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.