After a major computer company sold a division to an international rival, the buyout left Susan wondering about her future. Susan found herself on the outside of the corporate world looking in. No longer the young college graduate on the fast track with the company she had worked for since graduating with honors in engineering, Susan watched as the restructuring left her without her high-paying job. Now at age 49, Susan was concerned, and she questioned whether her age had anything to do with her being let go. “They hired my body double from the same university and another kid,” she says. “Two new hires who would work for basically the same pay had replaced me for less per year. Yes, I have the experience, but I understand business decisions.”
The Center for Retirement Research recently studied older workers and employer attitudes toward them. The study illuminates many key points, including the fact that attitudes are changing toward older workers. In the past, some evidence and many personal experiences and stories suggested that employers tend to shy away from older workers. Evidence in the courts indicates that discrimination does still exist, an unfortunate reality of a competitive marketplace. Privately, human resources professionals and other hiring decision makers point to not wanting to hire individuals with ingrained bad habits, the potential for higher health care costs and the “I’ll do it my way” attitudes that some older workers have demonstrated at their companies.
Statistics from a number of companies demonstrate that workers over 50 sometimes have a harder time finding work. The reality is that today’s 50-year-old is not the same as the 50-year-old of yesteryear. The argument can and should be made that older workers today are much different than older workers of the past. For example, Boston College’s Center for Retirement Research suggests that today’s workers are better educated than even those of 10 years ago. They are more physically fit. Physical demands of jobs are lessening as most manufacturing goes overseas. Labor-intensive positions have been and will continue to be lessened by machines and technology advances.
In a recent survey, 400 private-sector employers were asked to evaluate the relative productivity and cost of white-collar and rank-and-file workers age 55 and older, and whether, on balance, older employees were more or less attractive.
Employers worry that their older employees will have a hard time learning new tasks quickly, that their physical health and stamina will be a problem, and there is a significant concern about how much longer the older worker will stay on the job.
It is the cost of the older worker that is most concerning to many employers, not that the older worker is of lesser value. Over 40 percent of employers view older workers as more costly. The bottom line remains: Most employers see older workers as both more productive and more costly.
In most cases the cost and benefits seem to balance out. However, white-collar workers have much better prospects for working later in life than rank-and-file workers.
Flexible work schedules
Older workers might, for instance, have to accept lower pay or part-time work to stay employed. Many employers are hiring older workers on a part-time, temporary or project-assignment basis and not necessarily full-time. This means that not only do they get employees who need less training and are generally more reliable than their younger counterparts, but employers rarely have to pay benefits, unless they are hired 30 hours a week or there is a union issue, and they often pay an hourly rate or a project-basis rate that is far less than what these workers were earning when they worked full-time.
Another new survey suggests that employees are hoping for more interesting work in retirement. A few employers are beginning to get the picture.
There seem to be no easy answers, but it is important that as we develop the future leaders of our work force, we embrace this incredible knowledge transfer opportunity.
Sherri Elliott-Yeary is the CEO of human resources consulting companies Optimance Workforce Strategies and Gen InsYght, as well as the author of “Ties to Tattoos: Turning Generational Differences into a Competitive Advantage.” She has more than 15 years of experience as a trusted adviser and human resources consultant to companies ranging from small start-ups to large international corporations. Contact her at firstname.lastname@example.org.
One thing MedSynergies Inc. has gotten good at is growing fast. The company’s revenue has been rising at an eye-popping rate, 30 percent plus for eight years running. But a byproduct of that whirlwind growth is that it’s difficult to find and retain workers who can keep up the pace. Sometimes people get left in the dust.
“The biggest issue we face is getting and keeping quality people,” says J.R. Thomas, CEO of Irving, Texas-based MedSynergies, which manages business operations for health care providers. “It’s tough to recruit and develop human talent while growing so quickly.
“Our growth comes in spurts,” Thomas says. “It’s not a linear model, and that can make it hard for people. The issue of the skill sets that are needed, the talent level that’s needed, coupled with the inadequacy of the educational system we have today, plus the complexity of people’s personal situations — this all creates serious challenges in terms of getting and retaining talented workers.”
MedSynergies’ leaders began to notice the problem eight years ago. “In 2004 we did a large transaction to put private equity in the company to grow it, and we hired a lot of people,” Thomas says. “We received plenty of impressive resumes, but we found that some of the people we hired had performance issues that weren’t evident through the interview process or the reference process. We weren’t getting the value we thought we should get. It became a real problem.”
This led to an uptick in employee turnover, which produced a slew of issues for MedSynergies. “When you start to get into a situation where you’ve created a hyper turnover rate, you start to lose the culture of the company you’ve built,” Thomas says. “You start to see tension develop between the people who’ve been around for 13, 14 years and the new people you’re bringing in. You have to find a way to reinvigorate your company’s culture and teach your fundamentals to all the new people — your mission, your tactics, your strategy. As one of our people said, ‘We have to “MedSynergize” these people in how we do business.’
“The cultural aspects of turnover are a substantial investment,” he says. “It can be an expensive process. But if you don’t deal with it, you can’t grow over the long term.”
In the eight years since its growth started accelerating, MedSynergies has experienced mixed results in recruiting and developing staff. “Overall I’d give us a B or a C,” Thomas says. “I’m not sure anyone ever gets an A in that process. And it’s an ongoing process; I don’t think it ever gets completely resolved. You just try to keep getting better at it.”
Train the troops
MedSynergies has undertaken a number programs and initiatives aimed at improving its recruitment and development of employees, with varying degrees of success. One of the first was a training program the company’s leaders dubbed MSI Boot Camp.
“We looked at this problem in 2004 and saw that it wasn’t going to go away,” Thomas says. “In fact, we began to see that the magnitude of the problem actually gets bigger as you grow. And this isn’t a matter of simply identifying a problem and then solving it. You can get better at mitigating it, but I don’t think you can solve it.”
