Staffing ups and downs

In the last post, we were discussing bonusing of employees. Keep the use of those limited to your absolutely best people. Let's chat some more about that and some other staffing topics.

Something else I have found to be a valuable “bonus” is sending someone to an industry conference or training event. Note that I used the word “bonus” for this. Think about it: the actual value gleaned from folks attending these kinds of events is usually quite minimal. If it’s current news and practices you want, online feeds and forums are probably much more up to date. If you’re looking for training, there are books and online learning out the wazoo. And all of that can be obtained at minimal cost, or even free, as opposed to the thousands you’ll have to pay for the event and travel.

The real benefit of attending most events is in rubbing elbows with folks from other parts of the industry, making connections, and feeling appreciated that the company felt good enough about you to blow all that cash on your attendance. That kind of treatment should be reserved only for your top players – solely as an additional reward. Other folks who simply need information or training can be handled much more easily and much more cost effectively.

Speaking of top players, always be on the lookout. You may not have any officially sanctioned positions open, or the company might be enduring a long, cold hiring freeze. That’s no excuse. Opportunity is knocking. When a great candidate shows up at your door, you have to find a way to snag him. Chances are that someone else will depart, voluntarily or involuntarily, in the new few months anyway, right? So all you’re doing is pre-filling the hole. And in the process you’ll be upgrading your staff. You’ll probably need to go into battle to thaw the freeze or get a special position opened, but any reasonable leadership should understand the case you make for doing the hire. No sense being penny-wise and pound-foolish.

Also, from time to time, analyze your entire staff and determine where your weak points are.

Next, look at that group and ascertain if they are really that bad or not. Maybe you happen to have hired a totally awesome team where even the worst guy is far above average. That would be major kudos to you. This can especially be true in smaller companies and startups, or in situations where you’ve actually been able to hire the entire group to your own specifications.

In most cases however, your bottom 10% will probably be below-average performers. You may already have some of them on performance improvement plans. If not, start considering it. Your goal (and the goal that will make HR the happiest) is to improve this person so that he’s no longer part of the lowly bottom 10%. That would be a win-win-win for you all. Your goal is not to terminate him.

Sure, the enactment of a performance improvement plan will inevitably result in a paper trail that will justify that action should it become necessary. But your goal should always be to make this guy better. You have time and money sunk in him. He knows stuff. Think of the inevitable costs if you replace him: a long hiring gap while you convince HR you need to replace him, dealing with recruiting and interviewing, and the eventual ramp-up and training time for the replacement.

It is a much better return on your investment if you can keep the guy you have, with all his knowledge and training. It also makes a great success story. Of course, when it becomes obvious that saving this person is unlikely, don’t hesitate to take the necessary steps.
Stepping back from the day-to-day fracas and analyzing who your poorest performers are is just as important as picking out your top performers. Maybe you do a rank-ordering exercise, or maybe it’s blatantly apparent after you actually ask yourself the question, but figure out who makes up your bottom 10% or so.

Level the Playing Field... NOT

So, you're in a company where processes around pay (and other money matters) are all tightly controlled. Control is one thing, if it's done for the right reasons. But, as if every worker is capable of the same quantity and quality of work, big HR teams typically generate compensation, merit increase, and bonus systems that provide very little incentive for workers to excel. No, money is not usually the biggest motivator for most folks, but it matters. And, if you’re going to bother with increases or bonuses at all, why not give them appropriately, based on someone’s true contributions.

Nevertheless, it is common to see a merit increase system that awards the average employee with something like a 2% salary increase, while the top guys get 3%! Wow, a whole percent more! At the other end, the lowest guys on your totem pole will probably get only 1%. How sad.

These kind of differentials only encourage everyone to “move to the center” of the performance curve. “It doesn’t matter if I really excel, the 1% extra raise doesn’t add up to anything.” Yes, you have other tools to
use: praise, better assignments, promotions, etc... But if the tool is there, why not use it as intended? And don't pretend that the range of increases is "secret", and that folks won't really know what's going on. They talk. They know.

I actually had one HR leader tell me that the reason they liked to keep things egalitarian was so that some managers wouldn’t use “favoritism” as a mechanism for determining increases. Huh? I absolutely want my favorite guys to get the biggest increases. Of course, I mean “favorite” in the sense of “this guy will almost kill himself to get his work done and always does a fantastic job.” If what the HR leader meant by “favorite” was “the guy I like going to lunch with or my longtime friend,” then there is a completely different problem in need of a solution.

If it is within your control, take the top 10-20% of your folks, and do everything within your power to treat them excessively well. They are your livelihood. If it's not all within your control, at least work with your HR department to sculpt a set of policies that scream, “These people are the keys to our future success. We must make it impossible for them to be unhappy over something as simple as compensation.”

Your own HR team may feel that an extra percent or 2 over what the “average” folks are getting is sufficient to get that message across. It is your job to make them understand how false that really is. If 3% increases are this year’s “norm,” then your topmost guys may deserve 6-10%. If this year’s bonus standards are for most folks to get 10% of their salaries, your best guys should be getting double that, or more.

In fact, why does anyone not in the top 20-40% of all players deserve any bonus? A bonus should be for work performed beyond the call of duty. A bonus should be reserved for the guys who are dragging everyone else in your organization across the finish line. Bonuses should be for the people that everyone else aspires to be, and that everyone else wants to work with on projects. Pool up the bonus money and only award it to the top guys. The others will know how much work those guys did anyway, and they’ll be happy that the top folks are being incented to stay and help them be better at what they themselves do. And maybe it will help incent others to get to that bonus level.

