CareerCurve™

I was talking with someone recently about their company’s take on hiring from within. Although the organization was all for it, there were definite challenges in actually making it happen. These challenges sounded to me like they all revolve around Human Capital Management.

There are a number of benefits to hiring this from within such as:

• Already evaluated work performance as well as an employee’s ability to fit into company culture.
• It is much more cost effective to re-invest in an employee, even if you just consider recruiting cost alone.
• The employee already has knowledge of the culture, corporate policies, and your business goals.
• Advancement opportunities do wonders to increase engagement, instill loyalty, and lower turnover.

But this may not be so easy to implement, especially for very large organizations. I saw this video and it made me realize how many things you need to know to make hiring internally a valid and productive choice. It uses a funny comparison between the role a chair plays and the role an employee plays in the company to demonstrate these things. And of course, it ultimately winds up being a commercial for Human Capital Management systems, but the video raises some valid points nonetheless.

• Do you have a solid understanding of each employee’s strengths and weaknesses?
• Do you have knowledge of your employees’ career aspirations and focus on training and career development?
• Do you know what your company has already invested in each employee?
• Are you aware of the specific contributions made by your employees?

All of these things have to be there in order for you to successfully tap into a pool of potential candidates. 

What’s your takeon it? Does your organization take steps to hire from within and is it successful? Do many of your employees lose opportunities and do you lose out on this resource because of poor human capital management?  Do you have processes in place to make this a viable option?  Do you see the relationship between hiring from within and Human Capital Management?

It’s no secret that turnover in your organization costs a lot of money.  Estimates on what those costs are vary widely from 50% of the employee’s salary to 400%, depending on the nature of the job.

The projection is that a turnover storm is on the horizon due to layoffs, cutbacks and stress during the economic downturn.  Have you spent time preparing for this?  Do you know what to expect? 

The impact of turnover has another result that you may not have considered carefully enough.  It is very difficult on the remaining employees – the ones you NEED to keep.  Many times these employees are the ones who have to take on the burdens left behind when a colleague quits.  They have to deal with staffing shortfalls and absorb more responsibilities.  They have to communicate with dissatisfied customers due to quality concerns, slower production, and reduced customer service. They have to manage the stress that comes with watching co-workers leave the company and questioning whether sticking with the organization is the right move for them.

These things can quickly lead to a mass exodus. This will leave you with a weak employer brand which means you not only lose many good employees, but you are unable to attract quality replacements.  The cost for this damaging scenario is impossible to calculate. 

How do you prepare for market conditions suggesting you are primed for this? What can you do to reduce the amount of employees who leave and to support the employees who stay?  What steps will minimize the damage?

Become more human. 

If you recognize that your employees have aspirations, concerns, needs, and wants you can direct your interaction accordingly.  You can become more appreciative, more communicative and ultimately be more connected to your workforce.  You will be amazed at the loyalty that can be generated just by approaching your employees as human beings.  In addition, as you try to replace those that have moved on, you can be responsive, respectful of candidates’ time and need for feedback, and just generally kind.  This will do wonders for your employer brand.

It is easy to forget during tough times that not everything boils down to dollars and cents.  You can get so caught up in the daily numbers needed to survive that you ignore the big picture.  Yes, your employees are either assets or liabilities, but they are also human beings.  If you would like to generate loyalty, have some consideration for the fact that they are much more than machines that simply produce or don’t produce and interact in a way that makes them feel valued.

Human Resources is going to continue to be impacted greatly by Healthcare Reform.  In a previous post, I provided resources.  This is meant to be a short list of the ways this will affect you and why it might be a good time to ask for a raise.    Here are just some of your job duties and challenges relating to healthcare reform:

Compliance – You have to know whether your business is covered (there are exemptions for smaller employers and other things such as hardship cases) but you also have to know which employees are covered.  (Full timers are, but what constitutes full time?)  Expect many new compliance mandates.

Lots of Math and Analysis – You may have to analyze and determine whether it is cheaper to offer healthcare or not offer it and pay the penalty.  If you do offer it, do you stay grandfathered into the plan you have (which will undoubtedly go up) or do you switch and hope it is cheaper?  You should be aware of potential tax credits available to certain size employers to assist with premium cost.  There also prohibitions on lifetime and annual benefit spending.  You will also be required to offer, at no cost, a plan that covers almost all preventive care. 

Finding a Good Broker/Agent – I hope you trust your broker or agent because there is a lot to learn and the days of him or her just sending in a renewal at the last minute are over.  You need an advisor, someone who knows the ins and outs of reform and is going to guide you through all the little nuances that have a big impact on the bottom line.  If you don’t have one, you’re going to need to find one.

Implementing Automatic Enrollment – Companies with over 200 employees will have to enroll everyone in their plan and then the employee can choose to opt out.  Seems like extra work when you could just enroll those that want in instead.  It will also undoubtedly make employees very angry when they forget to opt out – and you’ll get to deal with it.   

Determining Salaries – Depending on whether you choose to offer healthcare you will need to reassess salaries dependent on your healthcare choices.  For example, how much more can you offer someone if it’s cheaper for your company to pay the penalty?  How does it compare to those that offer healthcare?

Mandatory Breaks for Nursing Moms – Not only do you have to provide “reasonable” breaks but you have to provide a “comfortable” place other than a bathroom.  Anyone know who defines “reasonable”?  Is it the baby?  And what does “comfortable” mean?  This could present a whole host of issues for you that I’m not even going to get into here.

The New Recruiting – Offering healthcare is no longer a competitive advantage in hiring top talent.  In addition, your company may decide full-timers are too expensive and start asking you to recruit temps, part-timers, and independent contractors. 

Layoffs – Your company may decide it’s worthwhile to restructure so it remains small enough to avoid coverage under the act.  If that happens, who gets to spread the word?

More Turnover and Less Retention – Children can now stay on a parent’s plan until age 26.  If you don’t offer benefits, will younger employees leave to work somewhere that does, once they reach that age?  How many of your employees stay at your company because they have pre-existing conditions and are afraid they won’t get healthcare if they leave?  Mandated coverage removes the need to stay and you may lose employees because of it.  

Unhappy Employees – There will be no more pre-tax healthcare.  There is a new box on the W2 where you need to include the cost of healthcare.  Even if the plan cost is shared 50/50 between employer and employee, the employee will be taxed on the total amount of the plan, not on what he or she paid.  So instead of this not showing up on their W2 at all, now amounts employees probably aren’t even aware of are going to appear as taxable income.  Can you imagine your office at tax time?

Workplace Wellness Programs – Grants will be established to create these programs and the employer will be required to offer them to receive financial incentives.  Who gets the job of designing and implementing them?

On the bright side, this spells job security for you.  (And for HR consultants, this has opportunity written all over it, especially with smaller employers who don’t have an HR department.)   That is well and good but rest assured, by 2014, you’ll have earned that raise!