No Love For HR

July 21st, 2008 by hragitator | Posted in Comments | No Comments »

I received an interesting comment to my article on Top Five Reasons Employees Hate HR , and I’d like to address the comments here.  First, I’d like to say that I love what Alissa has to say here.  She has a great attitude and is very optimistic and idealistic.   Many people look at idealists in a cynical light, but I want to be clear that I don’t feel this way about Alissa’s comments.

photo credit: Gianni D.

That being said, I am not an idealist…I’m a realist.  As a realist, I’ll add some commentary to her remarks (Alissa is in italics ):

Wow! I am brand new to HR and didn’t realize that there were people who actually “hated” the HR Dept.

Not knowing that there are people who hate the HR department is a sure sign you’re new to HR.  Wait until you start firing people and then see how well you’re received in the hallway.

Perhaps you have had bad experiences or what not but I do my job everyday and I do anything and everything to see that each employee is treated fairly. I handle our benefits and I have employees that come up here just to say hi and talk to me. I think its all about your personality and your ability to deal with employee relations.

This is a great attitude to have, and the one that I personally try to adhere to.  Soon, though, you’ll realize that people don’t like/dislike HR because of our cheery attitude or lack thereof.  They hate us because of what we’re forced to do sometimes.  Re-read the article and show me where I say anything about interpersonal skills.

To stereotype an individual based on the department they work in is a bit childish.

It absolutely is.  Re-read the article.  It’s not me who is stereotyping HR, it’s the employees.  They’re often EXTREMELY childish.  You’ll learn this too over time.

I read some of the comments and found them to be way off target. Im 24, and Im the HR Assistant so perhaps I only know the bare minimum of HR, but as far as your definition of “human capital” thats what Im here for.

Again, excellent attitude.  Please don’t lose this.

I don’t think Im a hall monitor. I didn’t know we were still in high school.

High school is just microcosm of the world at large.  Those same people you despised from school just grow up and join the workforce.  Now, instead of pulling on the cheerleaders bra strap, that same jerk is harassing her by the water cooler.  They never really change.

I care about people, and I care about each person who walks through my door. Everyone knows that if you don’t have inter-personal skills you shouldn’t work in HR. If you are selfish, you shouldn’t work in HR. You work with different people everyday and you have to be open minded and caring.

This is the usual reason that good-hearted people go into HR.  This is a fine approach to take while the business is going well, but it’s only a matter of time before things turn south.  Businesses are cyclical, and there will always be downturns.  When you are telling a father of four that he no longer has a job and have to watch him cry his eyes out, this will really test your caring interpersonal skills.  You need to prepare yourself for the fact that HR is part of the business, and business is sometimes very harsh.

And as far as planning company picnics,, that is our receptionists duties. I created my whole policy handbook when I hired in here. I have incorporated new policies, shared them in meetings, and Im just an assistant. So I guess that eliminates me! Nice input! Maybe it will help those who really have those problems, because I don’t.

In the end, Alissa reminds me of me when I first graduated from college and entered the labor market.  She’s young, bright, enthusiastic, idealistic, naive, caring, generous, and probably a few years from being bitter and cynical.  I’d love to fast forward and have her assess her own comments.

Trailing Spouses In Expatriate Assignments Get No Respect

April 23rd, 2008 by hragitator | Posted in Employee Relations | 6 Comments »

As a person who has lived and worked abroad on an expatriate assignment, I can attest to the fact that companies general do a very poor job of keeping an employee whole when comparing what they had when they left the US and what they have abroad.  One major area where many companies fail miserably is in consideration for the trailing spouse.

The logic that businesses use to ignore the trailing spouse is that employers don’t do anything for them in normal situations (i.e., when not on assignment), and the spouse doesn’t work directly for the organization, so compensating or considering them in some way is excessive.

photo credit: Bring back Buck

I’m here to tell you from first hand experience that this is bad approach to take.  Here is what the trailing spouse gives up when leaving the US:

• Their job/career/normal life.
• Their family and friends.
• Their car (people are surprisingly attached to these).
• Their house (also very attached).
• Their freedom.  Yes, some countries are less free or work visas may not even be available.
• Their ability to communicate, if in a none English speaking country.  Ever seen Lost in Translation.  Yeah, it’s just like that.
• Many, many little things that add up quickly - preferred shampoo not available, favorite hobby non-existent, little or no American media, etc.  This gets harder as time goes on, because they compound on each other.

