Given that several studies, such as SKE’s analysis of high performing workplaces, have shown that employee engagement is a key driver of business value, I was interested to find out from Ross what is really going on out there, especially in the SME market. How strategic are employers?

Social media, such as Linked In, is a disruptive technology that is impacting traditional business models. I was keen to hear Ross’s views on this and much more:

Can you explain the difference between agency recruitment and other forms of recruitment?

Recruitment agencies provide outsourced recruitment services, both permanent and temporary/contract. These outsourced services are mostly provided on a success-only fee basis.

The most common other form of recruitment is a company having an internal recruitment function where they undertake all, or most, of the recruitment activities themselves.

The advantage of agency recruitment is that it is a completely variable cost, incurred only when used. Internal recruitment has many fixed costs including staff, office space, software, telephone, Internet etc that continue to be incurred regardless of the volume of recruitment being undertaken.

Why should we take this market seriously?

Because it is a very large market. IBIS World research indicates that the recruitment industry in Australia comprises around 2,500 business and employs around 15,000 people. It provides a service, especially to the SME market, where internal recruitment would be uneconomic.

What trends are driving change in this industry?

Technology and social media, especially the aggressive growth of Linked In. Companies now have easier and cheaper access to DIY recruitment than they have ever had. This puts far more pressure on recruitment agencies to deliver excellent value for their fees.

The skills shortage means more and more pressure is on making the right recruitment decision, as a poor choice could have significant negative consequences.

Can you tell much about the merits of an employer by the way they behave in a recruitment process? What examples spring to mind?

Candidates, rightly or wrongly, make decisions about an organisation by the way the recruitment process is handled. The three major negatives are applications not being responded to, interviews occurring without any feedback and a long, drawn out recruitment process.

My very first permanent job was a good example of this (for the positive). I had two interviews within three days and then received an offer the next day. I had another offer elsewhere but the speed of the process gave me an ego boost. I thought that any company who acts that quickly must think I am good so I’ll take their job.

If people are increasingly recognised as the key assets in organisations, do we see the recruitment function treated with the respect it deserves?

Hmm, I’d like to say yes but I still see, in a majority of cases, a very reactive recruitment function. Recruitment works best when a company has a clearly defined competency model, accurately compiled job profiles, unambiguous behavioural competencies or values and a rigorous process used to assess ALL candidates for ALL jobs. When all these components are in place I would say that recruitment is seen as a strategic not transactional function.

The companies that do this best have a CEO who understands the strategic value of recruitment and provides a budget to build and maintain such a function.

How many employers are strategic in their HR activities versus those that are just trying to get through each day without falling apart!

My guess is that less than one per cent of people employed in HR in this country are doing anything that could be close to strategic. Overwhelmingly HR (and recruitment) is still very reactive and transactional.

You have created a strong niche as the “recruiter’s recruitment expert”, was it easy? 

No. It’s been ten years of training and coaching as well as five years of very active blogging, tweeting and building my Linked In network. Ultimately it doesn’t matter what I call myself the only thing that matter is what other people think of me.

What are the common problems you see in recruitment agencies?

Lack of their own effective recruitment processes! The recruitment industry has an annual staff turnover rate of 30%-45%, indicating that we are not great at recruiting the right people for own businesses.

Compounding this is the lack of structured and ongoing training for new employees. There is still too much ‘learn on the job as you go’ as the major training technique.

Thirdly, there is lack of understanding of how the game has changed by Linked In and others, and a reliance on the recruitment agency business model of last century being adequate for this century. Hence most recruitment agencies are only thinking about this month’s and next month’s fees rather than how the overall market is changing and what that means for their business model.

How do you help them improve their business performance?

Skill development predominantly. Secondly I provide ideas for structured performance management and how to build a career in recruitment.

What is your most satisfying achievement with your clients?

There have been plenty but the one that stands out is a client I first started working with as an employee . Then she gained the confidence necessary to start her own business, which is now thriving, and subsequently she was named as a 2011 Finalist in the Queensland Telstra Young Businesswoman of the Year.

What’s the best business advice you’ve ever received?

Specialise. Trying to be all things to all people is for mugs. I made a decision to niche myself in agency recruitment training, coaching and commentating and it has paid off for me.

