Maybe the huge internal market in India ensures sales and profits are easy to obtain so the rapid growth takes corporate leaders' eyes off the ball. This generally builds problems for tomorrow. And tomorrow promises to be more difficult as other developing countries, where labour is less expensive than India's, are learning the same outsourcing game.
India Inc. has problems in terms of getting sufficient ‘qualified’ people to work in certain roles. This has led to fast escalation in salaries and salary expectations as experienced people are ‘poached’ from competitors at a premium. This too is taking large bites out of the productivity apple.
As a result, we have leaders who are not leading, high levels of disengagement (our research shows around 70 percent are less than happy at work) and severely high attrition. The costs are horrendous.
There is much that can be done to assuage this but there appears to be a dearth of sufficient experience and practical understanding of not only people and performance in the workplace but also of the kinds of strategies that can make a real difference.
Important questions need to be asked and solutions found – before it is too late.
1. How much product do we need to produce & sell, just to pay for our attrition?
Many HR departments will be able to give a fairly accurate picture of what the cost of replacing a person might be. This should cover tangibles and maybe a fair guess at what intangibles might also be involved. We may even get an estimated total cost of our attrition for the past one year.
Attrition is a direct hit on the bottom line – our Profit Before Tax – but how many CEOs put this into true perspective by asking the question "How much product do we need to produce & sell, just to pay for our attrition?"
The answer clarifies the tremendous amount of time and effort that needs to be expended before any profit can start being made by the organisation and focuses the mind more clearly. It also leads to the other questions that now follow.
2. For recruitment/selection, our managers only mention skill sets required for a role. High performance demands important behavioural strengths. How do we determine these?
Too much emphasis is placed by recruiters on experience and skills when these can in fact mean relatively little. In so many cases, it merely means they have been working in that kind of role but it does not necessarily mean they have done a great job – which is what we need done.
Even if a person has had great success in a similar role in another company, it does not guarantee they can or will repeat their success with ourselves – in our culture, with our team, in our market ...
Consider this: How many people fail due to lack of skills, knowledge, experience, qualifications or training compared with the large numbers that fail for behavioural reasons: not being a real leader, negative attitude, immaturity, lack of persistence, and so forth?
A very high percentage of – even experienced – recruiters do not really understand what they should be looking for. Not knowing what we need is the first major step to non-performance.
It is time to rethink our benchmark criteria to ensure more high performers are selected.
3. How do we ensure we select a candidate who is more likely to be a high performer by objectively assessing their behavioural strengths against the role?
What percentage of our managers are real leaders and inspire people to enjoy producing great results? What percentage of our salespeople are real stars? Does this person naturally focus on detail as much as the job demands? Will this individual be able to take the pressure of a fast-paced job? Can this applicant face the tough situations we will throw him into?
It has been statistically proven that the normal interview is only about 14 percent accurate in determining future performance. That means an 86 percent chance of getting it expensively wrong. Is this a strong foundation for building a successful business?
What tools are we using to objectively measure candidates' behavioural strengths against the benchmarks for high performance? How robust and accurate are these tools? Are they working for us?
Selecting the wrong person for the job is the second major step towards non-performance. It is crucial to get it right most of the time – not just some of the time.
4. The strength of our leadership is extremely important. Why are we hiring or promoting such a large percentage of non-leaders into management positions?
Part of the reason is our desperate attempt to retain experienced people. They are promoted into Team Leader and beyond in order to try to keep them. The usual result: "we have lost a good contributor and gained an ineffectual manager."
Another part is not using any objective and robust assessment of the person's natural predisposition to lead and whether their leadership style is likely to be positive for the situation they will be in.
We are swayed by the fact they have been managing in their current role and we do not probe effectively to find out whether they really enjoyed such challenges or whether they really had to lead or instead just follow directions -- in other words, they did not actually manage, it was just a title.
Apart from these factors, do we check the person is mature enough to take real responsibility and persistent enough to face difficult situations?
Things must change because lack of leadership is strangling our potential and is yet another barrier against retention.
5. Why don't all the expensive Leadership Development initiatives make much of a difference to leadership performance and effectiveness?