New business was rolling in, so MedSynergies’ leadership team had to set up the new training program on the fly.
“At the time, we didn’t have a lot of time on our hands to create PowerPoints, to have great thoughts about how we were going to build our culture and onboard people,” Thomas says. “I think most small companies have that problem because everybody wears so many hats. We had to move. We had operations, we had new customers, and we were trying to hire people and grow. So the decision making was pretty quick.
“We started the boot camp and started walking our employees through things like the life of a claim and our five key metrics, which are one of our cornerstones — the foundational elements of a physician’s practice,” Thomas says. “It’s one of the things you’ve got to do right first because it’s a precedent to everything else. There’s some pretty core stuff you have to do. And very few people do it well. It has a lot of process rigor around it.”
Boot camp was an apt name for the program, as Thomas describes it.
“It was two 10-hour days, roll up your sleeves, hard core,” he says. “We covered areas like what you tell the client, what it means, how it impacts the company. And we got good results. One byproduct of that process is we found out some people at various levels of the company had skill sets that were above what they were hired in at. And we found the converse was true, too. Some people who were supposed to know it all and be an immediate impact player couldn’t dribble the ball.
“So it helped us evaluate, from a senior management perspective, our talent level in the company at that point. It also helped our ability to recruit, and it started building a culture about how we do our business.”
Go back to school
Another step MedSynergies took was aimed squarely at the problem of recruitment and the shortage of suitable talent.
“One of the big obstacles we face is that the level of talent we need at all levels of the company to meet our growth needs exceeds the ability of the city and the region of North Texas to supply it,” Thomas says. “We are really struggling to find talent at $12 to $15 an hour all the way up to $100,000 a year — and even above that level.”
MedSynergies is partly addressing this problem by partnering with a local institution that Thomas says is overlooked by many businesses in the Dallas-Fort Worth Metroplex.
“Probably the biggest unknown, unappreciated asset in Dallas-Fort Worth is the Dallas County Community College,” he says. “It’s huge. It’s one of the largest assets that, economically, we don’t know anything about. Most people don’t. I didn’t.”
A MedSynergies client who is involved with the community college convinced Thomas that his company would benefit by partnering with the school.
“We committed to do a couple things with the community college,” Thomas says. “One is we wrote a check to build a portal to help their students get jobs. So what they’re in the process of doing now is building a website where students can put their resume out and apply for jobs.”
Thomas says that part of his motivation for entering into this partnership was selfish. “I wanted access to their best and brightest to hire, at all levels of the company,” he says. “The community college is a great economic tool, and it’s a great societal tool. These are kids that are really working their way up. They either go on to four-year colleges or come out with a two-year degree, and they turn into great employees and do a phenomenal job.
“The other part is we want the community college students to look back and say, ‘They helped me get a job, so therefore I want to perpetuate the program,’” he says. “So it’s not just a charitable event. It’s really a business enterprise to pay back the school that’s done so many great things for you.
“I have high hopes for that,” Thomas says. “I think it will help our hiring process, and I think it will have some societal benefits for the community college and raise some awareness about how good a job they’re doing. They’re doing absolutely phenomenal work at the community college level. So I’m real enthused about that.”
Identify your stars
To help with employee morale and improve information sharing, MedSynergies has launched a monthly executive-employee communication program called Lunch With Leaders.
“It’s a monthly luncheon,” Thomas says. “It’s an open sign-up-to-have-lunch-with-an-executive program. Lunch is provided, and it’s a free-ranging group discussion. So you’ll hear things like, ‘I don’t understand my benefits. Are they better? Are they worse?’ Or there will be discussions about topics like working from home and other policy issues. It’s a great format to communicate with employees throughout the organization, because we find that they know a lot about what’s going on, while many of us sitting with C’s in front of our titles don’t really know that much about what’s going on.”
The Lunch With Leaders program has another important benefit. By fostering interaction between executives and employees, it makes it easier for MedSynergies’ higher-ups to identify who the company’s future leaders are likely to be.
“We’re trying to identify our superstars,” Thomas says. “There are probably 45 people in this company who are outstanding, phenomenal talent. And at the other end, there are probably another 45 people that the company will do great things without. And identifying both is very important to us.”
Asked what advice he would give other executives facing a similar predicament dealing with the dearth of available talent, Thomas says trusting your judgment is crucial.
“When you start to have a concern and you start to think there’s a problem or a potential issue, that means there is one,” he says. “Don’t second-guess yourself. You need to think about some of these issues, and you’ve got to continue to review your management team and your staff, and if you have a concern or issue, you need to trust yourself. You need to communicate it and deal with it immediately. Don’t wait.”
Another piece of advice Thomas offered CEOs is to be willing to admit you’re fallible.
“We all have egos, but sometimes you’ve got to be able to say you made a mistake, and address the mistake and move on,” he says. “We’ve done that. It’s not fun; it’s not easy. But when you tell someone ‘I made a mistake’ and you correct it, you build trust in that employee — whether it’s lateral or above you or below you. It doesn’t matter. They’re all important.”
Asked if he thinks MedSynergies has turned the corner toward resolving its problems with attracting and retaining talent while maintaining its rapid growth path, Thomas says he sees signs that the company is improving, and he feels that constant improvement should be the goal because true resolution isn’t possible in this case.
“It’s an evolutionary process, and I don’t think we’ll ever truly resolve it,” he says. “But we’re making a lot of progress. We’re seeing better employee satisfaction. We’re seeing more referrals from existing employees for jobs. We’re getting more job applicants for open positions than we used to have. On the other hand, we’re also seeing a downside: We’re starting to see our people being recruited by other companies. People say, ‘Hey, I want to hire from MedSynergies because they have some knowledge we can use.’ But that’s part of the deal.
“If you’re doing the right things as the CEO of the company, the average performance of the employees should continually improve,” Thomas says. “In other words, on the bell curve, you’re constantly trying to move your average toward the right, which is better performance. And as you move the bar to the right, you’ve still got to deal with the part that’s to the left — the people who are not performing to the level that the job needs.
