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Employee Handbooks: Out With the Old, In With ... What Exactly?

Cornerstone Editors

The employee handbook: every company has one, yet most employees never lay eyes on it after they get out of new-hire orientation. And who could blame them? "Today's employee handbook feels so antiquated," says Michael Molina, chief human resources officer at San Diego-based Vistage International, a membership organization that provides executive coaching to CEOs of small and mid-size companies around the world. "Let's face it," Molina says. "An employee handbook, you pick it up on day one and you put it down unless you have a question."

Small wonder, then, why innovation-focused companies such as Netflix and Zappos have experimented with more compelling handbook alternatives -- such as colorful, engaging slide presentations that showcase the company’s values, vibe and culture and downplay rules and policies, reference them in other documents or leave them out altogether. San Francisco-based Zaarly, a startup that supports a network of local merchants in selling their crafts (think Etsy for service and merchandise) has taken the concept a step further: Listed in the "Rules for Work" section of its of new employee "handbook" is a provocative mandate: "We do not have these."

Most companies may not go to the extreme that Zaarly has, but the traditional employee handbook that lays out employees rules and regulations certainly deserves a makeover. In an effort to recruit fresh-faced talent and create an engaged work environment, businesses are hoping that focusing on the good stuff (core values, perks, cool culture) will make the not-so-fun stuff (regulations, rules, fine-print) obsolete. As Molina explains, "In general they are far less detailed and serve as an advertisement for new employees."

But is that enough? Is there a happy medium to strike for companies that want to impress new hires with humor and personality, but also recognize the value of clear policy information on issues ranging from "WFH" (working from home -- a hot topic again) to social media policy to discrimination and fraud? The "no rules" concept may not be for every company, or even most companies, but it doesn't mean existing policies can't be rethought. As Molina explains, some companies are adopting a two-pronged strategy: pairing a more compliance-heavy handbook with another focused on company culture. "You can have a great work culture and still have an employee handbook about ethical standards and computer usage standards, with great responses from employees," Molina says.

So what does a successful two-pronged approach look like? Here are a few helpful rules of thumb:

Describe the Real Culture of the Company -- Not One You Imagine

"The handbook needs to be representative of the daily experience," Molina says. "You don't want to walk into a culture where everyone looks like a drone. When future hires walk in the door, they immediately get a sense of who you are as a company. You can tell them whatever you want in the handbook, but an employee smells the actual experience out very quickly. You have to be able to articulate that within a week or a month of what that environment is going to be like."

He's right: According to data collected by The Wynhurst Group, 22 percent of staff turnover occurs in the first 45 days of employment. If new hires feel lost, they need more than a presentation or a pithy page to understand their new work environment. The culture of the place comes out if you'd like it to or not, just by being there.

Don't Sweep the Important Stuff Under the Rug

A truly no-rule environment can't exist in today’s workplace. Policy and procedure help protect both the employer and the employee -- and they shouldn't be ignored. There is room for people to be hurt and also skirt responsibility if rules are not set in place. No matter how old or experienced your employees are, lack of clear-cut rules can backfire. In fact, most ethical problems arise when employees have an out or an excuse, says Chris MacDonald, professor of ethical leadership at Ryerson College in Canada. With no rules, the "I didn't know" excuse can run rampant.

"I think it's a gimmick to say you don't have a handbook," Molina says. "You can't operate without practices and policies and laws. So if a company wants to position itself properly, it has to set two things in place: something that tackles the culture and something that highlights the management practices followed. There are rules that you have to have in a company and they should be available to the employee. That being said, you must insure that the rules are representative of the daily experience in the workplace."

Stick to Substance -- Not Slapstick

It's important to attract and retain talent -- but even more important to stay genuine. Employees can see through the diatribe of a slick but substance-lacking handbook like Zaarly's. After all, the substance is what will hold the entire endeavor together. Yes, Zaarly throws around some fun and shocking phrases -- "You may speak to, call, email or have a meeting with anyone. Even if it's your first day. Even if you don't know their name. Even if they have a mustache," the handbook reads. But the piece also contradicts itself: calling for face-to-face communication as a tantamount practice while also encouraging employees to work from home or blast Skrillex if it makes them more productive. Furthermore it offers some tasteless jabs as other companies: "If you want to coast, we recommend you apply for a job at Craigslist."

