Category Archives: Talent

How to Insure Your Employees (Re)Connect with the Business

A recent article in Industry Week presented “ten tips from Watson Wyatt that were designed to help you help your employees reconnect with the business” in these troubled times. They weren’t bad, and are definitely worth a review (if you add a little flair). In the doctor‘s words, they are:

  1. Ditch the Dotted Lines
    The organizational structure should be crystal clear. Every employee should understand their role and how they contribute to organizational success.
  2. Cut the Crap
    Be honest about the situation. You might think otherwise, but an average employee can smell B.S. a mile away.
  3. Lead-line the Golden Parachutes
    Make sure executive compensation is in alignment and dependent upon the executives driving value to the business. Remember, while few people will have a problem with a 2M bonus to a CEO who increases profits by 20M (as long as all the contributors are justly rewarded as well), you can bet no one will agree with a 2M bonus to a CEO that led the business to a 20M loss.
  4. Sink Signature-based Sales Commissions
    A salesperson shouldn’t get a 1M cheque for signing a 10M contract. They should get the 1M cheque for delivering 10M of profitable revenue to the business. This means that they should be selling software and services aligned with the business and making sure that the customer stays happy and actually pays the business the 10M. Considered structured plans that give, say, 25% each time a revenue target is realized (such as first payment, second payment, etc. or every quarter the customer remains).
  5. Pitch Performance Penalties
    Review performance management and make sure you’re focussing on measures that contribute to success. For example, number of calls per day and number of bugs fixed are NOT good measures. The first entices customer service reps to get the customer off the phone as soon as possible, which leads to repeat calls when the problem doesn’t get resolved, and the second entices programmers to put easily fixable bugs in their code.
  6. Weed out the Weak
    Make sure you focus on the key talent that contributes to your organizational success and that the Wallys are the first to go when cuts are made.
  7. Trash the Touchy-Feely Awards
    You should only be rewarding exceptional performance, not the norm. Otherwise, what incentive does anyone have to truly excel? (Personally, I hate this “everyone should get a reward” crap that has infiltrated our society in recent years. It’s inspiring a culture of lazy lolly-gaggers. While it would be nice if everyone was capable, you should have to work for it!)
  8. Pitch the Proctologist
    The reports he finds with his flashlight are rubbish. Get a real data analysis system and base decisions on facts and analysis, not on gut-feel and emotion.
  9. Discard the Dunce-Hat
    If anyone needs it, they shouldn’t be working for you. Instead, make sure you understand where the critical roles and skills are and do what you can to support them.
  10. Abdicate the “Me-Too” Attitude
    A business needs leaders, not followers. Who cares what your golf-buddies are doing. You need to figure out where you business needs to go, how you’re going to get it there, and lead your employees out of the dark and into the light.

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Want a Turnaround? Start With Your Workforce

I enjoyed this recent article in Industry Week on the “Miller Centrifugal Casting Comeback” from revenues of 8M in 2003 to 22M in 2008 because it highlighted the key elements of a successful turnaround: your people. According to MCC, five key structural supports were required to achieve the turnaround, with the first two being workforce morale and employee satisfaction. In other words, it had to put the people who would ultimately be effecting the turnaround first.

MCCs secrets of a turnaround? They are:

  1. Workforce Morale
    MCC starting treating its workforce as valued customers and human beings, not just “resources” and numbers. Managers walked the floor, engaged in open dialogue, and equipped the workforce with decision making power.
  2. Increased Employee Satisfaction
    MCC implemented a gain sharing program in 2005 based on a pay-for-performance system.
  3. Lean
    Specifically, MCC focussed on eliminating waste.
  4. Quality
    MCC strategically invested in equipment and technology that would have a direct impact on quality.
  5. Customers
    MCC focussed on responding to actual customer needs and wants and not just perceived needs.

And they’re pretty much dead on. Add:

  1. Senior Leadership
    Leadership from senior management who embrace the change and walk-the-walk as well as talk-the-talk.
  2. A Realistic Transformation Plan
    Developed in conjunction with an expert that starts with a gap analysis between where you are and where you want to be and lays out a realistic path to get there

Then you are on your way to turnaround success.

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Talent, Training, and Transition: Three Emerging Themes from the Best Practices XChange

Last week, I attended the Best Practices XChange (BPX) hosted by The MPower Group in Chicago. This quarterly, one day BPX roundtable, event brings together senior procurement professionals (director and above) from BPX members and interested organizations.* The event was well put together, and I’ll be diving into the presentation by Dr. Lloyd Rinehart in a later post, but I wanted to start by summarizing the emerging themes from the roundtable discussion.

