Strategic Human Resources Management:
How to Reduce Your Stress
Human interactions at work are a constant source of interest, challenge and sometimes stress. The primary business role human resources management is to align your workforce with your business strategy. Aligning your people with your values and your vision will also reduce your stress.
1. Strategy: Where are we going?
Human resources is about people, just like business. Some people will show up for work everyday. Our opportunity is to capture their hearts and minds while they are there. It usually doesn’t cost any more and can even save you in terms of reducing involuntary turnover. For example, focusing on quality service has helped many private electronics stores compete effectively and win against the big box stores such as Best Buy and Future Shop. I’ve dealt with small businesses with an attitude of caring that easily out-service and out-sell the new big box employee who has been on the job for three months trying to sell me an extended warranty. Sharing your vision for the future and living your values everyday will help your people to understand where you are going.
2. Tactics: How do we get there?
Pursuing any strategy takes courage to stay the course. One of the most common weaknesses of entrepreneurs is to pursue every potential source of cash possible: the all things to all people strategy. This is not a strategy at all. I once met a very busy person who was a builder. He tried to build schools and renovate residential closets on the same day. He was always running in several different directions and never getting anything done. You can’t invoice what you haven’t finished. Cash flow was always a struggle. As an accountant, I’ve learned that businesses don’t have cash flow problems, they have strategy problems. Make sure your tactics are aligned with your strategy and your goals.
3. Human Resources: Aligning People with your Strategy
Aligning human resources with your strategy is easy, but it takes courage. It takes courage to make decisions that are consistent with your strategy. It takes courage to hire people that have the right attitude and a genuine interest in your field. It takes courage to invest in training for your employees. We ask: what if they leave? The real question is: how do we get them to stay? It takes courage to pay people by salary if you want them to provide high levels of personal service. It takes courage to give people positive and constructive feedback that will help them achieve their career goals and utilize their talents as best as possible.
4. Consistency is Key: It’s all in the ingredients.
To build a strong structure, you need a plan. You can’t change your mind from wood walls to concrete walls after the roof is on. I find that many entrepreneurs who have a clear focus on what they do and who their customers are have achieved better financial results and a higher quality of life than those who chase every customer that walks in the door. Human resources management is the same. But first, clarify your strategy.
You have three choices: 1. Low cost (very difficult for small businesses who can’t achieve economies of scale e.g. McDonalds). 2. Differentiator (takes significant marketing resources to build awareness that you are different e.g. IKEA). 3. Focus (niche specialties, the domain of private businesses e.g. your favorite restaurant, clothing store or specialty retailer).
Once you have selected your strategy, you then align the human resources components with your strategy.
- Recruiting – Focus on attracting people with the attitudes and passion for how you do business in your industry. This is a significant challenge in our current tight labour market where employees hold the balance of power. For example, restaurants will spend more time and effort trying to attract staff than they will attract customers. It is the manager’s role to clarify the strategy and the values and vision of the organization so that it attracts the right people through its strategic gravity.
- Training – Your strategy will determine why your customers buy from you. This critical fact will drive how you train your employees. In most business transactions, relationships and reputation matter. One successful client has achieved all the training certifications and accreditations possible in their industry. This provides them with an advantage in the market and with a specific training model. Adult learning processes involve being shown the task, performing the task, and then getting immediate feedback. Yet some businesses let people wander around aimlessly until they learn by osmosis or by accident. Some businesses have clear procedure manuals that enable effective training and skills assessment. Others provide for a combination of formal and informal on the job training.
- Compensation – This must be both externally competitive and internally consistent between levels. Internal consistency is more important because discord can result if people perceive that they are treated unfairly. One organization brought in a superstar at a higher salary. Once word got out, everyone wants a higher salary. Now, management is focused internally on fixing its compensation problems instead of externally on serving customers and growing the business. Money is also considered a hygiene factor, too much is never bad, but not enough is quickly noticeable to everyone. Adding performance compensation to a base salary can quickly motivate desired behaviour. At one business, they were losing employees to a much larger company with more benefits. After implementing the performance compensation, the business had employees returning back to it because of the opportunity for higher compensation based on performance. People who are motivated will select themselves into the system and slackers will quickly be weeded out.
- Retention – Like any relationship, ongoing attention to your employees is very important to keep people happy and involved. This is where small, private businesses can have an advantage if they take some little steps. Most small businesses have a family-like atmosphere which makes people more comfortable to work in. This keeps people from leaving and retains knowledge of customers and business practices. For example, most small businesses have flexible and informal work environments that increase both loyalty and performance. It is interesting to watch large multinationals try to replicate, rather unsuccessfully, these environments.
- Performance Management – Performance is the sum of knowledge, skills, abilities and attitudes. Professional athletes don’t show up in peak condition every day of the year. It’s the job of their coach to help them achieve their best with the skills they have. Many business owners have realized, some with great reluctance, that one of their most important roles is that of coach. Yet too often, I see people who are trying to coach someone who does not yet have the necessary skills. Any recent shopping or dining experience can give us examples of poor service as a result of lack of training. Yet we criticize the server or employee for a poor attitude. It a person can’t perform a task, no amount of positive attitude will accomplish it. People perform poorly because of two reasons: lack of skills, lack of attitude or both. Training is for skill development and coaching is for attitude.
- Succession Planning – Ownership has a responsibility to identify successors for both ownership and management. Management has a responsibility to develop systems and transfer skills so that the company will be stronger in the future. This is practical in terms of risk management and contingency planning in the short term. This also helps to expose younger managers to higher levels of decisions and accountability while under the guidance of senior people. Passing on skills, knowledge and experience is energizing for both the student and the teacher. One company is completing a management transition that will dramatically increase its overall capacity so service its current customers while exploring new opportunities in other industries.