employees a mechanism to move throughout the organization when a manager is not driving movement. They usually focus on “whole job” movement, in that most of the offered jobs are for promotions or lateral moves into other full-time permanent assignments.

Many of these legacy programs were designed to give existing employees a preference over external talent by providing a one- or two-week head-start for internal employees to apply, before external applicants are considered.

First-generation programs are merely operational and provide no strategic benefit. During the last few years, a new or “second generation” of internal movement programs has emerged at firms like Booz Allen and Microsoft. Unlike their predecessors, the second-generation internal movement (intra-placement programs) is proactive. Many rely upon teams of recruiters to identify internal employees who should be moving to new assignments and charge them with finding roles where the talent would be of greater value to the organization. They focus on business alignment, accelerated deployment, and retention of top talent. They consider what’s best for the employee and the needs of the organization to ensure that the placement will create the highest business impact. These new systems rely heavily on technology and metrics to ensure that they improve ROI and business impact.

The Key Elements of Second-Generation Systems

Some key elements that differentiate the newer “second-generation” internal movement systems:

• Proactive. Rather than making the decision to move to an assignment on their own, individuals are approached in order to increase both the volume and the frequency of internal transfers.
• Targeted movements. All movement is directed in order to increase its impact. Employees are not encouraged to make placement decisions based on a whim. Instead, individuals are provided with education and guidance related to what is the best placement based on their career aspirations as well as where they might have the most impact. The decision criteria for selecting individuals makes sure that the placement fits objective criteria including learning, retention, development, productivity, and business need.
• Part-time rotations. The process includes the capability of part-time placements. This allows the employee to stay in their current job while working in another on a part-time basis in order to develop or learn (i.e., one-day-a-week).
• Project opportunities. Internal movement may include assignment to specific short-term projects to fit a business need. Project placements can be full-time or part-time, but in either case, the primary goal is to meet a business need. Project opportunities can be “bid on,” filled by volunteers, or assigned.
• Overload assignments. The process also offers short-term placements for short-term business “overload” needs (seasonal needs, advertising promotions, etc.).
• Global. The system includes development and business impact assignments around the world.
• Remote. The rotations or movements can include virtual, work-from-anywhere assignments.
• “Outside the organization” placements. The process provides opportunities to place employees in joint ventures, at strategic partners, or even within a large customer’s organization.
• Non-obvious placements. The process is designed to increase the movement of individuals into “non-obvious” positions (generally outside their current organizational chart, functional area, or business unit).
• Technology. The entire process is electronic and paperless.
• Rewards. The process recognizes and rewards (both in the form of bonuses and promotions) managers for finding, developing, and “releasing” talent to other parts of the business.
• Metric-driven. The process continually improves its results based on metrics and data.

Reasons Why Effective Internal Movement Does Not Occur Naturally

If you believe in free trade and open markets, then you certainly understand the value of open competition. It’s hard to argue against the benefits of “right job” internal movement. Most understand the benefit of having the most skilled and best-performing player in each key position.

For example, you certainly wouldn’t want a great basketball player like Michael Jordan playing baseball when his highest skill and impact area is basketball. In the same light, you wouldn’t want a highly innovative individual working in a commodity business when their impact could be much greater if they worked in a fast-growth business unit.

Unfortunately, most internal movement systems are neither open nor competitive. Managers and HR policies almost universally restrict actively recruiting current employees away from their current assignments. In addition, many corporations allow managers to have veto power over losing an employee to an internal transfer or may require an individual to stay in a new position for at least two years before they can move to another.

It’s important to realize specifically why traditional “job-posting” and internal movement systems don’t work, so that you can design new systems that minimize the traditional weak points or flaws.

