Mismanaging Human Resources Management Can Strangle Your Business
By Frances Wright

Human resources management is particularly critical to the services industry because it is the means of billing the client - it parallels the machinery and raw materials in the manufacturing industry without which there would be no product. Frances Wright, operations director at FHC Strategic Communications, says that managing this resource is critical to ongoing business and profitability.

A manufacturer conceptualizing a product would include assessing raw materials and machinery in its ability to deliver the correct quality product at the right time, but in the services industry that becomes a largely intangible process. Services organizations must assess whether or not they have the necessary skills and the necessary number of people to fulfill on service levels.

The trick to attaining the right ratios of employee and skills to output is to have clear role definitions that are owned by employees and a clear understanding of the tasks that must be fulfilled so that processes can be organized. Performing this upfront will allow operations management to balance employee workloads to ensure minimization of over and under worked staff.

One of the pitfalls of not having clearly defined roles and tasks is a perception of unequal workloads. Overworked employees become aggressive and feel that they are unfairly treated by management while the under-worked employee will feel unimportant and believe they are poorly viewed by management staff.

Another negative aspect of this to the business is that under-worked employees are not performing for the business because they are not used to their full potential, so they begin job hunting. In fact, under-worked employees are a recognized source for recruitment agencies.

The business suffers in either case because if it is under capacity (where employees are overworked), then service quality and standardization of service suffer, while over capacity where employees are under-worked) results in profitability being affected.

In such cases companies often cut human capital from the organization to the point where they enter a negative spiral that results in a drop in quality; this, in turn, leads to a loss of income and a further drop in human capital as the business tries to contain costs and improve profits.

In the services industry companies must ensure an upward spiral if they are to be successful. Over-staffed companies cannot randomly cut employees from the payroll but should instead try to garner more business for the extra capacity, and invest in training and motivating staff to achieve an upward spiral.

A company that is in tune with its clients and performs regular client satisfaction audits will have the feedback necessary to ascertain whether or not the service quality is dropping. Also very important is the need for staff satisfaction audits so that processes and other issues are brought to light before they become a crisis for the business. Clear staff performance measurements also help companies to determine whether or not service levels are being achieved and maintained, as do measurable role definitions, goals and objectives.

With these criteria met, companies will find it easier to standardize their service and put quality checks in place. In manufacturing this is an easily accomplished task as inspectors and auditors are brought in to perform quality assessments, but services organizations must be innovative if they are to achieve service excellence.

A very important aspect in attaining this is ensuring that employees have quality control autonomy. They must be trained and motivated to not only recognize service quality, but also to want to improve it. Service delivery metrics and service level agreements that are understood by employees assist greatly in achieving this, and because employees have clearly defined roles, goals and objectives their performance can be audited.

For the business it is important to achieve the right balance of skills and number of employees within the business, and continual training and motivational programs need to be entrenched. Even with the right amount of staff and the correct skills mix, companies must be producing at optimum levels, and measuring staff performance and output. As the company grows, good performance and output must be maintained.

Doing this will help companies achieve the primary goal of human capacity planning, which is right-sizing the business. Secondary goals to achieving this are creating clear role definitions, measurable performance metrics, tracking delivery and capacity, ensuring quality assessment, creating an ideal working environment and ensuring regular feedback based on scientific methods - in the absence of such goals, management by perception will remain a major potential pitfall in the services industry.

Reprinted from HR.com

Author: Frances Wright, usman@fhc.co.za  Frances Wright is Operations Director, FHC Strategic Communications.