“And it never ends. You’ll never get to where everybody is an A performer. It’s mathematically not going to happen.”
HOW TO REACH: MedSynergies Inc., (972) 791-1224, www.medsynergies.com
THE THOMAS FILE
Name: J.R. Thomas
Company: MedSynergies Inc.
Born: Little Rock, Ark.
Education: B.S. in zoology, University of Arkansas; MBA, University of Texas
What’s the most important thing you learned during your years in school that you use today?
It has nothing to do with the technical components, the debits and credits and pension accounting and microeconomics and macroeconomics. The most important issue about going to school is who you’re sitting next to. Because business is about people and the things they have to deal with, the issues and pressures and performance. And it’s not about psychology or sociology. It’s about how people make decisions and how you’re going to attach and relate to that customer.
What was your first job, and what did you learn from it?
When I was growing up, I worked on our family farm. Among other things, we had a commercial hay and straw baling operation. In high school, my brother and I baled 44,000 bales of straw in a month. And the concept of quit never existed. We were greasing a hay baler early in the morning in the dust and dirt, and we’d come home at 7 o’clock at night, dirty as hell, sunburned, mosquito bitten. But the value of that is we learned that when things get tough, you’ve got to put the hammer down and keep going.
Do you have any overriding business philosophy that you use to guide you?
There’s no substitute for work. Go to work every day. Have a blue-collar mentality. Bring your lunch pail to work.
What trait do you think is the most important one for a CEO to have in order to be a successful leader?
You have to have integrity and respect. There are lots of smart people out there, but to get people to charge a hill, it’s about more than organizational structure or market opportunities or empowerment. It’s about these people sitting side by side with you. Are they going to march up the hill with you? They’ve got to trust you and trust that you’re going do the right thing.
There is “a tale of two mindsets” when it comes to understanding which employee groups are leaving and why they seek to leave. Furthermore, our research indicates that corporate leaders often fail to understand the nonfinancial priorities of their employees, such as the need for strong leadership, effective communication and career advancement opportunities, while the degree of importance that younger employees place on these nonfinancial priorities varies across geographies.
Companies seeking to enhance their global success need to figure out how to maximize business performance in the geographies they choose to operate in. As they expand globally, they will encounter several salient challenges:
- Attracting talent (especially leadership) to successfully navigate the market.
- Maximizing the performance of local talent.
- Retaining employees in markets with high turnover rates.
This becomes especially important in the context of the existing gulf between employers and employees on talent priorities.
Mind the gap
Generational differences fuel much of current social and political tension in Western Europe and the United States over globalization, nationalism and immigration, according to an in-depth analysis of results from the Pew Global Attitudes surveys.
Older Americans and Western Europeans are more likely than their grandchildren to have reservations about growing global interconnectedness, to worry that their way of life is threatened, to feel that their culture is superior to the cultures of others, and to support restrictions on immigration.
This generation gap is less pronounced in Eastern Europe and is virtually nonexistent in Asia, Africa and the Middle East. Nevertheless, Americans and Western Europeans of all ages are less likely than people in other parts of the world to tout their own cultural superiority and are less wary of foreign influence.
These findings are based on Pew Global Attitudes Project surveys conducted among more than 66,000 people in 49 nations.
As a consequence, although there is a growing recognition that in order for companies to build effective retention strategies they will need to tailor their tactics to account for generational differences, there remains the problem that many corporate leaders may be misreading the priorities among different generations, leading employers to offer the wrong incentives to the wrong employees.
Effectively addressing these challenges begins with a more complete understanding of the local work force, its various segments, and what makes each group tick.
Rather than standardizing talent management, companies should devise country-specific talent strategies with the involvement of local leaders who are as versed on the different aspirations of the generations that make up the work force as they are on other aspects of their business.
Such an understanding could help companies:
- Better address key issues for global expansion and enhance return on investment on talent programs through the design of customized programs that speak directly to employees’ aspirations, ambitions and attitudes (based on the generational cohorts that comprise a given country).
- Enhance leadership capabilities for managing and collaborating across borders and generations, thereby enhancing management effectiveness and business performance.
- Create competitive advantages by helping them stay current on expected work force composition, employee benefit options and preferences and other competitive offerings to determine the best plans to attract, retain and motivate top talent.
For those companies that embrace the concept of “plan locally, connect globally,” understanding and connecting with the aspirations of the demographic groups they are targeting can help them in their efforts to reduce cost and optimize performance on a global basis.
The recognition that customers are a heterogeneous bunch emerged as one of the important ideas for marketers in the last century. With the increasing importance of talent as a competitive factor, the recognition that generations differ around the world may be one of the important strategic avenues for decades to come.
Sherri Elliott-Yeary is the CEO of human resources consulting companies Optimance Workforce Strategies and Gen InsYght, as well as the author of “Ties to Tattoos: Turning Generational Differences into a Competitive Advantage.” She has more than 15 years of experience as a trusted adviser and human resources consultant to companies ranging from small start-ups to large international corporations. Contact her at email@example.com.
How do you know which companies have the credentials to serve your business needs?
In a variety of industries there are standards that can be used as a benchmark. The average consumer may not understand the behind-the-scene factors that go into setting the standard; however, the consumer does understand the meaning and intent of the third-party oversight of a specific segment. This is well established in consumer products and medicine, but the service industry is another matter, says William F. Hutter, CEO of Sequent Inc.
“Can anyone be an attorney? No, there are licensing rules,” says Hutter. “Would you do business with a bank that is not insured by the FDIC? Hopefully not. How many legitimate health care providers do not have Joint Commission Certification? None, because the standard is a requirement of doing business. Would you use a non-FDA approved medication? Of course not, because it could be dangerous.”