Pain Points in First-Generation Internal Movement Systems

• Talent “ownership” and hoarding. Most managers operate under the mindset that once they get top talent, they own it. It doesn’t seem to matter whether the talent was hired or developed by them; once they have talent on their teams, they are reluctant to let it go. As part of this “hoarding” behavior, they often discourage team members from even applying for internal positions and some even punish those who try to leave for being disloyal. Breaking this selfish and narrow perspective is critical if you are to get managers to adopt the superior mindset, which is that managers need to be talent developers and “releasers” because it’s best for the corporation to have the agility to rapidly move people to areas of immediate need without having to “fight” silos and political battles. The ultimate goal of any internal movement system is to get individual managers to adopt the role of being “talent launching pads” that find, develop, and then disperse talent to other teams or business units. Essentially, every manager accepts the role as a “farm team” that quickly disperses talent whenever it is ready.
• “Passive” job seekers. Individuals who design internal movement systems seem to lose track of the fact that when you are hiring external candidates, there are two basic types: those who are actively looking for jobs and those who are not (the so-called passive job seeker). It only makes sense that once these “passive” or non-active job seekers become employees, that they would retain the same traits that result in frequent movement. If most of your employees are not “active” job seekers, it is unlikely that they will take advantage of any internal job posting or internal movement system without some prodding or encouragement.
• Frustration with the process. Most internal job posting and movement systems are not particularly user-friendly. Unless you’re an insider, it’s hard to find out much about a job opening beyond the position description. Rejected employees seldom receive any guidance as to what they did right or wrong. Many of the jobs are “wired,” meaning that even though they’re posted, the person who will actually get the job has already been determined. Some internal movement systems make the mistake of limiting future movement (you must stay in the job 24 months before you can apply for another internally), and this hurts the corporation when an urgent need opens up sooner. Other systems even require your current manager’s approval before you can apply or accept another internal job, which certainly discourages free movement. The slowness and frustration associated with many internal movement processes often results in the very best employees leaving the company, because external recruiters are more proactive, faster, and do a much better job of praising and encouraging an individual to switch jobs.
• Targeted movement. Most internal movement systems leave the decision of “who should move to where and when” up to the individual employee or manager, neither of which have enough visibility into the organization’s grand needs to drive effective movement. Most employees have no information or even access to a way of identifying which jobs or business units are both the best for their career advancement and for the growth of the corporation. As a result of this lack of information, individual employees are forced to be self-centered, because corporations give little guidance to employees about skill shortages, growth rates, job security risks, etc. This forces employees to make their own choices about when and where to move. A superior process educates them about key corporate needs and areas that best fit employees’ individual career goals.
• No short-term overflow capability. In a rapidly changing business environment, it’s important to be able to make short-term temporary relocations, as well as long-term permanent ones. Unfortunately, most systems aren’t equipped to handle short-term redeployments. For example, if you have a business situation where you have a short-term sudden influx of customer calls, it’s important to have the “overflow” capability of handling the sudden increase in calls. Most systems just don’t have this capability.
• Weak management of the process. Most internal movement systems are poorly managed or in some cases literally unmanaged. They are often operated by individuals with a “clerical mentality.” Some of the first-generation systems provide no candidate screening, so managers must review every internal applicant. Others arbitrarily and prematurely screen out individuals who could have made an outstanding contribution. Most processes use only rudimentary technology, have no customer satisfaction assessment, and have no strategic metrics that directly assess the business impact of ineffective or “too slow” internal movement.
• Focus solely on employees. The majority of internal movement programs focus on the segment of the labor force that is very quickly becoming the minority. Organizations are becoming much more adept at leveraging contingent labor (temporary workers, contract workers, consultants, outsourced labor, labor on loan from strategic partners, etc.). Unfortunately, none of the talent management systems are being retooled to ensure management beyond the basics of procurement for the growing labor segment. Internal movement is perhaps one of the most critical activities governing this segment, as contingent labor is often leveraged to add immediate capability or capacity related to strategic objectives.

Chances are, you may have experienced many of the frustrations and gaps in logic related to internal movement programs identified in part one of this series. Next week, part two will dive into the benefits of improving internal movement systems.

Riviera Advisors consultant and former ERE expo chairman, Jeremy Eskenazi, joined us at at the ERE Expo 2009 Spring to moderate a panel discussing the challenges and strategies of change management. The panel also included Rodney Moses of Research In Motion/Blackberry, Vicki Perry of the Avery Dennison Corporation, and Aziz Chowdhury of the Baker Hughes Corporation.

Throughout the course of the session, the panel discussed the various changes they have encountered over the years, as well as what has worked and what hasn’t. Rodney Moses brought up an excellent point about how issues can arise when the focus is placed on why the change must happen rather than how the change will happen. Moses emphasized that communication, role responsibility, and openness are crucial during the process.

Another major change that many encounter in their organizations is the change from a decentralized business model to a centralized one. Vicki Perry addressed some of the challenges and resistance faced, especially regarding role responsibilities. Perry found the “myth of the month” strategy to be especially effective, helping to dispel rumors about the new system.

Aziz Chowdhury spoke on the same subject, discussing some of the mistakes that were made and things that were overlooked during the change. He also stressed the importance of communication and dispelling rumors during the process.

The panelists were all in unison regarding the importance of communication during the process, as much of the discord is a result of false expectations. Watch these highlights from the presentation for more!

DETROIT — General Motors Corporation Chairman and CEO Rick Wagoner will step down immediately at the request of the White House. –Comcast.net Finance

I always liked Rick Wagoner. He is the quintessential Boy Scout. Probably makes a great neighbor and a wonderful friend, so I take no glee in his departure. On the other hand, he was not the right person for the job and hasn’t been for endless years. GM made cars few wanted and it hemorrhaged cash. (This should bother you just a tad, as it is your cash they are currently hemorrhaging.)

As an example, rumor has it that when GM unveiled the Aztek in 2001, there was only a gasp and then dead silence; an unspeakably ugly car instantly hated by one and all. (John Sullivan’s Aztec is for sale by way; e-mail him on pricing.) How, in all that is holy, could Wagoner allow a car like this to see the light of day? He should have laid his body in front of it sooner then having it hit the press.

As you can see, poor leadership devastates us all. But wait: put down that latte and read on. I am not at the good part yet.

