Matrix Organizations: When and How They Can, Can’t Work

NEW YORK—Matrix organization, or the idea of balancing multiple organizational dimensions and building the “organizational infrastructure” for success, was popular in the 1970s before falling out of favor.

“In the 1980s and 1990s, matrix organizations were toxic—you didn’t want to touch one, didn’t want your boss to know you were using one,” Jay R. Galbraith, an organization design expert, told attendees at a recent organizational development conference sponsored by The Conference Board.

In recent years, Galbraith said, top performing companies such as Nokia, Proctor & Gamble, IBM and Toyota have been using matrix structures to gain competitive advantage.

“Matrix is out of the closet, and you have to learn how to make these things work,” Galbraith said.

Most matrix implementations fail to meet their objectives, so companies conclude that matrix does not work. But it doesn’t have to be that way. “It’s that most managements fail at matrix,” Galbraith said.

Design Challenges, Matrix Solutions

During the session, Amy Kates, principal of Downey Kates Associates, a New York City-based organization design firm, highlighted the design challenges that many companies face and how matrix organization helps cut across those challenges:

• Customer-centric design: Matrix organizations design around the customer, segmenting markets and selling solutions. Matrix organizations address how to be “operationally excellent and a product leader.”
• Readiness for innovation, organic growth: Matrix organizations help companies maintain a stable base of business units while they build their capability to assemble and disassemble teams around opportunities and projects.
  Matrix effectiveness.
• Centralization/decentralization dilemma: Matrix organizations are able to gain value from the parent company, make smart centralization/decentralization choices and connect units laterally.
• Global expansion: Matrix organizations look at options for connecting international units to the home country, create truly transnational companies, and balance globalization and localization.

“The one that we will focus on ends up falling into all these categories and we end up with some sort of matrix organization,” said Kates, who has co-authored a book on organization design with Galbraith.

Star Model

Galbraith is founder of the Breckenridge, Colo.-based Galbraith Management Consultants and a senior research scientist at the Center for Effective Organizations at the University of Southern California.

In the 1960s, he developed a framework for more structured decision making dubbed the “Star Model.” It encompasses strategy, organization design criteria, people, structure, rewards and processes. According to Galbraith, organization design is more than just structure. Different strategies lead to different organizations. For an organization to be effective, all the policies must be aligned with one another.

“This is the model I’ve used, and today every consulting firm has something like this,” Galbraith said.

The essence of strategies leading to matrix designs is the pursuit of the “and” rather than the “or,” Galbraith said. In other words, global and local, functional excellence and fast time to market, and national accounts and local accounts.

The key when designing a matrix, Galbraith noted, is to start with strategy. “The keys for me are the business processes and management processes,” he said. “You want to minimize the levels [of organizational structure that] you have. I try to get the levels out and make the matrix as tight as possible. Don’t spend all your time on dotted and solid lines.”

Different Matrix Designs

Organizations have adopted several different types of matrix designs with various degrees of success. Galbraith said most companies have mastered the simplest, which are two-dimensional and include products and functions.

Other matrix designs can be three-dimensional and might include functions, business units and countries. “This type is far more challenging and encounters cultural differences,” Galbraith said.

Others are even more complex and include four or more dimensions, such as those that arise when serving global customers. “This type is the cutting edge,” Galbraith said.

“The leadership at the top sees mastering the requisite complexity as a source of advantage,” Galbraith said. “They keep it simple for the customer.”

High-Performing Matrix Organizations

A lot can be learned from companies making it work, Galbraith said. Here are some key characteristics of successful matrix-driven organizations:

• They have sophisticated leaders who grew up on both sides of a matrix, manage conflict, work as a team and spend time “getting clear roles and understand power balancing,” he said.
• They create organization designs “that aren’t just about structure,” which are complete, and completely aligned. “It takes a complete design to make this work,” he said.
• They manage an effective change process that’s incorporated into the matrix.
  Matrix is inherently a team-based design that runs on open debate and dialogue.
• The high performers use the same techniques to guide the change process.

Kates added that “matrix is less of a structure problem and more about the other parts of the Star [Model].” Rewards result from more subjective assessments of performance, she said. The assessments result from top management’s discussions of what people achieved and how they achieved their results.

“Hire hard, manage easy” is the key guideline, according to Kates. “Some people thrive in a matrix, while command controllers do not.”

Assessing Matrix

Selecting the right people to be in a matrix is critical. “If you build a critical mass of people who have a similar mindset, you get to a tipping point,” Kates said.

There are several steps companies can take to assess their matrix and get it back on track if it’s not where it should be. It pays to look first at interpersonal skills and work and management processes.

“There isn’t really magic to making this work—it’s about the basics,” Kates said, adding that companies that succeed at matrix design “do all the basics all the time and pay attention to making all of them work.”

When it comes to interpersonal skills, make sure there are opportunities to build networks and relationships. Staff can use the tension created by the matrix to collaborate rather than compromise, ensuring that managers who share resources can work well together. Also, make sure matrixed positions are at the right level and that there is a culture of teamwork, with joint accountability when things “go well and when they go wrong” and frequent giving of credit to others, Kates said.

“If you don’t have a good team-based organization to start with, matrix shouldn’t even be on the table,” Kates said.

Work processes should be clear and streamlined, and there should be clear information flows and clarity around roles, responsibilities and handoffs. And when it comes to management processes, Kates said, there should be governance mechanisms “to force dialogue” and resolve issues quickly and at the right level, efficient and effective meetings, a minimum of management “rework” and “a robust process for objective setting, performance management and feedback.”

