A Management Mistake During Tight Labor Periods

It's no surprise to anyone who has tried to hire someone in the past year that the labor market is incredibly tight.  The unemployment rate (percentage of people who are unemployed and looking for work) is historically low.  According to the Bureau of Labor Statistics, voluntary turnover in 2021 was 25% and that trend has extended into 2022. That means one of every four workers is changing jobs each year!

Managers and small business owners in all industries are scrambling to find and keep workers. There is one unintended consequence of this panic that managers should be cautious of. That is the tendency for supervisors and managers to tolerate behaviors and performance that they would not tolerate during periods when the labor market is not so challenging.  Some individuals who were C players even before the pandemic have responded to their new power position by becoming C- players. They used to come in late once per week.  Now they're late virtually every day.  They used to make a few mistakes per week, now they make a bunch.

The problem for managers who tolerate this lower level of performance from their most disengaged employees is that the more engaged workers see this and are demotivated by it. Too much of this can result in the A and B players leaving the organization.

The question managers should ask themselves is, "would I prefer to be short-handed with my best, most productive workers or be short-handed with only my least productive workers." The answer is obvious. Managers should not tolerate behaviors and performance during a tight labor market that they wouldn't in more "normal" times. They should address performance issues with those whose performance is slipping, encourage them to improved, and if they remain defiant, invite them to exit the organization. It'll hurt in the short-term, but they are more likely to keep their best talent in the long-term.

Best Boss I Ever Had

“Tell me about the best boss you ever had.”  This is a favorite interview question of mine as well as a conversation starter I use in training classes.  Since a lot of my training classes are with construction, trades and manufacturing front line supervisors, I often hear some version of this story:

 

My best boss was Bob.  He cussed me every day.  He would throw tools at us if we weren’t doing what he thought we should be doing...

 

I enjoy hearing their stories because I had a Bob or two in my early life as well.  When teaching new supervisors how to be remembered by their team members as the best boss they ever had, I dive more into what made Bob a great boss.  If my training is successful, they begin to understand that it wasn't the cursing or tantrums that made Bob a great boss, it was that he cared.  

Bob wouldn't be remembered as a great boss if his behavior was associated with selfish motivations - like making his own bonus or getting off of work early. They knew Bob yelled at them because he cared.  He cared about the quality of the product or service. He cared about the customer.  He cared about meeting deadlines. He would take time to teach them skills.  He genuinely wanted them to grow professionally.

Bob's behavior is no longer acceptable in the modern workplace (though it still exists).  The modern foreman or supervisor needs to remind him or herself that it wasn't the cursing that made Bob a great boss, it was the caring. The modern supervisor is challenged to hold workers to high standards of performance and coach them in their career development without using Bob's techniques.  The answer is learning how to have adult conversations with workers, even when they aren't acting like adults. 

Leadership Lessons from History

 As Black History Month comes to an end, we want to share our thoughts on some influential black leaders.

ROSA PARKS
She was small but determined. Rosa had the courage to stand up for her beliefs. She was jailed for refusing to give up her bus seat for a white passenger. Effective leaders should make the right decision – even if it is not a popular one.

GEORGE CARVER
He was a strong proponent of personal responsibility. “Ninety-nine percent of the failures come from people who have the habit of making excuses.” This profound statement from the notable agricultural scientist highlights the significance of integrity. The values of an organization flow from the top positions.

SARAH BREEDLOVE WALKER
This inventor and businesswoman created and sold her own brand of cream/shampoo in the early 1900s to ease the problem of itchy skin due to a lack of indoor plumbing. Her company trained thousands of African American women to sell the products in stores, through the mail and door-to-door visits. Ms. Walker knew the importance of employee recruitment and training.

JACKIE ROBINSON
As the first African American player in Major League Baseball, Jackie was ostracised by players and fans. His non-violent approach to the Civil Rights movement emphasizes the impact of leading by example.

URSULA BURNS
She holds the distinction of being the first African American woman to lead a Fortune 500 company. She was the top executive at Xerox from 2009 to 2016 in her role as CEO and chairwoman. Organizations thrive with strong leadership.

It is crucial to have the right people in the right roles for success. Organizations rely on the Davidson Group’s experience to hire and retain the right employees. We specialize in employee training and development.

What Employees Love

Companies should be motivated to promote a healthy work environment. Happy employees are more successful, productive and collaborative. They think more creatively and are not afraid to take risks. Below are some ways to create and promote a positive workplace through these Human Resources (HR) practices.

Training

We recommend that companies dedicate at least one week to training new employees. The HR manager should create a planned onboarding program. This can include shadowing colleagues, attending meetings, reviewing strategy documents and locating key internal documents. Don’t forget to review health and safety protocols. Ongoing training should be offered as needed on specific topics.

Regular Communication

Two-way communication is crucial for organizational success. Managers should set up a regular schedule to connect with their employees, and this should be done outside of operational meetings. These check-ins can be done via text, Zoom, a phone call or over coffee. The key is having dedicated time each week to discuss projects, ideas and challenges.