It appears that he was forced out by the Obama administration. Is that not as embarrassing as it gets? It took an act of government to do what a board of directors should have done a decade ago. The fact that his board did not remove this sadly ineffective CEO is a glaring example of leadership that has failed miserably. This board had a moral as well as a fiduciary responsibility to do what was in General Motors’ best interest, and it proved to be absolutely worthless. If you think it gives a damn about GM, I suggest you smarten up. (If you think they care one iota about your bailout money, you need your head examined.)

So how does this little tirade relate to the emerging role of tomorrow’s recruiter? (See A Return to Recruiting: Notes, Thoughts, and Commentary.) Glad you asked. The future of recruiting is all about leadership and doing what is right for the clients you represent. For recruiting as a profession and for recruiters as individuals to thrive, it must add far more value. Recruiting, both individually as well as collectively, must develop the vision and the courage to act as leaders. We must move way from the concerns of politics, the pathological need to be liked and, as Jeremy Eskenazi put it, the “at your service” mentality that hurts us more then it helps. We must insert our opinion and thoughts where reinvention is required and lead through example. We must be willing to be unpopular. Please consider the following:

• Be a leader. Going along to get along is a sadly compromised existence. It kills careers, companies, and, apparently, economies. The opportunity to lead — to make a real difference in your future and the futures of those around you — has never been better. The world of business has been decimated and needs individuals with the courage and creativity to do what is right. If we worry less about what is popular and more about the actionable items that have real meaning in terms of supporting organizational objectives, we will become leaders and we will be great!
• Give them what they need: Yes; what they need, not what they want. Everyone knows what they want but few know what they need. (I want a Maserati Bora, but that’s not happening.) The difference between what they need as opposed to what they want is the sweet spot of leadership’s value. Take hiring managers as an example. They can be unspeakably inept in terms of how they handle candidates and conduct interviews. Become a quick study as it relates to their strengths and weaknesses. Give them positive reinforcement for what they do well (ranking candidates, for example.) Coach and carry them for the things they do not do well (making hiring decisions, for example). Short of shooting someone, do whatever it takes to provide the type of support they really need.
• Innovate big time/question everything. The future of recruiting belongs to those who are willing to invent it. (See Recruiting, Innovation, and Thinking Differently.) I am not sure how things will look down the road, but I have a strong feeling they are not going to look like they did before the world came to an end. I suggest that all of us need to rethink what we do and how we do it. Are the best practices of the future the same as the best practices of the past? Do we really need to hire the best candidate every single time for every single position? Does diversity really create a better final product and how is that measured? Get my drift?
• Don’t hire your friends. Like to spend time with your friends? Take them bowling. Recruiting is not a profession that lends itself well to cronyism as it colors one’s judgment. (Unless you work for the government, of course, because when you hire people with no brains and little experience, they better be your friends.) I can assure you that there is nothing I would enjoy more then doing a big project and hiring all of my friends. Sadly, some of my friends are not very good at what they do and to hire them would only demonstrate poor leadership. Think of your job as a recruiter to build a company one brick at a time with each brick being important. You wouldn’t use a brick that had a big crack in it because you liked the color, would you? Of course not. Think of your friends in that same way. If you have a friend that you think fits the job, toss them into the hat and have them evaluated along with the others. Do not push to have them hired because it goes against your role and mission.

As we enter the second quarter of 2009, I believe this country is in a financial mess that will not end anytime soon. The future is up for grabs and those individuals who demonstrate the ability to create significant value through courageous leadership will be on the road to real and meaningful success.

It turns out that the impending swine flu pandemic is also a major corporate issue that needs to be addressed with decisive plans and clear communications. Fear surrounding the illness is already affecting employee productivity and attendance, as parents in regions impacted are being forced to find child care or stay home as schools close for weeks at a time.

The potential damage that this particular flu can cause corporations is further intensified by the fact that many corporate staffs are already incredibly lean, making it difficult to tolerate extended spikes in absenteeism. If your corporation hasn’t set aside some time to assess how this threat can negatively impact your business and your employees, the time to act is now.

Potential Impacts That Firms Might Encounter

As more becomes known about the flu and its actual impacts, it will be easier for firms to identify and solve the problems that they could encounter. However, based on my research and from years of providing advice to corporations regarding past catastrophic events, I have made a list of the nine most likely potential impact areas that senior managers and HR need to prepare for. They include:

1. Absenteeism. The most obvious impact on most corporations will be an increase in employee absenteeism. Because health professionals who are highly visible in the media are encouraging individuals (who think they might be infected) from interacting with others, it is highly likely that many of your employees will choose to stay home in order to protect others. Having schools close (over 300 have already) might also mean that more parents will be forced to stay home while their kids are out of school. If family members get sick, your employees are likely to be absent while they care for their family. Some health professionals have also publicly encouraged individuals in cities affected to stay home and travel out as little as possible to minimize their risk of exposure, a message that may resonate strongly with those who already suffer from phobias related to germ exposure.
2. Morale and focus. What happens in your employees’ personal lives will also impact their ability to concentrate on their work. If an individual employee, friend, or family member becomes infected, it is likely their morale will be negatively impacted. It will certainly be difficult for managers to keep their employees focused on the customer when their personal lives are in turmoil.
3. Productivity. Sick workers are obviously less productive. Add to that burden the fact that more workers will be absent, while others will be less engaged, and it is fairly safe to assume that it will be extremely difficult for managers to maintain current workforce productivity levels. This will force managers and HR to pull away from normal activities to focus on these new issues. Conversely, firms that are located outside of the major impact areas will, as a result, have a competitive advantage.
4. Customer impacts. Firms in the travel, retail, or any industry where large amounts of people congregate and interact will be negatively impacted as customers change their habits in order to avoid encountering the flu.
5. Employer brand and recruiting. Firms that fail to act quickly to accommodate their employees’ needs will weaken their employer brand image both inside and outside the firm. This could positively affect future recruiting as potential candidates see how poorly the firm manages in a crisis.
6. Costs. Employee costs will likely increase in several areas, including costs related to overtime and temporary labor. Employee benefit costs are also likely to increase in the future as a result of increased health plan usage by your employees.
7. Travel. Fewer employees will be willing to travel on airplanes, trains, and even mass transit for fear of catching the virus. This will affect sales and weaken relationships.
8. Stock price. The stock price of individual firms might also be impacted if analysts and the public perceive that the firm may be benefited or harmed by the epidemic.
9. Smaller issues. The potential problems will be both large and small. For example, even minor things like what you serve in the cafeteria (there may be an irrational fear of pork products) may become issues. Simple practices like shaking hands with customers and job applicants may become huge issues overnight that management must develop a plan to deal with.

The initial strategic challenge is for senior management and HR to develop a process that can identify these real or imagined issues early on, so that a plan to deal with each of them can be developed.

Not All Firms Will Suffer the Same Exposure

The risk to your organization will vary depending on several factors. First of all, if your facilities are close to geographic areas where the outbreak is stronger or if you are a multinational firm that does business in Mexico, the risk will be greater (Google, for example, already closed its Mexico office). If your employees are required to routinely travel, your risk will be greater. Firms that are in healthcare and pharmaceuticals will have more direct positive business impacts and retail firms where there is a lot of public contact will face many potential problems. Small businesses are likely to be impacted the most, because it’s harder for them to easily replace workers who are impacted by the flu.

20 Action Steps to Consider
The key phrase to remember is that “it’s better to be prepared than surprised.” The emergency action plans that were developed in the past for such threats as Y2K, 9/11, the bird flu, SARS, and localized natural disasters should be used as a foundation to help your organization prepare for this current problem. Some of the possible action steps that you should consider include:

Part I – Strategic Actions

1. Senior management briefing. The CFO’s office, HR, and the Risk departments need to collaborate in order to build the business case for proactively addressing swine-flu-related issues. Senior executives need to be briefed on what needs to be done and the consequences for not acting quickly, in order to gain their support for the overall effort.
2. Transparency and lack of surprises. The old adage that “the only thing we have to fear is fear itself” is certainly true in this case. Fear makes normal people act irrationally. If you want to minimize fear among your employees, the most important step is to decide up front to be open, honest, proactive, and transparent in everything you do and say. Be forthcoming with information about risks and problems and answer questions before they even occur to most employees. Senior managers have to be continually communicating about the plan and its preventative measures. Management also must be frank in reporting incidents within the firm where flu outbreaks have actually occurred.
3. Identify “at risk” jobs. Not every job within the corporation will have the same risk factor for coming in contact with the virus. For example, obviously receptionists will have greater risks than those answering the phone in remote call centers. As a result, HR needs a process that aids in identifying the specific jobs where employees are likely to be the most uncomfortable and where employee absenteeism is most likely to increase. Also, because parents with small children are the most likely to be absent and older workers are the most at risk of serious complications, HR and managers might need to pay special attention to these groups of workers.