"I don't think a handbook replaces what you do day in and day out," Molina says. "I want new hires to feel as though they're coming to a place that is engaging and where the culture fits the company's values through the spirit of the right leadership and right energy. If whatever tool we use reflects that, then I think we've been successful."

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A New Poseidon Adventure: Flipping Succession Planning Upside Down

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A New Poseidon Adventure: Flipping Succession Planning Upside Down

Organizations make significant investments in efforts to hire the right candidates – the people who have the right experience and cultural fit. By carefully managing the performance and potential of these people over time, the organization can grow its leadership pipeline, keep a steady inventory of needed skills and competencies and remain nimble in the face of change (which we have plenty of all around us these day) – all of which can have serious impact on the bottom line. However, much of this pie-in-the-sky stuff relies on being able to locate and cultivate high-potential and high-performing talent across the board. Without an integrated succession management solution, recognizing and developing talent can be an ever-elusive process. The questions we are seeing asked today include: does the traditional top-down approach to succession management still make enough of a difference? Does managing succession for a slim strata of senior executives take full advantage of the kinds of talent data we now have at our fingertips? It doesn’t have to be so. Succession management can be an interactive process between senior leadership, managers and employees at all levels of the organization. And, if we trust them, we can actually let employees become active participants in their own career development. (Shudder.) Career Management (Succession Planning Flipped Upside Down) This "bottom-up" approach is gaining momentum because who better to tell us about employee career path preferences than employees themselves. Organizations actually have talent management and other HR systems in place that allow for collecting and analyzing a whole slew of data around: Career history Career preferences Mobility preferences Professional and special skills Education achieved Competency ratings Performance scores Goal achievement Training and certifications Etc. In short, pretty much everything we’d want to know to make well-informed succession planning and talent pooling decisions. For some, the leap is simply putting some power into the employee’s hands. The talent management system of 2011 is capable of displaying a clear internal career path for employees and then, on the basis of all that data bulleted out above, showing a "Readiness Gap" – what do you need to do to make the step to the next level? And if your talent management environment comes armed with a real Learning Management System, you can take it to the next level with a dynamically generated development plan that gets the employee on the right path to actually closing those gaps. Faster development, faster mobility. Organizations that seriously favor internal mobility don’t just make employees stick on pre-defined career paths – they can search for ANY job in the company and check their Readiness levels. I might be in accounting today, but what I really want to do is move to marketing. Giving employees the chance to explore various career avenues within the organization helps assure that "water finds its level" – that is, that the right people with the right skills and the right levels of motivation and engagement find the right job roles internally. Employee participation is key, but make no mistake – managers play an important role in this interactive process. They must be prepared to provide career coaching, identify development opportunities and recommend employees for job openings. The candid discussions require that employees have open access to information so they can best understand the criteria necessary to move to the next level. A Two-Way Street Employee-driven career management is just one tool. The more traditional top-down approach to succession management remains indispensable. But organizations that value talent mobility and the ability to be able to shift and mobilize talent resources quickly will find that attention to career pathing can be vital. For employees, of course, the impacts are immediate and include boosted levels of engagement, higher retention, increased productivity and more.

