Big Red Car here in the ATX after The Boss had a stint on the east coast for a funeral in Sandersville, Georgia, visiting sweet Wrightsville Beach during the big East Coast Storm of the Century, over to Charlotte to see the investment banker son, and down to Atlanta to see My Perfect Daughter and new husband.
Now, The Boss is back home to see his beloved Big Red Car and to get the Big Red Car a new paint job — come on, Boss, let’s get a paint job for the faithful, loyal, steady, fabulous Big Red Car.
Dear Readers, work it with me. I need a damn paint job and The Boss is resisting the inevitable. I have threatened a stop work action and he has threatened a trip to the junk yard. Help me here, y’all!
It’s 33F this morning headed to 74F this afternoon. Don’t y’all love a Texas winter?
So, The Boss fields questions on the development of an HR (human relations) capability from four different CEOs of lovely businesses with 25-75 employees. Sometimes, ideas germinate at the same time but this is an uncanny coincidence. Maybe not?
Human Relations
Human relations is the administrative requirement to minister to the needs of a company’s employees from maintaining personnel files to benefits administration to performance appraisal with everything else in between.
As a CEO grows her company, this is something that is initially being done by the seat of one’s pants and which every CEO knows will one day have to be formalized.
So, the CEO considers hiring a full time HR professional of which there are many acknowledged professionals out there.
So far, so good. Hasn’t cost anybody any money to talk about it, right?
Crawl, walk, run
As in any capability, the Big Red Car preaches a gradual implementation of any strategic initiative. You will remember we had this conversation before when we talked about Building An Organization — Financial Talent.
Read that article and take a look at the graphic and see how gradually a Chief Financial Officer can evolve from the smallest nugget of an organization.
The Big Red Car suggests you take the same approach to dealing with your HR requirements.
How, Big Red Car?
Here is a list of what you might consider doing — before you go out and hire an expensive full time HR person. Just a thought.
1. Make a dollar weighted organization chart showing the functional areas of the company and the individual positions within those areas by name and compensation level.
If you have any openings for which you are currently hiring, show them as dotted boxes with a target salary.
Know how much every function within the company is going to cost you and make damn sure that is what you want and intend to spend. Take the cost of benefits into consideration. They cost real money.
[Pro tip: A good growth management tool is to model what the dollar weighted org chart of the future looks like versus what you have today. It will identify the number of new positions and the cost impact on the bottom line. This can be done with an iterative approach — model it for six month increments.]
2. Have files made for each employee. This can be digital but make sure they are done. Collect all the pertinent data and remember this is confidential information. Safeguard it.
An easy way to do this is to develop an application form which contains all the information. This is easy stuff.
3. Develop a little spreadsheet of individual salary and other compensation history. Keep it current.
4. Sketch out an Employee Handbook with all of your policies codified in writing.
Hey, find a good one on the Internet and customize it to your own wishes. You can hire someone to do this for you.
[Pro tip: Monkey see, monkey do can be a good idea sometimes.]
5. Commit to writing your Vision, Mission, Strategy, Tactics, Objectives, Values as well as a Business Engine Canvas, a Business Process Graphic, and a quick slide deck on the company.
Most of this exists and the Objectives will be perfect to tie into the performance appraisal system.
This is all going to be part of your Onboarding Checklist and system.
6. Develop a job description for the entire organization chart starting with the top jobs and working down. Where there multiple positions with the same description, just one will do for now.
[Pro tip: You really want to develop something called a Basis for Employment but we are in that crawl, walk, run frame of mind and you can do that later and for new hires.
7. Publish your Values and live them.
8. Develop an Onboarding Checklist which outlines what happens when a new employee comes on board at your company.
9. Develop a Performance Appraisal system which uses the input of the new hire’s Objectives, a Self-Appraisal, and a Performance Appraisal Form.
Make the Performance Appraisal Form comprehensive and deal with compensation at the same time. There is nothing more lame than giving a performance appraisal and then saying, “We’ll talk money later.” Lame. Lame. Lame.
10. Outsource all of your benefits admin you possibly can. All of it.
11. When all this is done, take a week off and go to Mexico and lie in a hammock, drink beer, and congratulate yourself. Get a massage.
Because you have laid the groundwork for next big step.
The next big step
Just like we discussed with the incremental development of financial talent, you are going to contemplate a part time HR clerk, a full time HR clerk, a part time HR professional BEFORE you lay out the big bucks to hire a full time HR professional. Because you get the idea of being lean, nimble, and crawl, walk, run. That is you.
When the “work” above is done, then you will consider hiring a full time HR person and that full time HR person will step into a system that already has your fingerprints on it and it will be infinitely easier.
What should we expect, Big Red Car?
OK, so you’ve low crawled up on the solution and you’ve crawled, walked, run and still you’re now ready to hire that HR pro — so what do we expect to happen, Big Red Car?
1. It is going to be expensive.
2. No HR pro can exist for more than six months without having an assistant or a clerk. Not the end of the world if your headcount is going to justify it.
3. You will delegate the Hell out of all HR — hiring administration, current employee administration, benefits administration, performance appraisal, market research as to compensation, problem solving — responsibilities.
