Changing Role of HR: Jack and Suzy Welch, in the July 17 edition of Business Week, took on the issue of what HR must do to leave the line-item overhead category on most business balance sheets. Any HR professional who has experienced cuts in HR budgets, reductions in staff and outright elimination of HR departments will understand the importance of this move. Every HR professional should read the article, or stop pretending to want a strategic role in the company. Welch says that HR must first become a functional part of corporate financial management. Quantify. Dollarise. Given the very large, real and documentable costs of vacancies, turnover and legal problems, this is relatively easy. The real payoff, though, is on the positive side of the coin, when HR can track and document the dollars associated with productivity increases, longer tenure, better managers and employee satisfaction. In assuming this role, HR professionals have two major obstacles: 1) Lack of training in finance, numerical reasoning and communication of financial impacts (and worse); 2) Lack of interest in any of these things. Traditionally, people go into HR because of the warm and fuzzy, intuitive, "health-and-happiness" approach. Welch even counsels, "Drop the socialist 'treat-them-all-the-same' mentality." In the words of cartoon character Pogo, "We have met the enemy and he is us." If you're still not convinced you can (and must) take this route, answer the Welches' challenge: "What could possibly be more important than who gets hired, developed, promoted or moved out the door?" If you're having trouble with the numerical side of this challenge, make the CFO your ally. As John Sullivan noted in his Workforce Week review of the Welch position, "The CFO is the undisputed king of placing valuations on activities that are difficult to enumerate." By the way, your CFO is probably as uncomfortable with your warm and fuzzies as you are with the financial reports. But together, you can make things happen. Look at a specific example of this way of thinking: Talent retention - As far back as most of us care to remember, HR has tracked "turnover" as one of our few consistent metrics. As commonly used, however, turnover is at best a hodgepodge statistic, lumping together the results of current hiring practice, past practice, management change or failure to change, the winds of the economy and goodness knows what else! Talent retention, on the other hand, is more focused on current practice. According to Leslie Stevens-Huffman, writing for Workforce Week, "Nearly 70 percent of executives say that they view talent retention as important or extremely important." Identify the costs (both direct and indirect) of replacing talented individuals in your company, learn when new hires are most likely to leave and identify the factors causing them to leave. Design a program to extend the average life of talent in your company by even a few months and calculate the direct dollar impact. You will find you have reduced the costs of hiring, training, insurance, workers' compensation, management time and negative impacts on coworkers. Simultaneously, you will have improved productivity, job satisfaction and leadership, while holding on to valuable company knowledge and loyalty. The total positive financial impact of your talent retention initiative alone may well pay for your entire HR operation! 'Execution' in business - Opinion By John W. Howard, Ph.D. "Business Execution" has become the latest catch word of the book-and-seminar meeting industry. Google the words, you'll get 122,000,000 hits! Ralph Welborn, in his new book with Vince Kasten, Get It Done! A Blueprint for Business Execution, says, "It's a big, big problem. Consider this statistic: More than 64 percent of C-level executives from 250 midsized-to-large companies in the United States and the European Union have said that being able to execute, to react quickly to changing business opportunities and technologies, is critical for their success. Yet nearly 80 percent of them said that it is nearly impossible to achieve." They go on to say you will never close the execution gap, just reduce it. In another "execution" tome, Larry Bossidy and Ram Charan (Execution, the Discipline of Getting Things Done) focus on the effect that people, especially leaders, have on execution within a business. They use stories about specific leaders and their effects on business outcomes to illustrate the differences between companies with great execution and those with poor execution. In some cases, they point to changes in leaders that caused a change in the company's ability to execute, and the consequences. Given the acknowledged importance of the topic, the high probability of differences in execution being differences in leadership and our own strong bias toward empirical data, it would be interesting to see a study based on the Profile XTTM and the Checkpoint 360TM that is looking to identify the differences between the leaders of companies with famously, verifiably good execution, and the leaders of companies with execution challenges. Volunteers, please step forward! Case Study: Call Centre Working to Improve Sales Force with the Profile XTTM An inbound call centre for a neutraceutical and supplement manufacturer was experiencing turnover as high as 500 percent a year. Sales performance among its 60 agents varied widely, with top performers producing as much as six times the average sales of marginal performers. Ten top performers and eight marginal performers were identified in a current study. The 18 agents were instructed to complete the Profile XTTM online during paid working hours. However, two of the marginal performers were terminated before completing the assessment, leaving six in their group providing data. A success pattern was generated using a concurrent pattern from all 10 in the top-performer group. All agents in the study were matched to the success pattern for top performers. The average match-to-pattern for the top performers was 86 percent, while the marginal performers averaged 73 percent. This 13-point spread between the group averages provides evidence that the pattern is discriminating between top performers and marginal performers. If this pattern had been used when the sample agents were hired and if the company had used a criterion of 75 percent match-to-pattern or better to select for hire (see Proposed Criterion 1 in the graph), they would have hired all of their top performers in the sample but would have reduced their hiring of marginal performers by 50 percent. If they had used a more stringent criterion of 82 percent or better to select for hire (Proposed Criterion 2 in the graph), they would have missed 20 percent of the group who became top performers, but would have reduced their hiring of marginal performers by 83 percent! The issue of setting criteria and the factors that should be considered in the process has been discussed in earlier articles in this newsletter, but the issue of which criterion to use will likely be decided by some intersection of the need to fill seats and handle calls, with the size and characteristics of the pool of available candidates for the sales positions. If, over time, the bottom 25 percent of the current sales force could be replaced with people who perform at the level of the current top performers, the effects on total sales would be profound. These increases would also be expected to affect profitability to an even greater degree, since the sales increase would come without proportionate increases in fixed costs. Eventual return on investment in the assessment process would likely be in multiples above 10:1. The call centre is now conducting additional differential studies of the sales force, using the Profile Sales IndicatorTM, and the Customer Service group in the call centre, using the Profile XTTM, looking for possible additional improvements in the selection process.