Chief Investment Officer
best practices in hr
HR has always been a key function in banking. Our customers' experience is determined through all points of contact with the bank, as well as the "sausage factory" in the background. All, no matter how technologically-savvy they are, are people-driven.
Many bank CEOs acknowledge that by claiming their people are their competitive advantage, or touting their service as a differentiator. At the same time, the face of our human capital is changing, but HR practices aren't necessarily keeping up.
I strongly agree that people are what makes ANY organization work (or not!) Engaging their hearts and minds is what leadership is all about. It is true in all walks of life. Even at Apple, where technology was the product itself, Steven Jobs managed to engage his employees deeply despite poor management practices. He, too, recognized that it was the people, working toward a unifying vision, that made his company tick. This is certainly true in banking, where the product itself is fungible, but the way we deliver it and the ways our customers experience us vary widely. The difference is the people.
As you reflect upon your most valuable resource, I suggest that you also consider the role HR plays in your organization, and the way it administers this precious resource. The thoughts below pertain to the management of human capital beyond the basic administrative functions and talk more to the heart of the HR practice; specifically, strategies that can make our people more engaged, more effective and happier. Some are provocative and unconventional. I hope they'll make you reflect, change or continue your current practices.
- Performance evaluations vs. feedback: Most banks still administer performance evaluations, typically annually. They do so primarily to provide employees with valuable feedback and to attempt to conect them to the bank. Reality, however, defies these good intentions. Managers dread evaluation time when they are expected to write tomes about their employees and confront issues they would prefer not to tackle. Consequently, most performance evaluations exhibit grade inflation and do not truly reflect the contribution and relative value each team member brings to the table.
I question the value of this formal process. I feel that all too often, it's about the process and not the content. I believe both employees and management would benefit from more frequent, less formal and more quantitative feedback sessions where all parties have an opportunity to discuss future performance and future aspirations, focusing on what's yet to happen rather than looking in the rear view mirror (in George Myers' wise words.) This is a dramatic change; however, done right, I firmly believe we can create more value and true engagement at a lower cost by changing the interaction between managers and staff. This also requires separating the compensation conversation from the performance evaluation conversation. They are certainly related, but one occurs annually and the other should, in my mind, occur more frequently and without the administrative burden it currently carries.
There are many issues with this idea, mostly to do with execution. I do not minimize them. Yet, if you think this is a good idea, you can make it work.
- Employee surveys: We conduct periodic employee surveys to take the pulse of the organization, a key to successful engagement and organizational development. The question is, are there better ways to generate a candid and productive dialogue between management and staff, facilitated by HR, to get better information on pain and pleasure points across the organization? Surveys are static and do not allow us to ask each respondent a follow up question or two when needed. They are also often very broad, with many questions, thus reducing response rates. Are focus groups and more targeted surveys a better alternative? Something to consider...
- Turnover measurement: Most of us measure turnover as a single figure and report on it to all constituents accordingly. A more productive approach involves measuring turnover across different tenured employees (turnover within the first year vs year 1-3 or 7+ years on the job); or turnover across different positions (which most of us are already doing, such as Trekkers, both full-time and part-time); or desired turnover (of poor employees) vs. undesired turnover (of excellent employees) - what Dana Lorenson of Midfirst cleverly calls posatrition and negatrition. Such measures are far more informative and actionable than a broad brush single number. For example, turnover might rise as a result of rising performance expectations. That could be a good thing!
- Exit interviews vs. retention interviews: Most of us conduct exit interviews of departing employees to find the root causes for their departure. Fewer companies conduct "stay interviews" to examine the underlying motivations for employee retention. It's a more constructive conversation that can uncover simple steps to improve good employee retention. It also focuses on the employee and their motivations, the by giving the manager clues as to how to effectively motivate their team going forward.
- HR metrics: "What gets measured gets done," as we all know. The problem is, too much stuff gets measured, and too little of it impacts performance and results. That's were key metrics come in. Some examples of targeted and unusual HR metrics:
- Rookie year turnover (turnover of employees with less than a year tenure)
- Turnover relative to your market's unemployment rate. Target a natural turnover rate, where employees aren't so comfortable in their jobs they don't want to leave, but also not pressured to perform to the point they can't bear to stay.
- Percent and number of employees who work for someone they've never worked for before, another George Myers' gem. Incompatible management is truly the primary reason why people leave. Hence, working for a new manager, even if it's the right thing to do, puts employees at a higher defection risk.
- Using rank ordering: Rank ordering employees can be a harsh exercise (IBM famously used to let go their bottom Devine employees annually). It can also be an educational exercise, forcing managers to internalize their staff's performance independent of their personal liking or affinity. I think it's just good discipline and should be done for management purposes, not as a precursor to termination. It can also be an effective tool for compensation decisions, especially when the manager has a pool of money to distribute among their team members.
- Reducing number of goals to facilitate focus: Our banks typically have too many goals, from the CEO on down. In our quest to ensure that no task goes unnoticed we create confusion and diffusion. It's a healthy exercise to ask yourself three simple questions
- What two things can I do that will support the company goals most effectively this coming year?
- What two things of my daily routine are most important and require the most attention?
- And the most difficult: What two things am I doing that no longer need to be done?
I find people have the darnedest time with the last one. But it is an important question. As the world changes, and the nature of all our jobs changes, we, too, should not simply add stuff to our plates but also remove items from them
This article would not be complete without the following confession: every time I write the word "employee" I hear my good friend Skip Schoenhals in my ear saying, "associate, not employee." I am sorry, Skip, for using the word most prevalent in our industry to connote members of the team.