You won’t be shocked by the joint findings of EquaTerra and HR Executive stating that public sector HR needs to be more strategic.  This shouldn’t be a surprise given the traditional notion of the public sector lagging the private sector in progressive practices.  Because, let’s face it, HR in the public sector is hard.  

Some of the challenges EquaTerra cites are common to most HR departments, both public and private, including:

• Inadequate resources and lack of executive management attention and support that hamper process improvement efforts; 
• An inability to adequately focus on more strategic activities because of competing demands and insufficient resources;
• Ongoing attrition of skilled/affordable employees needed to address these challenges and an overall aging workforce. (pg. 4)

But others are truly public sector centric, such as:

• Competition from the private sector for employees; 
• Diminishing appeal of the public sector “brand” as a means to attract and retain skilled employees;
• More responsibilities than their counterparts of yesteryear as a result of mandates from the Federal Government and public calls for additional services, including homeland security.  (pg. 4)

If you’re still reading and haven’t fully given up hope just yet, you’re probably interested in hearing what the answer is - the big punch-line, the silver bullet shot forth from the blogosphere that offers that dreamy “ah-ha!” moment of infinite clarity and obvious action.  This blog may not have the ultimate answer, but here is some food for thought.  Perhaps the answer lies in the persistence of public sector HR to not take no for an answer.

We asked Glenn Davidson, Managing Director of EquaTerra Public Sector, to comment on how public entities can stretch tight dollars for key initiatives and transformation:

“Be creative; work smarter.  For instance, a marketing/branding strategy for recruitment, retention and driving behavior doesn’t have to be costly.  Look for alternative ways to get access to technology and services, thereby freeing up resources to do other work.”

Neil Reichenberg, Executive Director of IPMA-HR concluded that:

“This study demonstrates the challenges that public sector HR faces in becoming more strategic, especially in a time of diminishing resources. While the study results indicate that progress is being made, the journey is far from over. The HR department needs to develop innovative strategies and tools that will enable them to become leaders in total talent management within their organizations.” (pg. 19)

The underlying implication is that this is not happening.  But in fact, it is…. slowly.  Those who have a vested and external interest in public sector HR are going to continue to saber rattle and cry from the highest rooftops.  Why?  Because there are billions of dollars in services, licensing, consulting, competitive sourcing and the like to be gained if the internal HR functions could simply “get out of their own way”.  

The problem is that this type of change cannot truly exist without those who feel the pain each and every day electing to stop, take stock of their situation and say enough!  This is hard, and scary, and risky, and sometimes career limiting.  But if you don’t try, you frankly have nothing to complain about.  So take action now and let’s keep the conversation going. 

I’ve received a lot of questions as of late regarding current economic conditions and employee risk.  Both business leaders and employees are struggling with the realities of a down market crashing against a personal need for sustainability and financial security.  Employees are inclined to hide, stay out of sight, not rock the boat and somehow survive.  Employers are peppered with quick hit strategies, the need to act swiftly, massively shifting priorities and the temptation to cut, cut, cut.  

In April of 2005, a very unlikely source authored an interesting publication addressing some of these issues.  It was entitled, “Growing Old Together: Firm Survival and Employee Turnover“.  And the authors?  Two researchers from the Federal Reserve Board’s Divisions of Research & Statistics and Monetary Affairs. This is a very scientific paper, but the abstract does a good job summarizing their thesis:

“Labor market outcomes such as turnover and earnings are correlated with employer characteristics, even after controlling for observable differences in worker characteristics.  We argue that this systematic relationship constitutes strong evidence in favor of models where workers choose how much to invest in future productivity. Because employer characteristics are correlated with firm survival, returns to these investments vary across firm types.  We describe a dynamic general equilibrium model where workers employed in firms more likely to survive choose to devote more time to productivity-enhancing activities, and therefore have a steeper earnings-tenure profile.  Our model also predicts that quit rates should be lower in firms more likely to survive, and should tend to fall during slow times, while job destruction rates should rise.  These predictions, we argue, are borne out by the existing empirical evidence.”  