Part II – Employee Concerns and Available Options

1. Identify employee concerns. HR needs to be proactive and to develop processes and surveys that allow the firm to quickly identify both overall and individual employee concerns and questions. There should also be anonymous options for employees who are afraid to speak up. Ask your employees periodically what information they need and what specifically they would like management to do. A single point of contact should be designated for employees and managers and held accountable for managing the overall response to the pandemic.
2. Hygiene actions. Based on the flu avoidance advice that is being given out by public health officials, there will be an increased demand for hygiene-related products such as antibacterial creams, latex gloves, masks (the most common variety aren’t effective), and hand-washing facilities. Smart firms will proactively provide employees with many of these options, if for no other reason than to reduce their fear and concern level. Cleaning crews will have to be instructed to pay special attention to often-touched items like copy machines, coffee pots, shared phones, and doorknobs. Employees will also have to be educated about preventive measures.
3. Support for employees’ families. It’s important that HR take steps to understand not just their employee’s concern but also employees’ potential concerns related to their families. Smart firms will find a way to provide information to employee families. Firms also need to be flexible enough to allow employees to do “whatever they perceive they need to do” in order to protect and support their family members. It is highly likely that efforts in this area will later pay off in increased retention and employee referral rates.
4. Remote and flexible work options. Expand the current options that employees have to work at home during this pandemic. This is important because the actual cost of having sick employees come to work (and making others ill) is much greater than the cost of the inconvenience of letting employees who might be contagious work from home. Large-scale school closings will cause employees who are working parents of school-age children to want expanded remote and flexible work hours options. Individual managers have to be educated on the most effective ways to keep these remote workers productive.
5. Information and help sources. Employees and their families should be provided with a long list of information and “help” sources from within the organization, on the web, and from local community organizations. Educating your workers and their families can go a long way in reducing unnecessary fear and concern.
6. Involve unions. If you operate in a union environment, include union leaders (and alternatively, representatives of employee groups) early on in the planning. This involvement and cooperation can help to minimize rumors and it can expand your options for communicating with your workers.
7. Privacy concerns. While it’s important to be open and honest, protect the privacy of your employees. Privacy policies and procedures need to be revisited to ensure that they are effective enough to keep sensitive issues related to healthcare and illnesses confidential.

Part III – Company Policies and Operational Processes

1. Employee benefit and pay options. Everyone in the employee benefits and health departments need to be on full alert during this crisis. Smart firms will want to review their healthcare, counseling, and employee assistance plan coverage to ensure that the desired level of health coverage is being provided in every area related to the swine flu. Deductible and co-payment levels may need to be reduced for the short-term, in order to ensure that your employees seek out help rather than coming to work sick. Large firms might also consider having a nurse or health counselors on-site during the short term to minimize your employees’ time away from work. Another alternative to consider is offering “hazardous duty pay,” where you give short-term bonuses for those working in “high-risk of illness” jobs.
2. Absenteeism policy. Traditional absenteeism policies might not work adequately in this crisis situation. As a result, these policies need to be reviewed. Your employees will also have to be educated about which situations are best covered by standard absenteeism, personal days, long-term disability, or vacation policies. Management also needs to make it clear in which circumstances that it is best for the firm and for the individual employees to stay home. There should also be a “help line” and an internal web page to answer questions and concerns relating to health coverage, absenteeism, etc.
3. Travel policy. The organization’s travel policy needs to be reviewed so that employees who are concerned about their health know and understand their various options relating to “required” corporate travel. Large corporate events in the immediate future might also need to be reconsidered.
4. Long-term disability and death procedures. If the strain facing your workers is the most severe one, you will need to review and update your policies and processes related to long-term disability. And unfortunately, even employee death processes will need to be reviewed. Senior managers need to be aware that even a single employee death — that in the eyes of your employees is handled improperly — could be a morale crusher.
5. Contingent workforce processes. Managers need to plan for the possibility of losing a large number of employees as a result of this illness. That means that contingency worker plans need to be developed for supplementing the current workforce with part-time workers, temps, contract workers, or outsource vendors. Managers might need expanded authority to offer overtime to current employees to fill in as a result of employee absenteeism and illness.

Part IV – Miscellaneous Actions

1. Reassure customers. Study the potential impacts that this health scare might have on your customers. First off, you might need to change physical layouts to minimize their perception of crowded conditions. You may even have to change sales and customer service processes so that the potential health concerns of both your employees and your customers are addressed.
2. Localization. If you have a large number of employees in high-profile and hard-hit geographic areas including Mexico, you will have to develop customized plans to better fit the more serious situation. Cultural and regional differences will also have to be factored into localized plans.
3. Business interruption insurance. The possibility of business interruption could be an issue at many firms but it is especially important at smaller firms. Managers will need to calculate the risks and identify what coverage they currently have and what coverage levels that they might need in the future. For example, if your firm operates a Mexican travel business, it would be plain silly not to anticipate a partial or complete shutdown of your business for several months. Take this opportunity to review and update each of your emergency preparedness action plans.
4. Generalist role. HR generalists should be trained in how to handle swine-flu-related situations. They need to be the primary support person for individual managers that need advice and help.
5. Metrics. Metrics and reporting mechanisms need to be beefed up to ensure that senior management is constantly aware of which areas within the firm have the most absenteeism or flu-related issues.

Final Thoughts

Let’s face it: the current economic downturn already has many employees concerned about job security, so letting additional stress factors run rampant could be disastrous. Management can choose to ignore the issue and hope that it goes away, but truly smart managers will see this crisis as an opportunity to demonstrate to your workers that you actually “live” your corporate values. It’s an opportunity to demonstrate your concern for your employees’ needs and to help them directly in this uncertain time.

Even if the swine flu doesn’t become a major pandemic, acting quickly and visibly is still an opportunity to demonstrate that your firm is responsible and caring. Incidentally, by providing this help and support, you will also likely improve both your employees’ current productivity and their long-term loyalty. Not a bad ROI for both sides!

