Does Your Vacation Policy Work?

I’m always curious to hear of innovative (or, crazy, depending on one’s viewpoint) methods of increasing employee engagement and productivity.  I wrote about a year ago about a company in Seattle where the CEO increased the minimum wage to $70,000 (and they are still doing just fine).  And there are some companies that provide a time-and-a-half incentive to employees to take vacation.  One company upped the vacation incentive ante with paid for trips for up to one week.

What is with bribing people to go on vacation?  And, besides getting people to take some time off, do these ideas even work?
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There is some data that suggests that more vacation time makes executives more efficient.  Though, this might be because they have to get the same amount of work done in less time.  And there is plenty of studies that show that work breaks during the day help productivity.

My feeling (and I have zero data to back this up) is that another benefit of vacation time is that is allows us to come back with, if not a new perspective, at least a chance to look at a problem fresh, without only looking at previous solutions.  Think about how a crossword puzzle clue may have had you baffled at first, but then becomes easy after you spent time away from it.

Assuming that the above is at least partially true, it seems to me that having frequent time away may be as beneficial as long vacations.  Regardless, the key idea that in the long run we are more engaged and productive when we do not stare at the same problems.

Sure, at the end of January people are not spending that much time planning vacations (well, maybe skiers are).  But, this is when HR should be considering the impact of current paid time off policies, such as:

  • Does management support people taking time off by altering their workload pre-post vacation?
  • If you are in a work culture that does not support taking time off, do you understand why they are not?  Are you offering incentives for people to do so?
  • Are employees who are not taking their time off counseled so that they do so?

Yes, it seems odd to have to manage the vacation process.  But, like any other engagement and productivity tool, it does need to be monitored and cared for.

Is Seeing Really Believing?

Something I hear frequently from clients is, “I wish I had a day/week/month to see my candidates do the job.  Then I would make fewer hiring mistakes.”  It is, of course, an intriguing idea.  We test drive cars before we buy them.  Why not try out people before we hire them?

There is a long history of sampling work behavior in selection systems, whether it be using Assessment Centers to hire/promote managers and executives or having people make things for craft positions.  The accuracy of these types of assessments is good, falling somewhere between cognitive ability tests and interviews.  For candidates, the appeal is that they feel that they can really show what they can do rather than have their job related skills or personality inferred from a multiple choice test.

The issues in using a job tryout would include:

  • Paying the person for their time. There is an ethical, in some cases legal, issue in having a person work for free.  So, be prepared for your cost per hire to go up significantly.
  • Candidates would either need flexible schedules or plenty of PTO to participate in such a program.
  • Having meaningful work for the candidates to do. If you are going to narrow the gap between what the assessment and the job look like, then you would have to have projects that impact process, customers, etc that you would be willing to have a short-term contractor do.  Or, that you already have them doing.
  • Determining how to score the job tryout. Most organizations do a pretty poor job of measuring job performance over a full year, let a lone a couple of days.  Developing scoring criteria would be key for making good decisions and avoiding bias.
  • Having someone who is not your employee perform work that could affect your customers or the safety of others will make your attorney break out in a cold sweat.  This is should convince you not to do job tryouts, but you will have to sell that person on the idea.

What got me thinking about job tryouts was this article.  I was impressed that the company had thought through the problems in their selection process and came up with a creative way to address them. They certainly handle the pay issue well and they currently have the growth and profitability to make the program worthwhile. What is left unsaid, but communicated through some derisive comments about multiple-choice tests, is that they feel that using tests would not fit their culture well.

My concerns were that they are more worried about “fit” than skills.  This also translates into not having an objective way to evaluate how well a person did.  This leads me to believe that they would run into the problem of only hiring people who are just like them.

Lastly, they have a pretty high pass rate that “feels right.”  If I worked for them, I would be concerned that a lot of time and effort is being spent confirming what was seen in the less valid interview.  This is particularly true in a company where metrics are important for everything else.  Having people work for you for a few days and not having an objective way to measure how well they did is not going to lead to better candidates than a series of interviews.

Advances in selection tools will likely come from start-up companies who are not bound by tradition when it comes to hiring.  The tech sector presents a lot of opportunities to improve valid selection systems by their nature:  They are setup to disrupt and they gather a lot of data.  This presents a great platform for seeing what people do before you hire them to do it.