More on Organizational Structure

During another session, Michael G. Winston, former managing director, global head and chief leadership officer for Countrywide Financial Corp., said you can take two companies that are structured identically, with the same skill sets and same market conditions, and “one will skyrocket and the other will plummet.”

What makes some succeed? “The common denominator is that people seem to be the catalyst for great things to happen,” Winston said. “Leadership is the ultimate arbiter of organization success.”

Winston cautioned that no matter what organizational structure is put into place, “it will almost always be out of date” shortly after its inception if companies don’t organize and reorganize because the rate of change environmentally or technically “is usually fast enough to force distortions in that structure.”

Winston, a consultant who has held leadership positions in high tech and aerospace, shared several “personal convictions” about effective organization design. Among them:

• Proper structure facilitates performance but doesn’t guarantee successful performance. Meanwhile, improper structure leads to “doing it the hard way.”
  
• Changes in structure are disruptive—be careful.
  
• All structural benefits cannot be gained at the same time. Tradeoffs are needed to get the optimum balance of benefits.
  
• Proper staffing is critical to the success of the revised structure. Improper staffing frequently undermines sound structure.
  
• The most neglected aspect of organization design is the allocation of power.

Do Your Job Postings Work for You?

Are your ads succeeding in attracting the right kinds of candidates for your openings? Recruiting firm Dice, which specializes in technology and engineering employees, recently conducted a survey among more than 650 passive and active information technology (IT) candidates, which yielded some valuable tips.

Dice asked what kinds of facts or descriptions are often missing from IT job postings that they would find most helpful. When we saw the results, it seemed to us that the responses might apply equally well to all kinds of job applicants, especially those with skills that are much in demand. For example, Dice also seeks out candidates in accounting and finance. More than a third of respondents said that information about the actual work they would do is missing from most job postings. Here's sample language from a real job description that Dice offered as a good example: "You will be responsible for improving our foundational software to enable our company to scale to hundreds of thousands of concurrent users. You will collaborate with operations to steadily improve the scalability of the current service without suffering downtime."

Other inclusions that job seekers said they like to see are the particular skills they will need, a salary range for the position, a list of the benefits and perks the company offers, including any that are unique, what they will have the chance to learn on the job, how their work would serve the company's overall mission, and more. Dice also advises employers to show the zip code where candidates would work and include information about the culture, so seekers can tell if they'd be a good fit.

Says Dice regarding work culture, "Is your organization an aggressive Web 2.0 company with a start-up feel and an open-cube environment where flexible IT folks, who can wear many hats, thrive? Or are you more 'big company,' with private offices, well-defined jobs, and a culture that offers great work-life balance and excellent formal career paths?" We can think of lots of examples of work culture advantages that would appeal to all kinds of candidates. For example, if many employees have long tenure, you could highlight the presence of potential mentors to share their institutional knowledge.

If employees seldom come into personal contact with customers, you might highlight the casual, relaxed atmosphere. By contrast, if customer contact is routine, stress employees' roles in creating a friendly and professional atmosphere. Intrigued by the idea of podcasts or blogs to attract candidates? Dice advises that you avoid making them too slick; candidates are suspicious of hype.

So you have to ask yourself these important questions:

• what differentiates you from other employers
• is your culture nurturing
• is there job path creation
• are you getting the cream of the crop
• are you spending your recruitment budget in the right places

Your comments and suggestions are appreciated.

'Our senior leaders just don't get it!'

We all want our senior leaders to "get it"—to support, participate, and buy in to the organization's leadership development initiatives. We know for sure what it looks like when senior leadership is not bought in—fragmented communication, unclear direction, and few breakthrough results. But what does it look like when senior leadership "gets it"?

A senior leadership that "gets it" incorporates the leadership development needs of the organization into its strategic planning process.

What leaders are learning and the ways in which they are being developed should be a reflection of the organization's strategic goals. For instance, if a major strategic initiative is to dramatically grow the business, leaders should be trained on how to lead during times of growth and how to deal with capacity issues.

Development planners should actively seek senior leadership's input on what the most pressing business needs of the organization are and how the leadership development efforts can work to meet these needs.

At the same time, senior leaders should ensure there is an active linkage between the organization's strategic plan and the leadership development curriculum.

A recent Baptist Leadership Institute Web poll showed that about 65 percent of the respondents agreed or strongly agreed that senior leaders in their organization are taking active steps to make sure the strategic plan and the leadership development efforts are aligned.

A senior leadership that "gets it" is visibly engaged in leadership development, including teaching and actively participating in course work.

At Baptist Health Care, one of our leadership development mantras is that "Baptist leaders should teach Baptist leaders how to be Baptist leaders."

If senior leaders are not actively engaged in teaching, then they are not truly committed to leadership development. Taking the time to teach and develop other leaders is the price of leadership. A healthy culture will allow no compromise on this point.
Slightly more than half (53 percent) of poll respondents agreed or strongly agreed that senior leaders are visibly engaged in leadership development.

A senior leadership that "gets it" holds leaders accountable for implementing skills learned in the organization's leadership development journey.

On this item, we saw less optimism reflected by our web poll respondents. Only 41 percent agreed or strongly agreed that their senior leadership applies accountability to leadership development.

Leadership development without accountability is just "putting butts in seats" and expecting our cultures to change as a result. That doesn't bring breakthrough results.

Esteemed executive coach Marshall Goldsmith says, "A lot of what passes for leadership development in companies can be a waste of time." See if you recognize this process, he says. At a convention, you're entertained by a parade of speakers, and afterward you're required to critique the speakers and rate how effective they were. And you may be asked to critique the hotel and the food. But nobody is critiquing you. Nobody is following up to see what you learned or if you have actually become a more effective leader.

So who's learning (and changing) the most? The speakers, the hotel staff members, and the cooks.