Clean Up

Time is our most valuable commodity. It is respectful to clean up after yourself. That means washing your coffee cup and putting it away. It also translates to replacing paper in the copier after running a big job. Employees should be mindful of sharing key documents and attending meetings on time. Mutual respect promotes a professional work environment.

Set Clear Goals

Success is achieved when performance and goals align. Each person should have clear work objectives. Clearly explain what key performance indicators (KPI) will be used to monitor their progress. Set regular times to evaluate KPIs, which allows for tweak to be made. A company should align the goals of the employee and their team to the organization. It’s important to communicate how personal and departmental goals support the mission of the company.

If you want ideas on how to improve the happiness factor in your company, contact HR expects at the Davidson Group.

Elevate your Annual Reviews

Many organizations do their annual evaluations in the first quarter. However, research shows that managers and employees dislike performance reviews. The fundamental aspect of any evaluation is COMMUNICATION. Let’s discuss some review processes used by organizations.

360-Degree Review
Feedback is gathered from a variety of levels (i.e. subordinates, colleagues and supervisor). The employee also provides input on their view of their performance.

Pros – This can allow an organization to develop employee behavior and improve employee relationships.
Cons – This feedback tool is not customized to the needs of the organization. Some question the accuracy of results.

Hay Job Evaluation
This process allows an organization to map out different roles. Aspects of each role and a score are reported in the long profile, while the short profile details the nature of the role (i.e. accountant or sales manager).

Pros – This process provides salary benchmarks. It creates clear job descriptions and improves succession planning.
Cons – Some argue this evaluation supports the values of traditional management. It should be conducted by a trained expert.

Performance Reviews
An employee’s performance is documented and evaluated by their immediate supervisor. Although they are usually done on an annual basis, some organizations are doing them more frequently to improve communication.

Pros – It can enhance employee focus, determine training needs and improve performance.
Cons – There is a significant time lag in work and feedback. There are negative views on this process due to its subjective nature.

There are numerous other types of performance evaluations used. Instead of a lengthy review process, teach your supervisors and managers to give timely feedback. 

Contact the experts at the Davidson Group for ideas on how to improve your review process for better employee performance. 

The Importance of Human Capital

Almost 60 years ago, Dr. Martin Luther King, Jr.  delivered his “I Have a Dream” speech on the steps of the Lincoln Memorial to a massive crowd. He spoke these words to Americans in 1963, and they are still relevant today. He dreamed of equality for all Americans. 

His timeless words align with the field of Human Resources (HR), which focuses on human capital. Let’s consider a few pertinent quotes from his moving speech.

 “When the architects of our republic wrote the magnificent words of the Constitution and the Declaration of Independence, they were signing a promissory note to which every American was to fall heir. This note was a promise that all men - yes, black men as well as white men - would be guaranteed the unalienable rights of life, liberty and the pursuit of happiness.”

While companies are not guarantors of happiness, they should be motivated to promote a healthy work environment. Happy employees are more successful, productive and collaborative. They think more creatively and are not afraid to take risks (i.e. think outside of the box). If you want ideas on how to improve the happiness factor in your company, contact our HR experts.

 “We refuse to believe that there are insufficient funds in the great vaults of opportunity of this nation.”

Companies should carefully consider their goals and dreams for 2021. It’s important to ensure that your employees are using their time to achieve these strategic goals. However, employee retention and engagement are not often measured. Companies rely on the Davidson Group for employment practices that create a work environment to support your company’s mission and values.

 “So even though we face the difficulties of today and tomorrow, I still have a dream. It is a dream deeply rooted in the American dream.”

Successful companies support the American dream by providing a work environment where their employees can succeed based on hard work. The Davidson Group provides custom training, so your company gets focused attention on specific topics for maximum impact. 

"I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character.”

Organizations want the best employee for the job. Racial equality is promoted by Title VII, which prohibits racial discrimination in applicant recruitment, candidate selection and employee retention. Our assessment process will ensure your HR practices are compliant and robust. 

For your HR solutions, contact the Davidson Group by calling 336-294-5053.

It's a Great Time to Look at Total Compensation

Unemployment rates are at or near historic lows in many communities. Companies who hire low-skill workers at the bottom of the wage scale are scrambling to find dependable workers and to figure out ways to differentiate themselves from competitors in the labor market so that they can retain the better ones. 

We've seen rates drop from over 11% to rates in the 4-4.5% range since 2010. I'm old enough to have experienced these drops several times during my career. Each time, as the economy heated up during an economic recovery and unemployment rates dropped accordingly, the quality of candidates dropped noticeably as well. Individuals with recurring drug problems, criminal background issues and an obvious poor work ethic really stand out when the unemployment rates get low. It seems like there are more of them during boon times, but they've really always been there. Their numbers were simply diluted when there were more good workers in active job search.