Yet, well-intentioned companies with smart leadership tend to forge ahead with an outsourcing decision without understanding what standards they can use to measure the credibility of an outsourcing company. Too often, the price seems attractive, but it might be too good to be true. This emerging industry of HR outsourcing is full of minefields for the casual consumer. This is really the ultimate example of getting what you pay for.
Smart Business spoke with Hutter about understanding the standards of outsourcing.
What is driving outsourcing, and what is the liability of doing so?
Ever-increasing government compliance demands are causing companies to consider outsourcing their noncore functions such as human resources, payroll processing and 401(k) administration. These functions do not drive revenue or growth, but are part of the required infrastructure for almost any business with employees. These backroom functions consume dollars and time, while exposing business owners, managers and HR people to extraordinary personal liabilities.
Outsourcing is understandable and makes sense, because it can reduce your costs by saving time and headaches. But what about the liability associated with managing the business of being an employer? If there is secondary liability for the actions of a third-party outsourcer, what due diligence should a company conduct before outsourcing certain fiduciary functions?
What questions should a company be asking of a potential outsourcing partner?
Fortunately, there is a standard set of due diligence questions that can be asked of any company providing the service. One of the most common types of outsourcing is payroll. Another concept can provide a comprehensive package of HR services to small and mid-sized businesses for reasonable pricing. Professional Employer Organizations can vary greatly in expertise and philosophical approach; therefore, it is difficult to know how to select the best fit for your company.
Getting the answers to the questions below can help any company that is considering outsourcing its HR functions to a PEO.
* Have you visited the PEO offices to look under the covers?
* What are the professional affiliations of the company?
* Is the PEO a member of NAPEO?
* Does the PEO offer employment practices liability insurance, which covers its clients and managers?
* Is the PEO self-insured for workers’ compensation? If yes, how does it reserve for future liabilities?
* Is the PEO a member of the Certification Institute for Workers’ Compensation Best Practices?
* Is it accredited by the Employer Service Assurance Corp.? (www.esacorp.org)
* Does the PEO protect you from secondary tax liability?
* Does the company audit financial statements?
* Is the PEO able to secure fiduciary liability insurance coverage to protect trusted money such as retirement plan funds?
* Who is the plan sponsor for health insurance?
* What protections does the PEO have against one of its customers not making payroll?
* How does it protect confidential data?
* What are the back-up systems for technology?
* Does the PEO have senior HR staff to assist you in a time of need?
* What is its staff-to-customer ratio?
* Does it provide defense coverage in case of an employment-related legal action?
Are there third-party standards that a business should take into consideration?
Yes, there are standards established by third parties for the emerging HR outsourcing industry that can be relied on. One of the most important is Employer Service Assurance Corp. ESAC is an independent, nonprofit organization that administers an accreditation program for the PEO industry to verify compliance with government regulations and industry standards.
The performance of key employer responsibilities by accredited PEOs is backed by bonds, providing financial assurance for clients, worksite employees, insurers and regulatory authorities.
ESAC-accredited PEOs submit audited financial statements and quarterly independent CPA verification of payment of taxes, benefit contributions and insurance premiums. Assurance is provided through $1 million surety bonds held on behalf of each ESAC-accredited PEO, plus a $10 million excess bond covering all program participants.
The key to establishing a successful HR outsourcing relationship is built on a few fundamental considerations.
* Find the best fit for your company.
* Price is important but should not be the determining factor.
* Trust and confidence in your service provider are very important.
* Verify the company credentials.
* Visit the service provider’s local office to look under the covers.
William F. Hutter is CEO of Sequent Inc. Reach him at (888) 456-3627 or WHutter@sequent.biz.
When Bernadette Boas was given a pink slip from her very lucrative, global vice president type of role, she was happy.
But she didn’t understand why, so she decided to do some self-reflection.
“I was that bitch with the walls up, and there was no internal dialogue going on at all,” she says.
She recognized that her ruthless attitude had taken a toll on her health, as her body was mocking symptoms of a heart attack because of the stress and angst she was experiencing. She also saw that she had all the luxuries of life, but she didn’t have the things that really mattered — loving relationships and warmth.
“When I realized it was because of that nasty attitude, I was horrified at how many people I had hurt over the years,” she says.
She decided to write her book, “Shedding the Corporate Bitch,” as an apology to all the people she’s hurt over the years and to address how people can shed the ruthless leadership shell.
Smart Business also spoke with her about how business leaders can more effectively handle difficult people in the workplace.
How do you recognize toxic behavior in your team?
Any good, aware manager is going to see that an individual within their team or department or organization is toxic. It’s whether or not they’re willing to address it and not just look at their productivity.
For instance, that attitude for me produced a lot of great results for our customers. Our customers appreciated the fact that I would go at it with my own internal team and fight for them, and therefore I and created a lot of great results. But internally, what I did was create a lot of toxic environment among our organization.
The manager, they know when they have someone who is toxic, so they have to confront it and address it. When somebody is toxic, there’s something underlying that. There’s something underneath that. When someone is productive and good at what they do and is very much a leader but is taking on these attitudes and mindsets, they’re doing it for other reasons. Businesses don’t want to get under the covers and play therapist. When you think about coaching and why coaching and executive counseling is so effective, it’s because they are addressing that underlying motivation and underlying agenda underneath the behavior. Managers just need to pay attention to it, confront it and then just recognize that it could be easily addressed once they do — it’s not a lost cause when you have that individual. It doesn’t automatically mean they have to be fired. It just needs to be addressed.
How do you effectively address it?
Often times the person afflicting on to other people, they don’t really see it. They don’t see they’re being as damaging as possible. Some of them breed off of it. They love the idea that they’re intimidating people or they’re making people uncomfortable or they’re demanding. At the same time, they’re not seeing what it’s doing to themselves personally and professionally. A lot of times it’s confronting that. If someone had confronted me, I’m a smart woman; I would have woken up to it eventually. I would have saved a lot of the personal and professional damage I did to myself.