Do the Senior Leaders in Your Organization "Get It"?

I hope so. In my experience working with organizations and helping them create healthy cultures, I have seen that a strong commitment from senior leadership is absolutely necessary to create anything more than casual, cosmetic change.

The good news is that with senior leadership's involvement and commitment, nothing can stop the organization's pursuit of excellence!

What do you think? Do the senior leaders in your organization "get it"? Share Your Comments

Public vs. Private Company Managers: Which Are More Likely to Impact the Bottom Line?

Executives who hone their skills at the helm of private companies tend to be more driven, more bottom line-oriented and have much more flexibility than CEOs at publicly owned companies, who are constrained by their need to balance multiple objectives in a corporate ecosystem.

That was the consensus of four panelists who discussed the management challenges at private equity-backed firms during the recent Wharton General Management Conference. The panel was titled, "Managing Public vs. Private Companies in an Age of Buy-outs."

Today, private equity is facing "an industry transition from competing on capital [and] financial engineering to competing on value creation and access to the best management talent," said panelist Elena Botelho, a partner at ghSmart, an executive assessment and talent management consulting firm for investors, boards and CEOs. "This is driven by the need for these firms to get maximum improvements in their portfolio, especially now that the market is tough."

Botelho noted that this affects the way CEOs are hired as well as how top executives perform in an era of increasingly common corporate buy-outs. The result is a blurring of the lines between public and private firms, with shifting expectations of senior management. Although the current credit freeze has limited the number of recent private equity deals, the situation has created a unique set of pressures for managers, since so much attention -- from the media and the federal government -- remains focused on financial performance. At publicly traded companies, the normal expectations of shareholders about quarterly earnings have been ratcheted up with the significant increase of federal regulatory involvement. But as private equity firms gain more investor interest as an alternative to the public markets, CEOs at private companies find themselves expected to reap quick gains in a rapidly changing environment.

Gone, however, are the days of private equity "strip-and-flip" buying and selling, a period that many see as having ended with the collapse of two Bear Stearns hedge funds in July 2007 -- the beginning of the ongoing credit turmoil. A key question now is whether private CEOs, accustomed to taking greater short-term risks to maximize long-term returns, can thrive in a new, more transparent environment under unprecedented demands.

"Private equity firms get measured on IRR (internal rate of return), which is highly sensitive to the time they hold an investment, so every extra year means they have to drive more EBITDA [Earnings before Interest, Taxes, Depreciation and Amortization] improvements," Botelho said. "Before, if they bought the company, took on leverage and flipped it in two years, especially in an environment where multiples [or] valuation was expanding, it was a lot easier to show attractive IRR. Now they need to attract the best managers to improve the business."

More Science than Art

According to panelist Mark Brownlee, associate vice president at Infosys Technologies, CEOs in publicly traded firms necessarily practice business as more of an "art" compared to the top executives at privately held entities, where expectations and results are uncluttered by the corporate "ecosystem." In public companies, this ecosystem comprises "their trading partners, shareholders, their public culture and brand, and ... far too many people to answer to," Brownlee said.

At the private companies he has worked with, however, executives "don't care about an ecosystem," Brownlee noted. "[They] are much more isolated and can make more independent decisions. Management teams can be more like business technologists -- they understand the science of running a business. With a public company, you need to be the face of the company, dealing with analysts and [having] a constant interaction with the media. [Private] companies are great places to be because that's where you can work with people practicing the science of business."

Jonathan Hsu, CEO of New York-based 24/7 Real Media, a digital marketing firm, agreed. The comparison is "pretty stark," Hsu said. "Running a mid-size company and [being] responsible for everything makes you tougher than someone entrenched in a large public company."

Increased liability for public company executives and enforcement of the Sarbanes-Oxley Act, in addition to the comparisons shareholders have made with returns garnered by hedge funds -- fair or not -- have only exaggerated the distinction, Hsu added. "These trends have made public company executives more short-term focused [on] quarterly earnings targets, and in general, more risk-averse."

"For us, the title of CEO doesn't really exist," said Jude Tuma, founder and managing partner at Geminus Capital Partners. "When hiring a CEO, I do not look to a public company, [where a candidate would have] a very defined role. At private enterprise, we're looking for someone who can do a lot of different things."

Hsu suggests that the time it takes to interact with a public company's board and its shareholders -- what he called "a glorified cocktail party that you have on the road, all the time" -- detracts from a CEO's performance. At private companies, "quite frankly if you do well with the bottom line they leave you alone." Not so with public "corporate overlords," he said.

Lambs and Cheetahs

Botelho stressed that the panel was discussing private equity-backed firms, not necessarily private companies in general, and that top CEOs at publicly traded firms can be just as nimble and focused on the bottom line as their private counterparts. "Jack Welch is probably one of the best examples," she said.

To fine-tune the comparison, she referred to a study that ghSmart did in collaboration with economists and finance professors at the University of Chicago. It analyzed in detail assessments of more than 300 candidates for CEO jobs at firms funded by buy-out or venture capital investors. Candidates were rated on more than 30 specific abilities under three leadership categories. The "Hard" category included leaders who are efficient, aggressive, persistent and proactive. "Soft" was characterized as being flexible, a good listener, open to criticism and a team player. The third group was neither particularly hard nor soft, but seen as being persuasive, organized, analytical and calm. These are all positive traits, of course, but the "hard" and "soft" candidates were later re-defined as "cheetahs" and "lambs," making it clear which group made for better performers in terms of the bottom line.

A surprising finding of the study was that buy-out investors are twice as likely to invest in lambs, probably owing to their interpersonal skills and the level of comfort they instill. The cheetahs made board members nervous with their aggressiveness and willingness to move forward without waiting for direction.

