In praise of HR: The soft stuff can actually lead to some hard competitive advantage

It’s not easy being an HR executive. Just when you are about to applaud the cultural compatibility of a proposed merger someone starts talking about upstream synergies in the value chain. Or you unveil an innovative executive training programmed and boardroom colleagues question its net present value and pay-back time calculation. Or there is a crisis and the company needs to cut costs, so your desk is their first stop, since surely training, recruitment and work-life programmers are easily expendable?

Such attitudes are common, but they are also evidence of startling business naivety. A company’s real, sustainable competitive advantage is almost always based on the softer, intangible parts that HR executives care about – and very seldom on the hard stuff that’s easier to capture in numbers, such as production capacity, cash reserves or even brand recognition.

The hard stuff is often also the easiest to imitate. Production capacity, stock and sales points are things money can buy. A skilled and motivated workforce, a company culture which draws commitment and loyalty and effective informal networks and processes, are much harder to emulate, no matter how much money you have.

In fact the world of business is full of habits and beliefs which are taken for granted and rarely questioned. As an academic, I like to examine the research evidence about what actually happens in the real world of business – rather than what executives and consultants think should happen. Much of the evidence shows that HR practices do indeed have bottom line value. Here are a few of my favorite examples.

Downsizing (almost) never works. But good HR practices will be one of the success factors

Firms engage in downsizing to boost their profitability. But does it work? It has obvious advantages – waving the hatchet lowers headcount quite effectively and leaves you with lower staff costs. But there are some risky potential disadvantages, such as lower commitment and loyalty among the survivors. Academic studies indicate unwelcome rises in voluntary turnover rates after downsizing, often leaving a company leaner (and lamer) than intended.

Professors Charlie Trevor and Anthony Nyberg from the University of Wisconsin-Madison decided to examine who could get away with a downsizing programmed or, put differently, what sort of companies did not suffer from a surge in voluntary turnover following a downsizing programmed. The answer was pretty clear: companies that had a history of HR practices that were aimed at assuring procedural fairness and justice – such as having an ombudsman who is designated to address employee complaints; confidential hotlines for problem resolution; the existence of grievance or appeal processes for non-union employees, etc. – did not see their turnover heighten after a downsizing effort. Companies with good work-life balance benefits – such as paid sabbaticals, on-site childcare, defined benefit plans, and flexible working patterns – also did much better. The surviving employees were more understanding of the company’s efforts, had higher commitment, and were confident that the downsizing effort had been fair and unavoidable.

So downsizing can work; but only if you have previously taken commitment to your people seriously.

The individual star never outweighs the organizational environment

Another myth which non-HR executives tend to harbor, is that star employees can easily take their virtual Rolodex and join a competitor – where they will make them just as much money as they did for you.

This is a painful underestimation of the value of a well-designed organization, and overplays the supposed portability of many star employees. Professor Boris Groysberg from the Harvard Business School examined top performing security analysts and what happened to their performance when they moved to another firm (for an even higher pay cheque); it pretty much always plummeted.

Even security analysts (who are often thought to be able to take their skills anywhere) were much more dependent on the specifics of the organization in which they were embedded than they, and their employers, realized. Hence, careful, firm-specific HR practices help certain individuals perform better – and they can’t just replicate that business in another company.

Losing a star performer can be a good thing – especially if they go to a client

Many top executives are just as frightened of clients or customers poaching their top employees, as they are of competitors’ advances. And, of course, losing your well-trained, top-performing employees is hardly ideal.

However, there is definitely a potential upside – as Professors Deepak Somaya, Ian Williamson and Natalia Lorinkova discovered. They examined the movement of patent attorneys between 123 US law firms and 109 Fortune 500 companies from a variety of industries. And they found strong evidence that if a client company recruited a patent attorney from a law firm, that law firm would start to get significantly more business from that company.

Hence, your employees leaving for your clients can be a good thing; they bring you valuable business. McKinsey understands and manages this process particularly well; when you leave McKinsey you automatically become an alumnus of the firm (rather than a deserter). The firm carefully nourishes its relationship with alumni, because they subsequently bring a large chunk of their business through the door.

Soft initiatives have real shareholder value

The final persistent myth that HR skeptics favor, is that HR costs money and that shareholders do not appreciate all sorts of soft measures, such as work-life programs. That used to be true in a bygone era, but no more.

For example, Professor Michelle Arthur, from the University of New Mexico, set out to examine stock market reactions to the announcement of Fortune 500 firms adopting such work-family initiatives. The results were very clear. In the early 1980s, the stock market would hardly react at all to such soft and fluffy initiatives; if anything the effect of the announcement on a firm’s share price was slightly negative (-.35%). However, that changed into the 1990s, when announcement of a work-family initiative caused an immediate rise in stock price by, on average, .48%. That may seem peanuts at first sight, but if you are a £5 billion company, it implies that even one such initiative would immediately increase the value of your firm by £24 million.

So executives who question the (shareholder) value of work-life initiatives are simply stuck in the 1980s; nowadays even the stock market recognizes their value.

Why isn’t this HR wisdom more widely accepted?

