Canadian Management Centre's Training Blog

Allowing Time for Pet Projects May Be a Smart Move

As reported by HRI, A growing trend finds innovation and productivity rising as employers let employees work on pet projects on company time. Joyce Gioia, author of Impending Crisis: Too Many Jobs, Too Few People, thinks pet-project policies will become popular recruitment and retention tools as loyalty becomes more precious in the face of a tight labor market. Genentech and 3M have done it for years, and Google has made its "20% time" policy a major recruiting tool as well as an innovation driver. Giving employees a chunk of time to devote to their own personal projects - some of which have resulted in the development of a cancer-fighting drug and the creation of Post-it Notes - pays great dividends in innovation and productivity, not to mention new product sales. And allowing employees to work on independent projects can stimulate more loyalty and creativity. According to Robert Fulmer, visiting business professor at Pepperdine University, "It's a way to get people to go beyond what's expected of them." (Workforce Management [Frauenheim], April 24, 2006, pp. 40, 41.)

High Engagement Correlates with Better Business Results

As reported by HRI, "A well-researched and substantiated relationship exists between employee engagement ... and business results," according to the research and consulting company ISR. The firm studied 41 global organizations that it classified as either "low engagement" or "high engagement" on the basis of employees' belief in the firm's values, their pride in their association with the firm and their commitment to it. After examining the companies' performance over a three-year period, ISR concluded in 2005 that "the high engagement companies realized a 5.75% [positive] difference in operating margin and a 3.44% [positive] difference in net profit margin versus the low engagement companies." According to ISR, workers' perception of the abilities of their organizations' leaders was the factor with the greatest influence on engagement levels. ("Effective Execution - How Leadership Impacts the Bottom Line" [ISR]. Obtained June 1, 2006)

Survey: The Costs of Bad Hires Are Very High

As reported by HRI, Four out of 10 employers say that it costs them twice an employee's annual salary to replace that worker if he or she doesn't prove to be a good hire. A survey of 444 North American firms by the career transition organization Right Management found 42% of respondents estimating replacement costs at twice an employee's annual salary. The April 2006 report of survey results noted that 26% of organizations' representatives said their firms paid three times a worker's salary in replacement costs, while 11% put the figure at five times annual salary. Right Management reported that 15% of respondents said their replacement costs were equal to a year's pay for an employee, and 6% put replacement costs at four times the worker's salary. Said Rick Smith, a Right Management senior vice president, "The higher the position, typically the more costly the hiring or succession mistake." Right Management included recruitment, training, severance and productivity considerations in the replacement cost estimates. ("Lower Employee Morale & Decreased Productivity Are Biggest Consequences of Bad Hires & Promotions" [Right Management], press release, April 11, 2006)

Training for Leaders Is Seen as Top Change Management Strategy

As reported by HRI, Training leaders and managing relationships with customers led the list of change-management strategies favored by U.S.-based multinational organizations whose leaders were interviewed by the professional services company PricewaterhouseCoopers in 2006. Senior leaders from 133 U.S. multinationals responded to questions about change, and 77% said that they responded to change challenges by training their company leaders. Leading change management strategies and the proportion of companies utilizing them are detailed in the table below.

Change Management Strategies
Used by U.S. Multinationals, 2006

Change Strategy % of Companies Training for leaders 77% Managing customer relationships 71 Simplifying operations 67 Restructuring the organization 66 Implementing Total Quality Mgmt. 59

Source: PricewaterhouseCoopers

(Management Barometer [PricewaterhouseCoopers], May 22, 2006)

More International Assignments Go to Women

As reported by HRI, Nearly one in four international assignments made by multinational firms in 2005 went to a woman, according to figures released in March 2006 by the management consulting firm GMAC Global Relocation Services. GMAC polled 125 multinational firms and reported that 23% chose women for their expatriate workforces. The company, which conducts a relocation trend survey annually, noted that the 2005 figure represented a 5% increase over the previous year in the number of women sent overseas. "Women are more likely to possess the essential characteristics of successful expatriates," said Pramila Rao, an HR management professor at Arlington, VA-based Marymount University, "such as flexibility, sensitivity, cultural empathy and understanding non-verbal cues. Women also tend to be very good at building relationships and strong networking." (Global HR News [Smith], April 2006)

Top Execs Are Better at Innovation than Organization

As reported by HRI, C-level executives tend to have a high degree of creativity, innovativeness and risk-taking but score lower on organizational skills, relying on team support for execution, according to PsyMax Solutions, a human capital assessment firm. PsyMax studied the behavior characteristics of more than 240 executive officers and found that, while their work styles were most often characterized by high creativity, they lagged behind their subordinates in organizational skills. Wayne Nemeroff, CEO of PsyMax, said that these creative executives "probably need a lot of support from others on their team to execute what needs to be done" and would do well to surround themselves with managers that demonstrate essential organizational skills. (HR Magazine, March 2006, p. 16)

