Measuring the HR department’s maturity level

ELBONOMICS: All change starts as soon as you leave your comfort zone.

I’m a newly-hired human resource (HR) manager for a provincial bank. On my first day in office, I noticed many red flags about our company’s business practices. I need to submit a comprehensive HR plan to top management soon. What would be your recommendations for the ideal setup? – Hunter Boat

Your question revolves around the basic elements of an excellent HR system. This is an all-important issue that many of us, even those who are not in HR, need to understand. Fortunately, the answers are easy enough, starting with worker competence and how to channel it towards achieving company goals.

The key objective is to develop a corporate culture of improving worker competence. Start working on that, and it could ultimately define the entire HR system, its work processes and related norms. But first things first, you must set the tone with your top management.

Explore all the things that are negotiable and non-negotiable. For instance, are they willing to adjust your salary structure to match industry standards and at the same time attract the best talent whose competence can be built on? If not, how are you going to work with minimum wage earners, who typically come and go within a year?

There are many things to consider. In general, however, it boils down to the competitiveness of your pay and perks. If you can’t afford to raise your game in those areas, then how will you attract and retain the best talent, especially those with hot skills? It’s not easy. But with a targeted excellent HR system that evolves over the years, you can go a long way.

QUESTIONS AND METRICS

In creating an excellent HR system, you must start by asking questions to help you understand your current situation, with a view towards creating a road map. The following questions should help you address the “red flags” that are obstructing your mission of making HR a valuable partner in corporate profitability and sustainability.

What is your general people management philosophy? How does it support the corporate vision, mission and values? HR is the internal expert that provides overall guidance on all manpower issues. Be unique. Don’t get bogged down in the cliche that “people are the greatest asset.” Instead, focus on what you can concretize in real terms, similar to the Toyota approach in measuring a “Respect for People” metric. But don’t copy.

How do you hire and retain the best possible talent? Would you rather hire talent from a manpower agency and offer them regular posts in due time? Or do you hire directly for better control of the process? This can be done in many ways through manpower forecasting and planning.

The key metric here is an attrition rate averaging 5-7% per annum. However, please take note that 2% turnover could still be an issue if it promotes complacency, which results in poor labor productivity.

What is your salary structure and philosophy? This means doing a job evaluation (or re-evaluation) to identify the key job levels, ensure internal equity and create a competitive pricing structure. You also have to decide if you want your salary rates to be above average against an industry benchmark. Do you want a 10%, 25% or even 50% premium over what the market is paying? The choice is yours.

How would you develop a strategic employee development plan? Money is not everything. Training and development could be an important equalizer. Depending on age, many people would opt to stay in an organization in exchange for sophisticated training, challenging assignments or a post-graduate scholarship. Some may even opt to be assigned overseas.

How would you maintain good employee relations? With or without a trade union, an organization can’t be effective and productive if it doesn’t have a sensible strategy built on proactive two-way communication. The goal is to achieve a measure of industrial democracy where all employees are expected to be open with their ideas and complaints.

This includes a labor-management cooperation scheme consistent with the labor code, or even quality circles, where workers can propose how to make their job more efficient.

What is your performance management system? Corollary to this is reward management that must be preceded by a systematic job analysis to ensure objectivity. Depending on the prevailing practice in your industry, you may apply a simple system designed to facilitate 360 degree feedback. Whatever you choose, the applicable metric is “Pay for Performance,” which involves merit increases that cover inflation plus a little extra for exemplary work performance.

CHALLENGES

Many organizations, regardless of the nature of their business, are faced with various challenges, compounded by the pandemic, which has changed the way we do HR. Companies must deal with a new breed of workers who are reluctant to be managed in the traditional way.

This uncertainty has had a massive impact on workforce policies and practices. For one, the Great Resignation has adversely affected many businesses. Many people now prefer to work at home to take advantage of the available technology.

In an environment like this, it is inevitable that management must adapt to the dictates of the dynamic new work environment.