Don’t forget that the sole reason why the trailing spouse is giving up all of this stuff is so they can stay with their husband/wife.  The sole reason the husband/wife is there is because the company asked them to move to another country.  So, vicariously, the only reason the trailing spouse is there is to support the company.  If the spouse is willing to support the company, shouldn’t the company do something to support them?

I don’t think a whole lot is necessary, but these things are key:

• Ample choices in housing.  If you’re going to be sequestered in an apartment for the next few years, it should be something you like.
• Free language training.  Not just one measly starter class or a set limit of money (like $1,000).  You should pay to make the spouse conversant on the street if not fluent.  Remember that you might want to ask them to go local at the end of the contract.  How likely are they to do that if they can’t speak the language?
• Job hunting support.  If work visas are available, then this is a must.  Keeping the trailing spouse active and engaged is paramount to keeping your employee happy and working hard.
• Assistance finding daily amenities.  Spouses need helping getting re-established.  This means healthcare, gyms, schools, hair salons, charities, meeting friends, etc.

The key here is to keep the spouse feeling welcome and supported by the company.  If you don’t do this, then the spouse turns against the company because they feel left out or shunned.  Then, the employee must constantly try to defend the business from verbal abuse at home.  This cycle often ends poorly either for the couple (breaking up) or the company (losing an employee).

Ultimately, organizations have an ethical obligation to help keep these families happy when they are asking so much of them.  If you’re not willing to pay these extra expenses when sending employees overseas, then perhaps you shouldn’t send them.

Top Five Reasons Employees Hate HR

April 13th, 2008 by hragitator | Posted in General HR | 4 Comments »

For those of us that work in HR, it’s fairly well known that most employees feel a general sense of unease when HR is mentioned, but many downright hate HR.  When I first started to work, I really resented this fact, but as I grew to understand the business better, I realized that these feelings of hatred weren’t necessarily unfounded.

Here are my top five reasons why employees hate HR:

5. Employees don’t understand HR - It’s no secret that people fear what they don’t understand and hate what they fear.  Consequently, because much of what HR does is done behind the scenes, and most employees never work in HR, it’s not surprising that a shroud of fear arises from this mysterious cult-like department.

4. HR picks up where teachers left off - I have a lot of respect for teachers, especially those who teach teenagers or young children.  People like to say, "I feel bad for teachers.  I couldn’t do what they do.  Those kids are rotten."  This is true, but guess what?  Those rotten kids don’t just magically disappear after their senior year in high school.  They go out into the world and get jobs, and they’re meaner and ornerier than ever.  HR has to pick up where teachers left off.  These employees hate HR they way they hated their teachers and principals, and they don’t hide their feelings to fellow co-workers.

photo credit: Life As Art

3. HR breaks it’s own rules - People despise hypocrites, and they demand that the rules be applied fairly.  This is where HR sometimes gets into trouble with employees.  HR and management set the policies and HR enforces them.  Unfortunately, employees often see these policies as arbitrary or diminishing their personal freedom somehow.  Even worse is when HR makes exceptions and enforces the policies differently.  Employees talk, and if one person is allowed to take an extra week of sick leave while another isn’t, it will spread like wildfire at the water cooler.

2. Managers blame HR - Many managers don’t want to to be the bad guy or are more interested in seeming like the "cool boss".  So, when it comes time to discipline an employee, enforce a policy, or say no to a promotion, the manager often uses HR as a scapegoat.  "Gee, Tina, I’d really like to give you an extra 5% pay increase but HR won’t let me.  You know how they are with this stuff!"  Give it a break managers…you know there’s a budget and we all have to watch the bottom line.  Sometimes this means saying no to employees.  They’re resilient; they’ll get over it.  Trust me, I’ve said no plenty of times.