The basic premise is that circumstances are far more critical to ultimate success than any other factor. For example, he cites the fact that Gates, Jobs, and comparable computer all-stars were born in the mid-1950s as being a critical factor leading to their industry success. When the PC revolution started they were just the right age — old enough to participate, but not yet established on a career path that prevented them from taking risks.

For another example, Gladwell points out that most professional athletic stars are born in the first quarter of the year they were first allowed to participate in their sport. The idea here is that whether it’s youth hockey, baseball, or any sport for that matter, the best players at this early age are more mature since they’re 3-9 months older than their competition. This difference means a lot when you’re five or six. The chosen ones are then given more opportunities to be trained and play more often. Overall, the best of this group put in thousands of hours more honing their skills, in comparison to those of equal talent who didn’t make the team just because they were too young at the time.

Of course, opportunity is just one factor involved in success. Talent is still critical and essential, but according to Gladwell, not as important as hard work. This is where the extra thousands of hours of effort comes into play.

To become a master at any craft requires plenty of hard work, at least 10,000 hours, according to Gladwell. As an example, he cites Mozart who didn’t write any worthwhile music until he was in his mid-20s, after about 10,000 hours. The Beatles are another example cited, who worked 10 long years perfecting their craft at all-night clubs in Germany.

Now what does all of this have to do with recruiting and hiring top talent? The answer started back in 1978 when I first became a third-party recruiter.

After a few years of dealing with top people, it became clear that the best of the bunch had a number of core traits in common, specifically talent, hard work, and strong team skills.

This eventually became the Formula for Hiring Success described in my book, Hire With Your Head (Wiley, 2007, 3rd edition).

Here’s the abbreviated formula for hiring success:

Adler’s Formula for Hiring Success = Talent X Energy2 plus Team Skills

Translation: Enough talent to do the work times motivation to do the work squared plus comparable team skills.

The reason motivation to do the work is squared is because it’s the driving force behind talent, and without it, strong team skills don’t really matter. This pretty much parallels Gladwell’s observations.

The point is that circumstances and talent can take you only so far, but without hard work, 10,000 hours in Gladwell’s assessment, you won’t go too far. Of course, without the right set of circumstances, you won’t go as far as possible, even if you work extremely hard.

With the Gladwell insight, I’ve modified the success formula slightly, as shown below:

The Adler/Gladwell Formula for Hiring Success = Appropriate Job Circumstances plus Talent X Energy2 plus Team Skills

Although I didn’t use this exact formula, the simple concept allowed me to become a more effective recruiter. You might find it useful as well, whether you are a recruiter or a hiring manager facing a tough selection decision.

Here’s how:

Consider the formula from two perspectives, one from an assessment standpoint and the other from a career-counseling point of view.

Obviously, whether you’re a recruiter or hiring manager you only want to hire people who are highly motivated to do the actual work required and have the appropriate level of talent and team skills. On the flip side, if the job can be clearly presented as a worthy career move, the candidate will value it more highly than a job of lesser opportunity, even one paying more.

None of this matters much if you don’t define the actual work required. This is the core problem with vague or generic job descriptions. They don’t define the work in enough depth to allow the interviewer to accurately assess motivation to do it. Instead, motivation to get the job and the degree of extroversion is used to assess motivation to do the work. Making matters worse is the use of generic skills and competencies to assess talent and the degree of affability used to assess team skills.

The result? Once the probation period ends, many new employees settle in to a routine of average effort, average performance, and satisfactory team skills, despite so much promise during the interview.

Recruiting and closing are made more difficult without a meaningful job description, since it’s more difficult to prove that vagueness and an employer brand represent career opportunity. Under this situation, every job looks like every other one, with compensation the only differentiator.

If compensation is the primary reason a candidate is taking one job over another, the job shouldn’t be offered or taken. This results in the worst of all possible situations — a person who is overpaid while not learning or growing.

This is a pretty powerful case for the idea that job descriptions need to be defined in enough detail to more accurately assess motivation and better present the true career opportunity. In our company, we use performance profiles to describe actual job needs.

Here’s the quick description from Hire With Your Head:

“A performance profile describes the six to eight performance objectives a person taking the job needs to do in order to be considered successful. It differs from a job description in that it doesn’t describe skills or traits, but rather what the person needs to accomplish with his or her skills and traits.”

For example, rather than say a software developer must have 3-5 years of C++ and Java background, it’s more relevant to say the person will lead the development of a robust online search query system for a new eCommerce site.

This type of clarity allows an interviewer to determine direct competency and motivation by getting examples of recent accomplishments doing comparable work. (Here’s an article on using just one question demonstrating how to do this.)

From a recruiting standpoint, it’s also easier to position your opening as a good career move if the candidate finds the work itself meaningful while providing a strong learning opportunity.

The right circumstances lay the foundation for personal success. Of course, it takes enough talent to take advantage of the situation and strong degree of self-motivation to maximize the opportunity.

