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What do employers and employees owe each other? Who should you hire and how do you retain the best employees? How do you measure and manage employee performance? What are key elements in financing talent management? What are “next-generation” expectations? At EACUBO’s Senior Business Officers Roundtable, convened in Philadelphia last June, approximately 25 chief business officers explored the intricacies and implications of these significant questions. Topics for the roundtable were determined in large part by the results of the ACUBO Curriculum Project, which are helping to guide program development that responds to administrators’ unique needs. (See “Cultivating Your Career” in the June 2006 issue of Business Officer for more on this project.) Peter Cappelli, professor of management and the director of the Center for Human Resources at the University of Pennsylvania’s Wharton School of Business, contributed to the program, sponsored by Segal/Sibson, a human resources consulting firm. The lively roundtable provided a unique opportunity for participants to partake in some high-level discussions around these important human resource issues. When asked to identify the worries and risks that business officers were experiencing in the area of managing staff, participants listed the following: developing staff; dealing with “lifers;” providing staff with skill breadth and “bettering skills;” and sustaining change and new levels of excellence. They also sought strategies for succession planning and for understanding resulting new roles, tackling a lack of bench strength, and dealing with loss of institutional memory and organizational competencies. Cappelli offered much useful advice on dealing with these typical “people problems.” Smart Hiring Cappelli was quick to point out that many common
hiring practices are not considered good predictors
of an employee’s performance. Interestingly,
grade point averages, personality tests, and unstructured,
one-on-one interviews of a candidate by several
staff members are not the most reliable evaluation
techniques. In fact, it is more often intelligence
tests that evaluate cognitive abilities, work samples
or relevant material prepared by the candidate,
and previous experience in a similar position that
provide the most reliable predictors of how a potential
employee might perform once hired.
Intentional Retention Employee retention has taken on increased significance triggered by the advent of online recruiting, which, Cappelli asserts, is currently ranked the second most popular activity on the Internet. “People are not pushed out of their jobs, they are pulled out,” he says. “You are not going to keep everyone, and you don’t want to. The key is to create predictable turnover. That is, you can manage which, at what time, and from what positions employees leave.” You can do that, says Cappelli, by paying attention to retention realities. For example, solid social relations within the office often hold employees more firmly than financial arrangements. Hence, he says, don’t underestimate the power of social ties and a supervisor who sincerely cares for his or her employees. As the saying goes, “Employees don’t leave the job, they leave the boss.” Therefore, solid and worthwhile connections between employees and their supervisors create a valuable professional environment that competitors cannot instantly provide. Another key retention device, notes Cappelli, is to spot talent and give the designated individuals opportunities to show their potential. Many business officers who weighed in at the roundtable shared the opinion that the best professional development opportunities they had experienced were the ones in which they were “baptized by fire.” Such experiences pushed them, allowed them to learn a great deal, and resulted in them feeling valued and appreciated for their potential. For this to work, supervisors must identify such talent early and promote individuals sooner, giving high performers opportunities that they would not get elsewhere. At the same time, notes Cappelli, retention isn’t the only answer. Employers, for example, sometimes react to an employee’s resignation notice by providing financial incentives to stay—a practice that often provides too little, too late. Such action may keep the employee in place for the time being, but often these attempts simply delay the departure (or even fuel the employee’s desire to leave because it was only after resigning that his or her worth to the organization was recognized). Rather than focusing completely on retention, says Cappelli, consider what the real staffing problems are and accommodate turnover by thoughtfully redistributing responsibilities and better managing workflows. In the event that people leave, be sure that you maintain intellectual capital by creating a core team that can assist in the transition from one staff departure to the next. And, particularly if your high performers are heading for the door, consider the helpful practice of implementing an exit interview process that is outsourced to an objective third party. Exit-interview results provide a good indicator as to why people are leaving. Performance Measures “People expect fairness and expect rewards,” says Cappelli. Performance management is about identifying performance differences and managing employees in a way that raises the