What has been your biggest learning along the way?

Never stop marketing yourself. You can never have too many clients.

What legacy do you want to create?

A professional, thriving and highly respected recruitment industry. I would hope that people within our industry would see my consistent writing and training on this topic has helped raise the bar across the country for recruiters.

I reckon I’ve got about thirty years left in me doing this so I am not sure whether that will be enough time!

Thanks Ross for your insight into the trends and issues facing the HR and recruitment industries!

As a result, I’ve launched a new on-line publication, the Social Innovator, that assembles thought leading articles on this topic. It comes out daily and you can go there now to see what it looks like and request email notification if you wish.

I trust you will enjoy reading it and my email updates will continue, but on a monthly instead of weekly basis.

Without knowing exactly what will happen on the road ahead, we can prepare by observing our current situation, trends and past experiences.

Having sent out 49 weekly newsletters in the past year that analyse the business challenges ahead (and more than 20 that were published in the Leadership Section of the Business Spectator), I picked out five “P”s that drive organisational performance:

1. Partnership power

Partnering is an off-balance sheet way of gaining access to resources. As a solo practitioner, I’ve learned that partnering is powerful. I’ve been able to get two workshop programs from concept to reality within weeks, rather than the months it would have taken me on my own.

One of these programs was designed to help business and community interests partner more effectively, and there has been good demand for capacity building in this area.

A new frontier for the business, non-profit and the public sectors is cross-sector partnering. Technological advances, disruptive change and the shorter product cycles that come with it require higher levels of organisational flexibility.

A vice-president of Xerox recently talked of their use of innovative partnerships. For example, Xerox levered its product energy efficiency efforts by partnering with the US EPA to build the Energy Star program.

Energy Australia is well known for partnering with local communities in order to help balance its technical needs with social and environmental concerns, leading to less disputes and shorter development times.

A long journey is safer and achieved with more reliability if the driving is shared (as long as the partners get on with each other!).

2. Present well

In a tough business environment, improving communications is a cost-effective way of improving performance.

I can easily list 19 types of stakeholders that are critical to every business. From shareholders (or funders), employees and suppliers through to regulators, customers and the media. Once you start adding them all up there is a formidable array of “brands” that need to be managed in the market, as each one represents a different type of relationship.

If your executives are incoherent, your technical support crew focus on what they know rather than what the customer cares about or your emerging leaders are overwhelmed by public speaking, then you are putting brand at risk.

In the past year, I’ve seen numerous speakers fail to harness conference-speaking opportunities because they were not focused on the audience or the outcome. I’ve also seen a select few absolutely nail it.

Consistency in your messaging and the values you portray count for a lot. A car with three good panels and four rusty ones is not a great car.

3. Prepare for the future

Consider that business valuations are dominated by intangible assets such as intellectual property, employee engagement and customer connectivity; these less-visible assets account for 80% of the value of the US stock market.

Do you know what your intangible assets are? Which ones will you need to develop? What capabilities should your strategic HR plan be focusing on?

As much as social media brings a low-cost way of communicating, I’ve heard too many people embrace and expect it to solve their key business issues. It is just a tool, not a business solutions package.

Products like the Commonwealth Bank’s Kaching application are the result of leadership, internal collaboration, commitment to research and development and partnering capabilities, not social media per se.

It’s time to look under the bonnet, the engine is important!

4. Productivity is king, innovation is its servant

Productivity tends to imply cost cutting and longer hours, however it is often maligned. To me, it is about forming a better understanding of the assets in a business so that we can get better returns from them.

This could manifest itself in the form of more engaged and satisfied employees, the development of strategic partnerships or improving knowledge sharing practices. It requires some form of change, or innovation.

When Nestle decided to align its business strategy with major societal issues (water, nutrition and rural development), I’d argue that it was an innovative play on productivity. It was improving its alignment with regulators, communities and customers. This is smart, as it gives it scope to improve the value of its brand in the eyes of key stakeholders.

Nestle is not without issues in its business, however it is attempting to improve the productivity of a major asset – its corporate brand.

Persisting with the car analogy, every component has to play a role and pull its weight, so to speak, for it to perform well.