Whether you’re a recruiter or hiring manager, you’ll need to convert your job descriptions into challenges, projects, and performance expectations. Then use the interview to determine whether these represent a growth and learning opportunity for the candidate. During the interview, find six or more examples of where the candidate exceeded expectations or pushed herself to excel.

If these are comparable to the work you need done, you have found a star, and your star has found a true opportunity to take advantage of her talent.

The current economic situation just underlines the need for organizations to develop sustainable talent strategies to minimize the trauma of poor economies; maintain a top notch, committed and skilled workforce; and encourage the development of new skills among those already employed rather than the mass hiring of new workers.

It is more obvious now than ever before that the need for semi-skilled labor is ending and that most organizations will need a highly skilled workforce to be competitive.

Successful organizations have a core of skilled people who generate revenue, create new products and services, and interact with customers in a deep way. Finding these people is very hard, and the supply is diminishing and will continue to do so as the Baby Boomers, who make up a disproportionate part of this supply today, eventually retire.

Organizations have four basic tools at their disposal to deal with people: the ability to attract and acquire, the ability to develop and provide competency, the ability to engage and excite so they are committed, and the ability to measure performance and provide feedback to adjust recruitment and development practices.

By developing the right integration and balance between each of these tools, there can be employment harmony and much less binging and purging of people when economic winds change.

One might expect human resources to step up and claim responsibility for this, and a handful of HR chieftains have tried to do this. Unfortunately, HR is mired in legalese, labor law, and in a general belief that their role is to make people happy and feel good, no matter what the business reality might indicate. HR has consistently failed to show strategic initiative and a “can-do” spirit. Many, some say most, HR people are process-police who focus on doing something “right” rather than on doing something that has an effect on the bottom line.

HR professional organizations are constantly presenting seminars and rolling out speakers extolling the need to be business-focused and to earn a seat at the decision-making table. Yet, HR remains disconnected from business and is rarely listened to for strategic people advice. Rather, they are expected to execute the decisions made by real business people.

A small number of organizations are instead putting people without HR backgrounds or credentials into roles where they will have responsibility to craft these people strategies. The people assuming the Chief Talent Officer role are often people who have demonstrated their business credentials, perhaps by running a business unit or by their involvement in product development or customer service. Many of them have also spent time building work teams, grappling with the internal people issues in teams, and who have an understanding of the external trends and issues that are changing the nature of work and the ways people want to engage in work.

A successful Chief Talent Officer has to be far more than a recruiter or a trainer or a process integrator. A talent officer is the general and strategist in charge of the supply of what is becoming the rarest resources an organization has — skilled, committed workers. Their job is to understand the objectives of the company, architect the strategy to find or develop the people who will be needed to meet business objectives, and redeploy people efficiently and effectively when their initial objectives are achieved without losing them to the competition.

While more efficiently finding existing talent is a great skill for a world-class recruiter, it is not enough for a talent officer. Their focus will have to be on creating a net increase in the supply of people in any needed job category, instead of just being better at getting at the existing supply.

And, while being well versed in training technology and being able to creatively and quickly build skills or re-skill a workforce are wonderful skills for a training manager, those are not enough for a talent officer. They will have to architect systems and tools to assess and continuously train people to fill jobs we haven’t even thought of yet. Effective talent officers will be partnering with vendors, working with high schools and colleges, and marketing to the community the benefits of gaining the skills the firm needs.

And, while being somewhat familiar with the corporate business objectives and the global talent pool is important, it is not enough for a talent officer. They have to understand the global workforce and know where to move work or people. They will have to do that according to their firm’s business goals.

A talent officer has to influence management to implement the integrated people strategies that will keep a sustainable workforce in place no matter what happens to the economy. This is not an easy job but the integration of recruiting, development, engagement, and performance is what talent management is really all about. Those organizations that get this mix right will enjoy long period of employment stability, harmony, and productivity. We have some examples today: Toyota is one. Toyota retrains during slow times, has had very few and very small layoffs, and focuses on process improvements and job enlargement rather than mass hiring. IBM, over the years, has also focused on internal mobility and employee development rather than on mass external hiring. These sustainable practices are good for the economy, good for people, and good for profitability.

By 2020 these roles will be common in large companies and many smaller ones will use consultants to help them architect similar strategies.

The first casualty when war comes is truth. – Sen. Hiram Johnson (R., CA), 1918

The looming passage of the Employee Free Choice Act has the business world in a frenzy. The EFCA, if you haven’t been paying attention, would make it easier for unions to organize and reduce employers’ leverage in contract negotiations.

Businesses act like sentries on the parapets of ancient castles, warning of the approach of barbarian hordes. Consultants, trade associations, and labor lawyers presage unions gaining strength and forcing onerous agreements, obliterating productivity and adding costs. All of this comes, of course, at the worst possible time from a business perspective.

Unions, on the other hand, see EFCA as leveling the playing field. Management has used the current certification process to its advantage, they argue, intimidating workers and pressuring them to reject union certification in secret ballot elections. Given that union membership is at historically low levels — just 7.8% of U.S. workers currently belong to one — the portrayal of management as having the deck stacked in its favor is believable.