As pointed out by Brian Sommer in his post last week on The New Sourcing Concerns, one of the big concerns is transition management, both in terms of knowledge transfer and change management. Not only will a large number of baby boomers be bolting for the bay doors by the boatload as soon as the economy rebounds and their 401K will allow them to, but most companies don’t have any processes in place to capture their knowledge while they are still here and transition the knowledge to their new employees. Furthermore, they are starting to recognize the need for advanced sourcing systems to help them with their global strategic sourcing projects, but don’t have any processes about how to go about selecting, implementing and switching over to those systems in a risk and hiccup-less free manner. And while many companies still don’t have good answers, it’s nice to see the senior level recognition of this problem because the solutions are out there, and any company that gives this issue priority will find them.

The next major concern is talent availability. Even though the unemployment market has reached a high, averaging over 10% in North America (especially when you take into account all the underemployed “self-employed” and the “discouraged workers” who are conveniently left out of the US statistics to make the situation look better than it really is), there is still a dearth of talent in the sourcing marketplace, which is only going to get worse when the market recovers. Sourcing needs highly skilled workers, and with falling levels of graduates in science and engineering programs, economics, and other programs that train us to think logically and analyze complex situations, these people just aren’t out there in great numbers.

Furthermore, even when you find the talent, they still need to be trained since even most “supply chain” programs don’t prepare students for the complex sourcing environments present in most multi-nationals — which brings us to our third challenge. The fact of the matter is that there is no mass-market training program out there that will produce an advanced sourcing professional, yet alone a senior leader. (The NLP SPSM and the ISM CPSM, in particular, don’t come close enough. While I am a big fan of the SPSM certification program, because it captures the basics that every sourcing and procurement professional should know, but still doesn’t, and, through the SPSM2, introduces them to the world of international sourcing, on the doctor‘s scale of basic beginner – intermediate – advanced – senior expert, it still only gets you to intermediate. Better than the majority of the offerings out there, but still not where you need to be on a technical, EI, or cultural level if you want to be a senior professional at a major multi-national handling 8, 9, and sometimes 10 figure categories in today’s very challenging global sourcing marketplace.) The only answer is to find the best talent you can, augment them with advanced training from one of the leading consultancies who have been doing this in the field day-in and day-out for decades (after you have insured they have the basics), and then put them under the wing of a senior sourcing professional who needs to transition her knowledge to your rising superstar before she retires (because, when you get right down to it, what really makes a sourcing expert an expert can’t really be taught in a [n on-line] class, and can’t be learned until you have the advanced tools, techniques, and processes at your fingertips to learn from a master).

The story I’ve been pulling together lately, reinforced by this event, is that unless you can

  • find, and hire, talent while unemployment is high (and some of these individuals are available),
  • train them on advanced tools and techniques, and
  • use this new talent to lead your knowledge capture and transfer efforts
    while working under the guidance of a mentor
    (as they will be more comfortable with new systems and processes than your in-house experts)

you could be, to coin a colloquialism, up sh*t creek without a paddle.

I wish you the best of luck in your endeavours. You might just need it.

*In order to ensure best practice sharing amongst peers, each quarterly BPX roundtable is limited to 35 participants. As a result, BPX members get first priority. Remaining slots are then opened up by MPower to senior procurement professionals that are considering membership or interested in finding out more about the value BPX could offer them. For more information, feel free to contact Nicolas Hummer ( nicoh <at> thempowergroup <dot> com ) at any time.

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Charles Dominick on “Are You Prepared”

Today’s post is from Charles Dominick of Next Level Purchasing (and the SPSM certification) and blogmaster of the Purchasing Certification Blog.

I can’t recall a time in my procurement career when business conditions so strongly indicated that changes were a–coming. The latest United States GDP report indicated that the economic freefall has subsided, likely giving businesses the confidence necessary to resume the spending that will fuel growth. The last several US unemployment reports indicate that, while unemployment is still high at 9.8%, things aren’t getting worse by the minute the way that they were earlier in the year. And, after a period where commodities posted month–to–month price declines in seven of eight consecutive months, stability has prevailed and inflation has begun.

All of these indicators should be writing on the wall for today’s chief procurement officers: changes and challenges are ahead. Are you prepared?

What kind of challenges, you ask?

Consider these:

1. Heavier Workload.
As your company forecasts — and invests in marketing to create — demand for 2010, there will be a higher volume of inputs needed to support the higher volume of outputs. So procurement activity will increase. With a 9.8% unemployment rate in the US, this recession has claimed its fair share of procurement jobs. So, if you’re doing more with less now, you’re going to either have to find a way to squeeze more productivity out of your current (possibly depleted) team or add new staff —- new staff that will have to get up to speed very, very quickly.