Lost Communication and the Death of Process

The business world is both transient and stable.  People and priorities change, but as long as the organization is in existence it has processes that continue on.  When the information gets disseminated is becomes institutional knowledge.  We often connect this with an individual (When Maria leaves we are in trouble because she has so much institutional knowledge.), but keeping this information available improves the understanding of processes throughout the enterprise.
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But, how we speak about things changes over time.  For instance, organizational commitment became employee satisfaction, which became employee engagement.  There are subtle differences between them, but what we have always been talking about is, “How much do people want to be here and contribute?”  Yet, if we did not have records about how we understood these concepts we would have some difficulty understanding how and why we conduct (or don’t conduct) employee surveys.

The challenge is how to keep track of the amount of information that organizations generate and keep it in an update language that makes sense as the business changes.  For instance, in my practice it is normally takes quite a bit of communication and presentations to keep validated testing programs going when there is a change in HR leadership.

Perhaps a more interesting example is outlined in this article, which describes how a group of volunteers are taking handwritten letters to reconstruct the English language during Shakespeare’s time.  You may say that 400 years is much longer than any business organization has been around, but think about the rapid changes in computer languages and how important understanding the “old” ones are in maintaining or updating systems.  The archaic can be useful

What potentially gets lost over time and change in language are the research and reasons for doing things.  We lose the ability to answer the most basic of business questions, “Why are we doing this?  Why are we doing it this way?”  Being able to communicate the answers those questions allows for adapting processes when the environment changes and prevents reinventing the wheel.

 

 

CEO Accountability…Really!

I could fill up this post with examples of CEOs that got raises when the performance of the company they were running got worse.  But, that’s too depressing.

Rather, here’s a story about Tim Cook and other Apple executives getting their pay cut because the company did not hit its numbers.  Sure, Cook and the others are not going to start clipping coupons any time soon, but it is an all-too-rare example of executive compensation being linked to actual company performance.  In this instance, profit was down 16%, so pay got cut 15% (though I doubt whatever formula was used was quite that simple).  In this case, the cut is not receiving 100% of a cash incentive, which had been paid out in full previously.

Cynics will say that the cut amounts to change in the cushions for the Apple executive team, which I guess is true.  However, it does send a message to employees (and shareholders) that if executives are accountable for the overall performance of the company.  And this type of message is important in establishing a culture of accountability.

What this step also does is establish the purpose of executive variable compensation—to reward provide a reward based on recent company performance.  This is separate from any gains/losses in the stock price, which is supposed to be a forward looking metric.  Is this going to make Tim Cook work any harder?  Probably not.  Does it tell Apple employees that senior executives are accountable for the development and execution of business strategies?  Absolutely.

Why Clarity in Family Succession Planning Matters

I have some family owned businesses as clients.  They do have an extra critical dynamic which makes them different from other businesses.  As one owner said to me when trying to make a difficult retain/fire decision about a family member, “If Pat goes and then works for a competitor that would make Thanksgivings very awkward.”

showbox iosThough the extra layer of family issues can be seen as a detriment, businesses that want to stay family owned and/or operated have the advantage of being able to plan succession well into the future (assuming commitment by younger family members).  This can include education, cross-training assignments, and working for other companies.  The important point is that family owned businesses should focus on succession planning in management as part of the ownership transition.gmail Login  Sure, deciding what it takes to be the next Director of Midwest Regional Sales isn’t as sexy as the next CEO, but it is a necessary step.

When I read about how family businesses conduct succession planning well, what strikes me is that additional role definition is a key.  This article provides some good examples.  The lesson is that governance and individual responsibilities need to be even clearer for family members in the succession path than for employees.  Besides giving confidence to investors and other stakeholders, this really tells brothers, sisters, nieces, nephews, etc. not to make assumptions about when they get to run the business, but rather what milestones to hit so they can earn the opportunity to run the business.

Of course, clear role definition and long term succession planning are great tools for any business.  Being clear about selection criteria, knowledge and skill acquisition, and experience set standards for all employees who want to advance in a company.  But, for family-owned businesses, they can mean the difference between transitioning a business to future generations or having them stop with the founder.

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