Strategic HR
How Small to Medium-Sized Businesses Can Get the Most Out of the HR Function “For the world is changing: I feel it in the water, I feel it in the earth, and I smell it in the air.” These words were spoken in the movie and written in the book “Lord of the Rings,” and very accurately sums up what is happening in our world today. The fast pace of change for businesses due to recent social unrest, economic recession, and a global pandemic shined a light on just how unprepared so many companies, regardless of size, industry, or sector, were when it came to crisis management. If there is one lesson small to mid-sized business leaders have learned, it likely is the value, importance, and absolute need for strategic human resource professionals. Years ago, when I joined an underground utility company as the HR Manager, I knew nothing about the business. If I were going to add value to the organization, I had to understand the business— what they did, how they did it, their competition, and how the company could compete. Only then could I collaborate with superintendents on staffing planning, project managers around their pipeline of projects that would feed the revenue wheel, and the employees to understand how to keep them engaged and reduce turnover. In small to medium-sized businesses, many business leaders struggle with understanding the strategic partnership that HR can have within the organization. This is too often because HR does not properly understand the business and because many business leaders only understand the transactional support HR provides. Many business leaders determine a need for dedicated HR personnel only when the transactions become more burdensome than they are willing or able to handle. For HR to demonstrate the strength of the strategic partnership, they must be intimately familiar with all aspects of your business, understand when to outsource transactional tasks, and when to bring those back in-house. To get the most out of your HR department or function, business leaders should differentiate the transactional tasks of HR from their strategic partnership with the business. Transactions can be outsourced and automated. Many solutions are available, some of which were shared in a previous article, Resistance is Futile, that addresses many affordable HR compliance solutions (the primary transactional tasks of HR) for small to medium-sized businesses. The low to no-cost solutions available are numerous, and when employed, these services free up the HR team member(s) to become true strategic partners. There is a time in the business life cycle where outsourcing transactional tasks is the right strategic move, and when bringing such tasks in-house is best. A May 8, 2019, Gartner article, Gartner Survey Reveals That CEO Priorities Are Slowly Shifting to Meet Rising Growth Challenges, indicates that in the annual Gartner 2019 CEO and Senior Business Executive Survey, “a growing number of CEOs… deem financial priorities important, especially profitability improvement.” The survey also states that “at the same time, mentions of financial priorities, cost, and risk management also increased.” The appropriate treatment of transactional HR tasks can be a huge help in addressing such concerns in your organization. Outsourcing can stabilize cash flow, especially in a seasonal business, make it more predictable and easier on the budget. It can introduce automation, such as self-service portals, reporting, and file maintenance. Outsourcing transactional HR tasks can even shift the risks of non-compliance to a vendor, potentially saving your business hundreds of thousands of dollars in fines, fees, and government-imposed remedies. Typically, much later in the business life cycle, insourcing these transactional tasks is the right strategic move. It will provide more control of data, improve the quality of service transactions, develop deeper metrics and tracking, and improve innovation and creativity around HR initiatives. Due to economies of scale, it may even be more cost-effective to insource than outsource. Knowing the right time to do each is somewhat challenging, but HR becomes a more strategic partner to your business when done right. To help HR be more strategic, now that the transactional tasks have been appropriately addressed, we need to immerse them in the business fully. Take HR under your wing and teach them the business from the ground up. Company history is part of that, but only a small part. For example, in horticulture, your HR function needs to understand what growers do and what various crops and systems challenge them. They need to know the role and responsibility of those leading operations, whether they are working with plants in a field or a greenhouse, and the relationship between customer service, sales, product development, marketing, and operations. HR should visit and have a chance to shadow every department or function within your business, meet the key leaders, and have a chance to talk with entry-level employees. Invite HR to meet with key customers to understand this relationship and the customer’s challenges your company is trying to help them solve. Expose them to the entire industry through the various trade show events and conferences such as Cultivate, MANTS, Far West, or the Plug & Cutting Conference so they can learn about all the companies that make up