The "success" of the candidates who won the jobs at the firms ghSmart studied was determined in two ways, depending on if the CEO was still in the job or had left. If still with the firm at the time of the study, success was measured as meeting or exceeding targeted EBITDA. If he had exited, an attractive return on the investment was deemed successful.

The bottom line? According to the study's metrics, lambs achieved success only 57% of the time. The cheetah outpaced even the most bullish expectations, with 100% of those in the study earning their money in a "successful" fashion, according to investors' expectations.

"Where [the cheetahs] really spiked was what we call 'PEP talk' -- persistence, efficiency and productivity," Botelho said. "They drove hard, made the right decisions and went at it pretty relentlessly. The other group is [the one] we'd like to have dinner with. What made them special was consensus-building."

Given the results, she said, "When looking at CEOs, you're probably going to go for a cheetah." Later, in an interview, Botelho said she would never suggest that the best public company CEOs are not talented, driven and bottom-line oriented. Though the panel focused on private equity-backed firms with assumed profitability, it was also true that "there are scores of private companies that are family- or founder-owned, or are partnerships that don't have the performance pressure that comes from having public shareholders or active financial investors.... Some of those fall far behind public companies in quality of talent, business practices and results."

Still, Brownlee's point about corporate ecosystems rang true to her. "The point is that the set of issues a public company CEO has to deal with is broader than that of a private company," Botelho said. "Therefore, their balancing act between different objectives is more complex.

She added that firms that take a long-term view -- public and private -- use down markets like the current one to grab talent they otherwise couldn't afford or attract. "For example, in the last downtown of 2001, American Express hired a lot of people out of top strategy consulting firms when those firms were struggling with decline in demand. We see the same with our clients now -- they are actively looking for strong performers that are 'poachable.' In private equity in particular, it's typically difficult to attract senior talent from other firms because of carry (the executive's financial interest in the portfolio companies when they sell the company). In times like this, some of the portfolio companies are starting to struggle, and therefore carry is not looking as valuable as it did 18 months ago. The challenge for these companies is to have strong assessment processes to differentiate truly strong performers from thousands of average players."

Have You Organized to Maximize Business Partnerships?

For years I have organized my HR group around the departments/business groups they supported. As you look at all the discussion lines, websites, and blogs relating to HR being a business partner one could only wonder why we have centralized HR departments. Sure, there are come corporate needs but at the divisional, subsidiary, or non-corporate locations at are not noted beforehand here why is there a need.

Well some will say that is how we are organized and that's that. I can only say you who say that are not the HR leaders of today or in the future. How better can your HR managers/directors get more involved in the business, outset of issues, than when they are embedded in those groups they support. CENTRALIZED OFFICES ARE OUT!!!!!!!!!!

When you look at the competencies for HR professionals now and in the future, as Issac Dixson notes how better to hone these skills than to be in the thick of things with the managers, directors, and employees an HR person supports. Again these competencies are:

• Business Acumen
• Financial Savvy
• Quality Decision Making
• Managing Diversity
• Learn on the Fly
• Sizing People Up

These competencies are more in demand than ever in our businesses. So, take a look at your organization and think hard about your structure and how you can better develop your staff. Move them into the firing line to learn, grow, and develop into the HR leaders of the future.

Your opinions and thoughts are welcomed. Challenge this premise and let me know your thoughts.

HR Competencies for Today and the Future

If I had to look at competencies for HR professionals now and in the future Issac Dixson says these are important:

• Business Acumen
• Financial Savvy
• Quality Decision Making
• Managing Diversity
• Learn on the Fly
• Sizing People Up
  

These competencies are more in demand than ever in our businesses yet he still finds people entering the field that have little to no background or experience in any of these areas. If we add to this the significant legal exposure it makes me wonder why many organizations still feel that “anyone” can do HR stuff.

As a profession we must continue to insist on excellence, shun party planning and gift basket preparation (employee committees can do this stuff). Focus on strategy, get our staff’s tactically proficient and push information out to managers, leaders and employees.

Halloween is Tough This Year Huh !!!

What Current HR Issue Will Become Irrelevant in 5 Years?

There has been a lot of banter around HR sitting at the table as a strategic business partner and most recently was an asked question on Linkedin. A commonly shared belief around HR & corporate executives was that HR will no longer be asked whether it has a seat at the executive table. Why you ask, because HR will be and more commonly is today viewed as a valuable business partner who has demonstrated its value and ROI. As the business and world environment increases in competition and complexity, being strategic will become a must for those HR executives still vying for a seat. It is my feeling that the issue of the HR executive making it to the C-suite will become irrelevant in 5 years for those companies that want to remain competitive in today's world.

I think that another current HR issue that will become less relevant or irrelevant in the next 5 years will be the process changes HR makes. In the world of connectivity, outsourcing, and tools at hand, HR can hand those process issues off to operations partners and continue to outsource those administrative tasks. In the information technology world of today, there will be more self-service options, managers taking greater control over what has been an HR bastion. With these changes it will become increasingly important for HR professionals to have knowledge and understanding of the various business functions within their organizations, as they relate to the organization as a whole. To quote Dennis Roberts of Bush Industries, Inc. " transactional HR activities currently outsourced in many organizations will likely disappear off the radar screens of most HR executives in the next 5 years".

SHRM has listed 5 key issues that they feel, based on research, will become irrelevant:

1. perceptions about the value and role of HR
2. changes in health care/cost management and employee benefits
3. alternative work arrangements
4. influence of technology on the workplace
5. other human capital issues.