1. HR people are different - I was once told by an employee, "You’re not a typical HR person."  I’ll admit that I was happy to hear this.  One, because it means I stand out, and two, because I know the "typical HR person" this employee was talking about.  For a variety of reasons, the type of people who are typically attracted to HR are just a little different.  Think about the stuff HR does: fire people, discipline people, write policies, work with benefits.  While this is not all HR does, and there’s a lot of good and interesting things involved in HR, but many people just don’t understand why someone would choose to go into HR.  Who wants to fire some?  In general, I think it takes someone a little half baked.  Myself included.

Is there anything that can be done about this?  Probably not, but it’s good to be aware of the populace and how they feel.

Promoting the Wrong People

April 5th, 2008 by hragitator | Posted in Management | 2 Comments »

Have you ever seen a seemingly terrible employee get promoted? You know the types, the grouch that nobody likes, the whiner, the laze-about, the incompetent clutz, the bully, and so on. Everyone is shocked when they hear the news. So, why do companies do this? Why do they promote the wrong people?

 
photo credit: deaddamien

There are a variety of reasons, and none of them are very good to be honest. Yet, they happen everyday and will probably never go away. Let’s look a little closer, shall we?

• There is no one else. Let’s face it: sometimes companies don’t plan very well. This is true for human capital as much as anything else, and it often happens that a key position in a company is vacated and they simply have no plan in place for replacing the person. It’s desperate times that call for desperate measures, and sometimes there’s simply not enough time (or money) to do a prolonged and expensive search for a top-tier candidate. So, you do the next logical thing and pick the best you have. Sometimes the best you have has a hard time tying his shoelaces, let alone managing people.

• The right person is working on something too important. I have seen companies promote a less qualified candidate because they can’t afford to lose the best candidate from a critical project or assignment. This is well chronicled in about a hundred Dilbert strips, so I won’t go into it in more detail.

• They need to meet their “quota”. It’s said but true. While companies who are forced to complete an Affirmative Action Plan (AAP) are not supposed to set a quota and are still supposed to favor protected classes when all other factors are equal (they never are), companies secretly set quotas for race, gender, age, etc. It’s an ugly fact that’s not too much of secret. If the government believes it’s not happening, they’re blind. Regardless, some employees, competent or not, can get a free meal ticket here.

• The hiring manager is incompetent. I read in a management book somewhere that “sevens hire fives”. In other words, if you have a less than competent manager, they’re likely to hire someone even worse then they are. Businesses need to be ultra careful to let only “nines and tens” in the upper levels of the organization. It has a ripple effect that can be extremely detrimental in the long term and compounds over time.

• The employee is bad mouthing his/her co-workers. I recall a time when we brought someone who was working in the field into a corporate job, because they were such an outstanding employee. Turns out they weren’t that great at all, they had just been spending all of their time bashing their co-workers secretly and taking credit for stuff they didn’t do. In fact, it was so bad that we actually caught them expensing inappropriate personal items and made them pay back over a $1,000 worth of reimbursements. Be careful that an employee out of sight looks good only because they are not being watched closely.

Of course there are some other reasons that people like to cite: the employee is good looking, they’re having sex with the boss, they’re part of the “good ol’ boys (or girls)” network, etc. I’ve found that these are much less often true than people like to believe. They’re more exciting and more gossipy in nature, so people are drawn to them, but in reality is often much more boring than that.

Unfortunately, there’s not a whole lot you can do about these things other than to accept that they’re out of your control and try to look past them. Changing jobs is usually only a short term solution as well, because these problems crop up everywhere.

ERP Systems and HRIS Done Right

April 1st, 2008 by hragitator | Posted in HRIS | 3 Comments »

I have seen a troubling development, not recent but definitely increasing in nature, in the way companies use the HRIS module, or any other module for that matter, of their ERP system. The problem, as I see it, is that businesses purchase an ERP system for the most obvious reason (to have one system that brings multiple solutions together seamlessly), but then immediately devalues that system by farming out certain processes to other software companies when the ERP system doesn’t perfectly meet their needs.