Ok, so some of this seems pretty obvious.  If your organization is going to make it, you’re going to work a bit harder to ensure that this is, in fact, the outcome.  Is that correct?

“Quite intuitively, workers employed in firms highly likely to survive choose to invest more in future productivity than their counterparts in low survival firms. These investment patterns have several implications for the features of turnover and earnings across firm types in steady state and the evolution of turnover rates following business cycle shocks that are consistent with the relevant empirical evidence.”

And what about quit rates and job destruction?

“We qualitatively evaluate the dynamic properties of our model by computing the transition path between steady states following shocks to total factor productivity (TFP) and gross firm failure rates. Two outcomes of these experiments are particularly notable. First, as in the data, we find that quit rates are procyclical, because workers use slow times to retool (see DeJong and Ingram, 2001). Second, we find that job destruction rates are countercyclical provided gross failure rates for firms rise during recessions, even if the increase is very small as suggested by the existing evidence on corporate failure rates.”

It’s an interesting study.  In effect, they offer evidence that allows you to logically (and dispassionately) understand cyclicality in employment.  To simplify one of their flows, they spoke to the fact that training usually precedes an expectation for higher wages.  During times of training, our productivity would obviously slow, and history has shown that training increases during recessions (DeJong and Ingram, 2001).  If you’re training more, producing less and quitting less often, this can lead to layoffs, something too many Americans are painfully familiar with.

So what should you do?  For employees, the obvious answer may be to do everything in your power to help ensure the survival of your organization.  This is often easier said than done and should not involve stepping over the bodies of your coworkers and peers.  The market will eventually recover and those flaming bridges will come back to haunt you.  Instead, raise your hand and encourage those around you to do the same.  A trench mentality may do nothing more than lead to the fate that you fear the most.  So stay aware of what’s happening around you and let’s keep the conversation going.

The unexpected passing of a loved one can be a shock to your system.  Your last conversation with the dearly departed plays like a broken record.  You ponder their past and reflect on your future.  Your mind marks the calendar as “one week since”, “one month since”, “first 4th of July since”, and so on.  And throughout it all, you and the other surviving family members sort through documents, folders, notebooks and computer files seeking often disparate pieces of information that will allow you to press forward in their absence.

Similar feelings, albeit to a lesser degree, can be found in organizations dealing with the unexpected departure of a key contributor.  If we were to treat succession a bit more like estate planning, we may be able to avoid much of the stress, anxiety and confusion that remains in their wake.

To that end, I’d call your attention to Purdue University’s Six Basic Steps for Getting Ready for Estate Planning. Purdue has done a good job of itemizing each of major considerations, all of which can be repurposed for your succession strategy:

1. Initiate the Discussion: This is often the most difficult step, for like estate planning, this is something that many organizations do not care to discuss.  Begin by identifying those at-risk high performers that are likely to either seek greener pastures and/or retire.  
2. Take Stock of the Present: What is their span of control and/or influence?  What critical information do they have in their possession and how do you extract it?  What relationships do they singly control and manage?  Imagine that they left tomorrow and you had to make heads or tails of their world.
3. Develop Objectives: What exactly do you want to accomplish?  Business continuity is often the most immediate objective, but beyond that, how would you reinvent their role?  What characteristics are optimal and do you have a pool or readily available candidates to fill the void? 
4. Choose Advisors: Seek outside advice and guidance.  Whether through executive recruiters, consultants, industry connections or other third-parties, do not feel the need to solve for this complex equation through internal means alone.
5. Consider Alternatives: Should this previously occupied position cease to exist?  Could or should it be split into multiple roles?  Can you proactively communicate a desire to form mentor/protege relationships of this person’s choosing to openly and actively address the issue?
6. Review and Modify: Succession plans have an expiration date, and do not let your more important ones sour or stagnate.  Expect to revisit the plan quarterly to assess net-new factors or considerations that modify your prior assumptions and expectations.  Stay fluid yet focused. 