Unfortunately, a lot of companies don’t do a lot of training and coaching on managing people in difficult conversations in the workplace. They need to arm their HR organization or their managers with the tools to sit someone down effectively and needs to facilitate a dialogue with someone. Depending on that manager’s own personality, some can just call you out on it right away. Some will just sit you down and say, ‘Look, you’re hurting yourself in your career with the attitude you’re bringing to the business.’ Other people aren’t very good at dealing with confrontation. They may need training or have someone in the HR to facilitate and mediate that type of conversation.
Very simply too, performance reviews, [need to be] done more regularly and effectively. They have performance review processes but they’re done reactively — they’re not proactive with a purpose or effective to where it shifts or creates change in that individual. Unfortunately, a lot of companies fall short on being able to leverage those opportunities where they sit down and have a conversation with their employees or managers to address those kinds of issues. That’s the time to do it — whether it’s during the process or a one-off because of an issue because someone is creating havoc within the organization.
How to reach: www.sheddingthecorporatebitch.com
I’m happy to report that human resources is no longer limited to managing the administrative processes that ensure employees are appropriately hired, fired or paid. Today, HR plays a more strategic role in corporations than ever. HR departments, and the professionals that manage them, are expected to contribute to strategic business initiatives — things like creating a company culture that engages committed employees and designing a merit-based performance management protocol that effectively rewards and motivates workers.
Another trendy HR initiative is innovation. Many corporations are enlisting their HR teams to help identify, inspire and even institutionalize innovation among the ranks. So how does HR contribute to a culture of innovation? In more ways than you might think. Here are six that easily come to mind.
Recognize it — For the past decade, innovation has been an ideal business gurus have pontificated, business magazines have measured, and business owners have aspired to, so it’s no wonder some expect the next “innovation” to be accompanied by a little fanfare, or at least an impressive PowerPoint. In reality, of course, the greatest innovations don’t come wrapped in ribbons and bows. They arrive as memos inside plain vanilla folders or as e-mails in an inbox. Good managers have to be able to recognize and implement good ideas, but HR can help by shining a spotlight on new ideas and the employees who generate them.
Hire it — To thoroughly ingrain innovation into your company’s culture, start by hiring it. Identify job applicants who have a propensity for creativity and thinking outside the box. Design interview questions to determine how applicants have demonstrated innovativeness in the past, or if possible, conduct tests to measure applicants’ creative bent.
Share it — Companies often develop silos. It’s not intentional, but by default teams tend to confine themselves within perceived physical or professional boundaries. As a group that touches all areas of the company, HR can be a conduit for creative people and ideas. If you know someone in accounting who has an idea for saving money on office supplies, introduce them to the right person in procurement.
Champion it — Innovation often comes when someone has the guts to break from the status quo or bend the corporate rules a bit. Cheer on the rule breaker and champion the revolutionary if it means getting a good idea heard. HR should encourage management to have the conviction to embrace good ideas wherever or however they come.
Reward it — Create a performance-evaluation process and compensation system that recognizes and rewards ingenuity. Ideas that contribute to sales growth, market penetration, operating efficiencies or cost savings can have a tremendous impact on a company’s success. Recognize those that generate the ideas as well as those that help to implement them and don’t punish employees for failed ideas. Some of the best ideas just need time to come into season.
Promote it — HR can be instrumental in promoting a culture where innovation is pervasive. It can involve creating a physical environment that supports brainstorming and open communication or conducting contests that encourage out-of-the-box thinking. Whatever methods are employed, good ideas are the natural byproduct of companies that can successfully institutionalize creativity and innovation.
Innovation need not be defined by life-altering inventions or ground-breaking discoveries. Sometimes the most impactful innovations are as simple as a money-saving process improvement or a tried-and-true formula applied to a new product or market. Whatever it is or wherever it comes from, HR can help companies embrace it wholeheartedly.
John Allen is president and COO of G&A Partners, a Texas-based HR and administrative services company that manages human resources, benefits, payroll, accounting and risk management for growing businesses. For more information about the company, visit www.gnapartners.com.
Over the past few years, founder, Executive Chairman and CEO Don Murray has led Resources Connection Inc. by betting on customer service. The company’s upper management has coached the sales representatives at Resources Connection’s 80-plus offices around the world to spend as much time as possible with the company’s more than 1,900 clients.
“Lots of our clients have been going through huge issues, and you have to be empathetic to all the issues they’re going through,” Murray says. “There are a lot of ways that we can still help them. We have a great client base, and for us to be successful, we have to really keep on top of our clients and help them get through all of these issues.”
The focus on client relations has helped Murray keep Resources Connection in growth mode. The company — which operates through its subsidiary, Resources Global Professionals — generated $545 million in fiscal 2011 revenue, up from $498 million in fiscal 2010. But it has taken a lot of effort from management to find the talent and set the cultural principles that have allowed the company to continue performing at a high level, despite the economic climate.
“It really starts with the hiring,” Murray says. “If we don’t hire correctly, nothing else is going to matter. You really can’t teach talent, and to be successful, you have to have an inner drive, you have to be kind of impatient and you have to have a sense of urgency that is going to help you get through all of this. If you don’t hire the right people and you let your people become complacent, you’re never going to be successful.”
When Murray founded the company in 1996, he made up an acronym: “TIEL.” In short, TIEL spells out what type of person Murray wants on his team — the basic traits all company employees need in order to embrace and promote the culture at the company, and achieve success within the company’s framework.
“It stands for, first of all, hiring people that have talent,” he says. “We don’t want to have people who don’t have the necessary talent or skills, because then we’re carrying those people on our backs, and you’ll never win the race that way. If they have the talent, we need to make sure they have integrity. If they have those two things, we want them to have enthusiasm and a positive energy. Then, we want loyalty, so that we know those people can work well in teams. So that’s TIEL — talent, integrity, enthusiasm and loyalty.”