the horticulture industry as well as interact with other HR leaders to share best practices. Expecting HR to stay in their silo, their office, or behind their cubicle separates them from the business. It hinders their innovation and creativity when tasked with solving real business problems. Strategic elements that HR brings include assisting with developing the organization’s strategic and tactical plan, organizational development and design, strategic workforce planning, succession planning, and learning and development. Even the development of compensation and benefits programs, collectively the total rewards program, is strategic. In a March 14, 2019 article by The Predictive Index, Top CEO Priorities Are Business Strategy and Talent Strategy, the top two priority concerns are… well, as the title states… business strategy and talent strategy, two core areas addressed with an HR function that performs a strategic role. Add to that the January 17,
Take a Breath and Think
You deserve it, and your business may require it. By Ben Molenda, Human Capital Advisor, and Todd Downing, Managing Partner at BEST Human Capital & Advisory Group Are you tired of “Work From Home,” “COVID Procedures,” and “New Normal” articles? This one is different. Instead of being advised on how to do something, the goal here is to experience thought. “THINK” is what Thomas Watson Sr., the legendary founder of IBM, would tell his people, encouraging everybody to be thinkers, from the assembly line worker and engineer to the salesperson and office admin. It was what would bind the company together and become the cultural cornerstone of one of the world’s great companies. Despite the immense challenges thrust upon all businesses during the pandemic, the Green Industry has experienced positive, and some would say unprecedented, growth. Other industries have not fared as well and are just starting to recover. The stresses you have responded to in running your business with an uncertain future, proper COVID health protocols, plus the volume of business experienced or lost, have left many leaders feeling reactive. There has been considerably less time to focus on strategy as much as they would like. And – a bit exhausted. The pandemic has also created profound change and impact on the people who make up your organization. Strategic Human Resource planning is a vital component to successfully navigating this business evolution. We are all searching for solutions to protect, stabilize, and grow our businesses. But how do you define solutions when your time and energy have been dramatically stretched? A helpful first step is to identify what the Human Resource challenges or opportunities are that require problem-solving. To support leaders in identifying Human Resource solutions, ask yourself a few of these questions to flesh out potential areas that will require change. You can then begin formulating solutions to address these challenges. WORKFORCE DEVELOPMENT Have you identified specific training or development investments to grow key employees? Are your employees cross-trained if a key individual leaves the team? Does each position have a career progression plan? Have you openly discussed it with the individual? Do you have silos between departments requiring increased collaboration? HIRING What are the current bottlenecks or challenges to your business, and what type of professional would you hire to solve these problems? Is your ongoing hiring process compliant with applicable employment law and producing the desired and necessary results for your organization? Are your HR-related marketing tools and company branding message aligned with the current strategic plan to attract the proper level of talent to drive these organizational directives? Do you have a positive company brand image on social media and sites such as Glassdoor to help attract top talent? TOTAL REWARDS – COMPENSATION & BENEFITS Have you updated or benchmarked your benefits and compensation packages lately? If yes, how frequently do you do so? Do you include perks like profit sharing, continual education, or health initiatives to better invest in your employees? What unique benefits do you offer that are attractive to potential new hires or increase retention? Is your compensation in line with your geographic region, cost of living, and other industries to attract top talent? HUMAN RESOURCE SYSTEMS & SOFTWARE Do you have an organized electronic system for classifying and holding all your employees’ documents? Do you have an up-to-date chain of command to report HR issues? Do you have the appropriate technology and tools to maximize efficiency and effectiveness? (i.e., HRIS, LMS, TS, ERP, and Payroll). Do these systems seamlessly integrate? Are your HR employees adequately trained on them? EMPLOYEE RELATIONS Are your employees truly engaged in the business or simply “punching the clock”? What is your retention rate or turnover rate? What type of leader would your employees communicate that you are? Has an appropriate investigatory process been put in place? Are your HR professionals trained to objectively implement such a process to resolve employee relations issues regardless of their severity or nature? HUMAN RESOURCE COMPLIANCE If your Human Resource policies and practices were audited, would you pass without a fine? Have current policies been recently reviewed and updated