No matter how much time you think you have to deal with these issues, there is no better time than the present.  Like the grieving survivor, we often wish we could turn back the clock and have done things differently.  So let’s keep the conversation going (and the regrets to a minimum).

The animals at Kris Dunn’s HR Capitalist have broken free of their blogging cages as the 39th edition of the HR Carnival opens for business!  Strapping on their overalls and straw hats, human resources departments from all over the world are anxious to take a peek under the tent of the newest Big Top show.  Here’s a sampling of what they will see:

 ”Remember you are the expert (and act like it) - Ann Bares of Compensation Force shows us how in the area of compensation, related to when a request for a grade adjustment is real, and when it’s not.

-Tweak rewards and incentives based on the goal - Wouldn’t it be nice to be the expert on the impact of different types of rewards on individual vs. team behavior? Paul Herbert of Incentive Intelligence runs it down for you here.

-Use technology to deliver a customized experience for employees - Wally Bock reminds us that technology exists to customize our programs in many areas, including employee development.

-Become the expert on getting innovation through collaboration - Jon Ingham trots out some thoughts on the value of collaboration.  Maybe you should rethink locking down the social media sites via your web filter.”

…and there is much more, with 36 ”performances” across a litany of death-defying human capital stunts.  Enjoy the show and let’s keep the conversation going. 

Believe me, I know…you’re sick and tired of yet another “seat at the table” discussion focused on HR’s need to be more strategic in their organization.  I predicted that 2008 would end with HR still not gaining that elusive chair, but for the sake of argument, let’s assume they did.  Yes readers, the Chief Human Resources Officer (CHRO) has finally arrived and is ready to roll up her sleeves and provide highly strategic value.  What happens next?  

Enjoying the coveted view, she looks around and likely sees the CEO, CFO, COO, CIO, CMO and perhaps other executives discussing the current and future state of the business.  Given the significant influence that each executive exerts, what happens when the individual personalities change?  Put another way, how does C-level tenure impact one’s ability to drive value?

• CEO: A 2007 Harvard Law School study shows that a “manager CEO” of a S&P 500 firm averages 5.5. years of tenure.  Crist Associates’ 2007 Volatility Report also shows the majority of CEOs with less than 5 years of service.
• CFO: Crist has CFOs at just over 5 years and on the rise.  However, SOX compliance is still having a negative impact on longevity.  
• COO: Chief Operating Officer tenure is shrinking to just under 3 years, with the total number of Fortune and S&P 500 COOs diminishing at a perilous rate.  
• CIO: According to the 2008 State of the CIO poll results, a Chief Information Officer’s average time in seat is about 4.4 years, down from 5.1 years in the prior period.
• CMO: Spencer Stuart’s annual study shows Chief Marketing Officers at a mere 26.8 months, which is actually up from 23.2 months in the prior year.

Right.  So your COO and CMO will survive less than three years.  Your CIO is about four and a half and your CFO and CEO less than five and a half.  Suddenly it hits you - one of your most important tasks now that you have a seat at the table is to focus on a succession plan for those in the C-suite.  

This is an uncomfortable realization, yet an item that is often overlooked, even by market-leading organizations.  What’s perhaps more uncomfortable is the assessment of your own C-level survival, with Workforce Magazine’s analysis (and Corsello’s math) putting an average CHRO in seat for approximately 3.1 years.    

If all this executive rotation has your head spinning, grab some ginger pills, put on the motion sickness patch, stay calm, and let’s try and keep the conversation going.  

We’ve all been there at one time or another - the logical conversation that suddenly turns emotional.  The irrational leader’s flame consumes everything in its path, the spoken word oxygen that feeds the fire into a frenzied tempest of damage and destruction.  Dramatic enough for you?  You get the point.  And whether it involves negotiating a raise, a project, what you’re having for dinner, a movie choice or a business relationship, it helps to have a few pointers to help you get through those unexpectedly difficult times.