For those of you who are unfamiliar, go to Wikipedia for a detailed discussion on the advantages and disadvantages of Enterprise Resource Planning (ERP) and Human Resources Information Systems (HRIS).

To be clear, I am neither a technical person by background or an expert in any information system. However, I do understand the fundamental fallacy in the logic here. Why would you purchase an all-in-one software package and then immediately begin to allow other software packages in the door when the all-in-one doesn’t meet your needs?

The answer is simple, because individually all those decisions make sense. The story goes like this: you decide you need an integrated solution, you research vendors, you have steering meetings, you collect feedback, and then you finally make the big decision knowing that it is one you’ll be stuck with for a long time. Now, you made this well thought out, extremely expensive decision with a lot of effort, so you want to protect your investment. So, of course, you mandate that if the ERP you purchased has a needed solution available, your company should be forced to use it.

Unfortunately, this policy doesn’t hold up long. Most ERP systems are destined to fail because there is a chain of reactions that almost inevitably takes place. It goes as follows:

1. Company pays too much for software.
2. Company realizes it paid too much and now regrets paying too much.
3. To compensate, company tightens the implementation budget.
4. Implementation is poor due to lack of resources.
5. ERP system doesn’t function proper and quickly becomes despised by employees.
6. Employees are assigned to work on projects which require software solutions.
7. Employees remember terrible ERP system experiences.
8. Employees push to be allowed to purchase software other than ERP to meet their needs.
9. Company relents but says new software should “interface” with ERP.
10. New software “interfaces” but very poorly.
11. Both ERP and new software suffer from poor integration.
12. ERP loses further employee support because new software users blame ERP for all their troubles.
13. Rinse and repeat.

As you can see, this continues ad nauseum until your ERP system completely fails at reaching its original intention. Here’s the key: when you purchase an ERP system, you should treat it like a marriage. Not like the crappy marriage your parents had, but a really good one like on The Cosby Show.

If you don’t like one aspect of life with your spouse, you shouldn’t go have an affair. Instead, you should work really hard to find a way to adapt the marriage to meet both your needs. Its the same with ERP systems. If you don’t like one thing it does, don’t give up. Instead, invest the appropriate resources to make it work correctly. Otherwise, don’t by an ERP system at all!

Because this is a site with an HR focus, I want to make this relevant for the HR readers. If you have an HR module in your ERP, and it has performance management, talent management, recruiting, compensation, and so forth available, you should be willing to use what the system provides or be willing to commit the resources to altering it to your specifications.

If your HRIS system looks like the octopus above (hey, I know most HR folks are visual learners), with the ERP in the middle and eight different software packages that are supposed to link with your HR module, you’ve done something terribly, terribly wrong.

In short, don’t let small individual choices that make sense develop into a very large negative effect on your business.

Six Problems with Business Meetings

March 26th, 2008 by hragitator | Posted in General Business | 1 Comment »

Today, I spent the entire day in one long meeting. The purpose of the meeting was to reach a consensus on four issues and submit a recommendation to a decision making committee comprised of executives for final approval. It did not go as planned…

photo credit: mnadi

Leading up to this meeting I had conducted nearly two months of research, spoken to roughly 30 employees, and coordinated a global team of colleagues to canvass the business in their areas. To say the least, we had covered the organization as much as it was responsible to do so.

In this meeting, two of the four topics were resolved relatively easily with little debate. However, two of the topics were debated, at times heatedly, with the final outcome on both that we should conduct even more research. As you might imagine, this is not an optimal solution to move the business further, because at a certain point, you just have to make a decision.

To be clear, this is not a post to complain about my company or colleagues, because they all had excellent points and are intelligent workers. However, it did get me thinking about the most effective way to use meetings. I’ve found that if you need to solve a problem, and it requires buy in from many different individuals, the best way to do this is to talk to them individually. If you talk to someone alone, they are much more likely to be reasonable and understanding, calm and forthright, open and fair, flexible and insightful.