level of accomplishment across the organization. Consider the fact, notes Cappelli, that the best employees are much better at influencing the workplace than poor performers whose behavior is “demoralizing.” Consequently, he suggests an informal approach to managing employees by, “ranking staff from best to worst…it helps you identify where the problems are within your office.” Alternative ways of managing performance include providing more feedback earlier, establishing clear goals, and creating more objective performance measures. Implementing 360-degree feedback can also be of value. However, cautions Cappelli, recognize that the first couple of times you employ the process, feedback should be filtered because people tend to vent the first time that they are provided with the opportunity to comment on their supervisors. In addition, do not tie early uses of 360° feedback to compensation. Talent Financing In financing talent management, says Cappelli, the key aspect is to match your supply of talent to the organization’s anticipated demand for it. Traditionally, he explains, supply meant developing your internal employees by providing upfront investment in candidates with the expectation that these investments would be recouped over time. However, one does not own talent and in today’s workplace such practices can prove costly. When determining the human resources that you need, Cappelli says you must focus on three areas:
Tenure and Next-Generation Expectations In the 1950s and ‘60s, reminds Cappelli, Fortune 500 executives had been with their companies for 24 years on average. It was typical for employees to stay with a particular employer and acquire ever-increasing responsibility by moving up the chain of command, changing roles, and increasing their levels of responsibility within the same organization. The notion of a secure, long-term career is much harder to imagine today. It’s more typical for people to change employers, while remaining in the same functional area. In addition to the disappearance of the long-standing career track within one organization, other factors affect employee movement and loyalty. For instance, Cappelli says that “next-generation workers”—which he identifies as those younger than 30—are not willing to put in the extra hours at the beginning of a new job to establish themselves within the company; and a higher salary is not as strong a motivator as more vacation time, schedule flexibility, and signing bonuses. Workers under 30, says Cappelli, also tend to be impatient, are not particularly loyal to their employers, seek excitement, and suffer from “me”-ism. The results of a recent study conducted by Seminarium for PricewaterhouseCoopers exemplify this shift. When 25- to 30-year-old MBAs were asked what is most important to them in their first jobs, most articulated the aforementioned trends–regardless of where they were ranked within their class standings. In addition, the top-tier students pointed to priorities such as obtaining a good reference for future employment, finding a company that values balance between personal life and career, and working with likeable and inspiring colleagues. Those in the bottom tier indicated that they sought a variety of tasks and assignments, immediate responsibility, and the opportunity to influence their own work schedules. Based on this and other data, Cappelli notes that next generations require employers to provide them with autonomy while giving them constant feedback. “Members of this generation want to know how they are doing and want explicit expectations, clear measurements, and articulated rewards based on performance,” he explains. Although this, at times, is misinterpreted as being “needy,” says Cappelli, in actuality this tendency is due in part to the recognition of the short-term aspects of the jobs today. One way to take advantage of this approach, advises Cappelli, is to be more contractual with these employees. For instance, when possible, tailor a particular project or job to the person responsible for it and indicate straightforward outcomes. For example, you might say, “If, in two years, you accomplish project A and accomplish particular goals, then you will be offered a specific reward; and renegotiation of your position will occur.” Remember, says Cappelli, that this generation believes failure is okay because risk-taking is seen as a positive. But it is not only the next generations that business officers must work with. A number of aspects to managing talent relate to employees of all ages. For instance, consider the inverse relationship between employment rates and annual turnover: when the unemployment rate increases, annual turnover decreases. Hence, fluctuating economic trends will have an impact on your existing retention plans and your supply-and-demand formula. And think about the results of some of Cappelli’s own recent studies that show that one third of employees do not know the next step for them within their organizations. Don’t be surprised if the resulting lack of patience on the part of eager staffers creates a kink in your succession planning. In the end, advises Cappelli, business officers must create a clear strategy for hiring, retaining, and managing staff while being ready to revise their plans when other variables apply. Attendance at the 2006 Senior Business Officers Roundtable
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