On the positive side for employers, there is still a lot of movement among lower wage workers as they shuffle to find that employer they plan to call home for a while. As an outplacement consultant told me one time, Sometimes you have to take "a" job before you find "the" job. That's where many of them are. They're employed, but they're open to a better opportunity. Here are some tips to become that employer of choice:

1. Have an employee referral program in place. This program shouldn't have a big expense associated with it. You just need a way to say thank you to your employees who are willing to tell people in their circles about opportunities at your place. Paid-time-off is one of the most popular incentives. Sometimes owners outsmart themselves by insisting on a cash incentive, like $250 to 500, when a much less expensive non-cash benefit, like a full or half-day off with pay, would be preferred by an employee.

2. Consider weaning off of temps. Temps are a great way to ramp up operations and a good, reputable temp agency is a wonderful partner for any business that experiences peaks and valleys of demand. However, as long as a worker is an employee of an agency and not of your organization, they are likely to feel and act like an outsider. Take some time to calculate what your core workforce needs to be for the foreseeable future and set a goal to staff to that level with employees of your organization. When you identify good workers among your agency workers, bring them on-board when your contract will allow it, and make a big deal about it.

3. Look at your total comp.  Determine if your starting wages for entry level workers is competitive.  And remember, you're not just competing against people in your industry.  You're competing against every industry that hires workers with similar skills to what you're looking for. Then look at your benefits package as compared to what others are offering.  Commercial health insurance agencies are a tremendous source of information regarding benchmarks.  Consider conducting an employee survey to see if the benefits you are offering match what your employees (and the employees you are trying to recruit) actually want.  It may make sense to drop one benefit and replace it with another that they value more.  Look at your paid-time-off policies. This is a highly valued benefit that many smaller companies overlook. And finally, find ways to reinforce what their total compensation really is - whether it's total compensation statements or putting up graphs at an annual employee meeting - remind them of all the things you provide in addition to their net wages.

4. Have an on-boarding plan.  Employees experience buyer's remorse just like consumers do. The best way to fight buyer's remorse with new hires is to have a detailed plan for new that includes the first day, week, month, quarter or longer, depending on the position and responsibilities. Sometimes managers are so relieved to have a spot filled and the box checked, they forget to do the little things to ensure that the person gets fully socialized and engaged in the company and in their job. Seeing that the person is fully grasping their job and being (and feeling successful) and that they are making friends at the workplace is critical. If you want that new hire to still be around a year from now, don't let this part slip.

While some companies in some industries can be successful using what is essentially day labor - a revolving door of temps and new hires - most will improve their bottom line by building a stable workforce of engaged workers who are, and feel, like they are part of something.

   

Training Ideas for the Fall

Starbucks recently made the news when it closed 8,000 stores to conduct race bias training. This was made necessary by the actions of managers at a small number of locations who behaved badly. As summer comes to an end and the push toward the holidays begins, here are a couple of training ideas that you might implement before being forced to by a bad incident you hadn't planned on:

1.  Compliance Training - Imagine picking up a skinny envelope from your stack of mail and discovering that a former employee is suing you. You find out that one of your supervisors has done something that you didn't know about and has now made you potentially liable for back pay, damages, legal fees and possibly even fines. This actually happens quite frequently - a supervisor has employees working off the clock to avoid overtime - a supervisor frequently says disparaging things about a particular group of people based on race, age, gender or sexual preference - a male supervisor has been pressuring a female employee (or vice versa) for sex in exchange for better work assignments and better pay. 

Just as Starbucks wanted to be on-the-record as having trained their workers in these sensitive areas, it's important for every small business to be able to show that it holds regular training sessions for supervisors covering these areas of compliance and respect, and it could be an important component of your defense - showing that the perpetrator is a bad actor and the company made a good faith effort to prevent these things from happening. But what if you can't show that you've ever trained them? That's not going to look very good!

2.  Supervisor Training -  In my experience, small companies spend nearly 100% of their training budgets on technical or operational training with the occasional safety training thrown in. But many neglect basic supervisory and management skills training. Since employees join companies but quit bosses, this can prove to be an expensive oversight if poor behavior by one or more of your supervisors is resulting in higher levels of employee dissatisfaction and turnover. Just because Bob was your best technician, doesn't mean Bob has the skills to be a good supervisor. In fact, it's likely that because Bob was a great tech, he didn't require near as much of his supervisor's time when he was simply a tech. Bob may be shocked to find out how poorly some of the other techs perform and may not be equipped to help them raise their game.

Training supervisors and managers how to behave in ways that will keep you out of court is an essential part of running your business. The #MeToo movement has empowered women (and men) in the workplace to more confidently say something when they are being mistreated by colleagues, supervisors or managers. A robust economy where workers have options to work other places has made it easy for workers to leave if they perceive they could be treated better at another organization. Front line managers and supervisors represent the layer in the organization where business owners face the most risk in each of these areas.

If you would like assistance in either of these training areas, contact The Davidson Group. 