The problem with meetings is that they force people to take sides. In my meeting, I sometimes found myself arguing for things that I didn’t necessarily feel passionately about, but because someone was opposing me, I felt I needed to defend myself. Meetings almost force you to be standoffish with others for the following reasons:

• They’re probably sitting across from you, which feels confrontational.
• Others are watching, so you’re reputation is at stake.
• Your ego can be easily bruised, if someone makes a better point than you.
• You become emotional because of the often competitive nature.
• You probably don’t want to be in the meeting anyways and would rather be working.
• You might have gotten caught off guard by something you weren’t expecting.

Of course, meetings can’t be avoided, but we should keep these pitfalls in mind when we conduct them. Also, ask yourself whether you can responsibly gain consensus outside of a meeting. You should never be dishonest or withhold information, but you might save a lot of time by having several one-on-one discussions to set the stage before bringing people together.

Prepping a group in this way helps tear down the walls people put up in meetings because you’ve been able to explore all the issues beforehand. They feel they understand the subject completely and are prepared to talk in a reasonable, logical manner. I try not to call large meetings “cold” so to speak, but I could have followed my own advice better today.

Corporations’ Expectations of College Graduates

March 24th, 2008 by hragitator | Posted in Expectations | No Comments »

Graduating from college and getting your first job is kind of like being pushed from the nest and being expected to fly without hitting the ground, or at least that’s the way it feels. For an early twenty-something, you’ve spent your entire life thus far honing your skills for the academic world only to be thrust into a new environment that requires a completely different set of skills.

photo credit: Srevatsan

Don’t worry, though, because corporations really don’t expect you to know everything. In fact, they know that you’re not even worth the money they’re paying you right out of school. Rather, they are making an investment in their future. You’re kind of like a baseball prospect starting out in single A ball.

So, let’s set the record straight. What is it that corporations actually expect of a new graduate? You might be surprised.

• Be open to constructive criticism. You need to be malleable and coachable. I know you spent the last 4-6 years of your life studying business, but that was text book, and you now have to learn reality. Don’t get upset if someone tells you how to do things, because they probably know better than you.
• Bring fresh ideas and concepts. You should be up to date on all the latest theory, so you might as well put it to use. Don’t be afraid to suggest something radical. You might sound dumb, but that’s OK, because you have plenty of time to recover. You’ll probably learn something useful in the process as well.
• Ask lots of questions. One of my favorite sayings is “There’s no such thing as a stupid question, only stupid silence.” The company won’t expect you to know everything, but they will expect you to ask if you don’t. If you don’t ask, you WILL make mistakes.
• Work hard. You won’t be nearly as efficient as your co-workers right out of the shoot, so you’ll have to work extra hard to make up for it. What you can’t do with your head, you must do with your legs. Your head will catch up eventually. Work hard and establish a good reputation while you’re young and before you have a family to worry about.
• Learn to cooperate with co-workers. One of the most challenging things out of school is to learn to interact effectively with people of all types. Up until now, everyone has basically been your same age as you, and you probably had a clique of like-minded friends that you clung to. Let that go, you need to work with everyone effectively.
• Become an adult. This is the time to make the transition to adulthood, which means working with adults and acting like an adult. Let your old fashions go. Lose the earrings, nose rings, tongue rings, etc. Cover your tattoos. Change your speech (e.g., don’t say “dude”, “man”, “like”, “seriously”, “oh my God”, etc.). I’m not trying to stifle your self expression, I’m just pointing out reality. When you get to work, there won’t be any employees that do these things. Also, you’ll lose interest in them yourself naturally over time as your priorities change.

If you haven’t picked up on the the theme here yet, I’ll sum it up for you in one word: metamorphosis. You, as a new college graduate, need to be ready to change the way you act, the way you dress, the way you speak, and your priorities in life. If you don’t like this, don’t go into business.

P.S. - It’s not as bad as it sounds.