5. Performance is a battle of timeframes

In the investment world, capital flows in and out of stock markets with alarming speed. Investors who are obsessed with short-term performance are missing out on smarter opportunities and putting money at risk. As Warren Buffett noted:

The stock market is simply the transfer of wealth from the impatient to the patient.

Likewise, we are all challenged to develop long-term strategies and improve performance whilst balancing short-term demands. The Bendigo Bank knows all about it. Internal reporting cycles and sales targets compound the problem.

Leading businesses have the ability to head in the right direction and develop compelling communications around their approach, which help to mitigate unreasonable short-term demands.

A master of this game was the late Ray Anderson, of carpet and floor tile manufacturer, Interface. As the CEO of a listed company, how did he adopt a seemingly impossible environmental goal and get away with it? He used business – not environmental – language to describe what he was doing and how it would benefit shareholders. The financial results have been compelling.

No one wants a car with cheap brake pads that perform superbly for three months and then fail; we want ones that work consistently over a longer term.

Putting the “P” in Performance

When so many things are out of our control, there is no sure way to succeed. However there are ways to maximise our chances of success and these five “P”s are integral to that equation.

In short, innovative approaches to partnering, presenting and preparing lead to productivity, which in turn leads to performance.

There are three main ways in which businesses can benefit from improving the communities in which they operate:

1. Business environment

Initiatives that promote equitable economic development, community stabilisation and labour force skills help to create a better business environment and underpin business performance.

A rising tide lifts all boats, and business and community organisations can co-create better conditions for all.

For example, a coalition of property and casualty insurers in the US worked with a community-based network to help increase home safety in low-income areas. They provided education, free safety assessments and financing for hazard reduction projects.

Apart from the obvious social and community benefits, the insurers have been able to increase the profitable sale of insurance in areas where these products were previously not viable.

By assisting with community stabilisation, the business environment improves.

2. Business solutions

There are several types of initiatives that help solve specific business issues. Connecting with community can lead to outcomes such as product innovations, improving the employer’s brand and facilitating access to new networks.

Toyota has just completed a nine-year association with Conservation Volunteers Australia (CVA) where it provided promotional support, technical skills, expertise, employee volunteers and financial support.

The community benefited from an improvement in CVA’s processes for volunteer management and soliciting corporate sector support. Toyota dealers became deeply involved and improved their level of engagement with their customer base – the local community – and staff gained from development opportunities.

Toyota dealers found a new way of networking with prospective customers and participating staff had a practical environment in which to apply new skills.

3. Employee engagement

This category is really a subset of the previous one, but it is probably the most important and topical one. A common goal for business is to lift productivity through employee engagement. Companies like Westpac and Cisco provide selected staff with development opportunities by way of sophisticated and integrated strategies.

In the case of Westpac, their staff must prove that they are keen and capable of adding value before they are let loose on community sector clients, as the relationship needs to be win-win for it to be sustainable. Cisco provides its high performers with an avenue through which to make a difference by allowing them to work in a non-profit organisation for up to 12-months on regular pay.

Community sector involvement is one way of galvanising employee engagement and the productivity dividends can be substantial.

Finding business value in community

As the examples show, the relationship between business and community interests does not have to be a one-way street. It is smart to bring socially based strategies into the core of the business strategy in order to lift performance, whether it is focused on improving the broader business environment, specific business issues or lifting employee engagement levels.

This is how the community can help your business.

Adding an apple to a junk food diet is not the same as embedding healthy eating into every snack and meal.

I was reading an excellent piece by Michael McQueen (5 Lessons Every Business Can Learn from Kodak’s demise) in which he shows that, despite misreading the digital photography market in the 1990s, Eastman Kodak was doing innovative things right up until bankruptcy in January this year. So why didn’t all this innovation make it successful?

I thought this warranted more research and went searching for answers. Essentially, Kodak took too long to accept the fact that its business no longer revolved around a quasi-monopoly in traditional film stock.

George Fisher took over as CEO of Kodak in 1993 and he was able to drive cultural change at the top; however according to research by Gavetti, Henderson and Giorgi (Harvard Business Review, 2005), he wasn’t able to change the “huge mass of middle managers, and they just don’t understand this [digital] world”.

Once it fell behind the game, its internal culture dragged it down and never fully recovered. This sounds very much like an organisation that was doing some innovative things – but was not able to become an innovative organisation.