You may find yourself ultimately stifled by policy, but it's your duty to try to enact the change.

Human Resources: friends, not foes

If your company is anything larger than tiny, the folks who live in your Human Resources department wield a ton of power. They have the ability to make your life and job much more pleasant, or utterly unbearable. They are folks you need to consciously build a relationship with. I failed to properly understand this early on, and I probably paid the price.

Get to know them as best you can and as early as you can upon arrival. And don’t settle for phone calls either. If they are within walking distance of you, always go and see them face-to-face. Whether they call you or you give them a call, once contact is made, always say, “Hey, I’ll just pop over there and we’ll talk in person.” This is actually a pretty good idea for any team that you need to build rapport with.

Meet often, go out to lunch with them, or do whatever you have to do to have them feel really comfortable with you. Make sure to always alert them at the first signs of anything “HR oriented” going on in your team. Service organizations in general, and HR folks specifically, have plenty of crap to deal with from folks like you. Try to be one of the guys who they actually like working with, rather than the idiot they try to run away from.

Of course, despite building up the best relationship that you can, sometimes the HR team is completely constrained by rules that are handed down from above. Their freedom of action is usually inversely proportional to the size of the company. Small company HR can usually create, bend, and break rules quite frequently, while big corporate HR teams might as well try to strike the letter “Z” from the alphabet.

Regardless of company size, hopefully you will work with HR people who see their job as trying to help you be successful by maximizing the human resources that you have on your team. By “maximizing” I don’t mean giving you more people – I mean making the most of what you have through appropriate hiring, training, compensation, bonusing, and other techniques.

Unfortunately, there are some HR folks who merely see their positions as the policemen for every corporate edict, regardless of whether it helps benefit the company. Good HR folks will work within major corporate rules when they make sense, but will help push for change otherwise. They see their job as helping you succeed, rather than getting their kicks from finding ways to prevent you from getting what you need. I’ve worked with both types, and fortunately, there are far more of the good ones out there. Just watch out for the others.

One of the greatest challenges I’ve always had with HR departments is the tendency of larger companies to “level the playing field” with respect to compensation, increases, and bonuses. We'll dive into that next time.

Are you negotiating in good faith?

In all my years, my two favorite recollections of negotiating sessions both come relative to the purchase of new cars. The first was when I tagged along with my friend when he went to purchase one. We all know that negotiating for a new car is about as much fun as a paper cut on your tongue, but we pretty much know how to do it. They start with the list price, you counter with what you are willing to pay, the guy writes it up, and then he takes it to his manager because he has no power whatsoever to bargain. The guy comes back with a new price from the manager, and the process continues. Even that basic process is flawed because you have the power to negotiate, and the guy on the other side of the table doesn't.

Anyway, when we sat down with the sales guy, he asked my friend for his starting price. My friend told him “$20,000.” The salesman wrote it all up and dutifully took it to the sales manager. When he returned, we were all ready for the counteroffer. But, what the salesman actually said was, “Sorry, but that’s not high enough for the manager.” We waited for the counter, but the sales guy just sat there staring at us. We eventually asked what the counter was, but he simply reiterated that our first offer wasn’t enough.

We were stupefied. They actually expected that we would raise our offer as many times as needed until we hit some acceptable price to them. I said to my friend, “Why don’t you offer $20,001?” The salesman replied, “We can do that if you like, but we will all be here for a very long time.” They actually wanted us to bid against ourselves – not a great negotiating strategy.

Our response was, “Not likely,” and we departed. What a bunch of jerks. I told that story to as many people as I could, and resolved to myself that I’d do my own business negotiations better than that. No moveable goal on their side? Take a hike.

My second car purchase was for an elderly relative who was unable to leave her home and needed a car for her live-in nurse. This meant I got to turn the tables on the sales team – just like the salesman had to get everything approved by his manager, I had to phone my relative for approval. Wow! Was that fun! Every time the sales guy would come in with a counteroffer, I could shake my head and say, “Boy, I don’t know if she’s gonna go for that.” They obviously didn’t encounter this kind of one-upmanship much, and they had a hard time dealing with it.

In the end, the balance that I achieved through that technique led to a great final price, and it taught me how useless it is to be stuck in an unbalanced negotiation. Same with my friend’s attempted car purchase. The balance was missing—the dealership expected us to be flexible and move our position, while they intended to keep saying “NO” until we had given in sufficiently. But that simply doesn’t work. Both sides have to be willing to play by the same set of rules.

In your own negotiations, make sure that the balance exists – and I mean that both ways. Both you and the representative on the other side should have equal amounts of power in what you can agree to.

When beginning any kind of negotiation, the best way to get results is to enter with the expectation that some kind of win-win solution is achievable. If you start with the premise that you will get exactly what you want, even if it is at the total expense of the opposite party, not only is that dumb from a business perspective, it also has an aroma that the other guy will pick up fast. And once he’s gotten a whiff of it, he’s very unlikely to bargain in good faith – he will be on the defensive. On the other hand, if the other guy can see that you are honestly making a best effort, he will be more willing to work with you towards a good solution.

This is not to say that you should accept a compromise that is not in the best interest of your team or the company in general. It means that you might have to do a little bit more work to get all your points across. You also need to periodically extract yourself from the depths of the discussion and try to view things from above. How would a third party view the progress of the negotiation? Are you coming across with the win-win attitude, or that of a dirtbag?

Win-lose solutions might seem to give you a victory for now, but ultimately they fail because the other side doesn't ever have much to gain. Don't do it.