The truth probably lies somewhere in the middle. What is undeniable, however, is that the EFCA will make organizing easier for unions (which is why they support it so enthusiastically). And that has employers wondering what the implications are for them.

How Much Is Your Organization at Risk?

The first question most employers ask is whether or not they are at risk of being targeted by a union. When you look at it from the unions’ perspective, some employers are better targets than others, and they will focus their efforts accordingly. Manufacturers, ironically, are not top targets because labor has learned that such firms can pack up their machinery and move to places less friendly to unionization.

Thus, place-based employers — health care, hospitality, retailing, retail banking, and government — are ideal targets for organizing. One cannot uproot a hospital or a restaurant to avoid unionization efforts without losing its customer base. Some businesses require that you have facilities where your customers are, even in today’s online world (it’s difficult to deliver a baby over the Web).

Employers in industries that have lots of low-paid hourly workers are also prime targets because such employees often have issues about pay, working conditions, or schedules. Health care, hospitality, and retail show up in this category, as well.

Organizations with records of poor employee relations are at greater risk for obvious reasons. Workers who have grievances — real or imagined — are much more open to the union’s case for collective bargaining and the EFCA will make it much easier for such people to act out their frustrations.

How Should Employers Prepare for EFCA?

Passage of EFCA is not certain, but with a pro-labor Congress and President the odds of it becoming law are better than they have been in a generation. So employers should prepare now for a new labor marketplace where unions will have more clout. Here are three things employers should do at a minimum to prepare themselves in advance:

Objectively assess the state of your employee relations. It is hard for employers to get an accurate fix on employees’ sentiments because workers are reluctant to criticize for fear of retribution. This is especially pronounced during tough economic times. Executives also tend to see themselves as far better at managing than their employees do. So it is important to assess the health of your relationship with your employees through objective measurements such as employee engagement or satisfaction surveys, exit interviewing those who quit to find out why, and monitoring external blogs and forums for comments about your workplace by current or former employees.

If it is apparent that you have points of chronic conflict, you need to address those quickly to reduce tension and relieve frustration.

Educate front-line supervisors and managers about the EFCA and its implications. There is truth in the old saying is that, “people join a company but quit because of a manager.” How your managers and supervisors work with their employees sets the tone for your organization and determines how well management and the rank and file get along. If the EFCA passes, you will also need managers and supervisors to be vigilant for signs of organizing efforts at your workplace. Nearly every expert advises strongly against union-bashing or fear-mongering: you are far better off clearly and dispassionately laying out the facts to your workers as to what the impact of unionization will be and letting them decide. If you have supervisors or managers who have significantly higher than normal turnover rates, you need to evaluate their ability to lead and inspire their people; if someone is unable to get people to do their jobs without threats or coercion, they shouldn’t be in such a role.

Communicate, communicate, communicate. Employers should communicate frequently and honestly in any case, but now more so than ever. The more those communications are in the form of dialogue — brown-bag lunches, town hall meetings, lively intranets, blogs, and wikis — the better your relationship with your employees will be. If a work site is targeted by an organizing effort, employers that already have open lines of communication will be able to present their side of the situation more proactively. If you react to the organizing effort, you will appear defensive, and workers will suspect ulterior motives. Indeed, a recent study found that people trust the opinions and attitudes of “people like me” twice as much as they do corporate CEOs. The sooner you can establish a positive relationship with your workers that encourages healthy two-way dialogue, the better off the organization will be regardless of what happens.

How Much Will It Cost?

New initiatives are hard to fund while organizations are cutting back. The question for employers, though, is whether the cost of preparation is outweighed by the cost of a union bargaining on behalf of its employees.

A review of the data about the impact of unions on business performance is fascinating. More recent data generally comes from the unions and their allies showing that worker productivity is, if anything, improved after a union is in place. The fact that contrary data is usually 20 or more years old shows how blasé business became about unions. Most research, though, agrees that labor costs will increase once an organization has collective bargaining in place. One study pegged the differential at 30% higher costs for union shops versus open ones.

Some may counter that if unions push wages higher, that will mean fewer jobs as employers try to keep labor costs in line with shrinking revenues. But if you are a service provider, that also means lower customer satisfaction and reduced sales because wait times increase and the customer experience degrades as harried employees try to please annoyed shoppers, guests, or patients.

Improve Your Odds of Success

The three actions recommended above need not be very expensive, and certainly they pale in comparison with significantly higher labor costs across the board. Some ideas can be implemented using existing staff and systems (schedule brown bag sessions using e-mail, for example). Any effort, though, will require the strong commitment of your leadership and your managers. If they are unwilling to take the time and make the effort to engage with your employees, you are probably too late to make significant change anyway.

You can take the chance that the EFCA doesn’t pass, and hope that all of this goes away. But if you bet wrong the biggest loser will be HR, which will be blamed for what happens next.