Text Box: Jack and Suzy Welch, in the July 17 issue of Business Week, took on the issue of what HR must do to leave the line-item overhead category on most business balance sheets. Any HR professional who has experienced cuts in HR budgets, reductions in staff and outright elimination of HR departments will understand the importance of this move. Every HR professional should read the article, or stop pretending to want a strategic role in the company. Welch says that HR must first become a functional part of corporate financial management. Quantify. Dollarize. Given the very large, real and documentable costs of vacancies, turnover and legal problems, this is relatively easy. The real payoff, though, is on the positive side of the coin, when HR can track and document the dollars associated with productivity increases, longer tenure, better managers and employee satisfaction. In assuming this role, HR professionals have two major obstacles: 1) Lack of training in finance, numerical reasoning and communication of financial impacts; (and worse) Text Box: Changing Role of HR: Forget ‘Warm and Fuzzy’ — Know the Costs of Lost Talent Text Box: 2) Lack of interest in any of these things. Traditionally, people go into HR because of the warm and fuzzy, intuitive, “health-and-happiness” approach. Welch even counsels, “Drop the socialist ‘treat-them-all-the-same’ mentality.” In the words of cartoon character Pogo, “We have met the enemy and he is us.” If you’re still not convinced you can (and must) take this route, answer the Welches’ challenge: “What could possibly be more important than who gets hired, developed, promoted or moved out the door?” If you’re having trouble with the numerical side of this challenge, make the CFO your ally. As John Sullivan noted in his Workforce Week review of the Welch position, “The CFO is the undisputed king of placing valuations on activities that are difficult to enumerate.” By the way, your CFO is probably as uncomfortable with your warm and fuzzies as you are with the financial reports. But together, you can make things happen. Look at a specific example of this way of thinking: Talent retention — As far back as most of us care to remember, HR has tracked “turnover” as one Text Box: of our few consistent metrics. As commonly used, however, turnover is at best a hodgepodge statistic, lumping together the results of current hiring practice, past practice, management change or failure to change, the winds of the economy and goodness knows what else! Talent retention, on the other hand, is more focused on current practice. According to Leslie Stevens-Huffman, writing for Workforce Week, “Nearly 70 percent of executives say that they view talent retention as important or extremely important.” Identify the costs (both direct and indirect) of replacing talented individuals in your company, learn when new hires are most likely to leave and identify the factors causing them to leave. Design a program to extend the average life of talent in your company by even a few months and calculate the direct dollar impact. You will find you have reduced the costs of hiring, training, unemployment insurance, workers’ compensation, management time and negative impacts on coworkers. Simultaneously, you will have improved productivity, job satisfaction and leadership, while holding on to valuable company knowledge and loyalty. The total positive financial impact of your talent retention initiative alone may well pay for your entire HR operation! Text Box: In this issue: Changing role of HR ‘Execution’—the new buzz word Trim the time wasters Improving a sales force Wasting human resources—quote

Volume 4, Issue  2

Edited by John W. Howard, Ph.D.                                                              Annual Subscription Rate  $ 36.00

 ©2006, Performance Resources, LLC,  and Profiles International

Truck Driver Turnover at All-Time Record Highs  According to the American Trucking Association, the rate has been increasing steadily from the beginning of 2004, when the turnover rate was 120 percent; the fourth quarter saw a rate of 136 percent! In 2005, large carriers averaged a turnover rate of 130 percent, the highest annual rate on record. According to the ATA, trucking groups are working hard on reducing the rate.
Text Box: The economy continues to produce new jobs, “boomers” begin to leave the world of full-time work, and it appears that (in many markets) we have passed the point of “full employment.” In my home state of Utah, unemployment in some counties is less than 3 percent! One client says, “We have people working for us who don’t even want to work!” This environment puts even more emphasis on that elusive quality, “talent.” —Editor Text Box: “...you’ll never close the execution gap, just reduce it.”