to conform to recent legislation, court cases, and executive orders? Especially revised regulations? Are Human Resource audits (internal and external) conducted regularly to ensure compliance with all employment laws? SUCCESSION & EXIT PLANNING When was the last time you took time away from your business as its owner or leader of a division? Are you able to take time away knowing you have a team to keep running the business profitably and efficiently? Do you know what you will do when you retire? Have you mapped internal succession paths, including your own, so you know where to recruit externally and where to develop internally? DIVERSITY Would your organization’s effectiveness benefit from someone with a different background, mindset, viewpoint, or values? Have you hired individuals from various backgrounds and educational backgrounds? Have you properly followed Equal Employment Opportunity Laws? Are you tracking appropriate diversity data regardless of whether you must file an annual report? OPERATIONS & PRODUCTION Are you struggling to achieve complete buy-in to LEAN principles or Health & Safety protocols? Do you have employee retention or engagement problems with your production team? Are current performance metrics or KPIs aligned with job expectations, job descriptions, and organizational outcomes? SALES & MARKETING Do you hire sales professionals based solely on knowing your product and customers, or have you taken time to identify and assess for successful sales or marketing behaviors? Have you worked with your sales, marketing, and production teams to understand and increase collaboration with one another relative to production capacity and sales growth? Are your customer-facing professionals a positive reflection of your company with customers and the industry? NEW PRODUCTS & MARKETS Do you have new products in the pipeline that will require hiring professionals with a unique skill set or knowledge? Have you identified new markets to enter that will require hiring professionals with the targeted industry knowledge? FINANCE
Your Exit Plan: The 3 Inarguable Reasons to Start NOW
What is Your Business Exit Plan? If you’ve ever done a business plan for the purpose of raising capital, one of the key questions is “What is your exit plan?” Many business owners think that question is self-serving, intended merely to let the venture capitalists figure when and how they will get their return on investment. In truth, however, that question is far more important. A business exit plan is a strategic plan with an end date. Putting a time frame on your plan, and defining the goals to be achieved by that date, creates a future-focused mindset for the owner. It controls and reduces your tendency to prioritize daily firefighting over long term thinking. It provides you with a yardstick to measure progress. Most importantly, it affects your thinking about almost everything in your business. Here are the 3 inarguable reasons why you should start your exit plan now. Reason 1: It’s Never Too Soon In my years of working with business owners, I’ve helped many transfer their businesses to family and employees. I’ve worked with others who sold their companies to a third party for tens of millions of dollars. Surveys show that many owners have regrets afterward. Others happily move into the next phase of their lives or careers. A few have seller’s remorse. On the other end of the spectrum, some come to the realization that they hated their business owner lives for years. The majority feel that they received a reasonable reward for monetizing their work of decades. None of them. NOT ONE of them has ever said “I spent too much time planning.” It’s likely that the sale of your business will be the most important financial event of your life. There are a few lucky owners who have wealth outside or beyond the value of their businesses, but for most of us monetizing those decades of effort is the culmination of our working careers. If your exit plan is to transfer to family, you can choose vehicles like Grantor Retained Annuity Trusts (GRAT) or Self Cancelling Installment Notes (SCIN). These may have to be in place for years to substantially reduce or eliminate taxable proceeds for you and/or your heirs. In a sale to employees, developing the documentation that shows their assumption of managerial responsibilities over time is a basic qualification for SBA loan approval. That, plus developing their “down payment” equity, punches the ticket for you to walk away with your proceeds in pocket on the same day that you cede control of the company. In a sale to third parties, the condition of the financial markets at your time of exit will decide the size of your multiple. Preparing your business with due diligence in mind, and understanding the different classes of buyers, allows you to better choose the time, method, and proceeds of your transition. Although it is difficult to time the stock market, shifts in acquisition multiples take much longer to develop. Being prepared allows you to enter the market while prices are at a peak. Five years is reasonable planning time. Ten years is better. There is no time frame that’s “too far out” to be thinking about your exit. Reason 2: It Changes Your Thinking It’s difficult to run a business without being reactive. Employee issues, customer problems, and vendor policies can shift your priorities on