2. Staff Will Leave.
As you contemplate having your existing staff handle the heavier workload, have you considered the possibility that some of those people may not be around for you to delegate to? Very, very few good employees will voluntarily leave a company during a bad recession. They know the risk of doing so. But as the economy thaws out and heats up, more opportunities will present themselves. Those employees that were unhappy but stuck with the company because of fear will finally feel ready to move on to greener pastures. You may find yourself trying to fill positions that you didn’t count on having vacated.

3. Price Increases.
There will so much upward pressure on price, it’s not funny. First, every year, suppliers come out with their new pricing in January. January is always a convenient excuse for raising prices. January is right around the corner. Second, commodity prices are on the rise, so prices for most goods tend to follow. Third, because of the nasty effects of the recession, some suppliers are so financially weak that their choices are to either raise prices to cover their losses or die. Fourth, it’s basic economics that as demand picks up, prices go up until supply adjusts to keep things in balance. With such a long economic dry spell, businesses are antsy to quit hunkering down already. Demand will go up, pushing prices up.

So, you may very well find yourself with a heavier workload, fewer long-time employees, more newer employees, and suppliers shoving higher prices down your throat. Because of the line of business that I am in, I know one solution that will help employees be more productive, get new employees to deliver results more quickly, boost the morale of existing employees, and provide your team with the skills necessary to combat price increases. But there are other solutions and this post is not a sales pitch so I won’t even go into what that solution is.

What I do want to do is just to share what I foresee in the immediate future for procurement leaders so that you can be prepared for these challenges with the solution(s) of your choice. With proper preparation, you can be ahead of this wave of change and succeed while other, less prepared peers of yours struggle to keep their proverbial heads above water.

Thanks, Charles!

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Individuals Do Matter, Even if Statistics Says they Don’t

A recent article in the Harvard Business Review, which purported to tell us “when individuals don’t matter”, stated that under the right conditions, groups — whether ant colonies, markets, or corporations — can be smarter than any of their members in an effort to apply swarm theory to corporate performance. This is because, in complex adaptive systems, hard-to-predict behaviors emerge from the interaction of the individuals.

The article says that executives make three common mistakes to demonstrate that they don’t grasp how complex systems work. A complex system cannot be understood or managed with a focus on a few key parts, or individuals. It needs to be analyzed as a whole, and this is where many people executives fall short and, according to the author, make the following errors:

  1. They extrapolate individual behaviour to explain collective behaviour.
    Wall street believed that EPS was key to a stock price, but then financial economists concluded that cash flow drove the stock price. The economists, who focussed on how the market behaved, turned out to be more accurate.
  2. They don’t understand that changing one component of a system may have unintended consequences for the whole.
    For example, the collapse of Lehman Brothers, which had losses larger than expected, roiled global financial markets, increased risk aversion, and even parts of the market that were supposed to be unrelated, like money market funds, were jolted.
  3. They prize standout individuals while ignoring how much they draw on their surroundings for support.
    The example given is how many sports teams will hire a star in an effort to quickly improve team results but then see little or no improvement because the newly transplanted star is separated from the people, structures, and norms that made her great in the first place.As someone who has worked primarily with smaller business and start-ups in my career, I have seen this way too many times. “We’re going to hire Mr. Big Shot because he ran the top performing team at Great Success Co. that generated 10M in annual savings” even though he’s never worked at a small company, never sold point solutions, never worked in the vertical, and we have a candidate who used to sell a similar solution for a similar sized competitor who is well educated, experienced, sociable, hard working, and comes with a go-getter attitude. As (I) expected, it turns out Mr. Big Shot was actually Mr. Hot Air who only succeeded in alienating the good people the company already had, who then took other jobs at their first opportunity, because Mr. Big Shot couldn’t survive without a hard-working team who did all his work for him and made him look good in exchange for the little rewards he would throw their way from the big discretionary budget he kept to keep his team happy.

This last point brings me to my main point. Even though, as the author notes, wrong assumptions about the relevance of individual agents to the behaviour of a complex adaptive system will kill your corporate performance, it’s also true that the wrong individual can significantly disrupt the system you have in place and have an effect that is more detrimental on your system than you might think any single individual could. Which is why individuals do matter. Even though it is collective effort from a focussed team that mutually trusts each other that builds an organization, it only takes a single individual to tear it apart. Remember that the next time you get all hot and bothered for an organizational superstar.

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