   

Employment Applications: Do's and Don'ts

A common question I am asked is, should we update our job application form? My answer is typically, it depends on what you use it for?

When to keep your application form but review it
If your organization still accepts walk-in applicants and/or you collect application forms from people when they are still applicants, it is probably worth your while to take a fresh look at your document. 

Since you may likely collect many applications for each position you fill, it is prudent to avoid collecting personal data that you won't need until you're ready to make the applicant an offer. So here are some items that we don't recommend including on your application form:
- Social Security number
- Drivers License or CDL number (even if the job is for a driver) 
- Date of Birth
- Dates that the candidate attended or graduated from schools
- Questions about citizenship 
- Questions about health conditions 

If we decide to make an offer to an individual, we can collect Social Security, drivers license or CDL numbers at the offer stage so we can run the appropriate background screens. But there's no benefit to having file folders full of drivers license and Social Security numbers on individuals that we have no intention of hiring. 

Here are some questions that may be legal, but you may want to consult with legal counsel before including them on your application form:

- Have you ever filed a workers comp claim?  This may help protect you from serial workers comp abusers, but may also be perceived to be discriminatory against people with disabilities. Ask your attorney if this question makes sense for your organization.

- Have you ever been or convicted of a crime? This question is already illegal in some states and municipalities, and is falling out of favor with the EEOC.  If you use it, make sure that you are screening employees on crimes that apply to your situation and not on convictions that aren't really relevant. For example, people convicted of child abuse obviously can't work at a day care center and you won't hire a controller who's been convicted of a financial crime, but neither conviction may matter (in the eyes of the EEOC or DOL) when the candidate is applying for a job erecting scaffolding at a commercial construction site or answering non-financial customer service calls. 

When to ditch your employment application form

If you're like a lot of organizations that almost exclusively use a submitted resume to screen and interview applicants, but stick a formal application form in your new hire packet because you always have, you can probably replace the application form with some other data collection and disclaimers tools and eliminate one piece of aggravation for your new hire on their first day. Disclaimers and acknowledgements that typically appear on an application form should be duplicated somewhere else, however. These include:

- A release giving the company permission to run the appropriate background screens. We generally recommend including this in the offer letter. State the offer is conditional upon certain specific results, then include the language that gives you permission to verify the candidate meets those conditions. Also, attach a form to the offer letter in which the candidate provides you with whatever information you need to run the screens appropriate for their position (social security number, drivers license number, date of birth and even race), if required for the background screens. As long as you gather this information at the offer stage and not the application phase, you're fine (and even if those two phases occur within minutes of each other).

- Certification that the information that the applicant included in the resume is accurate. We can also include language to that effect in the offer letter - their acceptance of the offer is also certification that what they've told us is accurate. 

- Notice that the company is an equal opportunity employer. Be sure to include this in the wording of any ads placed on job boards.

In summary, if you need an application form, make sure it's a good one and if you don't really need one anymore, make sure you haven't forgotten to include the stuff that used to be on your application somewhere in your recruiting, selection and on-boarding process.

   




  

What Great Managers Do Differently

I ask the question, tell me about the best boss you ever had, frequently. I ask it in job interviews to see how a candidate's prospective new boss might measure up, and I ask it when I'm leading workshops with front line supervisors and managers. While my results are not scientific, they are intuitive - the best bosses both care about the employee as a person and care about their performance as an employee. And the best bosses have the right conversations with them at the right time.

Some managers want employees to be happy to the point they are willing to sacrifice performance for employee happiness. This was called Country Club Management in Blake and Mouton's managerial grid model that I learned early in my career. Kim Scott calls it Ruinous Empathy in her 2017 book, Radical Candor: Be a Kickass Boss Without Losing Your Humanity.

These managers enjoy having conversations with their employees, but it is generally about kids, vacation, the game last night or the latest blockbuster movie. High performers crave feedback about their performance but they're not going to get it from this manager. But those employees who always seem to have drama going on outside of work are going to find an empathetic ear from this boss. 

Other managers don't give a hoot about the people who work under them, as long as daily, weekly and monthly goals are met. They might have a perfunctory casual conversation every once in a while, but there's a good chance they're going to look at their watch in the middle of it. Blake and Mouton called this Authoritarian Management. Scott refers to it as being Obnoxiously Aggressive in her model.

These managers give copious amounts of feedback - the majority of which is negative. Sometimes they deliver it in real time (when they are really angry) and other times they save it up and deliver it via dump truck during a performance review or, what we used to call (irreverently) a "come-to-Jesus" meeting, designed to turn performance around. These managers tend to good performance for granted, but react quickly to mistakes.

But what employees want is the best of both - they want a boss who cares about them as a person, but also challenges them professionally. This boss has empathy when life gets in the way of work, but challenges those who frequently cite outside issues as an excuse for poor performance. They want a boss who talks to them about their performance and their career development at regular intervals, focusing on both what is going well and what is not. Scott calls this Radical Candor. I call it simply talking to people. I frequently coach struggling managers to talk to your people!