This is a very thing because now, dear CEO, you can focus on the product, the service, the company, and growing the business which is YOUR freakin’ job in the first place, right?
Delegate everything. The best CEOs are ruthless delegaters willing to live with a little imperfection in order to delegate everything. Delegate yourself out of a job, if you can.
4. Then, you will find out all the stuff you’ve been doing wrong which is unlikely to contribute to anything mission critical.
It is like keeping a neat and clean cemetery — it doesn’t bring anybody back to life but it is time consuming and it is expensive.
Employees will now have a place to go to complain about their managers.
In the past, that was you, dear CEO. Now it is the HR manager who is only too willing to listen to a story, go see a manager, pick a fight, and only when there are bruises and lacerations COME SEE YOU.
Let me be clear. Some of this is the cost of being an employer. Shit happens. But a lot of it is that when you put up a Complaint Box it will get filled to overflowing with complaints.
Hire a full time HR pro and you will be spending a lot of time learning about stuff that isn’t really mission critical. Tough balancing act to be sure but a time suck like you’re never seen.
Exemplars
Go over to the Free Stuff tab and see what forms you can get for free. [I am not giving you a hyperlink on purpose, you lazy readers. Sheesh! This is Free Stuff. Tab it out.]
If you need some other good exemplars — job description, basis of employment, employee performance appraisal input, performance appraisal form, values booklet — ping The Boss and let him know what you need. He may charge you a good joke in return but he’ll send that shit to you.
And, there you have it, dear CEO. A strategy for incremental development of your HR capability and a spot of crawl, walk, run that will work for you.
But, hey, what the Hell do I really know anyway? I’m just a Big Red Car. Paint job? Yeah, work The Boss on the freakin’ paint job.
Good stuff.
A keeper for when my startup gets to the “25-75 employees”.
Cost per Employee
For each additional employee, I see some more costs: When go from 99 employees to 100, ballpark each employee costs 1% of the building, janitorial, maintenance, utilities, security, insurance, the, say, TGIF catered lunch, etc. So, have to add up those costs and pro-rate them for each employee.
Sure, growing from 99 to 100 may not make those additional costs obvious, but growing from 25 to 75 or 100 to 200 will. Indeed, one cost of those last 50 employees is the HR department itself and also the time the CEO spent before and on his week on the beach after finding how to delegate HR.
And each new employee needs a desk, chair, phone, computer, e-mail and Internet access (likely from an ISP), purchased software, routine computer support, cloud access, desk supplies, printing and scanning, business travel, and more.
A technical employee may need books, videos, conference attendance, consulting, e.g., calling a paid expert at Microsoft to resolve some tricky issue in system administration of a high end version of SQL Server in an hour instead of working alone for a week.
And, as in the classic Fred Brooks, The Mythical Man-Month, “adding people to a late software project makes it later” because of the quadratic growth the number of person to person communications about the work. His claim is an exaggeration and is specifically for software but does have a point that is more general and significantly valid. So, adding people can slow down the work.
Sure, maybe don’t hire someone until there is some very valuable work that is well identified and described, quite doable, and very much needs to get done and where the other employees are so overworked that they are desperate to welcome a new employee to help with the work. Then hire for just that work, no more and no less. Okay. In the short term, this is fine. But in the longer term, the work to be done tends to change, and there is a bigger challenge, the “main point” just below.
Job Description
Really, the main point in a job description has to be, see what needs to be done, find a good way, maybe a really good way, to do it, and get it done.
Case Study #1
E.g., at a university with 55,000 students on campus, there was a computing center for the faculty and students. The center had an Amdahl mainframe with 6 million bytes of main memory and a processor clock of 3 million ticks per second. Nearly all the input was via punched cards, but there were also some typing terminals, dot matrix DEC Writers, typing on paper at 30 characters per second and a few video terminals that looked to the computer just like typing terminals.
The group had their own building, a staff of 80 persons, and a CIO.
The business school had a person who helped students, faculty, and staff use the keypunch machines and submit jobs to the mainframe.
The business school was starting a new MBA program and wanted some better computing. They had a committee, from mostly the accounting department, that had met for two years with no good ideas.
A new faculty member arrived, saw the situation, concluded that the place was in the dark ages and far behind what he had administered on a part time job in US national security while in grad school, and, after two weeks on campus, in the first faculty meeting, stood and suggested a super mini computer from Boston, DEC, Prime, or Data General.
He led the effort. The CIO bitterly objected. A year later the proposed computer was running, and the business school was thrilled. The site was wildly successful for years. The new prof served on a committee to pick a new CIO for the university. E.g., some students in the new B-school computer center worked out some database logic and some word whacking software, and the school alumni office, then, had daisy wheel printers going 40 hours a week building relations with the alumni. Presto, bingo — big ROI on the cost of the new computer. Others on campus wanted the same, and the system was borrowed, polished, and became a biggie for the whole campus. Biggie ROI again.
The struggling word processing department was disbanded, and the new computer became the center of word processing, for research, teaching, administration, etc. There was dial-in access, and faculty could type from home. The site became the world site for distribution of Knuth’s mathematical word processing software TeX on the computer used (a Prime, maybe the same as Bloomberg was using then).
