HR development strategy

Imagine that you just invested a significant amount of money in a development program that aims to move your team to a leadership position in the market, a place that will give you a real edge in a few years.  It may be an adapted sales approach, a new collaboration matrix, a novel communication method, or a customer interaction system.  The management team understands this and sees the potential.  In fact, it is the management team that insisted on the effort.  They decided that without this, the competition will have such advantages in 2-5 years that the quality of our relationship with customers will not be able to compensate sufficiently to keep the momentum until the new product hits the market in 5 to 7 years.  The loss incurred will not be recovered.  In fact, the new product may as well not launch in that case.

Now imagine that about 15% of field people either decide not to adopt the new operational principles or are unable to do so but, in every case, their current results are such that their managers opt to overlook their lack of effort because their numbers look good.    After all, that’s what is evaluated in the end, the numbers, not the attitude, efforts or dedication to grow.  Quite frankly, numbers are much easier to measure. Please note that this is not a hypothetical situation, we have seen it happen a little too often.  In addition to that, because of the way the recognition programs are structured, the chances for any of those individuals to earn more as well as become the employee of the year, or being celebrated publicly throughout the corporation are very, very high.   This, we have also witnessed many times.   Now consider the following questions:

1. What does this say about corporate priorities?
2. What are team members supposed to do with the new initiative?
3. How are team members interpreting the message sent by those actions?
4. What is the point of that investment?
5. What is the actual cost of the initiative?

Chances are that most people reading this can relate.  You have seen it happen; you have lived it.  You have felt the results.

Let us explore a few potential answers.  All of them are based on factual information.

Question 1: What does this say about corporate priorities?

Clearly, it indicates a focus on immediate results being more important, in the short term, than long-term results.  It says that, while we understand that our future depends on the growth of the competencies identified in the development programs, we are not willing or able to truly invest in that future.  In a public company, shareholders must be happy.  If the leadership team is not able to explain decisions and actions over a period of 10 years in this case, the need to please investors is founded on short term results.  The plan is therefore to invest in the future but do whatever to keep current revenues stable.  It is not a bad approach in itself.  What is often overlooked are the consequences associated with the short-term view.  It may also speak of the compensation package of the CEO.  But that is another topic.

In a private company it may indicate a lack of courage or true understanding of consequences.  It may speak of a lack of vision or that too many members of the leadership team are close to retirement.  This is real folks.  Companies have actually avoided investing in their future because a contingent of partners close to retirement did not want to see their year-end compensation reduced by 5 to 10 thousand dollars on an average $500,000.00 package.  What is $10,000.00 for anyone making more than half a million dollars?  More importantly, what does it say about the leaders of the company?

We can explore dozens of possible reasons for either public or private corporations to “overlook” investing in the future to support short-term results.  The question remains, what does it say about priorities?  Whatever the reason, the main conclusion is that the short-term wins over the future.  If an employee, whatever their level, also comes to this conclusion, how do they see their future in this group and where will they focus their efforts?  That leads us to the second question.

Question 2, what are team members supposed to do with the new initiative?

If a person sees the value for them, they will adopt the initiative.  They may look at the longer-term possibilities and determine that their mastery of key competencies will be an asset.  It may even help them in the short term.  If the company fails in their readiness to face the competitive product, they will have developed skills that can more easily transfer to another corporation.  That way of looking at the initiative will serve them even if it means using the competencies elsewhere.  In short, the company invests in their future at the risk of losing them when those skills are more relevant. 

Another person, as it is depicted in the second paragraph, decides that the effort to change is more costly than the immediate return.  Their current trend indicates that they are likely to max out on their potential bonus without the pain of learning something new.  In addition, they may be recognized as “the best” which in turn, will likely make them more attractive to another employer if things take a downturn in just a few years.  And while their manager may be on their case in the short run, they know they will eventually be left alone. 

One may imagine numerous other possibilities but in almost all cases, the decisions will be founded on personal value rather than team impact.  In itself, that is not the real problem.  We should all look at options that improve our prospects.  The problem resides in the probable deterioration of the team dynamics and the resulting consequences.  A few of those consequences are illustrated in the answer to the third question.

Question 3, how are team members interpreting the message sent by those actions?

One interpretation is that the leadership team does not know what they are doing.  I don’t know about you but if I conclude that leaders having influence on my career do not understand their own actions, my trust in them is seriously jeopardized.  If that is the case, I am likely to dismiss most of their decisions.  The result is that I will do what is right for me and my clients based on what I know, not on what I should consider as a better option.

Another interpretation is that someone had a budget to spend and did just that, spend the money.  If using a budget is the basis for a decision, I am likely to dismiss or overlook the actual value of the decision and the object of that decision.  Anyone with a few years in an industry will soon recognize the “flavor of the month” effort and give just enough to be left alone.  Whatever value the initiative may have is likely to be lost.  What a waste.

I am convinced that you can identify several other interpretations that most likely go down the same direction.  And in most cases, the end result is similar.  So then, what is the point of making that investment (question 4)?

If management sees the need for the future but remain focused on the short term.  If team members individually benefit or dismiss the effort with little to not positive impact on team collaboration.  If people see this initiative as disorganized or as a “make-work” project.  Why do it?  Why spend money that is considered a waste?  Why give energy to something that is not valued?  Why ask people to invest when leadership does not?  How many decisions are made on the wrong premises and result in more damage?

Which leads us to the final question, one that we must ask with more regularity.