The Latz Negotiation Institute wrote a piece in December of 2000 entitled, Dealing With the Irrational, Real or Posed, Is Tough.  The article argues that one of the most critical (and difficult) pieces to assess is whether the other party is truly irrational or simply trying to appear irrational.  So how does one diagnose truth versus fiction?

“First, take a deep breath. This is not your garden-variety negotiation and it will require you to dig deeper than usual into your negotiation toolbox…. Then closely observe and evaluate the sincerity of your counter-party’s allegedly irrational actions. Listen carefully to what that person is telling you - verbally and nonverbally.  Are their actions consistently irrational, or is their irrational behavior limited to certain instances or episodic in nature? The more limited and inconsistent the irrational behavior, the more likely it’s a ploy.”

 And if they are faking their irrationality?

“Our natural response? Give him whatever he wants. He’s crazy, and he’s got his finger on the nuclear trigger. We can’t take the chance that he’ll push it, so we better concede. [Instead] find an opportunity to openly point out our knowledge of their acting talents. Then treat them like any other rational but tricky negotiation opponent.”

But what if they are truly irrational?

“Explore the reasons underlying their irrational behavior. Find out why they’re so consumed with anger that they can’t listen to reason. Perhaps it’s a personality conflict. Or perhaps an unrelated event has put them into this temporary state of mind… If it’s an emotional outburst or related to a recent traumatic event, take a break. Given sufficient time, individuals often will become more reasoned and reasonable.

And if none of this works, re-evaluate your leverage and your alternative to this agreement. How much do you really need or want an agreement with an irrational individual? After all, terminating the negotiation may be your only rational course of action.”

All excellent guidance.  Beyond Latz’ advice, look to organizations such as Vantage Partners to help with your most complex, global negotiations.  Keep your cool, and let’s keep the conversation going.

On Friday we discussed the origins and implications of the language barrier facing the HR outsourcing (HRO) market.  Given all the varied interests in this increasingly complex industry, how do we begin to break down HRO’s language barrier?    

Convergence Begins

It is only in the past eighteen months that we have seen the industry take note of buyers concerns surrounding language and taxonomy.  In 2007, two separate initiatives led by competing advisory firms (immediately following their failed merger) were announced:

• OpenDoor HRO: Launched in April of 2007 by the triad of EquaTerra, SAP and Arinso (now NorthgateArinso), OpenDoor was intended to offer best practices and supporting documentation to speed the sourcing process and ensure adoption of common standards.  Unfortunately, the closed-door origination was viewed to have disintermediated several dozen organizations that would have preferred to help shape the standards by which they would be measured.
• TPI HRO Standards Initiatives: Announced in May of 2007, TPI presented a new initiative based upon collaboration with ACS, Convergys, ExcellerateHRO, Fidelity and Hewitt.  Like OpenDoor, the intent was the derivation of a common taxonomy, including pricing norms and service levels.  TPI was recognized for being more industry inclusive, yet did not embrace the transparent presentation of OpenDoor.

The most promising initiative yet is the work of the Industry Standards and Practices Committee of the HR Outsourcing Association (HROA).  In April of 2008, the committee announced the publication of the first approved practices, acknowledged as the largely preexisting work of the TPI HRO Standards Initiatives.  In a mature nod to the best interests of the industry, OpenDoor HRO has joined with the committee to remove any angst or confusion surrounding competitive standards.  Although this signifies positive momentum, one should question whether interests are proportionately represented, for of the thirty one committee members, only six are buyers of HRO services.

Outcomes and Conclusions

Renowned critic and playwright Eric Bentley said it well:

“Ours is the age of substitutes: Instead of language we have jargon; instead of principles, slogans; and instead of genuine ideas, bright suggestions.”

Without overreaching, one such bright suggestion is for HR executives to get involved in this quest for standardization.  This language barrier will not come down in a means favorable to all parties if those who stand to lose the most participate the least.  This initial taxonomy represents only the United States and the English language, so rest assured that much debate remains over how and if each suggested metric could be applied to your countries of interest.