The new prof gave a special, very popular, MBA course in computer selection.
So, there in computing the real job description was, see what needs to be done, find a good way, maybe a really good way, to do it, and get it done. That’s what the CIO and the B-school staff person were not doing and the new prof did.
Case Study #2
Once a guy was working in a software house with customers at a research lab of the US Navy. There was a competitive request for a proposal (RFP) for a software development project. But one existing project was in trouble, and the guy was asked to go for a week and try to save the project. By the afternoon of the first day, it was clear that there was no way to save that project in a week.
But there was also a problem with the RFP — in an important sense in estimation of the power spectrum of ocean waves, what the customer was asking for was impossible. From the classic Blackman and Tukey, The Measurement of Power Spectra, written at Bell Labs and Princeton, the accuracy the customer wanted would require hundreds of hours of data.
To illustrate this point, in the next four days of that week, the guy typed in some software to generate sample paths of some stochastic processes and calculate and graph the sample power spectra, over and over as the stochastic process continued. The software clearly illustrated how early on the sample power spectra were wildly inaccurate but, over time, converged to exactly what generated the stochastic process to begin with.
So, the Navy really could get the accuracy they wanted, but they needed more data and had just learned how much more.
The software house got sole source on the development RFP.
So, again the real job was, see what needs to be done, find a good way, maybe a really good way, to do it, and get it done.
HR Recruiting
Back to HR, there is a danger, a huge danger, a great way to shoot the whole future of the whole company with a .308 shot straight to the gut, right along all totally without sound or pain.
The HR shop is usually a distaff ghetto of psycho majors who have no chance at all of any insight at all into the main qualification of the jobs — see what needs to be done, find a good way, maybe a really good way, to do it and get it done — or how to recruit such people, especially for 2016.
Indeed, for likely the most important work for the future of the company, the usual approaches of HR will strongly filter out just the people who are good at the main qualification.
How? The HR people are, without exception, highly sensitive social butterfly types, natural applied sociologists. They all would get at least a B-, without study, in Erving Goffman’s obscure, classic The Presentation of Self in Everyday Life.
Then with a nerd, just terrific at the real work, suddenly saving the day with some fast work in, e.g., power spectral estimation, the HR people will, even in just a first phone screen, get a headache and a backache, do an upchuck, and feel worse than having a barbed wire enema. All their central life belief system, highly cherished, exquisitely sensitive, psycho-social, Victorian garden party, touchy-feely sensors will sound loud alarms at which time the phone screen sophomore college, psycho major, junior assistant summer intern will report, with some strained facial expression, a huge no fit, and that will be the end of the chances of that candidate at that company and, also, an nice step to the end of the company itself. Now, the situation might be better if the business of the company was catering dances for sorority parties at the Seven Sisters, at least as long as the catering staff didn’t have work with anything as technical and dangers as 120 V, AC extension cords!
In general, usually there is just no way the desirable candidates for a company in 2016 will make it through HR recruiting. No way. Not a chance.
There is an even bigger challenge: Fundamentally, the goal has to be to recruit people who can do really good work on really important work — see what needs to be done, find a good way, maybe a really good way, to do it and get it done — where the present staff doesn’t know about the work and doesn’t know how to do it.
So, how is the current staff going to recruit people they don’t understand? And if the current staff does start to understand, will they feel threatened from the competition and reject the candidate? Uh, in B-school courses, in psycho-social terms that’s called goal subordination.
In picking someone to do a really good job painting the ceiling, say, picking Michelangelo, whom do you ask? A bunch of house painters? Some people who have no idea at all how to conceive of a masterpiece?
Really, finding good people is, first, the job of the CEO, and as the CEO “delegates” that he has to find a way so that the company will continue to find good people.
Uh, maybe right along he should have some friends send in their resumes and, if they get that far, have the phone screen just to see if HR can recognize the good stuff when they see it. Likely they won’t.
So, for HR in recruiting, for a quote,
Evaluations
Somehow I suspect that the recommendations for employee evaluations will become too rigid and emphasize simplistic formality over essential reality.
Danger
Even HR people understand that they would like to get more power. So, they can suck up to the CEO and COO and suggest that they, HR, can for employee and management evaluation provide a more objective, alternative to the usual management hierarchy. Then, too soon, HR can be the become the main power in the company, putting their psycho-social, touchy-feely, fuzzy-bunny play time standards ahead of any and all the real expertise in the rest of the company.
A CEO or COO who permits that deserves to have their company die.
Good stuff and an entertaining read (as always).
What do you recommend for outsourcing/delegating HR. Something like an all-in PEO or more piecemeal?
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There are a lot of nifty pieces of software/apps that will cut a few corners for you. There are a lot of retired HR folk who can work very reasonably on Craigslist or other sources.
BRC
https://www.themusingsofthebigredcar.com
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Before you hire a full time HR professional, let’s try an incremental approach. Crawl, walk, run.
Here is how to do just that.
https://themusingsofthebigredcar.com/human-relations-crawl-walk-run/
BRC
https://www.themusingsofthebigredcar.com