Innovation has two main applications: (1) with respect to products; and (2) with respect to organisational processes – and I’d argue that both are required, with the latter being more important.

Organisations, by their nature, are designed to meet our needs more efficiently and effectively than the efforts of individuals alone. It follows that the process of ‘organising’ the way things are done should be the higher order concern.

In some areas of government for example, I have noticed that the innovation discussion tends to be product-centric, geared towards scientific and technological breakthroughs, and less concerned with organisational process improvement.

There are means and methods of embedding innovation into everything that we do. It starts by recognising that employees have great ideas and putting in place systems that harvest them effectively.

If it is done well, organisations can develop an ingrained culture of idea formation, validation and implementation. Do executives and managers drive it? No, it is an employee-centric model and it works in for- and non-profit environments. It also increases employee engagement and productivity.

There is a well-known manufacturing brand that has maintained double-digit earnings growth in a challenging market environment. Being an innovative organisation has played a big part in it.

So let me pose the question again: Do you have what it takes to be innovative?

Picture this: A good practice employer. Great pay and benefits. Progressive workplace health and wellbeing policies. Investing in its people. Great induction training and support. Excellent skills training. Mentoring and coaching programs. Management development provided to proactively support career progression. Leadership development. A wide range of personal development programs, including pioneering spiritual development opportunities.

And then one of the most talented young leaders announces they are going to leave because they want to ‘make a real difference’ and ‘give something back to society’. You might be thinking ‘how bloody selfish is that?’ – what about giving back to the employer that has invested so much in your personal and professional growth?!

But it happens and it will increasingly happen over the coming decades. Even with a global economic slowdown, the war for talent is very much alive and expectations are rising in terms of what a good practice employer will provide. More of our young talented emerging leaders are seeing opportunities to ‘make a difference’ in either their own commercial enterprise, harnessing the low entry cost, fast start up digital world, or in the growing world of social enterprise.

Talented executives see new heroes in entrepreneurs who are not only highly successful commercially but are becoming philanthropists at a much younger age. It is also quite common these days to hear young executives saying they want to make a lot of money fast so they can become a philanthropist or social investor.

Employers must keep evolving their thinking and their practice in line with patterns and trends in what motivates their people.

Larger employers are much more impressive these days in understanding the benefits of corporate social responsibility and corporate giving, not just treating it as a PR layer that can be peeled off when budgets are tight. They are much more sophisticated and progressive in their executive development programs and coaching support, very much encouraging human development, authentic leadership and the fulfillment of potential.

And yet, it is still quite rare to see truly integrated corporate and community leadership development initiatives. Maybe this is the next great challenge for good practice employers to be able to retain their talent.

There is still a great deal of detachment between core business activities and external community development. Even in leadership development programs, it is common for external community engagement to be seen as a self-actualising final layer rather than the heart of the program or foundation stone for the program.

There are many opportunities for leading edge employers to create and deliver a shared value model that incorporates integrated internal and external community development. Businesses are, after all, communities at work. They are populated by people who want to make a difference within their internal work community and a range of external communities – geographical communities and communities of interest.

Enlightened employers can design and deliver leadership development programs that are aimed at building competence and confidence in all forms of leadership, including within the internal community at work and relevant external communities.

They can link with relevant external communities and community organisations in building long-term mutually-beneficial partnerships. This could include specific projects that can deliver desired outcomes within the lifetime of the project, as well as the ongoing capacity-building benefits of all collaborative efforts.

For example, a large corporate can partner with a community organisation that provides services and support for people with mental health problems or mental illness. This can be an ongoing relationship with integrated development programs and a range of collaborative projects, learning how to grow together.

There can be specific modules on topics of direct mutual interests such as coping with stress and positive mental health, and there can be the more generic sharing of leadership and development challenges.

Rather than have a corporate leadership program that has several modules on corporate leadership issues before moving more into personal development and then into community development as a topic, it can begin with a focus on personal development and the wider context in which corporate activity takes place.

Perhaps your talented employees can feel they are ‘making a difference’ without needing to change employers.

_________________________________

Paul Vittles is Chief Facilitator for The Vittles Organisation www.vittles.org

The barriers include ineffective leadership, culture, misaligned interests, low staff engagement, poor strategic and implementation skills and so on; it is a long list.