Large sums of money are expended in an attempt to "turn people into leaders." The real cost is, again, how much product we must create and sell just to create the profit to pay for this? So why aren't these costly exercises producing the significant ROI we would expect?
Unfortunately, what is not normally understood is, if a person is not naturally a leader, "development" will be unlikely to be successful. What is expected of them is too uncomfortable for them to enact, so it doesn't get done.
This presents two issues. First, why are we selecting non-leaders into leadership positions? Second, why aren't we using training budget to train people in what they can excel at rather than what they dislike having to do?
Why aren't we training people in a way that capitalises on their (behavioural) strengths so that both they and the organisation benefit?
6. How do we objectively support a manager in the practical understanding of what to do (and what to not do) to create a ‘tailored’ climate for each individual to be motivated, productive and successful?
Motivational theory is all very well but how should it be applied in my workplace with this person? How long does it take for a manager to understand a person well enough to know what kind of leadership the person needs?
Without this practical understanding, we are greatly increasing the potential for mistakes – leading to disengagement, low productivity and attrition.
The old saying is true: "people join a company but leave their boss" and with positive leadership sorely lacking in Indian companies, we have a potent recipe for attrition.
To increase retention, we need a simple, straightforward way of helping our managers be more successful in dealing with people: a simple but effective guide for understanding, coaching and developing a person as a unique individual.
7. How do we provide quick and objective feedback to a manager about who is getting disengaged, with possible reasons why, enabling the situation to be remedied fast?
How often do we know in advance that a person is beginning to feel disgruntled at work? Unhappiness tends to build slowly over a period of time, which makes it difficult to notice – until it is too late.
‘Too late’ unfortunately translates into lower morale which in turn leads to a decline in productivity, customer service, retention and profits.
How large is the potential for disengagement? Gallup research in 2002 found over 70 percent of employees disengaged. Our study of hundreds of McQuaig Profiles taken in India has revealed a similar disengagement level. This illustrates the reality – the crippling loss of potential.
Why haven't we got an ‘early warning system’ or regular form of ‘health check’ to enable us to provide an effective remedy while it is easier to deal with? Why should we wait until it is incurable? How can we ensure we apply remedies that hit the causes rather than just the symptoms?
8. Although we may be gathering data on why people leave us but are we also analysing what makes the longer-term employees stay as long as they have?
Although exit interviews and other methods of gathering reasons for people leaving may well prove of benefit, does this tell us enough?
No doubt there will be certain pockets where attrition levels are higher than elsewhere in the organisation and conditions specific to those areas will lead us to possible causes. The management style of the person heading such an area might well be an example.
But should we not focus on the other side of the fence as well? If we have longer-serving employees who are also good performers, what is it that makes them different? Such a study could reveal important factors that need to be addressed at recruitment stage or in terms of what behavioural strengths their managers possess that make a real difference for their direct reports. Such information will provide a solid foundation for a strategy to "get it right more often".
9. Why is HR so expensive to run? Their budget costs the company dearly.
In the majority of companies, accountability is where it shouldn't be instead of where it must be.
Why do we give HR department a budget? They are not a cost centre. They are a service provider. In reality, various departments incur the costs, not HR.
Consider this: I am an awful manager, pushing my staff unduly hard to meet my targets. My area has low morale, attrition is very high and HR is running around counselling my distraught staff, undertaking exit interviews and recruiting replacements for me.
What happens? My appraisal focuses on the achievements against targets and I get a great increment - maybe a promotion. The fact that I am costing the company dearly is neither seen nor considered.
If HR calculates the cost of their services and charge them back via MIS, what will be the impact on my departmental P&L? My cost to the company will be evident – I am failing in my responsibility for keeping costs at a competitive level. My true value to the company (or lack of it) will be clear.
Using this as part of the measure of management/leadership effectiveness will make a significant contribution to ensuring those who add real value are identified and considered for greater responsibilities – the leaders who will take the company forward. Those who are ineffective will realise the true nature of management and resolve to improve ... or leave to make way for someone who does.
(This article was also featured in People & Management magazine in May 2011.)
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