Well, all these are very key issues but if you were to pick 1 or 2. I would nominate the ones noted above. As for these, the election may take care of the health care issues, we should be addressing alternative work arrangements already (read my blog post dated 7/708), technology has already made its way from the PC to the web and we should all be there by now, and other human capital issues is a catch all for things HR should be doing now strategically for their organizations (i.e.: recruitment, retention, compensation, succession planning, workplace ergonomics, etc.)

You comments and thoughts on this subject are welcomed.

How to Build HR Credibility

Credibility—it's hard to establish and it's easy to lose. Yet, it's critical for HR success. Today, one expert's take on how to lose it.

The respected HR Competency Study, conducted by the University of Michigan Business School and its partners, has identified six core competency domains for HR managers:

• At the basic "relationships" level: Be a Credible Activist
• At the mid "systems and processes" level: You Must Be an Operational Executor & Business Ally
• At the top "organization capabilities" level: You Are The Talent Manager/Organization Designer, Culture and Change Steward, & Strategy Architect

While it's clear that all these functions play important roles for HR managers, the study identifies the "credible activist" as the most important. You need both parts, the study suggests—you must be both credible (respected, admired, listened to) AND an activist (offers a point of view, takes a position, challenges assumptions).

With only credibility, HR managers are admired, but have little impact. And on the flip side, activists without credibility may have great ideas but they will not be listened to.

The study notes that this credible activist combination is often called "HR with an attitude."

Your comments and ideas are welcomed.

Have You Minimized Your Axability?

I am sure many of you are asking yourself "is my job safe; am I going to lose my job; or am I next in line to be laid off". Well in today's world if you are a realist you would be asking yourself these questions. If you can believe this, I did every day for 20 years at my last company. Don't call me paranoid, call me a realist. You can be a star one day and a goat the next. Anyone who thinks otherwise should have their head examined. Today business is business and not a welfare home.

So to minimize your axability (or RIFability to some) you should think about the following things to protect your job in a recessional economy:

• Act like a manager/survivor/partner/leader. You should act confident, always add value each day to the area you work in and always be available. Provide advice and ideas that will strengthen the business environment in a confident manner.
• Provide your leaders with positive hope. Give them the sense that they are moving in the right direction. As always make sure it is in the right direction and you agree with the approach. I don't mean brown nosing here.
• Get to work early. Don't be the straggler, the one who always comes in just after work starts or calls in repeatedly with some lame excuse.
• Look busy. That means not busy work but good solid work that you can see the product as well as others.
• Be part of the organization. Your success will be monitored by your participation in the organization. Be visible, be noticed, be out there with the troops. Don't be an outsider. That old saying the train is leaving the station and you better be on it or get run over. When I mean run over I mean "see ya, your fired".
• Plan B-D. If you can not follow these very simple guidelines you will be another plan which may mean looking for another job. The thought here is do it while you are still employed.

To further this thought you should read the September issue of Harvard Business Review (http://www.hbr.org/) . It articulates the thoughts here in more detail from 2 very credible sources besides myself, Janet Banks formerly of FleetBoston and Diane Coutu from McKinsey & Company.

International Mobility

International mobility, where professional employees are required to work cross-border and remotely in order to meet corporate and client needs, is set to become even more virtual and certainly more widespread in the future. The need for an internationally mobile workforce comes as a result of sharpened competition, the pace of globalisation and the pressure to operate on a trans-national basis. Although expected to expand increasingly over the coming years, cost pressures, lifestyle choices, changing work practices and improved technology will be making changes to the traditional nature of international mobility. But having good people amounts to nothing if a company doesn’t have good people management. For companies that do business globally, the need for broad, comprehensive HR programs that anticipate, and address, the myriad issues that come with having an internationally-dispersed workforce is absolutely crucial. It’s essential that you have in place a competitive international mobility programme that is not only aligned with your business strategy but also facilitates the transactional aspects of international mobility.

If this is your situation:

• You need to ensure that your international assignment policies are aligned with and meet the needs of your business while being cost efficient.
• You want your international assignment delivery structure to be efficient and to use technology effectively.
• You need tax-efficient international assignment structures and policies.
• You need to manage risks by complying with regulations in the locations where your global workforce is deployed.
• You need tax-efficient international assignment structures and policies.
• You want to ensure you are selecting the right staff for international assignments and that their performance is meeting business objectives.

Your comments and ideas are welcomed please reply to this blog.

Human Resource Strategy & Business Effectiveness

The world of work is changing: outsourcing, international mobility, talent shortages, new labour laws, globalisation, shifting demographics, an ageing workforce. Where, how, and for whom, people work is, in turn, transforming company structures and cultures. Over the next decade, the convergence of dominant business, demographic, and social trends will only accelerate the changes sweeping through today's workplace. In fact, people issues within the workplace are now a priority on the boardroom agenda. Companies have realised that a successful business depends on how you design and implement a people strategy that is properly aligned with, and supports, your business strategy. Only then can HR become an actively participating strategic business partner in implementing plans and achieving budgets. As a result, HR leaders are under more pressure than ever to demonstrate results from their workforce practices and policies; they are being encouraged to implement people strategies that support the organisation's business objectives and increase accountability and transparency around people management and reporting. The bottom line: HR is increasingly seen as a strategic linchpin—one that needs to work closely with operations, finance, and other corporate departments to help drive business strategy and success.

If this is your situation:

• You need guidance in developing and deploying HR strategy and planning services.
• You want to create a new HR service delivery model.
• You have decided to create and implement HR scorecards but don’t know where to begin.
• You have to benchmark your core HR processes—locally and globally.
• You need to identify key performance indicators for your HR function.
• You must align your HR strategy with your organisational culture, values and business strategies.
• You want to leverage your HR resources so that you become an employer of choice.

Your comments and additional ideas are welcomed.