The Hidden Costs of Ignoring Your Talent Management Strategy

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The Hidden Costs of Ignoring Your Talent Management Strategy

Building and maintaining a successful company hinges on having the right people to execute projects and drive results. People, we hear time and again, are your company's most valuable asset. But their success — and HR's ability to recruit, engage and retain them — depends on HR pros who are strategic decision-makers, armed with the proper tools to let them excel at their jobs. Modern HR professionals manage much more than payroll and benefits. But their technology tools, in many cases, haven't evolved past basic productivity software like email or Microsoft Word. HR simply can't be strategic with old-school tools that reduce people to statistics and give little insight into what the numbers mean. Emails and spreadsheets were not designed to deliver meaningful insights into people's performance, suggest when employees should be promoted or highlight skills gaps in a company. For that, HR needs a broader, more strategic set of talent management tools, which lets professionals manage every aspect of the workforce, from training and performance reviews to collaboration and succession planning. Yet, research shows that less than 25% of companies use a unified, holistic approach to their talent management. The Real Costs of "Doing Nothing" As a Talent Management Strategy The critical relationship between business strategy and HR strategy too often gets overlooked by senior leadership. While it may seem like the company is saving money by managing recruiting, training, performance and succession via manual and paper-based processes, in reality it’s costing your business more than you know. For example: Without a talent management strategy, a company with 2,000 employees is losing almost $2 million every year in preventable turnover alone. Businesses that don’t invest in learning suffer from decreased employee performance and engagement to such a degree that they can expect to realize less than half the median revenue per employee. That’s a direct impact on the business. In employee performance management, organizations without a focused strategy waste up to 34 days each year managing underperformers and realize lower net income. To learn more about the business impact of talent management and how to start building out your strategy, check out the eBook Why Your Nonexistent Talent Management Strategy is Costing You Money (And How to Fix It) and register for the March 19th webinar, Building the Business Case for Talent Management.

The Return of the Moderate Merit Budget – Wreaking Havoc on Pay for Performance

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The Return of the Moderate Merit Budget – Wreaking Havoc on Pay for Performance

With the economy now on steadier ground, most organizations have returned to administering a merit budget to the pre-recession levels of 3 to 3.5%. In the years immediately following the economic downturn, many merit budgets were eliminated entirely or were reduced significantly and reserved for a select segment of the employee population. Pay for performance has become a necessity for many organizations that are expected to accomplish more with fewer resources. I often get asked: "How can I truly award my top performers with such a limited budget? Should I do so at the expense of my ’Meets Expectations’ performers? What if I need to retain my ’Meets Expectations’ performers and giving them 0% to 2% increase puts me at great risk for turnover? But if I don’t recognize my top performers, don’t I risk losing them...?" These are difficult questions to answer, however you can determine the best solution for your organization by considering the following: Are your employees paid at market pay levels? Is your organization’s performance management process mature? Does your organization have other compensation programs in place to reward top performers (e.g. variable pay)? Market Pay If turnover is a concern, and your organization needs to maintain ’bench strength’ in order to achieve its strategic objectives, your biggest priority should be to ensure that you are paying your employees at market pay levels. Why? Historically, as the labor market strengthens, organizations become vulnerable in terms of losing people. Hiring and onboarding replacement talent is not only costly to the organization, but can also cause dissension among existing employees since new hires may be getting paid more. Be sure to stay abreast of market pay levels and trends, and use the merit budget to correct disparities. Performance Management Process Organizations vary significantly in terms of the maturity of their performance management process. Closely examine your organization’s process and look for ways to improve it. If there is a perception that one management team is an ’easier grader’ than the others, the process is inherently flawed and any pay for performance program will not be viewed as credible and fair by employees. A good place to start is to get a calibration process in place and communicate broad guidelines on expected distribution ratings. Variable Pay Programs Variable pay programs (e.g. bonuses) have become increasingly more popular across all industries and career levels. These programs provide the opportunity for employees to share in the organization’s success while not adding to fixed payroll costs. Some plans have an individual performance component which can be a very effective means to recognize top performers. However, in order for this type of program to be successful, individual goals and targets must be well documented and communicated. Again, this is largely based on the maturity of the organization’s performance management process which takes time to evolve. What are the best steps to avoid wreaking havoc on your pay for performance process? First ensure your pay levels are keeping pace with the market Continue to evolve your performance programs with calibration among managers and a rigorous goal setting process Promote variable pay plans to reward high performers without adding to fixed pay roll costs It’s not always an easy journey but, in the end, it’s best to use a measured approach that is based on business needs and a realistic assessment of your current programs and processes.

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