The challenge for small and mid-sized business owners and managers is that there are so many demands on their time. Unfortunately, those key employees on whom they depend for their division or company's success can unknowingly become their lowest priority. They  can go weeks or months not really talking.  

An approach that worked for me was blocking my calendar for short, regularly scheduled meetings with each of my direct reports. When I had an office job, we called them tea times and met weekly. When I had a field job, we called it tailgate time and met monthly. In both cases, we spent just a few minutes discussing everything from kids, sports and movies to project updates, performance feedback, and training needs and opportunities. By having a standing meeting, I could address mistakes and performance failure in context. Without those regular meetings, an unexpectedly scheduled meeting with me would signify that they were in trouble. But because we met regularly, negative feedback was taken as feedback and not necessarily a reprimand - a subtle but important distinction.

Call it what you want, but the best managers communicate with their employees regularly and demonstrate they care about them on multiple levels.

When Assessments Don't Work

Sometimes I'll ask an owner or manager about using pre-employment assessments as part of their employee selection process and they'll say something like, we tried that and it didn't work. To be fair, sometimes assessments don't appear to make a difference. Here are some reasons why assessments may not seem to be helping you hire and retain stars as promised:

You're using the wrong assessment. A good consultant - one who is looking to sell solutions, not assessments - is going to look at the roles you are trying to fill, ask relevant questions, discuss alternative assessments that are available, and make recommendations based on your need, not just on what they offer.

Your assessment is not benchmarked. Some consultants give the assessment to your best two or three employees, then blend the results and call that a benchmark. It's really better to benchmark the job, not your people. I prefer a process where we get a group of stakeholders in a room and discuss the success factors of the job, then run a benchmarking assessment against those success factors. This gives much better results than benchmarking incumbents.

The failures of new hires have nothing to do with assessment results. People typically leave jobs in the first six months for one of three reasons - 1) Bad management. The assessment may be identifying ideal candidates, but those candidates are quitting because their supervisor is a jerk, or the company culture is negative. I haven't found an assessment yet that will predict which candidate will prefer working for a bad supervisor. 2) Poor job design. The job itself is no fun and even though we did our best to put lipstick on that pig during the interview process, once the reality of the job sets in, they choose to do something else. 3) Poor pay. There is usually a link between pay and job design. Do you really expect workers to do your job for the same wages they could do some other job that is more interesting and generally more attractive?  

Should you ditch your assessment or the consideration of using an assessment? Unfortunately, the alternative is to base your hiring decisions almost 100% on interviews. Studies show that unstructured interviews are almost a waste of time - you are likely just as well off making job offers based on applications or resumes, sight unseen, than bringing people in for casual, unstructured interviews. Make the interviews more structured by using pre-selected, valid interview questions and the results are slightly better.

Step one is to understand why your workers are leaving and take appropriate action to close the back door. Step two is to add more structure to your interviewing process to increase the validity of your results. Step three is to add one or more benchmarked assessments to your selection process. Invest in these three steps and you'll find that each time you add a new hire to your company, you've upgraded your talent pool.

The Davidson Group can assist with all three of these steps - contact us for more information.

A Common Recruiting Mistake

Perhaps you heard about the college baseball coach in Texas that notified a prospect in Colorado that he wasn't welcome.  Unfortunately, we are not recruiting players from the state of Colorado. In the past, players have had trouble passing our drug test, he wrote to the high schooler.

This is an example of a very common error related to recruiting - the tendency for hiring managers to draw conclusions about an individual based on past experience with other individuals who share some common link.

In this case, the coach's failed logic is pretty easy to spot - by excluding all prospects from Colorado, he is unnecessarily limiting his prospect pool and he might possibly miss out on a future hall of famer, like Goose Gossage (from Colorado Springs) or a Cy Young Award winner, like Roy Halladay (from Arvada).

Most companies have competitors they respect and competitors they don't think as highly of. As a result, managers often have a strong bias against candidates who previously worked for one of the companies that are not as well respected. In essence, they are saying, since we perceive Company X to be a lousy company, Candidate A is probably a lousy candidate.

This is a lazy shortcut that so many managers and owners make in a variety of ways. Other examples include:

We prefer workers from a certain ethnic group rather than workers from another ethnic group. The reality is that there are hard workers as well as lazy individuals in every ethnic group.

We don't interview anyone with an aol email address. The assumption here is often that workers over 40 aren't "energetic" enough or will expect too much pay. That candidate you passed-up based on indicators they are older might be a marathon runner or yoga instructor who is highly skilled and very affordable. 

We don't hire anyone with tattoos or goofy hair colors. 40% of millennials have a tattoo. Are you sure you want to automatically eliminate that much of your prospect pool based on what is likely a faulty assumption - that a large percentage of your customers will be put off by someone with visible tattoos?

Men do this job better than women (or vice versa). Statistically, men dominate certain fields and women others. Does this mean that a dentist should automatically reject a male dental hygienist candidate or a construction contractor ignore a female carpenter applicant?  

