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6 Questions to Ask Yourself and Your Team

To get a start at assessing how well you’re managing your human capital, consider the questions below.  How you answer them can give you an initial read on whether you’re on track or may be putting your business plan at risk. If you’d like a more detailed analysis, consider engaging us to do a PPL Audit.

1. How much time do you spend on people issues?

In the highest performing organizations, the CEO, executive team and even Boards of Directors get personally involved in assuring strong human capital.  One leader of a Fortune 100 company estimates that he “when things are running well, I spend 20% of my time on people.  When I’m re-building an organization, it’s 40%. “

Do you spend at least one day a week making sure you’ve got the right people, doing the right work, in the right roles?

2. When you’re working on people issues, are you focusing on reducing costs labor costs or on making sure your key employees are positioned to execute your business strategy?

Your business competes by differentiating itself in your products, your services, your pricing—and most likely, the biggest differentiator is your people--their skills, motivation and focus.

Just as strategy means making choices of where to focus, managing your workforce for competitive advantage means knowing where the best people will make biggest difference, and insuring they have resources to do so.

While everyone on your staff makes an important contribution, some roles are absolutely crucial.  These are the roles without which you can’t execute your strategy.  Have you identified the vital roles, and are you certain you have the best people, able to do their best work, in those roles?

3. Do you invest a disproportionate share of resources in the people in the roles that are absolutely critical to your success?

You should be investing disproportionately in them—putting the best talent in these roles, paying them disproportionately, and investing more in their development.  Review your compensation plans to make sure, for instance, bonus eligibility varies considerably, based on strategic impact; that the lion’s share of time and money spent on training is targeted to these people.

4. Do you know who’s leaving your organization and why?

Un-managed turnover is costly on many levels.  Replacing an employee is conservatively estimated at 1.5 times salary.  Even more costly is the disruption to your organization and customer relationships.  Perhaps most of all, you lose the increasing value that experienced employees can deliver over time.

If your turnover exceeds 10%, you’ve got inefficiency in your organization—and if you have high turnover in your pivotal roles, your business plan may be at risk.  Take a close look at what might be driving that turnover.  If you’re losing people within one year, evaluate your hiring process, as well as your process for orienting and training new hires.

5. How good is the information you have about the performance of your workforce?

The performance of your workforce is a leading indicator of your firm’s performance.  Traditional workforce measures, however, don’t shed much light on how effectively your workforce is differentiating your firm from your competitors.  Many indicators draw on benchmarks, or measure outcomes, rather than leading indicators.  Look beyond measures such as revenue per employee to measures that are based on your companies strategy and that answer questions such as:

• To what extent has your workforce achieved your customer and operational goals?
• Are your leaders and staff demonstrating the behaviors that will create the results you need?
• Does your staff, especially those in key positions, have the skill they need to execute your plan?
• Does your staff understand—and embrace—your plan?

6. How efficient is your organizational structure?

If there are more than five layers between you, the CEO,  and your front-line employee, your organization probably moves too slowly, and you may diffuse accountability too broadly.  Spans of control also indicate efficiency.  In any organization, there are justifiable ranges in spans of control based on factors such as the complexity of the work, geographical spread and experience of the staff; however,  the average across your organization should be approximately 8:1.