EEO-1 Deadline is September 30

Employers have less than two weeks to prepare and submit their EEO-1 reports. SHRM members can receive resources on this topic from SHRM's Express Request service (select key term "FALL: EEO-1.")

2009 HR Budgets

I am sure by now most of you have begun your 2009 budget cycling and for HR 2009 will be a bell weather year. As you look at the economy, recent corporate layoffs, corporations that are or have been crashing and burning, you need to make sure you place your budget dollars in the right spots. So, where are they you may ask? You need to look carefully at the following areas to ensure that you focus on retention of your stars as well as those in key positions that you do not want to lose.

It is also time to look at those resources that you have outsourced. It is critical that you look at those costs carefully and renegotiate with those providers harder than you ever have before. The budget dollars you save on renegotiating fees you can place in retention programs and general employee based programs that will keep your employees at your company and also as an attraction mechanism for those you intend to recruit. Here are some areas to concentrate on if you have not already:

1. it goes without saying that you should zero base your 2009 HR budget for every line item
2. renegotiate your recruitment fees for contingent and retained searches
3. review and renegotiate where necessary web-based expenses
4. renegotiate wellness programs you already have in place
5. strong review of your benefit packages and survey to make sure you have the right mix of programs
6. training programs and web-based learning
7. employee satisfaction survey to make sure your employees are in harmony with the strategy of the company and your entire employee program mix
8. review of compensation programs to ensure you are maximizing productivity
9. orientation is key to what an employee feels about a company in the early stages of their employment
10. travel & relocation, making sure you have the appropriate dollars in place to keep in front of your employees to stop-gap any impending issues
11. utilize your dues and subscriptions that build your team and strengthen the organization as a whole
12. make sure there are budget dollars for your intranet so it is the first place employees go for information

These are just a few key budget items that you should be looking at to maximize your budget and how you spend your budget dollars.

As always your input and comments are welcomed.

New Law Will Allay Fears of Genetic Discrimination

On May 21st, the Genetic Information Nondiscrimination Act (GINA) became law. The new law was enacted to protect individuals on the basis of their genetic information in both employment and health care.

What is genetic information? GINA explains that genetic information is information about a persons’ genetic composition, or a persons’ family history of inherited traits and disorders.

Perhaps the most relevant to HR professionals, the new law will make it illegal for an employer to discriminate against an employee due to the employee’s genetic information or family member’s genetic information. GINA will further make it illegal for an insured or self-insured health care plan to deny eligibility to enroll for health care coverage or change plan premium or contribution rates because of an individual’s or family member’s genetic information.

The new genetic nondiscrimination law will prohibit an employer form requesting or otherwise acquiring a person’s genetic information, except when such information is needed for FMLA compliance, used for an employer-sponsored genetic service or wellness program, or when such information is commercially available. Some inadvertent acquisitions or genetic information may also be permitted under GINA.

In addition to the new federal statute, most states have their own restrictions on genetic information (only PA, ND, & MS have no genetic information statutes). HR professionals should know that GINA will allow state laws that provide additional protections to individuals, above and beyond the federal statute, to supersede the new federal law.

The employment provisions for GINA do not become effective until November 2009, or 18 months after President Bush signed the bill into law. The provisions pertaining to group health plans become effective May 2009 – one year after the date of enactment.

As legislation develops, keep in mind that you can get involved in the issues that may impact your workplace by expressing your views through SHRMs HRVoice program. SHRM members can plan an instrumental part in influencing HR related-information at the federal and state levels by using HRVoice. Visit www.shrm.org/government/hrvoice .

Today's Best and Worst Cities for Salary Growth

Let's face it, most of us wouldn't complain if we were offered a raise. Used to be, you could expect at least a cost of living raise once a year. But these days, that's not necessarily a given.

The Bureau of Labor Statistics reports the average cost of living in the United States grew by 4.1 percent in all of 2007. But average wage growth was 3.4 percent, according to CBsalary.com. This year, the BLS reports the cost of living has already grown 5.5 percent. These numbers, unfortunately, are troubling to the average worker.

So where do you have a better chance of earning a raise that at least matches the cost of living increase? And where is salary growth seriously lagging? We looked at the top 200 metropolitan statistical areas in the United States and identified the 20 cities with the fastest wage growth and the 20 cities with the slowest.

The results varied even within individual states. While wage growth in College Station and Waco, Texas grew at a healthy clip in 2007, growth in other Texas cities like Amarillo, Tyler and Victoria, was sluggish. California had three cities among the 20 with the speediest growth. The Northwest (Idaho and Wyoming) and Southeast (Florida, Louisiana, Mississippi and Texas) regions had solid growth as well.