a daily basis. When your exit plan is in place, you have a broader perspective. Every decision you make is now in the context of “Does this support my bigger picture?” There are numerous examples. Hiring: If your exit plan is to pass the business on to your children, then hiring becomes a support function. You look for employees who can fill in areas where your offspring lack the necessary skills or don’t have an interest. If you plan to sell to employees, then you are looking for a Successor in Training (SIT). That is someone who shares many characteristics with you. If you are selling to a third party, you want a Second in Command (SIC). That is someone who compliments your strengths, and who can be contractually incented to stay on the job with a new owner. Securing a management team adds considerable value to any company. Lease vs. Buy: If your plan calls for selling to someone who is likely to relocate the company, or who already has your production capabilities, you may want capital equipment to be easily disposable. A competitor or much larger acquirer may want to leave the equipment out of the transaction. In a Main Street business, you may choose to have a strong tangible asset base for an entrepreneurial owner to use when obtaining acquisition financing. Real Estate: Should you own your building? Some buyers (say a publicly-traded acquirer) prefer to lease space. In that case, owning your building could provide a post-transition income stream in your retirement. On the other hand, a relocated company could stick the owner/landlord with a special purpose building that requires significant remodeling to be rentable. These are just a few of the decisions that are better made in the context of your long term plan. The decisions you are making in your business today all have lasting implications. Reason 3: A Plan is not an Action If you are taking a long trip, you likely determine the route before you start out. If it is complex, you may print out the directions. Nonetheless, you are still likely to use a navigation app to alert you to problems along the way, like traffic jams or construction. But everyone understands that printing out the directions isn’t the same as beginning the journey. You might take that step days or even weeks before actually getting into your car. It’s the same with your exit plan. Choosing your time frame and preferred method of transition isn’t the same as making it happen. Writing it down is a key component of preparation, but it shouldn’t be confused with implementation. Starting Your
The Foundation of Everything
Take a step back and look at your company. Do the people seem genuine? Do you feel as though they are making significant progress in reaching the organization’s goals and ambitions? Do you believe in your people, your process, and your mission? How do you foster trust within your company, especially during a crisis like COVID-19? Trust has three foundational components, like a 3-legged stool. Each leg is essential and depends on the others to work together. If one leg breaks, everything collapses. The same goes for trust if one of the components begins to wobble— trust is in jeopardy. The three foundational pillars of trust are authenticity, logic, and empathy. Authenticity “A true leader is one who is humble enough to admit their mistakes.” – John Maxwell Did you ever experience being in a conversation at work and feeling that the person you were talking to was not being completely honest with you? Our human nature can quickly zone in and identify those not being real with us. To avoid a problem with authenticity, BE YOU – ALL THE TIME around EVERYONE – Voice your thoughts and opinions, respectfully. Pay less attention to what you think people want to hear and give more attention to what you need to say. For companies to emerge from this crisis successfully, all ideas need to be explored to reimagine and decide the best strategy. Leaders need to allow the office to be a safe place for everyone to speak when creating a culture of trust. A leader is not expected to know all the answers— welcome comments and ideas. Allowing an environment for fresh perspectives helps build an authentic team and ultimately leads to trust within the organization. Logic “When dealing with people, remember you are not dealing with creatures of logic, but creatures of emotion.” – Dale Carnegie Most problems concerning logic are not about the quality of the logic, but about the ability to communicate the reasoning in a decision-making process. Likely, we all have sat in team meetings where one person dominates the time by taking us on a long journey through their experience and often is interrupted and never makes a definitive point. Many people like to tell a long story before getting to the point. To communicate logic clearly, start with your point in a crisp, clear sentence and then make your supporting statements. This approach allows for greater clarity and prevents you from being interrupted before making the critical point you needed to make. If everyone in an organization has clarity on the decisions, real progress can be made, and trust becomes foundational. Empathy “Empathy is simply listening, holding space, withholding judgment, emotionally connecting, and communicating that incredibly healing message of you’re not alone.” – Brené Brown Would your employees say that management is