Oh, the Humanity!

By Elisha Tropper | July 11, 2005

Converting executives should pay closer attention to their best asset: the people.

Several years before I entered the flexo industry, when I was just another freshly minted MBA reentering the professional workplace, I joined a premier strategy consulting firm in New York with visions of learning from acclaimed business experts as I helped lead Fortune 500 companies to greatness. Two weeks into the job, I was summoned to a partner's office and told to pack my bags and head across the country to assume responsibility for the reorganization of a $4 billion company's financial reporting structure.

Excited, I inquired as to which of the firm's organizational structure gurus was heading up the project, and when I would meet with him or her to receive my marching orders. The partner listened to my question, paused, and then calmly informed me that there was no other guru – that in fact I was to be the firm guru on this project. After all, he continued, had I not just graduated with honors from one of the most prestigious business schools in the land? As part of my curriculum, did I not take a course in organizational management and human resources? When I answered in the affirmative, he nodded and told me I was perfectly qualified to handle this particular task, given that the executives at the client company regarded human resources management with disdain and just a little bit of fear mixed in for good measure. It was a five hour flight, he reminded me, which would permit ample time to reread my textbook and notes from business school. And that, the partner assured me, gave me a dramatic advantage over any executive who might challenge my ideas or conclusions.

I mention this story not to explain why I fled the management consulting industry, but to highlight a fundamental weakness in current business management practices in general, and a particularly acute shortcoming among many of today's flexo managers – a reluctance to take a hands-on approach to managing human resources issues.

The role of the executive
Earlier this year our company began restructuring our sales force and customer service team. Desiring to adapt the industry's best practices, I sought the advice of respected owners and executives of label companies from around the country on recommended strategies for recruiting, hiring, evaluating, and compensating salespeople. Most of the executives with whom I spoke were extremely forthcoming, and I learned a great deal, much of which I have put into practice. They shared compensation formulas, training regimens, and their feelings on everything from recruiters and employer references to the monitoring, reporting procedures, and evaluating of field personnel.

As I digested the information, a common theme emerged from the managers' responses – or, more accurately stated, from what their responses consistently lacked. Noticeably absent from these conversations was any significant discussion regarding the importance of executive participation in an ongoing HR management effort.

As those who study professional management will attest, this is not surprising. In most industries that are composed of small to mid-sized privately held (often family owned) businesses, the managing executives inevitably prioritize the perceived "nuts and bolts" managerial issues, such as finance, sales and marketing, quality control, manufacturing processes, and organizational efficiency. Rarely do they focus on HR management, a fundamental discipline that is critical to the maintenance of organizational health and growth.

In the flexo industry, this is quite understandable. Of the many disciplines critical to success, none is as perplexingly discreet as HR management. Companies typically build and market themselves around the production capabilities of multi-million dollar pressrooms and prepress departments replete with state-of-the-art flexographic technology, for these are a company's most visible and definable assets. Beyond production, day-to-day financial realities require a clear focus on cash flows, inventory, and banking relationships. In addition, pressure to increase sales to alleviate financial strains thrusts managers to the front lines, confronting the marketplace and the company's growth efforts on a continuing basis. In the battle with these pressures for executive mindshare, HR management is rarely the proverbial "squeaky wheel" which "gets the grease."

Facing responsibility
As in other industries, when it comes to grappling with the "fuzzier" employee-related issues, too many managers dish off the responsibilities, relying on underlings to muddle through waters that appear far too murky to waste a top honcho's valuable time maneuvering his or her way through. What a mistake! While it is true that there is much perfunctory paperwork and legalese to wade through in the course of effective HR management (such as IRS reporting forms and health plan and 401K administration), it is equally true that the effective deployment of these programs, as well as a hands-on approach to recruiting and employee satisfaction, is a crucial differentiating element between successful growth companies and slower-moving staid businesses.

Comprehensive HR management involves a great deal more than administrative gymnastics. It requires a detailed understanding of the many factors within the company that have an impact on both the day-to-day lives and long term goals of the employees. It requires an ongoing awareness of the near- and long-term goals of the company, and the route the company is traveling as it proceeds toward those goals. Most important, truly effective business managers intuitively know that any gaps in their human resources – whether it be missing skill sets, unfilled positions, conflicting objectives, or unmotivated, incompetent, or dissatisfied employees – will inevitably affect the delivery of quality products and services to their customers. Unfortunately, it is usually only at this point in the business cycle that top management is reminded of the importance of human resources.