Fastest Wage Growth
College Station-Bryan, Texas2007 salary growth: 9.5 percent
Gulfport-Biloxi, Miss.2007 salary growth: 7.2 percent
New Orleans-Metairie-Kenner, La.2007 salary growth: 6.8 percent
Redding, Calif.2007 salary growth: 5.9 percent
Merced, Calif.2007 salary growth: 5.7 percent
Boise City-Nampa, Idaho2007 salary growth: 5.5 percent
Dover, Del.2007 salary growth: 5.4 percent
Pocatello, Idaho2007 salary growth: 5.3 percent
Baltimore-Towson, Md.2007 salary growth: 5.3 percent
Wilmington, Del.-Md.-N.J. 2007 salary growth: 5.2 percent
Jackson, Tenn.2007 salary growth: 5.2 percent
Casper, Wyo. 2007 salary growth: 5.1 percent
Atlantic City, N.J.2007 salary growth: 5.1 percent
Santa Rosa-Petaluma, Calif.2007 salary growth: 5.1 percent
Lakeland, Fla. 2007 salary growth: 5.1 percent
Waco, Texas 2007 salary growth: 5.0 percent
Houma-Bayou Cane-Thibodaux, La. 2007 salary growth: 4.9 percent
Athens-Clarke County, Ga. 2007 salary growth: 4.9 percent
Chicago-Naperville-Joliet, Ill. 2007 salary growth: 4.8 percent
Chico, Calif. 2007 salary growth: 4.8 percent
Slowest Wage Growth
Florence-Muscle Shoals, Ala. 2007 salary growth: 0.1 percent
Ocala, Fla. 2007 salary growth: 0.9 percent
Alexandria, La.2007 salary growth: 0.9 percent
Kalamazoo-Portage, Mich. 2007 salary growth: 0.9 percent
Saginaw-Saginaw Township North, Mich.2007 salary growth: 1 percent
Springfield, Ill.2007 salary growth: 1.1 percent
Visalia-Porterville, Calif. 2007 salary growth: 1.1 percent
Brockton-Bridgewater-Easton, Mass. 2007 salary growth: 1.2 percent
Waterloo-Cedar Falls, Iowa 2007 salary growth: 1.2 percent
Decatur, Ala. 2007 salary growth: 1.4 percent
Dubuque, Iowa 2007 salary growth: 1.4 percent
Cedar Rapids, Iowa 2007 salary growth: 1.4 percent
Amarillo, Texas 2007 salary growth: 1.5 percent
Weirton-Steubenville, W.Va.-Ohio 2007 salary growth: 1.6 percent
Greenville, N.C. 2007 salary growth: 1.7 percent
Gainesville, Fla. 2007 salary growth: 1.7 percent
Victoria, Texas 2007 salary growth: 1.8 percent
Sheboygan, Wis. 2007 salary growth: 1.8 percent
Tyler, Texas 2007 salary growth: 1.8 percent

How Do You Identify Your Company's Future Leaders

In observing the future leaders of companies I have worked for over the past 30 years there are certain traits that you as human resources practitioners should look. Here are some key helpful hints on how to identify your future leaders. If you install these into your succession planning your company will benefit:

1. individuals who deliver consistent results;
2. individuals who demonstrate that they can grow, adapt, are flexible, and lave the penchant to learn faster and better than their peer group;
3. continually demonstrate looking for challenges, assignments, move out of their comfort zone while showing excellent judgement;
4. individuals who take leaps of faith in innovation to grow your business;
5. individuals who are not satisfied with the status-quo and who look to take opportunities to the next higher level;
6. individuals who have excellent decision making, looking for team input rather than shooting from the hip;
7. individuals who think through a problem or opportunity clearly and have the guts to be open, honest, and authentic in a point of view, and
8. individuals who question voraciously to determine the proper direction and instill a sense of innovation and imagination in their resolve.

What are your thoughts and opinions. Your comments are welcome.

Corporate & Social Return on Investment

In early August (August 5 post) I outlined the need and importance of social and corporate responsibility. As the cultural landscape continues to change, we have found that there are big returns when companies and their employees give back to the community. This is coupled with employees continued interest in giving back to the community and the environment where their company is resident or the city/town/hamlet where they live.

I discussed the compelling rationale on this benefit and what companies can do. In a recent study, there is evidence that employees who give back tend to remain longer with their company than those who do not. Think about your retention rate. As well, 27% of customers define corporate and social responsibility as a company's commitment to the community or environment & 76% of consumers who purchase goods & services produced by companies with strong social, corporate, or environmental output make their decision to buy based on that commitment.

So, if you are a smart company with smart employees you will benefit from providing the opportunity for employees to give back to their communities as well as the company you have to opportunity to gain additional market share. For that your shareholders will see a greater return on their investment (look at General Electric's 2007 Annual Report). These are powerful dynamics at work in our ever changing world. In addition, there is overwhelming evidence that companies with these type incentive and social conscience programs will significantly outperform those companies that do not.

Your comments and concerns are of interest and I would like to hear your feedback. Please email me.

Hiring from Outside the Company: How New People Can Bring Unexpected Problems

As life-long employment fades and the workforce becomes increasingly mobile, many companies look to hire skilled, experienced workers to improve productivity quickly. Those workers, however, often bring baggage from prior jobs that can negate the benefits of their prior experience, according to new Wharton research.

Companies might be better off investing in training fresh recruits with little experience in an industry so the companies can have more control over how the new workers adapt to their new employer's corporate strategy and culture. The research found that training may be more productive than paying a premium to hire experienced workers who might come from a different sort of corporate environment.

"Human resources managers will want to [hire] people who worked in a related industry or firm for the skills they bring. That makes sense from a human capital perspective, but we question whether that's all they bring with them. Do they bring other experiences ... positive or negative?" asks Wharton management professor Nancy Rothbard, co-author of a paper titled Unpacking Prior Experience: How Career History Affects Job Performance. Rothbard wrote the paper with Gina Dokko of New York University's Stern School of Business and Steffanie L. Wilk of Ohio State University's Fisher College of Business.

Drawing on psychological theory, the authors examined employment applications and hiring records at two call centers for a major property and casualty insurance firm. The authors set out to assess not only the impact of bringing in skilled and knowledgeable workers, but also cognitive and behavioral responses that developed during [the new workers'] previous employment.

When More Experience Means Less Success

In interviews with managers early on in the project, Rothbard and her colleagues discovered that the issue of cross-corporation baggage kept coming up. A senior human resource manager told the research team, "We tried to hire from our competitors and paid a premium for the experience -- but those hires were the least successful." Another manager quoted in the paper said: "People are weighed down by the baggage they bring in."

