HR Practices Set Foundation for the Best Places to Work

Think that human resources is confined to ensuring that your payroll and benefits issues are taken care of?  Think again…

HR encompasses an umbrella of areas that, although they would seem to be commonsense practices, may not be commonly found in practice in many organizations. Sometimes referred to as “soft” issues, the intangibles of establishing environments of trust and respect are critical to achieving tangible business results.

Independent financial analysts have researched the performance of the "100 Best" companies starting with the publication of the book, The 100 Best Companies to Work For in America (by Robert Levering and Milton Moskowitz, 1984 and 1993), and on an annual basis to accompany each of the "100 Best Companies" lists with Fortune Magazine since their inception in 1998.

Looking specifically at annualized returns for the companies identified by the survey as “Best Places to Work” versus the stock market in general, the research has found from 1998 through 2007, the “100 Best” outperformed the S&P 500, 11.85 percent versus 5.93 percent (reset annually).

A few thoughts about practices that contribute to becoming one of “the best”:

• Consistent, open, honest communication with employees. This is true even in times when you are facing situations that prevent you from sharing a great deal of information. Your honest communication to your staff requires that you tell them that while you cannot share everything with them at present, you will share everything that you can—and as soon as you can.  Why so important, you ask?  Because when employees are left in the dark (and, yes, they do know when they sense that you’re holding back information), they will fill in the blanks with their own (mostly negative) interpretations. 
• Recognizing employees’ efforts and rewarding them for going above expectations. Aligning your compensation practices to create a pay-for-performance culture is important.  But, don’t overlook opportunities to personalize recognition.  A note of thanks left on an employee’s desk or an email to the company about the feedback you received from a client—about an employee —send powerful messages of acknowledgement and gratitude.
• Providing the resources that employees need to effectively do their jobs. Sometimes this may be equipment; but more often, it’s the soft skills of communication and empathy that are needed.  As Abraham Maslow once said, “If the only tool you have is a hammer, you tend to see every problem as a nail.” 
• Setting boundaries through guidelines and discipline, where appropriate. Provide a written series of steps that employees can expect if behavior or performance fails to meet the Company’s values and expectations.  These steps can help to create a stable work environment because employees are not left with question marks about consequences.
• Development opportunities – this doesn’t have to be anything formal, fancy or expensive. The act of coaching an employee through an issue so that they learn from it and develop the self-confidence to deal with the next issue that arises is a development opportunity.  Also, make a routine of talking with your staff about where they see their skills aligning with your company goals now and in the future.  Ask if they see opportunities where you can assist them with skills they want to develop further.
• Demonstrate humility. According to one survey, companies can gain back as many as fifty percent of their former customers by calling and apologizing for past mistakes.  Just imagine how much more powerful your transparent, heart-felt apology might mean to an employee.  Remember, employees leave people, not companies!
• And the list goes on …

So, this does sound like it could mean some time and maybe even financial investment on your part as a business owner? Yes, it can, but let’s consider the impact of not making good HR practices a priority in your business: 

• Higher turnover, which equals increased expense for recruiting and training new hires, not to mention the cost of losing your Company’s valuable intellectual capital.
• Impact on employee morale, which inevitably leads to reduced productivity and efficiency.
• Employees who may not be contributing their full creative efforts to your business because they are unsure about the consequences of an idea that doesn’t turn out to be as successful as they thought it would be.

What’s a business owner to do?  So many priorities, so many demands for your time, energy and resources! 

The idea is to start somewhere — today — by making your employees a business priority in just one way that is different from how you managed your business last week.  Identify what you currently do, then acknowledge what you would ideally do if time and resources were not an issue.  Finally, look at the gap between those two areas.  Don’t worry about starting too small.  And don’t think you have to come up with all of the answers yourself.  Ask your employees for their input, which is a great way to learn things you may not be aware of, all the while gaining valuable employee buy-in for new ideas. 

Explain to your staff that you plan to devote a different level of focus to developing your capital assets in the coming months, the chief of which is them – your HUMAN capital!

Sometimes referred to as “soft” issues, the intangibles of establishing environments of trust and respect are critical to achieving tangible business results. Start today by making your employees a business priority.