Top Five Things You Won’t Learn in Business School

March 21st, 2008 by hragitator | Posted in Off Topic | 1 Comment »

With a bevy of excellent business schools, both grad and undergrad, available and the potentially high stakes of getting accepted to a top tier school, you’d think that you’d learn everything you need to know there. This is not the case, though. Below are my top five things you’ll never learn in business school.

1. Your professors were usually wrong. After spending all those late night hours pouring over text books and enduring endless study groups, students come to think the teacher’s word is gospel. They will grade your test, so they do control your future. Don’t confuse this control for actual knowledge. B-school professors aren’t like chemists or physicists. They’re more like English Lit professors. You just have to make your opinion match theirs. Unfortunately, just like many English professors have never written a novel, many B-school professors have never worked in the business world. Don’t be surprised when you start working and find out most everything they taught you was worthless.
2. Employees care about their personal lives more than work. In B-school, all theories are based solely around how employees behave at work. Not bad, but it completely ignores that they spend the majority of their time away from work. Here are just some of the things that happen to employees that affect their work productivity: they get married, they get divorced, they get sick, a family member dies, they have children, they get into car accidents, they buy new houses and cars, they run up credit card debit, they fail to make child support payments, they get arrested for DUIs, they have affairs. If you want to be a good co-worker and boss, you’ll learn to recognize these things when they happen and show compassion and understanding. Don’t be a jerk because an employee isn’t working 110% all the time. Stuff happens outside of work - it’s called life. When you graduate from B-school, you’re trained like a marine to be a working machine, but that only lasts while your young and unmarried. Cool your jets a bit and people will like you better.
3. Companies are not run as a meritocracy. When studying in B-school, you get the impression that all companies will have a complex career path built for every position, and hard work and dedication can send a person as far as they want. You also learn that companies want to and will actually promote people based on their skills and abilities in order to create a competitive advantage. In reality, companies promote people for odd reasons and hold people back for even odder reasons. Here are some of the reasons I’ve seen people get hired or promoted: because of the color of their skin, because of their gender, because of what fraternity they belonged to, because the best person was too busy on an important project, because the company needed someone quickly and they were the best available, because the project was going to get axed and the company wanted to get rid of that employee, because that person’s family goes on vacation with the CEO, because that person sleeps with the CEO, because that person went to the same school as the CEO, because the best candidate is too good and would make the boss look bad in comparison. Life’s not fair, get used to it.
4. YOU will get laid off. In B-school, there is frequent talk of downsizing, rightsizing, and the like, but it’s always in the context of when the correct time to do these things are. As if you will be the one making that decision. The reality is that there just aren’t that many executive positions in a company, and you will probably never get to decide who does and doesn’t get fired. However, you probably will be laid off one day. Over the course of your 40 year career, there is a high chance that one of the companies you work for will go through a down time and you’ll get canned. B-schools don’t tell you how to deal with that, though.
5. Your company will screw you over at some point. In B-school, they give the impression that a company’s main goal is to keep it’s employee’s happy and productive. The truth is that they only want to keep you happy enough not to quit. Remember, this is business and the goal is to make money. Making you happy probably costs money. Here are some of the ways you might get screwed over: denied a promotion promised to you, denied a pay raise promised to you, denied a bonus promised to you, denied an office promised to you, moved from location to location so you can’t settle down, asked to do work far below your experience level, asked to do way more work than is humanly possible, get a lower performance rating than your incompetent peer, someone else given credit for work you did, asked to work overtime/holidays/weekends, asked to cancel vacation, miss child’s game/recital/birthday for work, make long, exhausting business trip for 1 hour waste of time meeting. I could go on, but I think you see my point. You will slowly become disillusioned with the beautiful, perfectly logical world your professors built for you.

There are, of course, more things that business school doesn’t teach you, but I think this is a good start. For those new graduates reading this, B-school is still a very good idea, just don’t believe everything they tell you.

