Profits: A human resources theory of relativity
By Terry Corbell
As Albert Einstein once said, “Imagination is more important than knowledge.” His quote has applications for business. Indeed, Einstein had imaginative insights. He even helped shorten World War II.
In August, 1939 – more than two years before America was drawn into war after it was attacked at Pearl Harbor – some six years before the atomic bomb shortened World War II – Einstein wrote a two-page letter to President Franklin D. Roosevelt. In it, he proposed ideas on uranium and nuclear chain reactions, which he believed could be used in the construction of “extremely powerful bombs.”
In his quotation on imagination, Albert Einstein was probably referring to physics or his renowned theory of relativity, but his thoughts are also applicable for profits in 21st century business.
For example, CEOs of publicly traded companies want to able to predict which strategies will appeal to investors. In its December quarterly newsletter, McKinsey & Company says its research shows that each company only has to worry about the preferences of 100 core investors who have the ability to influence share price movements. Like any sales situation, the key is to know the customer. Unfortunately, some companies inflate share prices at the expense of quality in the eyes of consumers.
Information technology professionals might think security and data integration are the keys to profits. Newspaper classified ad salespeople probably consider online pictures to be vital for sales success. Chief Financial Officers believe they should have more time for strategic planning, but they’re so weighed down mainly by compliance documentation and earnings reports, they aren’t able to help grow their companies, according a recent IBM study.
Candidly, for companies to compete successfully in 2006, profits will depend on the performance of workers; about which many CFOs have little knowledge. And performance depends on morale and attitudes.
Perhaps it’s a little strong, but here’s a recent nuclear bomb-like announcement from Towers Perrin, a HR consulting firm with a Seattle and global presence. It recently released its world’s-largest human resources study on worker attitudes; it concluded that employee attitudes pose a threat to corporate performance.
Only 14 percent of employees are fully committed to their jobs and employers, according the survey of more than 85,000 workers at midsize and large companies worldwide.
The highest motivated employees (40 percent) work for companies in Mexico. As a result of the stress on long hours and low wages, the least motivated (less than 10 percent) are Asian workers. Americans and Europeans are somewhere in the middle. The term Towers Perrin used to describe motivated workers, “engaged.”
Only 21 percent of American workers are engaged. The two reasons the firm cited: Skepticism about CEO leadership and lack of trust. Fifty-five percent are “passive” job-seekers; which means they’re receptive to job offers. So turnover is a financial problem.
Worldwide, regarding product quality in companies: Among the highly engaged employees, more than 80 percent are optimistic they can make a difference compared to 31 percent of the disengaged workers.
In customer service, 72 percent highly engaged workers believe they can contribute compared to just 27 percent of the disengaged.
In efficiencies, 68 percent of the highly engaged can influence costs vis-à-vis 19 percent of the disengaged.
Only 59 percent of the highly engaged anticipate remaining with their current employers.
Julie Gebauer, managing director of the firm’s Workforce Effectiveness practice, indicated U.S. workers are frustrated with pay issues. She said they’re also unhappy with other issues: “Elements like career opportunities, fairness and work/life balance are often more important than pay and benefits when people are making decisions about whether to stay with or leave a company.”
“This presents two challenges for employers,” said Donald Lowman, a Managing Director of Towers Perrin HR Services. “One is understanding, in concrete terms, the nature of the work experience needed to achieve higher levels of engagement. The second is identifying the unique people practices and programs required to shape that experience -- from management style and behavior to communication and culture; from career and performance management to rewards.”
Indeed, another study last month concluded that 80 percent of companies fail to take effective precautions in employee retention and recruitment of workers. Spherion, a publicly traded HR firm, with Harris Interactive polled both workers and companies.
Spherion learned there is a disconnect between employers and workers think. For example:
Time and flexibility are important to 60 percent of employees; however, just 35 percent of companies understand workers’ feelings.
69 percent of workers believe wages are an important consideration for them to remain with their employer but only 49 percent of companies.
Aside from compensation, and time and flexibility, here are the other employee priorities:
Benefits, 68 percent.
Growth and earning potential, 64 percent.
Management climate, 60 percent.
Supervisor relationship, 57 percent.
Culture and work environment, 54 percent.
Training and Development, 49 percent
Forty percent of workers plan to job hunt in 2006 but firms anticipate a 14 percent turnover; the survey also showed 33 percent of employees, aged 25-39, is suffering from burnout.
As Einstein alluded, everything is relative; it just depends on your perspective. Over the years, I’ve lamented the lack of 19th century values of focus and hard work among workers, but my sense also is 50 percent of profits depend on the success of a company’s HR programs and employee performance.
To inspire worker loyalty, survey your employees using open-ended question methodology, and take the indicated corrective measures. You can spend all the money you want in branding and marketing, but you won’t enjoy maximum profits until you develop a contented, productive workforce. Your human resources program will then become a center for increased profits.
From the Coach’s Corner, not to over simplify but here is a quick checklist of 13 tips in cost-effective recruiting and retaining of the best workers:
Have a job description for every position, no matter how little skill is needed.
Continuously network, ask your best workers for employee referrals, use trade publications, and advertise in economical local newspapers. Although tempting, free online ads won’t generate the most productive workers.
Screen for common sense, creativity and education. Einstein’s theory about imagination being more important than knowledge often works in HR.
Remember job knowledge or hard skills are important but so are soft skills in communication and teamwork. Coachable workers who aren’t afraid to work on their strengths and weaknesses, and set goals will make you money.
Check references thoroughly using open-ended questions for comprehensive answers.
Family and friends will work fine as workers in tight economic times. Don’t forget temporary help firms for short-term projects or for hiring on a temp-to-perm basis.
Create a favorable first impression with a gracious welcome of new workers and encourage a buddy system.
Take a page from the playbook of Employee Stock Ownership Plans (ESOPs) by developing an inspiring communications program.
Survey your workers about their priorities. Accommodate employees when feasible.
Regularly appraise workers.
Don’t cut corners in training and development.
Treat workers equally and regularly enforce your company’s procedures.
Use exit interviews as opportunities for growth and to learn from mistakes. The good workers might return or refer outstanding candidates to you, if you’re seen as a caring employer.