From: Leadership/Current Trends/Evolving Models/Characteristics of Leaders

The Role of Chief HR Officers Changes

As reported by the HRI, the role of the chief human resources officer (CHRO) is evolving to require leaders who can act as both "strategist and steward," according to a report by Deloitte Consulting. Jeff Schwartz, principal with Deloitte's CHRO Services, says that HR leaders are "now expected to play a central role in building and shaping - not just staffing - the enterprise strategy." The report, "Strategist & Steward: The Evolving Role of the Chief Human Resources Officer," lays out four components of the CHRO's responsibilities.

• Workforce strategist - Rather than overseeing workforce strategies, CHROs must develop and inform the strategy, taking into consideration "global labor trends, available talent and next-generation leadership and workers."
• Organizational and performance conductor - The CHRO must be an agent of change and a "rewards program architect" to determine the best way to boost organizational performance.
• HR service delivery owner - While the responsibility for overseeing daily HR operations will not disappear, it will require new skills in orchestrating multiple resources - internal and external - to operate as "a cohesive whole."
• Compliance and governance regulator - The CHRO will work more closely with the board on such issues as risk assessment, regulatory compliance and business ethics.
  ("Meet the 21st Century Chief Human Resources Officer (CHRO)" [Deloitte Consulting], press release, April 3, 2006)

From: The Evolving HR Function/Current Approaches/Evolving Roles of HR Professionals

Mercer: Zurich Has Highest Quality of Living

Zurich topped the list in Mercer Human Resource Consulting's 2006 World-Wide Quality of Living Survey. The annual survey involved more than 350 cities that were scored based on 39 various criteria. The base score for the index was that of New York City - 100. Switzerland cities took the top two spots, with Zurich scoring 108.2 and Geneva scoring 108.1. Vancouver, British Columbia, was third with 107.7. Baghdad occupied the bottom slot with an index of 14.5. Western European cities occupied more than half of the top 30 spots on the list, and many cities in Eastern Europe rose above previous levels in the survey, reflecting the economic progress in that area. The top Asian city was Singapore at 34th with a score of 102.5. Tokyo was next on the list with a score of 102.3, and Hong Kong managed to rise from 70th to 68th with a score of 95.4. London landed the highest ranking for a UK city at 39th (101.2), while Honolulu was the top-ranking city for the U.S. at 27th (103.3). The lowest score for a U.S. City was 95.4 for Houston, placing that city 68th overall. ("World-Wide Quality of Living Survey" [PR Newswire], April 10, 2006)

Culture Is Crucial to Offshoring Contract Negotiations

As reported by HRI, When negotiating a contract with an offshore provider, it is important to understand the cultural differences involved and take steps to minimize any problems that may arise. Jeswald W. Salacuse, a law professor at the Fletcher School of Law & Diplomacy at Tufts University, has identified 10 aspects of negotiations that may be affected by cultural differences and surveyed over 400 people of 12 different nationalities in an effort to determine how different cultures deal with these aspects. The most obvious facet of negotiation is the goal. Are the companies looking for a contract or a relationship? The survey found that 74% of Spanish respondents indicated that a contract was the goal, while only 33% of Indian executives responded similarly. Other aspects include the following:

• Personal style. Is the negotiating style formal or informal? It is easier to start off with a formal attitude and move to a more informal style as things progress.
• Attitude. Is the negotiation outcome perceived to be win-win or win-lose? All of the Japanese executives surveyed saw negotiations as a win-win process, but only 33% of the Spanish respondents agreed.
• Time sensitivity. Is the negotiation process expected to move quickly, or be drawn out over time? U.S. executives tend to press for quick resolution, while their Japanese counterparts invest more time in developing a relationship.
• Risk-taking. Is the other party a risk-taker or risk-averse? The Japanese tend to be the most cautious of the 12 nationalities represented in Salacuse's survey, while the French, British and Indians indicated that they were more likely risk-takers.
  (Ivey Business Journal Online [Salacuse], March/April 2005)

HR Management : Future Trends Series 6 of 6

In the near future, watch for the merger surge – There’s likely to be greater industry consolidation soon because corporate buyers have plenty of cash and business opportunities in an environment still marked by low interest rates, according to the Transaction Services group of PricewaterhouseCoopers. “What isn’t spent on stock buybacks and special dividends will likely go to M&As, as companies struggle to maintain competitiveness in an economy that’s still growing fast,” said Bob Filek of PricewaterhouseCoopers (2005).