As an industry, we have yet to quantify the efficacy of these recent initiatives.  Although it is tempting to sit back and wait for others to clear a global path forward, we must work together to ensure that the language of the future of HRO is one we can all speak and understand.  Apply your skill, experience and immersion, for much remains to be done and it is this analyst’s opinion that the most difficult work is yet ahead.

Let’s keep the conversation going.

As all students of dialect are aware, interpreting another’s language requires a combination of skill, experience and immersion.  Literal translation may be eminently possible, but deriving intent involves a more detailed analysis of origin, region and culture.  Without such comprehension, mistakes will be made, time will be wasted and inappropriate conclusions will be drawn.  HR outsourcing (HRO) has faced and continues to face these same dilemmas, and clarity must be attained before interpretation is simply left to the intermediaries.

Origins and Evolution

Industry anthropologists do not dig very deeply for the lost ruins of HRO.  Many may discover the transactions consummated by Exult (now Hewitt) in the early 2000s as their only point of reference.  Others claim that such outsourcing has been around for decades, perhaps even centuries, citing the dependency that organizations have always had on external sources in support of the needs of their workers.

Despite its questionable origination, this market continues to evolve at an increasing pace.  Today we find over ten thousand service providers claiming to offer HRO, each with their own value proposition, return on investment and competitive differentiation.  It comes as no surprise that you, the human resources buyer, are faced with unprecedented market confusion precipitated and perpetuated by the lack of a common taxonomy. 

The Quest for Clarity

In April of 2008, attendees from around the globe arrived in New York City for the annual HRO World event.  A seemingly enlightened migration of consultants, advisory firms, analysts, industry press, service providers, association leaders, clients and pundits assembled for this sixth instantiation.  One might expect to see and hear all that is relevant to global HR outsourcing, perhaps uncovering the source of this semantic confusion.  In walking the show floor and visiting with vendors, specimens may be gathered with the hope of a great linguistic discovery.  

In examining the collective, one finds universities, commuter services, pet sitters, applicant trackers, pollsters, employee verification services, health clinics and retailers all speaking of their service to HRO.  Clients stand next to their outsourced providers and explain their often unique and unreplicable path to success.  Advisory firms count the number of transactions this past year, each with their own definitions and criteria for inclusion. And what of the HR executives?  Who represents their needs and answers this quest for clarity?  Who, pray tell, is to blame for such continued confusion? 

Divergent Interests

HRO World is not to blame.  Vilification does not belong to one firm, one person, one assembly or one industry body.  Beginning in 2000, the fervor of growth and determination to secure market share necessitated that each participant attempt to define the language of the HRO industry from their own perspective.  This included:

• HR Service Providers: They began to modify pre-existing price lists to support this new holistic version of end-to-end outsourcing.  Experience was strong in some areas, and weaker in others, resulting in depth but not breadth.
• Advisory Firms: A new category of consultant was born, and these firms had the unenviable challenge of ensuring that RFIs and RFPs were responded to in a common format.  With comparative analysis driving awards, service providers tried to influence any language gaps to their advantage.
• Legal Firms: Dealing with hundreds of pages of text, the lawyers attempted to translate intent into legally binding language that will last through significant changes in context and content over a multi-year period.
• HR Departments: Across a wide continuum of standardization, HR buyers did not have a common set of internal metrics and measurement by which to compare the outsourced solution.  What language did exist was country or region specific, causing strife in areas of global deployment.        

This frenzy erupted a mere eight years ago.  Some might argue that this represents ample time for resolution, and were we not addressing such a varied set of global interests, I would tend to agree.  However, with billions of euros, pounds and dollars poured into the HRO market, many have been either unwilling or unable to pause long enough to ensure that sustainability supersedes short-term interests.

On Monday we will explore the convergence of outcomes and possible solutions to this dilemma.  Let’s keep the conversation going.