listening to them? Not just hear them, but attentively LISTEN. The best listeners provide eye contact and lean forward in the conversation with no distractions (put away the cell phone). Listening is critical for building empathy. For most companies, this is the leg that “wobbles” due to demanding schedules. However, during a pandemic, this is a critical time to listen. Each of us is experiencing this crisis differently. We are all facing unique circumstances and challenges. Listening to your team to better understand them and their situation fosters a healthier relationship to build trust. Trust is the foundation of everything we do. It can be earned and built. It can also wither and break. If a company develops and operates in a culture of trust and transparency among all stakeholders, it can make unprecedented progress in reaching its goals. With a foundation and culture of trust, companies experience better productivity, enhanced morale, lower staff turnover, ability to handle challenges, willingness to take risks, enhanced creativity, optimism, teamwork, higher client satisfaction, better company reputation, and higher profitability. Be real, start with your point, and know you are not alone. It works, trust us. Does your organization want to learn more about building a culture of trust that can help you to unprecedented growth? You’re not alone, and we are here to help. SOURCES: Unleashed: The Unapologetic Leader’s Guide to Empowering Everyone Around You, By Frances Frei and Anne Morriss (Authors) The Five Dysfunctions of a Team, By Patrick Lencioni (Author) The 21 Irrefutable Laws of Leadership, By John C. Maxwell (Author)
Succeeding in a Virtual Interview for Candidates
Tips you can use when being interviewed virtually. Thanks to the modern workforce enjoying the freedom of choosing their work hours and office settings and also the increased availability of telecommunication mediums, many organizations and individuals are relying on virtual meetings and interviews when exploring new candidates to join their company. Doing so can limit feelings of connection and develop uneasy feelings during an interview. However, when done correctly, virtual interviewing can establish solid rapport, increase the speed of the hiring schedule, and improve the onboarding experience. The following is a tutorial to make sure that you get the most out of your upcoming virtual interview. 1. Are you a procrastinator? No? Now is not the time to start. Get familiar with the software you will be utilizing. Test your speaker, microphone, and video. Make sure to close out of other applications to enhance the speed of your operating systems. Conduct a run-through with a peer to learn the program’s capabilities and gain feedback. If you do encounter issues where a glitch occurs and you can’t hear the response, be direct and honest. There could be a connection issue, so wait for the audio to resume and ask them to repeat what they said. It is essential to be upfront and obtain the answers necessary to make a thoughtful employment decision. 2. People like pretty Is it a coincidence that the Home & Garden Channel (HGTV) generates over $1B annually and is the fourth most-watched network behind three news outlets? Nope! People enjoy settings that make them feel a sense of comfort and organization. Refrain from overly distracting artwork, display items, and TV screens. If video conferencing from an office, that is great. If not, feel free to move things around to allow for a well-lit, neutral area. While preparing your environment, take note of where your fidget items are. Leave the stress ball in the drawer. Put the metronome in the closet. Make sure you silence notifications on your phone and the device that you are using for your interview. Your focus should be on the interviewer. As such, you should have notes and questions on the device you are using. Tip: This will allow you to maintain eye contact rather than looking down and reading from a notepad. 3. Look in the mirror When interviewing virtually, there is no checking in with the receptionist or lounging in the waiting room with other candidates. Before the call, take some time to remind yourself why you are interviewing for this role and organization. Look yourself in the mirror and get motivated. While doing so, make sure that you are well-groomed and well dressed— FROM HEAD TO TOE. Wearing a business appropriate top and sweatpants bottom is a dangerous game to play. Not only will you not be mentally stimulated wearing sweatpants, but it will also promote poor posture, and what if they ask you to stand up and show them the picture of you and your friends at the Grand Canyon up on the top shelf behind you? Nobody wants to see a half-dressed person in an interview. Enjoy the time you have with your interviewer and get to know them – they could be virtually interviewing many candidates that day. Separate yourself by following these tips and appropriately sending a thank you note of some kind promptly after the interview. Putting this tutorial into action may not have you walking out of the building in a blaze of glory, but it will bring a big smile to your face when you walk away from your camera. Click here for our Candidate Resource Center for more information and tips on resume writing, interview preparation, and more to help candidates on the next step of their career journey.