Humans have a natural tendency to assign people to groups and to attribute skills and abilities based on group stereotypes. Since hiring managers are busy and want to be efficient in their interviewing and selection processes, it is tempting for them to screen people out based on these types of broad-stroke criteria.

Hiring managers will get much better results if they evaluate each candidate as an individual rather than a member of some arbitrary group first. The kid from Colorado may be a stoner, but he might also have never smoked marijuana in his life and go on to be a star player at another university. If that turns out to be true, the college in Texas missed him because they used faulty criteria to evaluate his potential.

Does Your Comp Strategy Align?

How is your company going to win in a competitive environment? The answer to that question is really your business strategy. You might try to win by offering the lowest price or by delivering the highest quality or by offering the best value (of price and quality) or by finding some unique niche. You must clearly understand how you are going to win.

Compensation strategy must follow and align with business strategy. Based on your strategy, certain roles in the organization may generate a higher return on investment than others. Some roles may be easier to train and develop, while others are more difficult to develop and may be scarce in the marketplace. 

Here are some tips for controlling labor costs and increasing your return on your labor investment:

1. Make sure you are a good place to work to begin with. Companies that have a negative culture with bosses that are simply hard to work for typically must pay a premium to attract and keep employees. I sometimes refer to this phenomenon as the "a$$hole premium." If you regularly schedule two hour meetings on Friday afternoons at 4:00 or jump down people's throats every time they make a mistake, you are probably paying it. You can avoid this premium by simply becoming a better employer. 

2. Understand market rates. Some roles in your company should be paid at or above market rates (based on your business strategy). Other roles may achieve a satisfactory result at or below market rate (if the cost of turnover is relatively low and the time to proficiency is relatively short). It's important to know which roles matter more and what the general market rate for those skills is.

3. Align your rewards with the behaviors you want. Commissions, individual performance bonuses, team performance bonuses, etc. should align with the behaviors that you want repeated. Want collaboration? Look at team rewards. Think competition is the best motivator? Look at individual rewards (and hire competitive people). It's easy for a company to inadvertently reward behavior A when they really want behavior B. One example might be paying commission on gross sales when your business goal is to improve profitability. Your commission structure may be encouraging sales reps to offer discounts at the very time you don't want that behavior. 

It's really easy during times when unemployment is low and competition for talent is high to start throwing money at your labor force. But taking some time to analyze where your cost of labor should be, structuring it to get the best bang for your buck, and looking for appropriate ways to make a portion of total compensation variable so that you can reward the behaviors and the performance that is important to you in a way that is self-financing, is an important strategic initiative. Now might be a good time to revisit those questions in your organization.

Why Don't My Employees Take Initiative?

Bob is a service technician. He drives a company truck. He drove it for several days after he noticed the check engine light blinking. Finally, the engine seized up. A repair bill that might have been a few hundred dollars became several thousand dollars due to Bob's lack of initiative. Bob had no good answer for why he didn't report the blinking light when he first noticed it.

These are the kinds of things that drive small business owners batty. My employees can see the piece of paper on the floor just like I can, why don't they pick it up?

Initiative or proactivity is an interesting topic. Turns out there are two possible explanations for why Bob let the truck blow up.

First, proactivity is a personality or behavioral trait similar to extraversion or conscientiousness. Some people score high in proactivity and others low. In Bob's case, if he scored low on an assessment that measures proactivity, he might be as likely to let his personal vehicle blow up as he did his company vehicle. If this is the case, no amount of yelling or disciplinary action is going to make Bob more proactive. He might notify someone the next time the check engine light is blinking, but he's just as likely to miss a new opportunity to proactively contribute as he was the last.

Second, organizations might be inadvertently managing initiative right out of individuals. How can this happen? 

Jane is on the phone with an angry client. There is no specific policy to address this particular client's complaint. Jane proactively offers the client a solution that is "outside-the-box." The customer is happy with the outcome but Jane's manager is furious. Jane gets reprimanded. 

Joe is in the field and encounters a situation he's never run into before. Rather than call his supervisor, he attempts to solve the problem himself. Turns out his effort to solve the problem actually made it a little worse and cost the company a modest amount to correct. Joe gets an earful from his supervisor for not getting permission before attempting the non-traditional fix.

In both of these cases, Jane and Joe were proactive and showed initiative. In both cases, their initiative was met with punishment. If this happens often enough, both Jane and Joe will eventually decide that it's not worth taking initiative. 

So, the very managers who are asking me why their employees aren't proactive might be the very managers who tend to question every decision their employees make and create a culture where it's safer for employees to do nothing than to do something before they've been told to. In other words, they become passive because they've been trained to be passive. 

If hiring proactive individuals is truly an important predictor of success for certain roles in your organization, then you should measure for this during the interview and selection process. If proactivity or initiative is not a significant success factor for your organization, and what you really want are people who are compliant and do only what they're told, then you'll need to accept some mistakes of omission because you're not likely to get many mistakes of commission.

