Strategizing for Profitability: The Key to Business Success (Part 1 of 3)

This is the first in a series of three articles about improving business profitability by implementing strategic measures for managing employees. This article introduces the idea of using a structured “leadership system” for building a competent work force to achieve business goals. Increase Profitability by Building a More Competent Work Force Imagine what it would be like if all employees in your organization had the knowledge, skills, and motivation to do their job well every day. If everyone had what it takes to be successful, training would be substantially faster and less costly. If everyone worked diligently and conscientiously, things would get done on time and poor quality would be a thing of the past. If all employees paid attention to safety, accidents and injuries would be rare. Having employees like this would make running a business a lot easier, wouldn’t it? The “perfect employee” may not exist. But there’s no reason why companies shouldn’t do everything in their power to minimize the number of nightmares created by poor employees. BizTips BizTip #1 - Improve your business efficiency through structured human resource management programs. Organizations do not become successful by chance. The most common denominator of highly profitable companies may be the efficiency of their business operations. Organizations that want to be the best in their industry tend to use structured approaches for making their business run more smoothly. Most companies use methodical procedures to control the level of risk conce ing their financial and operational affairs. The process of managing employees, however, is often left to chance, which reduces efficiency and increases operating costs. Only the most sophisticated companies apply systematic human resource management techniques for improving business efficiency. Businesses should take advantage of structured approaches that help to eliminate employee “wild cards” – unpredictable behaviors that often throw costly wrenches into otherwise efficient operations. Therefore, one solution for improving business efficiency is to use systematic methods for ensuring that one’s company receives a reasonable return on its investment in human resources. BizTip #2 - Build an effective "leadership system" to maximize profitability. Leading employees down the right path to get desired business results essentially means using effective selection, training, certification, performance management, and employee incentive tools and procedures. Structured human resource management techniques are important to use when times are good, but they become essential during economic downtu s and business slumps. The primary purpose of a leadership system is to promote successful job performance and to maximize business profitability by:

• Selecting individuals who are motivated to learn and are capable of satisfying all job requirements
• Providing sufficient training and coaching to employees in all relevant areas
• Ensuring that employees have the necessary knowledge and skills to perform all job duties
• Evaluating employees comprehensively to determine how their job performance can be improved
• Using structured training and motivational tools that help employees become more successful

A leadership system for managing human resources in a company should be results-driven. For example, an organization might design its leadership system to achieve the following outcomes:

• Increased productivity
• Better quality of work
• Greater employee commitment
• Enhanced customer satisfaction
• Reduced number of accidents
• More effective teamwork
• More accurate documentation
• Improved employee morale

A well-designed leadership system should incorporate management tools and procedures with the following characteristics:

• Relevant -- The “content” of the system should focus on knowledge, skills, abilities, and traits (i.e., competencies) that contribute most to successful job performance.
• Comprehensive -- The system should include an evaluation of all key competencies needed for job success.
• Integrated -- All components of the leadership system (e.g., selection, training, performance management) should be connected to each other through a set of competencies that result in employee behaviors benefiting the organization.
• Efficient -- The management tools should be easy to use, and the procedures should emphasize timeliness and efficiency.

BizTip #3 - Use a "competency model" as a blueprint for assessing employees. A competency model should be the foundation of any leadership system. Competencies are types of knowledge, skills, abilities, and traits that underlie and contribute to effective job performance. A competency model is simply a “blueprint” for building human resource management programs that meet organizational objectives. In addition to the necessary technical knowledge and skills needed in an organization, the following nontechnical dimensions might be included in a competency model:

• Written Communication Skills. Comprehending written materials; producing accurate and complete records; verifying documentation for completeness and accuracy. Includes reading comprehension, documentation skills, and visual speed and accuracy.
• Oral Communication Skills. Expressing thoughts, ideas, and opinions clearly, fluently, and concisely; listening attentively to others and responding appropriately to questions and comments; asking appropriate questions to obtain information; comprehending and following oral instructions. Includes fluency, vocabulary, probing skills, and listening skills.
• Problem Solving Skills. Solving work problems by analyzing information and applying logic to arrive at sound and timely decisions; applying a systematic process for identifying, understanding, and resolving problems encountered on one’s job. Includes general learning ability, memory, inductive and deductive reasoning, and decision making.
• Interpersonal Skills. Establishing and maintaining effective working relations with customers; demonstrating behaviors that reflect an attitude of customer service, responsiveness, and concern; working cooperatively with co-workers and participating as a team member. Includes courtesy, composure, empathy, respect, and conflict resolution ability.
• Personal Effectiveness Traits. Applying personal characteristics and traits to enhance one’s job effectiveness and to increase one’s contribution to organizational goals and objectives. Includes self-development, organizational commitment, personal integrity, quality orientation, industriousness, and safety awareness.

After defining the knowledge, skills, abilities, and traits needed by employees to perform successfully in their jobs, make sure you use appropriate skills tests, personality tests, structured job interviews, and job knowledge tests to make more effective human resource management decisions in the areas of employment, promotion, and employee certification. BizTip #4 - Ensure that all your human resource management programs are integrated and competency-based. Maintaining a successful business in today’s highly competitive world is no easy matter. The real key to success is to make good predictions about business matters and to make timely decisions based on these predictions. In other words, companies can achieve a competitive edge in the marketplace if they minimize risk in all areas of their business, including those that relate to human resources. Implementing integrated human resource management programs is one of the most effective ways to eliminate employee “wild cards,” which usually affect efficiency and decrease business profitability. Effective leadership systems involve management programs that “speak to” each other throughout the work life of employees, from the moment they are hired to the moment they leave an organization. Management programs also need to be “competency-based,” which means they should be designed to address or measure knowledge, skills, abilities, and traits required for job success. Integrated, competency-based leadership systems ensure that business goals are achieved through well-designed selection, training, certification, performance management, and employee incentive programs. BizTip #5 - Conduct an organizational needs analysis regarding your human resource management programs. Companies don't always feel as healthy as they would like to feel. Often it's difficult, however, to determine exactly what might be causing the discomfort or pain. Sometimes there is a problem with organizational structure or organizational culture. And sometimes it's a matter of management. A structured needs assessment can help to identify organizational effectiveness issues and provide options for taking corrective action. You can easily take your organizational pulse by completing a free Organizational Needs Analysis, a business tool that provides recommendations for improving your organizational health. Managing Employees Systematically Companies that want to be leaders in their industry and become more profitable should not overlook a key component to the vitality of their business: their employees! Just as structured financial and operational systems are required to run a successful business, a systematic approach for managing employees is also needed to maximize profits. Building a more competent work force clearly contributes to business profitability.