Question 5, what is the real cost of the initiative? 

A first aspect is obviously associating the dollar value with the results or opportunity cost.  If the initiative costs $2,000.00 per person involved, how do you know that this amount is recovered, when it is and, more importantly, what increases in revenue or profit result from the investment?  We must be convinced that it was worth it if we decided to go ahead with the initiative, right.  One way to evaluate the results is to measure changes in sales trends for each person involved, or revenue change.  A better way is to compare a group of people that went through a growth initiative versus one that has not.  If both groups were trending in the same direction and one has changed its direction following the initiative, the difference is the result of that very initiative.  See https://aseret-uido.com/results/ for more information.  If no difference exists after a reasonable time span, the initiative was not useful.

What about other costs?  If a group is told that an initiative has been put in place because it is believed to be important for everyone, people will expect that all involved must join the effort.  In our case, 15% of people just don’t change.  And of these people, none seems negatively impacted.  In fact, it starts going around that those individuals are left alone.  They can keep doing what they did before.  Moreso, these people are ultimately recognized by the leadership as the “best”, the “winners”.  And yet, the other 85% are told that they must adapt their way.  What are some of the consequences of that?  Dip in trust, disillusion, incomprehension, disdain, sarcasm, condescension, and disengagement.  What does those cost?   Imagine that any of these thoughts or feelings lead to the voluntary departure of 3 of the people you identified as key potentials for the future.  It is estimated that the replacement of such people, taking into account the impact of their departure on their clients or contacts, plus the fact that they may be joining forces with a competitor, and training another person, could be in the vicinity of $220,000.00 per person.  What is the net cost of this situation?  We often overlook the hidden costs of certain leadership behaviors because the other costs are easier to measure.  Putting pressure on an individual to change when their revenue numbers are good puts us immediately in a situation in which we see the implementation of an important initiative as a potential loss.  It is much easier to push other people that are not meeting their revenue potential because we also see a loss of potential revenue.  What would we do if, on the contrary, we looked at those situations from a more positive perspective, one of potential gain.  The person already attaining expected revenue may in fact be underperforming based on the existing potential, therefore, helping that person grow may have a seriously positive impact.  The person that must increase their revenue base may react very productively if we coach them in a positive manner, looking at the longer-term impact rather than immediate progress.  The point is that if a decision is made for a valid reason, it should apply more broadly and with an outlook on the future. 

Let’s look at the loss associated with a strong potential employee leaving.  If it costs us $220,000.00 in one year to replace that individual, how much is the 15% compensating for that in immediate revenue?  What is the longer-term cost?

The point is not to say that the15% are bad people and they should be forced to accept reality.  Neither are we saying that it is OK to let them “do their thing”.   The point is the following.  If the initiative is indeed important for the future, a company must have the courage to implement it completely.  Otherwise, don’t do it.  Save that money for something else that is going to be meaningful.

Some of you may say: what about splitting the apple in two?  You mean going halfway in with the initiative?  Are you thinking of encouraging people with a future to grow and letting short-term returns come in until they don’t?  Well, to avoid the costly consequences enumerated above, you would need to plan in advance and make both half of the apple part of your plan.  You must be able to explain your actions and the expected results.  But then, what do you say to the people that will soon be “disposable”?  How is going halfway in explained, and how will people react?

A key aspect here is decision making and its impacts. 

1. Are you clear on the objective.
2. Are you looking into various options?
3. Are you considering the outcomes?
4. Can you evaluate the costs associated with each outcome?
5. What action will best help you meet your objective?

First, are you clear on your objectives?  Do you want to prepare for the future and yet limit short term losses?  In this instance, I would ask this: what is the most important part of that objective for the future of the company?  If it is the future, then what will be the most efficient way to get there? If ensuring optimal short-term returns to secure the future is your objective, great.  How will that be done?  What is the process behind meeting that objective?  Clarity of objective helps eliminate options early on to focus on viable alternatives instead.  What was the objective of launching the Challenger Space Shuttle in January 1986?  Stop the bad press, look decisive, avoid another delay, or ensure that we have every possible chance to bring the crew back alive?  Nobody would say that the last objective was not “the one”.  But was it the objective used to make the decision?  We now know that it was not. 

If the objective is to prepare for the future and yet limit short term losses. The second step is to evaluate the various options to meet that objective.  We touched on a few earlier.  Then step three is to consider the possible outcomes for each option.  In decision-making we tend to orient the decision toward the option that has the least negative with the most positive outcomes.  Step four is to quantify the cost of the options.  Losing 3 people that are part of our future will likely cost $660,000.00.  To what extent is that acceptable against the non-attainment of expected revenue for the year? Well, that depends on the associated number to that option.  And what is the cost associated with delaying our initiative by 1, 2 or 3 years?

Once options, their probable outcomes and costs are evaluated, a decision to act is necessary.  It does not mean that adjustments should not be considered.  Not at all.  It does however imply that changes must be seriously evaluated and in line with the original objective.

And maybe the most important question of all: If you have an objective and consider an action, it must be because something of value must be done.  That usually stems from an existing problem, right?  So, what is the problem that needs fixing?

In too many cases, the issue is not the decision to act, it is a misguided evaluation of the problem.  In this case, the problem seems to be that the current approach will not enable the group to be well positioned in the near future.  If that is the case, the loss incurred with be felt at multiple levels.  The other problem is that short-term results overshadow the long-term prospects.