Identifying talent
Consider a professional football team seeking to win the Super Bowl. While certainly a great place to start, it is not enough merely to have a superstar quarterback or running back. Winning requires the support and cohesiveness of top-to-bottom talent across all positions, and a depth of quality personnel. A successful team might be built around superstars, but does not compromise on the quality of the supporting cast. Need evidence? Dan Marino played over 15 years with the Miami Dolphins, yet the team never won a Super Bowl. Barry Sanders excelled for a decade with the Detroit Lions, yet the team never came close to the Super Bowl. On the other hand, the great dynasties of the past 25 years in the NFL – Pittsburgh, San Francisco and Dallas – were built around all-time great players, but truly differentiated themselves talent-wise with their role players and supporting casts.

Read through the literature of any flexo company and you will likely find a statement along the lines of "At XYZ Label Company, our people are our most important asset" or "What truly differentiates XYZ Label Company are our experienced and devoted employees." Well, of course! With the exception of a monopolistic concern, the most important asset of any business – whether in the service or manufacturing sector – is the personnel which produces and implements what is being sold. And yet, the management of these assets remains the responsibility most shirked by otherwise brilliant hands-on managers and owners.

Businesses that place a premium on human resources strive to achieve excellence along the following bases:

1. Effective recruitment of both skilled and unskilled personnel

2. Low turnover among personnel in general, and management and skilled workers in particular

3. Maintenance of a quality workforce within the constraints of a reasonable budget

4. Maintenance of a fair and consistent compensation structure within the company

5. Alignment of the employees' goals with the company's goals

6. Effective communication between employees and management, and among all levels of management.

I (along with our company's employees, no doubt) will be the first to admit that I don't have all the solutions to the complex challenges that face today's business executives in the realm of human resources. In interactions with leaders in the flexo and other industries, I continually seek to learn the secrets to success along these fronts. What I have realized is that human resource management is a fierce discipline, and as with all disciplines, success and continuous improvement can be achieved through consistent dedication to a few fundamental tenets.

In the case of human resources, the fundamentals might include:

1. Maintenance of a pleasant and professional working environment at all levels of the company

2. Providing the maximum benefits within your budget. Benefits include not only the traditional perks such as health coverage and paid vacation, but can include such options as financial planning assistance or advice, continuing education grants or loans, company parties, special events, and interest-free term loans. (I recommend a clear policy on this last option detailing at the very least the maximum loan amount available to an employee, the maximum number of loans in aggregate at any time, a predetermined repayment schedule of deductions from the employee's paycheck, and most important, a signed loan agreement between the company and employee.)

3. In this era of increasing health coverage costs, it is well worth your while to bid out your company's health plan every year or two to ensure that you are getting the most bang for your buck. But try to keep the benefits as consistent as possible. I personally recommend always giving your incumbent health plan provider the "last look," assuming that you are satisfied with the overall service you have been receiving.

4. Crystal clear job definitions.

5. Annual formal performance reviews (preferably written) in which the employee's progress and shortcomings are frankly discussed, with a plan of action in which future expectations are clearly outlined.

6. Elimination of internal competition for promotions, bonuses, or any other forums which reward one employee at a potential or perceived expense of another.

7. Concern for the welfare of not only the employee but his or her family and life situation outside of the company. This does not necessarily involve a single additional dollar – what is required at a minimum is an understanding of the particular issues of each employee and how as an employer you are in position to provide a listening ear, advice, or any other potential assistance when necessary.

8. Developing and adhering to a company handbook detailing all human resources policies and procedures. Don't make employees guess what the expectations and rules are – make it as black and white as possible, and make sure to adhere to it with as much consistency as possible.

9. Promote from within whenever possible – and if you are forced to recruit from the outside, explain to those within what skills or experience were required that necessitated going beyond the company's walls.

10. Allow final say on any new hire to be that of the manager to whom the new hire will directly report. It is only logical that a manager can be held accountable if he or she has the authority and responsibility for hiring their personnel.

11. When recruiting, never hide the truth about the company and the working environment in which the recruit will shortly enter. It benefits no one – not the company nor the employee – to recruit someone under false pretenses and then live with the reality of an unhappy employee who feels that he or she has made a mistake in accepting this job.

To many businesspeople managing their companies, most of these fundamentals are obvious and probably already in effect. The underlying principles, however, can too often be overlooked. Any company that strives to develop partnerships with customers must never forget that its most important partnership is with its employees. Great businesses can be be built only on solid foundations, and the development of a two-way partnership between ownership and the employees can be the critical ingredient to a solid foundation.

The author is president of Prestige Label Co. Inc. of Burgaw, NC, a CFG company, headquartered in New York City.

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