The challenge to many HR executives is formidable - place an increased emphasis on Corporate Social Responsibility (CSR) while ensuring a connection to business results.  This is simple enough to state, but reasonable questions are often raised when preparing to execute a holistic CSR strategy.  Should HR lead by example or policy?  Is CSR participation optional or mandatory?  Does “good” CSR positively impact recruiting, retention and referrals, and if so, how?  What are the hard and soft benefits of a properly aligned CSR strategy?

As you can likely surmise, this is a broad topic with numerous implications.  In an attempt to narrow the conversation, I’ve captured three distinct perspectives for your consideration.

1) Linking CSR to MBA Recruiting: 

The Stanford Graduate School of Business reported on a recent study which found that, “the future business leaders rank corporate social responsibility high on their list of values, and they are willing to sacrifice a significant part of their salaries to find an employer whose thinking is in synch with their own”.  When asked to quantify their commitment to CSR, respondents said, “they would sacrifice an average of $14,902 a year, or 14.4 percent of their expected salary” for those organizations which embody caring for employees, caring for stakeholders, environmental sustainability, and ethical business conduct.   

2) Sourcing CSR via Incentives and Employee Engagement:

Elizabeth Seeger, Project Manager with the Corporate Partnerships Program of the Environmental Defense Fund, finds innovative organizations sourcing concepts from employees and linking compensation to CSR performance:

“In my conversations with companies, a lot of them are finding that their best CSR ideas and most of the motivation for CSR related activities are coming from their employees.  Many companies have set up hotlines or some way to get ideas from employees to management.

Also from the HR perspective, companies are starting to tie environmental (and perhaps) social performance to compensation.  I met with a company doing this the other day and they’ve been able to drive significant performance improvements and reduce costs through better efficiency.  This will become increasingly common, I think, as we enter a carbon-constrained world and start dealing with water scarcity and waste issues” 

3) CSR’s Impact on Brand and Brand Equity:

For those of you just getting started, consider purchasing Kellie A. McElhaney’s Just Good Business: The Strategic Guide to Aligning Corporate Responsibility and Brand.  As Executive Director and Adjunct Assistant Professor of the Center for Responsible Business at Haas School of Business at University of California, Berkeley, McElhaney emphasizes seven principles for building CSR into your brand, with two HR-centric examples below:  

“Get a Good Fit: It’s tough to select just one social or environmental cause to champion when every one is worthy, needed and critical. Your job is simple: Pick a social or environmental challenge for which you own part of the solution (or helped to cause it). For example, tackling homelessness and partnering with Habitat for Humanity, a nonprofit that builds houses, is a perfect fit for appliance-maker Whirlpool. It behooves Whirlpool to have as many homes as possible buying their home appliances. 

Work from the Inside Out: To employees who are educated about it, CSR is like a drug: Give them a little, and they’ll want a whole lot more. Start by educating your employees about your CSR strategy. Your employees are not only your biggest (and most efficient) brand ambassadors; eventually, they may come to you with better CSR ideas and strategies.”

Regardless of your current level of CSR competency, current and future employees will place increasing demands upon HR for answers.  Prepare yourself, study the literature, seek assistance from your peers and open up communication channels from within.  If done well, CSR can prove to be one of the most rewarding endeavors of your human resources career. 

Let’s keep the conversation (and CSR) going.

For those of you who read blogs on a regular basis, you may be familiar with the group-posting term “Carnival”.  The gist is that a topical area is chosen and a lead blogger collects the best and brightest postings from around the world.  The newest to hit the scene is the Leadership Development Carnival, a concept developed and led by guru Dan McCarthy at Great Leadership.    

This month’s Carnival presents a midway of advice and commentary from over 30 leadership development pundits, including our own humble Inflexion Point article describing Seven Tips for Managing Today’s Employee Population.  So click on over to Dan’s site take a look.  There is a lot of terrific content from some very intriguing authors, none of whom have professional Big Top training.

If you yourself would like to submit, you may do so by clicking here and filling out the requested information.  Dan will post the next Leadership Development Carnival on August 2nd.  

Happy reading and let’s keep the conversation going.