Is your organisation flying high as an employer?

If you travel regularly for business, you are probably very familiar with economy class flying. Apart from the food, (about which the less said the better) what else is memorable about travelling economy class? Except for the odd disastrous trip, I am sure your answer is the same as mine, absolutely nothing! Now, there is a lot to be said for non-memorable flying. In fact, the fewer surprises the better. But, why is it that we can travel thousands and thousands of kilometres by air and remember almost nothing about it?

The answer - because flying economy is generally an unpleasant chore we would rather avoid. We fly economy because we have to, not because we want to. It is not what you would call a life enhancing experience. We prefer to forget about it as soon as it's over. Unfortunately, the experience of working for many companies is very similar. Because staff cost money, airlines reduce costs by employing as few people as possible, which means their interaction with economy class passengers is minimal. There may be nothing wrong with the economy class model as far as the airlines are concerned, but as a model for HR it leaves a great deal to be desired.

 "There may be nothing wrong with the economy class model as far as the airlines are concerned, but as a model for HR it leaves a great deal to be desired. "

Economy-Class HR

Consider the economy approach to employing people. You get interviewed on the way in, generally ignored while you are there and, if you are lucky, interviewed on your way out. Staff development is nonexistent or ad hoc and, just like flying economy, you find it difficult to get any work done because your company skimps on the resources you need to be fully productive.

It is an unfortunate fact that many companies pay more attention to their staff and treat them better when they arrive or leave than when they are actually working for them. In a 2006 survey of talent, the Economist reported that American companies spend up to 50 times more to recruit managers on US$100,000+ than they spend on their further development.

Not surprisingly, employees in these organisations feel like economyclass passengers - ignored or worse, treated with contempt. Therefore, not surprisingly, they behave like economy class passengers. They complain to each other about the "service", stay on board for as little time as possible and then get out as quickly as they can without a backward glance. High staff turnover, the scourge of many organisations across the world and particularly here in China, is hardly conducive to creating a productive workplace. It is also a clear sign that all is not well inside the business.

But, it gets worse. Those who leave first are generally the most employable and the employees a company can least afford to lose. As someone pointed out to me recently, "When the rats start leaving a sinking ship the best swimmers go first." This comment is rather cynical, but unfortunately, it is also true. Furthermore, the employees who are left make the minimum effort required to stay employed while keeping a careful watch on the job market. The result is lower productivity, excessive staff turnover and an organisational culture characterised by staff resentment and a lack of commitment to the company and its customers. These are all key indicators that a company is headed for trouble, because ultimately the success of any business depends on the quality of its staff.

Are People Really Your Company's "Most Important Asset"? Like the airlines, in recent years, many companies have reduced staffing levels to control costs. This is all the more reason for them to look after the people who are left. If you look at the mission statements of these companies, you will read something like, "People are our most important asset and the key to our success".

Unfortunately, these companies don not always behave as if they really believe this stuff. In a major study of 90+ US, the Corporate Executive Board (a management development organisation) found that three quarters of new recruits believed that the reality of their employment did not match the promises made to them when they first came on board.

So, why do so many managers pay lip-service to this type of statement and, yet, contradict it with much of what they do on a daily basis? The truth is that many managers do not really know why people are important and, as a consequence, treat them like the airlines treat economy class passengers. And, yet, the answer to why people are important is quite simple: It is your people who create the value for which your customers are prepared to pay the price necessary to generate margins your company requires for sustained success.

As competition intensifies, customers expect constant improvement to your products and services in order to remain loyal. Consequently, your company's need for creative and skilled staff, genuinely empathetic to customers and their needs, continues to grow every year. These people are in high demand and have no doubt as to their value in the job market. If you don't look after them they will leave and take your company's competitive advantage with them.

In modern organisations, people - particularly their skills and knowledge - now account for up to half of a firm's market value. Marcus Buckingham and Curt Coffman point out in their international best-seller "First, Break All the Rules" that much of a modern company's value "Lies ‘between the ears of its employees'. Today more than ever before, if a company is bleeding people, it is bleeding value."

 "In modern organisations, people - particularly their skills and knowledge - now account for up to half of a firm's market value."

On the other hand, there is evidence that investing in people can pay significant dividends. The Corporate Executive Board argues that companies that want to attract and hold the very best staff need to improve their "employment value proposition" (EVP) - the tangible and intangible benefits employees gain from working for them. Their original research indicates that companies which invest in their EVP enjoy considerable advantages in terms of significantly greater (up to 400%) employee commitment, a 20% larger pool of potential staff and a 10% lower wage bill. Essentially, these companies pay less to keep people, have more people wanting to work for them and enjoy far greater staff engagement than companies which neglect staff needs.

Is Your Company An Economy Class Employer?

We have already looked at some of the tell-tale signs that your company may be an economy class employer. What are some others?

1. Recruitment of staff is not given the time and attention it requires to avoid the otherwise predictable failure of many new appointments. In economy class companies, even critical senior appointments are based on one or two interviews and "gut feelings," rather than being the result of a planned and structured process in which senior management invests considerable time and effort.

2. There is no strategic HR plan linked to corporate strategy to identify the key competencies required by the organisation for current and future success.

3. Staff development is ad hoc and based on the whim of individual managers rather than being implemented as part of an overall plan to equip the organisation with the skills and expertise required to succeed in today's and tomorrow's markets.

4. There is little succession planning. When a key staff member leaves, there is a mad scramble to find a replacement and management reacts with genuine surprise to learn that there are no replacements available within the company. Their only option then is to look outside and compete for the scarce resources which should have developed internally during the preceding three to five years.

5. Performance management is treated as an unnecessary irritant. I am constantly amazed by managers who maintain that people are the key to value creation while regarding performance management - formal and informal - as a low level priority, something they may get to once all the other "important" stuff is done. Performance management is a core management skill and yet is hardly even on the radar in many large organisations. It may be completed as a once or twice yearly ritual, but it is not regarded as a vital strategic tool for creating superior value.

6. The final, and most important, sign that your company is an economy class employer is the low status accorded to the HR function. If HR management is not represented at the highest levels of your company - and paid accordingly - resourced properly, and closely involved in all discussions about the company's current and future performance, you work for an economy class employer.