How do we overcome these barriers? A simple but effective technique uses three key components:

1. Authentic vision

Your vision of the future needs to be authentic at its core. What do I mean by authentic? It will be attainable if it is harmonious with who you are as an organisation: satisfying the collective values of your people and key stakeholders such as owners, customers and suppliers. It will also be aligned with real needs in the world.

In my analysis of the top-30 global companies, I found that only 3 (10%) had a vision or mission statement that reflected true values and societal needs. They were: Nestle (better food to help people live a better life), Royal Dutch Shell (meet the energy needs of society in a sustainable way) and Google (organise the world’s information and make it accessible).

At their worst, some companies, like Bank of America, have a vision that is rooted in the 20^th (or even 19^th) century. Their vision is to be the “world’s most admired company”, which is usually code for “we want to make a lot of money and hang the rest”.

2. Co-creation

Your vision describes “what” you intend to do. Co-creation is a powerful way of forming the “how”.

You can do this by engaging a wide range of people in the “how”, such as staff, customers, distributors, community, regulators and partners.

For example, in the public sector there has been rapid growth in the use of “public participation” as a technique for the co-creation of outcomes. It is particularly effective at the local government level where major development issues can gridlock the system; a representative sample of ratepayers, armed with access to technical experts, works as a group to make an informed and unbiased assessment of the best solution.

3. Inspiration

If we have the right sort of vision and the desire to co-create the outcome, then how do we inspire people to start the change process?

One of the most effective methods is to put more substance around the vision and compare “what we have now” to “what could be”. Nancy Duarte, presented this in an interesting way when she analysed two prominent speeches: Martin Luther King’s use of “I have a dream” and Steve Jobs’ launch of the iPhone.

They both flip between what their audience had ‘today’ and what their future could look like, to induce the desire to change.

I recently saw an up-and-coming speaker, Franca Sala Tenna, use a crystal ball as a prop to great effect to help create a sense of “what could be” when set the task of inspiring an audience of employees to commence a journey of change.

Change management is tough. Comedian and corporate hoaxer, Rodney Marks, recommends that the best way to effect change management is to … change management.

But seriously, there is a lot more to change management than what is presented here; however these three components will help you break the back of that process.

I recently ran a workshop on forming effective partnerships for community-based groups who were looking to increase their corporate sector involvement, and a key learning from the program is that you need a powerful perception of yourself to play the partnering game. This is valid for all organisations and not just those with a business – community flavour.

Too often we are blinded by the inside-in view that we have of our own organisations. This is not a criticism; it is a fact of life. When you are intimately involved with your own workplace and its day-to-day challenges then you tend see things differently to someone sitting outside that realm.

To form effective partnerships, a fundamental building block is creating mutual value for both partners. As we know, personal relationships are prone to failure if they are one-sided.

How do you determine what you have that may be valued by others?

Consider AMP’s partnership with the NSW Cancer Council, where it helps support families deal with the financial pressures of severe illness. In the process, AMP strengthens its relationship with its financial planners, financial planners have an avenue for developing their sense of purpose and community involvement that plays to their strengths and the NSW Cancer Council is improving the level of service to its clients.

Whilst the benefits of examples like this look obvious when presented in hindsight, it is difficult to develop strategic partnerships with a blank sheet of paper. One of the critical tasks you have is to increase your own awareness and perceptions of what you bring to the table.

How do you fine-tune your radar, saving time and energy, by seeking out the most appropriate partners?

The most efficient way to do this is to complement your own inward-looking analysis with an outward-in view, where someone you trust can help you create that powerful perspective. It has the power to shift your perspective and the perception of who you are as an organisation.

How will you create the powerful perception that you need to form effective partnerships?

It is a private event, so I can’t document the specific examples on show. What struck me as interesting though was the emergence of a clear and common theme: leading companies are increasingly driving innovation from within.

Company after company talked about innovation as a broader organisational process, rather than a focus on specific products or parts of the production chain. In many cases, there were collaborations across work areas and functions that created the right environment for innovative things to occur.