Job candidates, particularly for management-level positions, are assessed against the TIEL principles from the moment they walk through the door for the first interview. Murray and his leadership team try to get a grasp of a candidate’s alignment with TIEL throughout the interview process, asking questions about the person’s past professional experiences and past record of maintaining customer satisfaction.
“You get them talking about their experience and how they have actually handled things,” Murray says. “You get a feeling for whether they’re just telling you stuff that they think you want to hear, or whether they really have relevant ideas and experience. What we’ve found a lot is that people who are leaving their positions because of the changes in the economy, a lot of those people have become stale, they haven’t kept up their skill sets. So you bring all of that out in a conversation, over the span of a number of interviews. We do probably seven or eight interviews for people we are trying to hire internally, to get a broad range of opinions about that person.”
Murray says your decision on whether a job candidate is a match for your culture and mission will ultimately come down to a subjective judgment call. You will have to make up your mind one way or another. But if you know what you want in an employee and can measure each candidate against those selected qualities, you can make a much more informed and accurate decision.
An involved CEO is always the best kind of CEO when it comes to management-level hires. You don’t want to sidestep your human resources department, but you do want to know what is going on, and get a detailed background on people that could potentially find their way into an influential role on your team.
At the company, Murray and his president, Tony Cherbak, don’t delegate interviews for key positions. They see to it that one or both of them have a chance to sit down and oversee a round of interviews.
“We make sure we interview those people, whether they are going to be in our Singapore office, Brussels office, London office or wherever,” Murray says. “Too often, CEOs delegate the process of hiring someone who is going to be very important to the company. With that approach, you have different people in the company doing different methods of hiring, which means you don’t always adhere to the same standards.”
Below the upper management level, Murray might not interview the candidate directly, but he sees to it that the people who are performing the hire maintain the same standards.
“Below the people who are critical to us directly, it is really about working with the managing directors in the offices, to give them the same sense of quality,” Murray says. “We keep the principles of TIEL in front of them, and ask them to focus on those principles. That is how you keep those standards consistent, no matter where you’re hiring throughout the company.”
One of the hardest components to maintain high standards in your hiring practices is the willingness to wait out a drought. If satisfactory resumes aren’t showing up in your e-mail inbox or candidates don’t impress you during the interview process, you can begin to feel the pressure to get someone hired as the process shuffles along. But you need to remember that the wrong hire will cost you more in the long run than having a vacant position in the short-to-medium term.
“We have offices that could use five more people, but those offices haven’t yet found the right people to hire, so they aren’t hiring,” Murray says. “We have some places that are three people down because they can’t find the right people. What happens is you need the people already in place to chip in, do a little extra and realize that you’re just going to have to lose some of the short-term growth that you would have if you were able to hire a few more good people. You keep reminding them that hiring the wrong person creates so much negative energy, it wastes so much time, you are simply better off not having a person than having a person who creates a negative effect.”
Even with the most thorough and well-defined hiring practices, the employees you hire will only bring their raw materials to the table. It is up to you and your leadership team to mold them and leverage their skills and talents to improve the company.
It’s a question of culture, and culture starts at the top of the organization. You have to set the values you want emphasized, communicate those values frequently and develop a system of accountability. Murray wanted client satisfaction to be the focus at the company moving forward, so he communicated and developed incentives around it.
“A lot of companies have great mission statements, have really good slogans and philosophies, but a lot of the behaviors at the top don’t back up the mission statement,” Murray says. “That leads to a loss of leadership’s credibility in the eyes of the organization. You have to keep instilling what you think is important, you have to keep reinforcing your culture with your behavior. You can’t tolerate bad behavior.”
To align incentives with the performance and values that Murray desires, the leadership team has tied a portion of the compensation system at the company to group performance. If a given unit performs at a high level regarding client satisfaction, the whole unit receives a bonus.
“People don’t want a substandard person on their team, so when you reward teamwork, you help enforce high standards across the board,” Murray says. “A lot of companies put an emphasis on awarding the most money to their stars, and they have a performance rating system where 70 percent of the company is rated as average. We don’t tolerate average, and our employees don’t either, because a portion of their compensation is tied to how their group does. No one wants to be average, because no one wants an average person bringing down the whole group.”
Use customer feedback
You can accomplish a lot by developing and enforcing high standards internally. But if customer satisfaction is the lifeblood of your business, there is no substitute for giving your customers a voice, and letting your company hear it.
If you want to know if you’re achieving customer satisfaction, ask your customers if they’re satisfied. Murray and his management team frequently meet with clients during stops at field offices. Once a year, the company holds a meeting of all staff members who interface with clients. During the meeting, Murray asks representatives of several client companies to take part in a panel discussion.
“We typically have three or four clients on a panel,” he says. “Those clients give their view of how we’re doing, how we could do better, and then they’ll answer questions from the people in the audience. We have a number of our major clients represented in that forum, and that approach has been very successful. Last year, we had a meeting in Detroit in a building attached to General Motors. When our people around the world hear our clients talk about what they like and how we can do better, it is a lot more effective than having one of us in management do it. It involves our clients in business, and shows our people that our clients want us to be successful.”
Building those bridges help engage customers and motivate the employees that you worked so hard to identify, hire and train. It is an example of perhaps your most important role in the living, breathing organism that is your company — that of connective tissue.
“Nothing is better than visiting with your clients,” Murray says. “It helps you assess yourself, it allows you to listen to what people are trying to tell you. A lot of cultures in business are based on the belief that you don’t want to tell the boss anything bad, so if you want the reality of the situation, you need to find out for yourself. You need to visit your clients and customers, you need to talk with them. You need to thank them for being your customer, build that relationship, then get an assessment from them on the service or product you are providing. That will help you get a feeling of whether the people in your company are telling you the whole truth about how you are serving your customers.”
How to reach: Resources Connection Inc., (714) 430-6400 or www.resourcesglobal.com
The Murray file
Born: New York City
Education: Accounting degree, California State University, Los Angeles; MBA, University of Southern California
First job: I worked in an A&P supermarket in New Jersey when I was 15 or so.