Bear Stearns Billionaire Blunder

March 19th, 2008 by hragitator | Posted in Off Topic | No Comments »

At this point, the Bear Sterns debacle has gotten extensive coverage so I won’t comment on the unfortunate demise of this once mighty company. As I read through the news stories, though, I found one piece of information often significantly under reported:

Joseph C. Lewis, a British businessman, lost $1 billion on the sale of Bear Sterns!

OK, so the guy was a billionaire, and even after losing a cool billion he’s probably going to be just fine. Don’t lose any sleep over poor ol’ Joe. Still, it got me think about the very fine line and significant amount of luck that goes into becoming successful in business or otherwise for that matter.

Joe was so confident in Bear Stearns that he purchased the stock in large amounts at upwards of $150 per share just a few months ago. I’m sure Joe is a smart guy, or at least smarter than most, but this is a blunder of gigantic proportions. When Bear Sterns sold to JPMorgan, his cut was only $22 million.

photo credit: Shiny Things

What does this say for the rest of us? Certainly, Joe had probably taken big risks before and had them pay off. Perhaps he was overconfident, but who wouldn’t be as a billionaire. My gut tells me that he didn’t do anything stupid necessarily. Rather, a series of unfortunate events completely out of his control ended very negatively for him. The same probably holds true for a lot of his successes.

As I now look back at my early career, I had a few fortunate coincidences that played a major role in my future. There was the professor who just seemed to like me and consequently set me up with a job interview. There was the first candidate who declined a job offer to move with her husband leaving a position open for the second candidate: me. There was the boss who went to church with a VP at another company and introduced me resulting in a better job for me.

Let’s not lose the opportunity to reflect on Joe’s huge financial loss as an expression of the good and bad things in our lives that are out of our control and know that even very successful billionaire’s are subject to the same laws of probability. It’s the tie that binds us together.

Hiring Freezes Create a Cycle of Failure

March 18th, 2008 by hragitator | Posted in Management | No Comments »

Anyone who has worked in the corporate world for even a few years has probably experienced a hiring freeze. As you might guess from the name, this is where companies stop (freeze) all hiring. Personally, I could never see the logic in this action, even though I understand the causes.Why do companies institute a hiring freeze? There are a variety of reasons, but the most prevalent by far is that the revenue forecast is looking poor and management wants to contain costs. Given that, it seems to make perfect sense to freeze hiring. No new employees coming on, no major increases in expenses. What could go wrong?

photo credit: ollografik

Keep in mind that the reason revenue forecasts are low to begin with probably comes from two sources:

• The economy is turning down, or
• You’re losing to your competitors.

A hiring freeze will not alleviate either of these pressures. If the economy is in a downturn, then a hiring freeze is only delaying the inevitable. You certainly aren’t making things better by refusing to employ people. If anything you’re contributing to the downturn.

If you’re losing to your competitors, it will be very difficult to catch up to them by freezing hiring. If you freeze hiring, you delay or halt projects by constricting their resources. However, no CEO wants to tell the market or customers they’ve delayed or canceled a project, so they freeze hiring because they don’t know what else to do. In fact, when you’re losing to your competitors, that’s when you need to redouble your efforts. Hiring freezes are non-action. They’re a slow steady death. Your competitors aren’t freezing hiring and delaying their projects, so you’re just getting further and further behind.

As you can see, the cycle goes something like this: get behind, freeze hiring in hopes that reducing expense will magically make up for lost revenue, magic doesn’t happen, projects are delayed, customers cancel orders, market responds by lowering stock price, get further behind, continue hiring freeze, etc., etc.

I’m not saying that companies shouldn’t control hiring. They definitely should, but it should be a normal business process not a panicky reaction. Also, consider freezing bonuses, first class travel, expensive dining, holiday parties, company newsletters, etc. before you resort to freezing hiring. Employees may not like this, but they won’t stop working.

If things do get really bad, then don’t freeze hiring (indecision). Be a leader and realize what needs to be done. Cancel projects, lay off employees, and re-structure the business to either work in the current economy or challenge the competitor effectively.

I know it’s not always that clear cut, but a hiring freeze is a disease on your business and often one of the first signs of an imminent demise.