One company dramatically reduced its succession risk and, at the same time, provided emerging talent with a greater sense of importance, well-being and career path options. When the emerging leaders who were part of this process spoke about it, their higher level of engagement shone through. The secret? Designing a process that liberated assets across the organisation rather than sending their emerging talent on “another management program”.

Another enterprise gave us an insight into its path of reinvention which is significant because it is in an industry that is in decline. It utilised a shared value framework to address the threat to its operating performance (refer to last week’s blog to get an understanding of shared value).

The role of consultants and advisors will be challenged if this trend prevails (yikes!). Their role will shift from collaborator to thought-leader, helping to seed the design elements of the work environment rather than a more interventionist approach.

The three key reasons for driving innovation from within are:

1. Quality – higher quality outcomes from strong leadership and high levels of employee engagement
2. Cost – in this challenging business environment, keeping external costs down is the flavour of the day
3. Sustainability – less reliance on external advisers to implement change

 
As Mahatma Ghandi said “Be the change you wish to see”. To drive innovation from within requires more management time and head space, however the productivity benefits look promising.

If you have a skerrick of social conscience in your body, then the idea of business profiting from community partnerships may get your back up. On the other hand, if you yearn for business to really care about the community and help make a sustained and positive impact, then I’d argue that it needs to profit from doing so.

To make the case, let’s look at the three basic types of business and community interactions in turn, and consider their motivations and benefits:

1. Corporate philanthropy

I’m talking about business strategies and actions, and not the actions of foundations that sit alongside major companies.

To give is a good thing, and for businesses to donate money is fine. The problem with this form of giving is that both sides may be missing out on opportunities to drive their dollar further, and fall short in terms of potential impact.

The community group in question gets a windfall gain. The business distributes some of its surplus funds and shares the joy. It may be motivated by the need to ease its collective conscience, by altruism or the need to stroke the ego of its owners or executives.

This is type of relationship is beneficial to both sides, but is akin to a casual fling.

2. Corporate social responsibility

The problem with corporate social responsibility (CSR) is that no one has really nailed down what it means, as it means quite different things to different people. It tends to refer to transactions, such as supporting certain causes with goods or services or events such as corporate volunteering days.

Again, no one would say this is a bad thing. The motivations for business are usually based on maintaining a licence to operate. In other words, doing enough to be considered a good corporate citizen.

At its worst, it is a mechanism to get a photo of the company helping happy, smiling disadvantaged people on the front cover of the annual report; and business can be condescending in its approach to community-based organisations, expecting them to drop everything to cater for the firm’s volunteering needs or kiss their feet for the opportunity to talk to their executives.

The outcomes of CSR are quite variable for community groups and uncertain for the businesses that engage in it. If the outcomes for business are not linked to profitability, it can fall away easily when there’s a change of management or the economy turns down.

This is more than a casual fling, but not the basis for marriage.

That is not to say that CSR initiatives are a waste of time, they provide a great entry point into the exploration of more meaningful relationships.

3. Shared value

Going back to Microsoft: several years ago it partnered with the peak body for US community colleges to fund a $50m, five year initiative, designed to help standardise the IT curricula, upgrade technology and improve teacher development.

It didn’t do it for the sake of being good.

Microsoft, at the time, was seeing the growth for its own products constrained by a lack of sufficiently trained IT graduates. Given that community college network accounts for 45% of under-graduates – it saw an opportunity to develop the capacity of the labour market to help it fulfil its own objectives.

Some may see it as a form of exploitation. Alternatively, we could see it as the creation of an integrated relationship, more commonly referred to as “shared value”. The business benefits in a financial way (market development, staff engagement) and the community has access to better training and education resources.

The beauty of this type of relationship is that there is mutual value created. If it is done well, it becomes reinforcing over time and more immune to management changes and economic downturns.

A successful marriage is based on many things, such as trust, respect and mutuality, and this is the goal of the shared value approach.

 
No one is going to forcing community groups into partnerships without their consent. However, if improved profitability is going to drive the creation of more partnerships and sustain them for longer, then they should be very interested, especially when they are locked in a never-ending cycle of resource constraints.

Provided the partnerships in question are balanced and delivering appropriate benefits to the parties involved, they are a powerful way of levering social impact.

There are many more dimensions to this conversation, which I plan to continue in coming weeks. In the meantime, you may wish to leave a comment, opposing or agreeing with my views?