Time for a New Employee Handbook?

Wise employers understand that employee handbooks have several purposes: 

First, they are marketing documents. Your organization likely has marketing fliers used to promote your products and services. Those fliers were designed to influence potential buyers to have a positive image of your brand and build potential buyers' confidence in your organization's ability to solve a problem or somehow make their life better. Your employee handbook should do the same for new hires - inspire confidence in your organization as a fair and good place to work.

I run across some organizations who have invested thousands on slick marketing material but their employee handbook looks like a Frankenstein document. Sometimes they are not branded, they have multiple fonts and font sizes, each section reads like it was written by a different author (because they were cut and paste from different sources), and it's chock full of legal-sounding terms and phrases designed to intimidate the new hire.  Nothing says, "welcome to the company" more than a document in which every other sentence ends in, "..may result in termination." 

Second, they are guidebooks. A good handbook shows employees where the boundaries are. It defines the behavior that is expected and rewarded and behaviors that might get you in trouble. It's not a substitute for managing, and supervisors and managers shouldn't expect to have a written policy to back up their every decision. For example, I see some handbooks where the dress and appearance section is over a page long as the company has codified every violation that's ever occurred. For most organizations, just saying "dress appropriately for your position" and "management reserves the right to send you home..." is probably enough. If specialty shoes or apparel are required, it's appropriate to mention those in the handbook, but defining the difference between unapproved flip flops and approved sandals in a handbook for 50 employees seems silly - and will be perceived as silly by new hires.

Third, they are for compliance. There are some policies that simply need to be in a handbook. For example, if Paula Deen's restaurant group had an employee handbook with a well-written harassment policy that communicated what employees should do if harassed back in 2012, she would be millions of dollars wealthier today. Government agencies and the courts expect a company to have certain policies in place covering discrimination, harassment, at-will employment and several other staples of labor law compliance. Some once-popular policies have been found to be out of compliance in recent years, so it's important to purge those from your handbook.

If you handbook is more than three years' old, if it was borrowed and repurposed from another organization, if it doesn't reflect your brand and present a positive first impression of your company, if it has more pages than your company has employees, or if sounds like a real estate contract, it might be time for a handbook refresh.

HR Priorities for 2018

Each January I publish a list of HR priorities for small and mid-sized companies for the coming year. Here is this year's list:

1. Harassment Policy and Training - sexual harassment has been a dominant feature on newscasts over the past several months. Like me, you've probably been shocked by some of the allegations against prominent celebrities and politicians. The take-away for small and mid-sized businesses is that they should have two things in order: First, they should make sure they have a good policy. Read yours and confirm that it covers what it should and is very clear about what employees should do if they believe they are being harassed. Second, they should make sure all of their foremen, leads, supervisors and managers have received documented training on what harassment is (and isn't) and what to do if they encounter it.

2. Classification of Exempt/Non-exempt - if you are located in North Carolina, 2018 signals the beginning of a new enforcement division which represents a consolidation of resources at the state level specifically to combat misclassification of employees. Summarizing what one labor attorney told me: "in the old days, if one agency determined you were out of compliance, they didn't necessarily communicate that with other agencies, but with this new enforcement group, you're more likely to get hit with fines from multiple agencies for a single infraction." That might mean fines from the wage and hour division for failure to pay overtime plus fines from the taxing authorities for failure to withhold the proper taxes, all from a single investigation. Even if you're not in NC, lack of compliance with exempt/non-exempt can be an expensive mistake.

3. Classification of Employee/Contractor - many small companies find it tempting to bring on workers as 1099 contractors rather than employees. It's less hassle for the company and the workers like it because their weekly check is bigger. But it's a risky strategy. The government discourages the use of 1099 because it doesn't get its tax money on payday, and may not get it at all. The fines and penalties associated with misclassification of employees as contractors are among the stiffest an employer can face. The threat of prison is even on the table for extreme cases.

4. Social Media policy - the National Labor Relations Board under the Obama administration took a very rigid stance against social media policies that they felt had the potential to silence speech protected by the NLRA. That Board, now lead by a Trump appointee, recently announced a softening of that position. But it still makes sense for organizations to ensure that they have a social media policy that protects the companies interests while also remaining in compliance with even a narrow interpretation of the NLRA. 

It can be a costly mistake for business owners to assume that since a more business-friendly administration has replaced a more labor-friendly administration, that investigators and auditors from state and federal agencies are going to turn a blind eye to violations such as these. The rules are still the rules and business owners are better served being compliant.

If you need assistance with these or any HR initiatives in 2018, The Davidson Group is here to help.

Can't Find Good People?

Every service company I speak with is concerned about their ability to find good, quality workers. In an environment where the competition for talent is fierce, which companies are going to be most successful? What's the recipe for winning?

Let's start with the basic myth. When I'm training foremen and supervisors, I'll often ask them if today's young people have a poorer work ethic than their generation had. Almost unanimously they say "yes!" 

