Undermining HR=Struggle for Growth Phase organisations..10 warning signals often missed by CEOs

Is HR being grossly devalued in small and medium sized Entrepreneur and family driven firms ? This coming from a business guy like me :) Having worked now closely over the last 12 years as a Mentor and Coach with over 60 such organisations at different stages of evolution and from a variety of industries, one has seen from close quarters,?the huge price these organisations often pay, by not having a good or senior enough In house HR Manager or head or clear HR Strategy.

I have found this huge gap in so many organisations, family run or more professionally driven by younger entrepreneurs or funded firms. While they are quite liberal with headcount and the facilities, they often settle for a junior HR resource, maybe an HR manager or Asst Manager level. Nothing wrong with that per se,?except that one cannot expect these very junior resource to play any kind of a strategic role or drive key HR initiatives.

So while typical areas like payroll, recruitment, joining formalities, statutory compliances etc can get taken care of by outsourcing and are fine that way, some of the more critical areas get severely compromised .

Have listed 10 compromises or warning signals that?chew the top and bottom lines of these organisations, yet are often missed...

• 1.?Poor quality job descriptions or KRA or competency definitions?or positioning of the organisation to employees. Often because the junior resource does not understand the role in depth. This affects the Performance Appraisal process too which often is another weak link, done annually as an increment and not a developmental exercise. And often people take cover under the - I was not clear about my role excuse to cover up!
• 2.?Poor quality of selection, lack of rigor in the interviewing process, poor reference checking for shortlisted candidates. Costly mistakes and wrong hires often repeated. I often end up rejecting a large % of senior hires shortlisted, just because the culture fit challenges that I see will emerge between the leaders and them.
• 3.?Lack of a structured Induction and Orientation process?for new candidates to ensure no ambiguity on the expectations and to help them settle in seamlessly, more so if they have come from a more structured company with clear policies .
• 4.?Lack of a structured training and certification process?to ensure clear understanding and positioning by the new employees. Or refresher training for older employees. HR here depends on the line/functional managers who are too busy fighting their own fires and see HR not so positively .
• 5.?Inadequate and regular communication by the leadership?atleast once a month to the ground level staff, leaving plenty of scope for gossip, speculation and activities that dilute the motivation and energy level on the floor.
• 6.?Inadequate reward and recognition programs?that instill a sense of pride and competition among employees, teams, business units or locations and drive up performance.?Often I find Incentives structures designed with so many conditions and unrealistic targets that its no longer an incentive structure. I jokingly tell the leaders, you have worked very hard to make sure no one or just a small % gets incentive :)
• 7.?No clear organisation structuring?that defines heirarchy, levels, career growth options. Sudden business exigencies often lead to sudden adhoc changes in structures and leave jobs redundant. HR then does the post master job of managing the forced?or unforced exits at the masters bidding.
• 8.?No clear measures or metrics for HR performance?eg attrition overall by function, manager, time spent by employees before attriting. Not surprisingly when we dig, we find in many cases more than 50 % of the attrition happens within 3 -6 months of joining !?But rarely is it a red flag in the organisation. Even for HR. HR analytic and HR Tech tools can really help here.
• 9.?No measures of productivity loss?- So they keep hiring, firing, hiring ,training and the wheels keep moving. Who is calculating the loss in productivity due to the gap in hiring and having at least 20 - 30 % less employees than required who are fully productive. Or the cost of hiring again and again. And management time spent on this. No guesses how many $ or lakhs are lost without a trace every year. Lost business opportunity.
• 10.?Leadership development - a luxury?.And finally, the realisation that more often than not, the leaders across senior and mid level themselves, sometimes maybe the CEO's themselves are the bottleneck to growth and team motivation, since not enough focus has gone into their development as leaders through exposure to leadership interventions. While owners are now seeing the value of experts to guide them, their own growth as leaders through coaching is often overlooked.

These to me are the 10 top of the mind key areas that struck as we went about helping organisations prepare and gear up for 2 X growth.

Some core HR functions like the ones below or above just have to be in inhouse or tie ups with reliable Service Partners.

So while outsourcing?some of the HR and admin functions is fine, we feel the organisations will be stronger if these 10 programs are focused on week after week by a strong in house person or team, supported by HR Partners depending on the complexity and size of the business and the teams.

CEO's and founders who have compromised on having a strong HR Manager who is also a strategic leader and who is not a yes man, have through these?points most certainly lost a lot more talent, money, goodwill and employee loyalty than they thought they were saving.

A quick reflection on which of these 10 points are a challenge can be a good starting point for making HR a critical Strategic function and not just a support function it was.

Happy to get your thoughts, comments or shares.