What is the best business lesson you’ve learned?
One of the most painful lessons I’ve learned is that you can’t change people. If somebody doesn’t have a sense of urgency, it is very hard to instill that in them. Over the long haul, you really can’t motivate low performers to be high performers, and you can’t teach talent.
What traits or skills are essential for a business leader?
You need to be a good communicator. You have to be intelligent enough to understand the environment of business. And you always have to be on the lookout for new ideas. Don’t become mired in the old way of doing things.
What is your definition of success?
If you look at the best athletes in the world, they are usually very well balanced. So my definition for success is being balanced. If you are serving your clients well, and motivating your employees, and all of that is in balance, the business is usually successful and you are pretty happy.
Scott Wise admits it’s difficult to find and keep good employees for the seven restaurants he operates. But despite that, he knows he’s doing something right ? Scotty’s Brewhouse grew from $11.6 million in annual revenue to $18 million between 2008 and 2010, a 55 percent increase.
“It’s important to keep growing our company so everybody’s fire continues to burn, so everybody feels they have another place for them to move forward,” says Wise, founder, president and CEO of the 1,000-employee company.
“Your employee is No. 1, not your customer,” he says. “If your employee is not happy, your customer is going to know that and is probably not going to come back.”
Smart Business spoke with Wise about how Scotty’s finds workers and stokes the fire within them.
What does it take to find a good employee?
Gosh, it’s hard. It’s tough. It starts all the way from the beginning. From the minute you hire them, you’ve got to hold hope that your manager has done his job. We try to put a lot of effort into the manager who’s doing the hiring so that he or she can find the right person. You absolutely have to recognize the right person, see through the bullshit and make sure that someone is not just saying things you can say to get hired. So it starts with that.
But from watching over my entire company, I would say just the generation we are dealing with right now, I don’t want to blame anybody or blame a generation, but it’s just, I hate to say weaker, but I think every generation gets a little weaker in some respects. Maybe they have been a little more overprotected or they need to know a little bit more about why ? “Why do I have to be there at 10 o’clock instead of 10:30?”
They ask a lot more questions. They want to know why they are doing this, or what’s in it for them if they sell these different food items or these different drink items.
I think that the toughest challenge is to always keep all your staff motivated, content, happy and, obviously, as the end result ? pleasing your guests.
What solutions are you taking to address the challenges of Gen Y workers and others?
It takes proper training. If you don’t train them correctly, they won’t want to stay with a company that doesn’t train them properly. The employees won’t feel like they know what they are doing, and they feel uncomfortable where they are, and they are not going to want to stay there.
To follow up, the chief executive needs to personally send an e-mail to every new trainee that comes into the company and tell them, ‘Hey, here’s my e-mail address. This is really me typing this e-mail. If you ever have a question or you feel like someone is saying something rude to you or anything, you need to e-mail me here.’
It all takes good training. We actually have two directors of training in our company so we try to put a lot of emphasis on them and making sure that they have proper training manuals and everything in place.
What are the responsibilities of the two directors?
One travels to the restaurants and actually goes to each store and talks to staff and the training manager.
The other one, who is the main director of training, manages the entire database and stays back to make sure everything is put together. Then she gives out information to him to transfer to the restaurants. They work together in the training.
What types of perks are successful with employees?
Try to just take a little bit extra effort to show support to all employees: Christmas parties, summer baseball games, anniversary cards and gym workout memberships are a few.
You don’t want them to be giving 80 hours a week at work and just killing themselves with that.
You want people to have a good work/life balance. That’s kind of my philosophy. I really think that helps.
How to reach: Scotty’s Brewhouse, (317) 759-6336 or www.scottysbrewhouse.com
At his company’s national convention last year, founder and CEO Ed Kaloust was unsure of how to handle the announcement for Medi-Weightloss Clinics’ employee of the year. The problem wasn’t identifying a worthy candidate, but narrowing the success stories down to just one person.
“We just had three spectacular employees,” says Kaloust, who has grown the weight loss company from start-up to $16.5 million in revenue in 2011.
So he decided to announce three winners.
In today’s economic environment, having too many good people is hardly a problem a CEO is worried about. In fact, Kaloust says having the right people in the organization to grow its unique business model — a medically supervised and managed weight-loss program where physicians help clients lose weight through a combination of medication and diet – is why the Tampa-based business was one of Inc.’s fastest growing privately held companies in 2011.
“One thing that I believe in is what I call my ‘PLU’ method,” Kaloust says. “I believe that we need People Like Us. So we are very, very selective in the people that we choose to do this. By doing that, we can then be very supportive in helping them develop their program.”
From the time he started the company, Kaloust has been resolute in sticking to his PLU philosophy, carefully evaluating any business partner before he brings them into the enterprise, even if it means growing more slowly.
“People are really having a tough time out there,” Kaloust says. “I believe that it’s critical to keep that in front of us and to understand that growing through quality PLUs, people like us, is much better than trying to build 15 or 20 of these a month.”
Through deliberate organic growth, Kaloust has expanded the company from its initial three employees to 55 employees and 90 franchisees today. But in addition to having a company built with PLUs, he says, a leader needs to be able to support them effectively.
“My focus has changed from building the infrastructure to leading the infrastructure,” Kaloust says.
You need to let your people know that you are available to help them achieve their goals today, tomorrow and in the future, by “over-servicing” them. For example, Kaloust assigns a franchise field consultant to every 12 to 14 franchisees to help handle all of the marketing and compliance issues at each location so that they don’t need to worry about it.
“You need to do everything you can to protect the people who are investing in your program,” Kaloust says.
“That is one of the keys to not only growth, but it’s very key right now. Every time we turn around there is a new problem out there. So you’ve got to be there in front of them and keep reminding them, and you’ve got to be there to support them.”