Rothbard says executives at the insurance company told of hiring a talented and highly trained adjustor from another insurance company. While the hiring company provided high-end insurance with a strong emphasis on customer service, the adjustor came from a company that was more focused on keeping costs down. Rothbard says the adjustor just could not help himself from "nickel and diming" customers on their claims, even though that attitude conflicted sharply with the firm's strategic direction and culture.

"It was so embedded in his ideas about how to do the job that even at this other firm, where management tried to instill the other set of values, it didn't translate," explains Rothbard. "He had the skills to get up and running quickly in the [basics] of what an adjustor does, but ... he was ultimately not adaptable to the strategy and norms of the new firm. His experience tended to trap him."

Rothbard describes employment "baggage" as a set of norms and experiences that shape the workers' response to their jobs as much as, if not more than, the industry and occupation-related skills and knowledge they bring to their work.

According to the paper, "Habits, routines, and scripts that contribute to performance in one organizational context may detract from performance in a different organizational context. That is, the relationship between prior related experience and performance may not be wholly positive. Indeed, despite the common assumption that prior related experience will improve performance, past research findings have been mixed about the effect of work experience on performance."

Rothbard and the other researchers were intrigued by the notion that the norms and values employees pick up in the culture of one firm are not easily shed as they cross organizational boundaries. "Those kinds of transfers really are not discussed at all when we talk about mobility of the workforce. We assume people are cogs that can be plugged in and they will perform similarly in different environments."

Incidentally, Rothbard says, managers in certain industries may find the research particularly important. "For example, consulting firms have very large differences in culture and strategy and mission. It can be very difficult to overcome the years of acculturation you get from one firm."

The transition between companies is an increasingly important issue for employers and workers. In the late 1970s, Americans were estimated to have an average of seven employers during their working years. By 2005, the U.S. Bureau of Labor Statistics found the average American worker born in the later years of the baby boom had 10.5 employers by age 40.

The research team reviewed the work history of more than 7,200 employees and applicants to explore the relationships between prior experience and productivity. Their findings show a strong relationship between prior experience and knowledge and skills on the job. At the same time, however, the models indicate that prior experience does not always signal increased productivity.

A Factor in Reviews: 'Cultural Fit'

Beyond those results, the researchers were able to examine employment reviews to delve into the question of individual employee adaptability and the impact on productivity. Supervisors rated employees on adaptability. The researchers found that people who were more adaptable did not reflect a negative relationship between prior experience and effectiveness on the job.

The authors also looked at "cultural fit" within the organization. For employees who felt they fit into the culture of the firm, the negative effects of prior experience in the occupation are not pronounced. For employees who said they did not fit well into the organization, there was a significant indication of the negative effect of prior "baggage."

Rothbard says the research findings are important not only in light of the increasingly mobile workforce, but also because so many companies are in a constant state of change themselves. "If your business has changed, you need to consider trying to retool people, not just in terms of their skills, but in terms of their values," Rothbard suggests. "Not that people can't shed these things. But it may take more training and socialization than you" first expected.

According to Rothbard, companies may want to use a mentoring program to help employees from similar companies readjust to the culture and mores of their new firm. "I know it seems odd that if you hire someone with experience to then say, 'Here's your mentor,'" Rothbard acknowledges. "But maybe they need a mentor for the values of the company, not so much the skills needed for the job."

Rothbard says that when companies hire employees with experience, they tend to rely on that experience as a substitute for training. "Maybe they pay more for those people and invest less in training, but we suggest that might be a mistake. You really need to think carefully about your training and socialization to mitigate the negative effects of the trouble people have transferring the way they think about how the job is done."

Finally the researchers used the data to gain insights into the role of cross-company transfers of skills, as well as cultural baggage, on long-term careers. The research indicates that the advantage of prior task-relevant knowledge and skills diminishes the longer an employee stays at the new firm.

"Over time as individuals become socialized into the new firm, the amount of prior work experience they brought with them matters less for the skills they demonstrate on the job," says Rothbard. "However, the negative direct relationship between prior work experience and performance does not diminish as much, suggesting that the norms and values people bring with them may persist quite substantially."

The new research findings should help companies develop hiring and training strategies that fit well with their own culture, Rothbard adds.

"If you have a strong culture and a clear strategy in doing things that differ from your competitor, you may want to think carefully about whether you want to hire for experience or whether you want to hire people with less experience and invest more in training them in your model," Rothbard advises. "If your competitive advantage is the culture of your company, you want to be careful about bringing in people with a long tenure in their occupation or industry and think about how that prior experience is going to bring positives as well as negatives to the firm."

What Kind of an HR Manager Are You?

Since there have been numerous articles on retention of employees every HR executive should be asking 2 very important and mission critical questions as a strategic partner with your CEO:

• what kind of manager am I?, and
• what kind of managers do I have in my organization? (this includes your CEO too)

As we all know, the biggest untapped opportunity within your organization is how managers and you as a manager shape the way people work together to deliver results. So, what kind of manager are you?

• a micro-manager (you know what this is)
• an arms length manager (macro-manager)
• a cloistered manager
• a secret manager (never tell the staff anything even the need to know stuff)
• a good people manager
• a task master
• an on and on

Well, I extend the challenge to each of you to look inside yourself and ask those 2 very important questions. Then you should reflect to see if your style is getting the best results from each individual, department, group, and business.

If the answer is yes then you win the lottery and you have tapped the greatest opportunity in business by unleashing the energy, creativity, and knowledge of your workforce.

If the answer is no then you really need to reassess how you manage, as well as your managers so you get the best results, return on your investment, employees that are engaged, and limit your turnover.

Your comments and opinions on this post are welcome to wgstevens2@gmail.com