They're shocked when I tell them every generation believes this and every generation is wrong. I heard the "young people today don't want to work" thing when I was a helper on construction sites in the 1970s. Engineers building the Taj Mahal in the 1640s were saying it, as were stone masons building the pyramids 4,000 years ago.

What is true is that some individuals have a stronger work ethic than others (in every generation). In periods of relatively low unemployment, we run across more candidates with lower motivation and weaker work-ethic than periods of higher unemployment rates. 

What is also true is that work ethic and motivation is not all genetic. Work ethic can be learned and motivation can be tapped. Which leads us back to the question, which companies are going to win in this economy?

The service companies that are going to win are not the companies that invest in finding that secret supply of excellent workers that no one else can find. The companies that win are going to be the ones that find ways to be successful with less than ideal candidates.

The service companies that are going to win aren't simply complaining about the current talent pool, they're building systems that help a candidate who isn't an exact fit to have a reasonable chance at becoming successful. They're building on-boarding, training and feedback systems as well as mentoring programs and career paths to keep people who aren't natural-born stars to build a skill set, become engaged and remain on-track.

The service companies that are going to win aren't going to simply outspend everyone else on talent. If your culture sucks (read: your supervisors and foremen treat people like they're disposable), it doesn't matter how much money you throw at compensation, you'll eventually lose to the company that knows how to build a culture that workers embrace. If you can get $16 of value out of a $13 employee, you're going to handily outperform the company that's having to spend $23 to get that same $16 of value. 

The service companies that are going to win will say "thanks" and "well done" a lot. The service companies that are going to struggle are going to generally ignore good performance as something that's expected and spend their energy berating poor performance.

The service companies that are going to win are going to be employers of choice who build their total rewards programs around what their workers really want versus what they'd prefer to give them. (Think: maybe an afternoon off with pay rather than a gift card?).

The service companies that are going to win are going to win with less than ideal candidates. If your organization is determined to find plug-and-play, immediately productive workers that don't need to be trained or managed, you're going to spend a lot of time recruiting.

What Matt Lauer Means to Your Business

There has been an avalanche of sexual harassment and misconduct claims making the headlines in recent weeks. I'm sure that a lot of politicians and public figures are sitting on pins and needles hoping their name doesn't make the news. This is good news for employees, mostly but not exclusively women who have tolerated much more of this type of behavior than they ever should have. Employers of all sizes will likely have more of these claims to process and more judgement calls to make as victims feel empowered to come forward.

With regard to the Matt Lauer situation, NBC is going to be facing the same questions your organization would be facing, albeit much more publicly - what is your policy, what kinds of training did you have in place, who knew about the behavior and what happened when management found out?

Here are some tips for any organization that is concerned about their own vulnerability to situations like NBCs current predicament:

1. Review your harassment policies. You likely have boilerplate language in your handbook. Nothing wrong with that, just make sure the language is clear and especially make sure that your employees know whom they may contact in the event they are harassed in any manner, including sexually. Make sure that there are several avenues for reporting the harassment, don't limit them to chain of command. Many Davidson Group clients include our phone number as an outside third-party option for employees to contact.

2. Train your managers and supervisors. Now is a great time to offer training to your managers and supervisors on what is and isn't harassment, what to do if they suspect harassment, and what to do if one of their team members reports harassment to them.

3. Train your employees. Now is a great time to remind your employees what types of behaviors are not acceptable in the workplace, what to do if they are victims of those types of behaviors, and what might happen to them if they are the one doing the harassing.

4. Treat all accusations seriously, investigate thoroughly and apply consequences consistently. This is the hard part because harassment claims are so personal and can vary so much in nature and substance. The very clear-cut cases, like when the behavior is caught on video or when there are multiple witnesses, are not as difficult. But sometimes these situations are much grayer. In some cases it may not even be clear that something happened at all. With these we can find ourselves torn between supporting the accuser and being fair to the accused. 

We can learn something from observing the political personalities that have been in the news recently. What I have observed is when a figure considered a political opponent stands accused, it's portrayed as outrageous behavior that needs to be dealt with sternly and immediately, but when someone considered a political ally stands accused, we are urged not to rush to judgement. 

How does this translate to your company? When the accused is a mediocre performer whose contributions are easily replaced, it's easy to stand with the accuser. When the accused is a rain-maker who is not so easily replaced, it's tempting to impugn the accuser or to raise our burden of proof requirements. 

It takes courage of leadership to do the right thing, even if it temporarily hurts the organization. NBC will probably find that it would have been better off addressing the situation with Matt Lauer after the first credible complaint versus what they are now facing. It is the organization's responsibility to treat every case with the same level of seriousness, whether the accused or accuser is a low level employee or an executive, and attempt to apply consequences for bad behavior that are consistent and appropriate.

If your organization could use some help with developing policies, delivering training, conducting an investigation, or helping with a messy situation, contact The Davidson Group and we'd be happy to help.