It’s also important for leaders to demonstrate confidence and stability that people can look to and be inspired by.
“We have to protect the system and protect the clinics that aren’t doing well,” he says. … “We do whatever we can to help them get though the economy right now.”
Kaloust shows this by letting his people know that there is no problem too small for his involvement and no interference if an employee or franchisee calls him or comes to him with an issue.
“I’m not afraid to reach down to the smallest issue that we have in the company,” he says. “If I can help, I want to do that.”
In addition to having formal support systems in place for employees, an open-door policy lets them know you care about their wellbeing.
“I just make the time,” he says. “It doesn’t always happen and I don’t have that now as much as I used to because we have built such a strong company, but I would get involved.”
With the right team and support in place, Kaloust says, success is just a matter of letting people do what they do best.
“I believe that adage that you can take away everything I have and give me back the people, and I’ll do it again,” he says.
How to reach: Medi-Weightloss Clinics, www.mediweightlossclinics.com or (877) 633-5677
Ed Kaloust spent 43 years in the securities and investments industry before founding Medi-Weightloss Clinics in 2004. He had never planned on being in the weight-loss business. In fact, he was set on retirement, soon to be heading off in a custom-built sailboat to fulfill his dreams of blue water sailing. But then he got hit with a market opportunity that he couldn’t say no to.
“I felt that we were in the perfect storm, because we had a country that had an overweight issue and had 70 percent of its population dealing with it,” says Kaloust, CEO of the company.
In addition to making sure you have a clear problem, a differentiating solution and the right people to execute it, Kaloust says having a partner can be a key factor in how well you capitalize on a new market opportunity.
In addition to being an asset through complementary talents, partnerships can be a mirror to help you reflect on and guide decisions about a company’s direction.
“It’s a lonely office when you are a CEO or a president,” Kaloust says. “Everybody is looking at you, and where do you look?”
By partnering with James Edlund, now president of the company, Kaloust was able to balance his financial background with Edlund’s pharmaceutical experience to grow Medi-Weightloss nationwide.
“There are a lot of people who say that partnerships don’t work,” Kaloust says. “That’s not true. Some partners don’t work, but other partners will help you go on to do bigger and better things than you can do on your own.”
How to reach: Medi-Weightloss Clinics, www.mediweightlossclinics.com or (877) 633-5677
A regulatory tsunami is headed toward companies sponsoring 401(k) plans. It will arrive next year when new federal rules take effect, creating an unprecedented burden of accountability for employers.
More than ever, employers will be required to assure that fees associated with these plans are reasonable for the services being provided. To do so, they should move expeditiously to determine and evaluate all plan fees.
Employers are already required to exercise this due diligence by the Employee Retirement Income Security Act of 1974. Yet the fees charged by large financial institutions providing 401(k) plans vary widely and are extremely difficult for employers and employees to ascertain. Many aren’t aware that their fees may be too high because, until now, the government hasn’t required plan providers to voluntarily disclose all fees.
Nevertheless, by entering into arrangements with plan providers that involve unreasonably high fees, many employers have been failing to protect participating employees as required by ERISA. To remedy this lack of compliance and to help employees make more informed investing choices, the U.S. Department of Labor has issued the new rules, which reinforce and expand employers’ existing responsibilities as plan sponsors.
Effective in 2012, these rules will open up new terrain for potential federal fines — as the DOL is substantially increasing its investigative staff — as well as lawsuits from employees. This liability stems from employers’ role as plan fiduciaries, a regulatory/legal status meaning that they must consistently put plans’ and participants’ financial interests ahead of their own.
The new rules require plan providers to disclose fees to employees in chart format in quarterly statements. Currently, these statements show investment returns net of fees, so employees don’t know how much they’re paying plan providers or investment companies that supply products for their plans.
Though the rules require plan providers to disclose fees in an easily understandable format, there are indications that the revised account statements may turn out to be long, confusing documents — something on the order of a prospectus. Confusion will ensue, and employees will queue up at HR to ask what it all means.
After making sure employees understand the newly required disclosures — which is, itself, a fiduciary responsibility — employers will undoubtedly be lambasted with bitter complaints from employees who were unaware of the amounts of fees being deducted from their accounts and others who simply thought their actual investment returns were lower.
Accordingly, it’s imperative that employers act now to “X-ray” their plans or engage a qualified consultant for that purpose, so they understand precisely what fees are being charged for the services being provided. This will involve reviewing reams of plan documents and confronting plan providers to ascertain fee information.
But that’s only the beginning. The tsunami’s force is amplified by the “reasonableness” requirement: How can employers know whether fees are reasonable?
To do so, they must determine where their plans’ fees fall relative to industry norms, so employers must benchmark fees against the full spectrum of the national market for plans of the same size providing the same services. These data-intensive comparisons can be highly complex, especially for small firms that lack the necessary expertise in-house.
The new rules also put increased pressure on sponsoring employers to assure that anyone advising 401(k) plans or participating employees is a fiduciary. ERISA rules have long prohibited non-fiduciaries, including brokers, from advising employees on the suitability of specific investments — a scenario rife with potential conflicts of interest.
Yet, because of lax enforcement that the government is now trying to repair, brokers typically play a dominant role in servicing 401(k) plans. By contrast, fiduciaries — who must avoid even the appearance of conflicts — must comply with stringent regulatory standards that don’t apply to brokers. Moreover, fiduciary advisors are subject to substantially greater legal liability.
Hence, the new DOL rules require employers to determine whether plan consultants are fiduciaries. If they aren’t, fiduciary responsibility — and liability — for the plan resides with the employer.
Companies that proactively get out in front of the tsunami by lining their corporate doorsteps with due diligence sandbags will minimize the damage. They have no time to waste.
Anthony Kippins is president of Retirement Plan Advisors LLC, a Cincinnati-based financial services company that provides retirement plan fiduciary services and employee benefit solutions to small companies. He is an Accredited Investment Fiduciary Analyst.