You may know the story of the inebriated cyclist searching for his bicycle keys under the lamppost, although he knows he lost them somewhere else. He tells a passer-by that he is looking for them under the lamppost because “it is light there, and I will never be able to find them in the dark” (where he had actually lost them). The story reminds me of the executive who is trying to solve a company crisis or gain a competitive advantage by managing the things that can easily be measured (production capacity, headcount, profit & loss). Those things may be easy to observe and influence but they are seldom the real root of the problem, nor do they really harness your competitive advantage.

To do that, you have to look where things are much more difficult to measure and manage – to the loyalty of your workforce, their motivation and job skills. Manage those things well and you are truly entering the light.

Chicken Azteca

Chicken Azteca has become a family fave at our home here lately. It's super easy, and I love a good crock pot recipe. My kids have said, and I quote, "Mom, this is FANTASTIC!"

I'd say it's a keeper;o)

I do apologize for my failed attempts of food photography. It is way more tasty than it looks:o)

Here's what you need:

-3 chicken breasts or 1 pack of the thin cut chicken breasts
1 15 oz can of black beans rinsed and drained

(make sure to rinse and drain, or it will look like mud)
1 med chunky salsa (16 oz)
1 16 oz package of frozen corn
1 to 2 tsp of cumin
1 to 2 cloves garlic
1 can pet. diced tomatoes(I use a can of Rotel) 
1 8 oz cream cheese

Put everything except the cream cheese in the crock pot & cook on low for 4 to 6 hrs...pull the chicken breast out and chop it to bits.  Put the chicken back into the crock pot, and add the cream cheese. Stir until combined. Serve with sour cream, cheese, and chips!

The Business March 30th 2011, "Cantrell-Versial" Edition

The final Business show in a triumphant month of March features special guest Rob Cantrell! Rob made his standup comedy bones in his adopted hometown of San Francisco before leaving for fame and fortune elsewhere. Said fame and fortune includes "Last Comic Standing," "The Marijuana-Logues," and a performance film - "Metaphysical Graffiti – A Road Movie" - that screened at the Cannes Film Festival. He's a contributing writer for High Times magazine, and he's got an album called "Keep On The Grass," which was recorded right here in San Francisco.

We've also got Chris Garcia, Bucky Sinister, Sean Keane, and Chris Thayer, along with comfortable theater seating, and convenient access to Cancun Taqueria. As always, admission is just five American dollars. See you there, America.

Living a Life Worthy of Your Calling

My family and I have the privilege of attending a congregation with two excellent preachers. We have heard some very inspiring sermons since we have been going there. Last night, the sermon given was very much needed...for myself that is:o)

The title of the sermon was, "Live a life worthy of your calling." The speaker used Ephesians 4:1-3 as the core of his message.

As a prisoner for the Lord, then, I urge you to live a life worthy of the calling you have received. ² Be completely humble and gentle; be patient, bearing with one another in love. ³ Make every effort to keep the unity of the Spirit through the bond of peace.(NIV)

Here are the points he laid out using these short verses:

1. Live a Life of Humility

This is a tough one for me. I really like to have my ego stroked. I have contemplated shutting down this blog on several different occasions b/c of my desire to be told how fantastic my projects are. That's usually when I have to take a break from blogging. I have to focus more on the needs of others than my own. Regroup, so to speak.

2.Gentleness

Another struggle of mine:o) I strive to be more gentle with my children and my husband. I have the tendency to be wound tight...it ain't pretty. Breathing deeply and staying calm is usually not something I do. If I were a cartoon, I would probably have steam blowing out of my ears at times:o) My great grandmother was the epitome of gentleness. I really want to be her when I grow up:o)

Here are a few of the verses that he named off that speak of gentleness:

Gal. 5:22-23=But the fruit of the Spirit is love, joy, peace, long-suffering, gentleness, goodness, faith,

 ²³Meekness, temperance: against such there is no law.

2 Cor. 10:1=By the humility and gentleness of Christ, I appeal to you—I, Paul, who am “timid” when face to face with you, but “bold” toward you when away!

Col. 3:12= Therefore, as God’s chosen people, holy and dearly loved, clothe yourselves with compassion, kindness, humility, gentleness and patience.

1 Tim. 6:11= But you, man of God, flee from all this, and pursue righteousness, godliness, faith, love, endurance and gentleness.

Here's a quote to ponder:

"How far you go in life depends on your being tender with the young, compassionate with the aged, sympathetic with the striving and tolerant of the weak and strong. Because someday in your life you will have been all of these."

~George Washington Carver

 3. Patience

Now how many of you struggle with this one as much as I do?

I think most of us look at patience in the same manner as this little cartoon below:

 The preacher stated, "We value it in other people...We know people who need more patience. However, we don't include ourselves on the list".

I usually don't pray for patience because I know that I will get it....I have children:o)

4. Peaceful

committed to unity. 

I usually experience this during nap time:o)

Something that we should take into consideration is that 'Jesus is our peace.'

 Eph. 2:14=For He Himself is our peace...

Keeping Christ as my focus, and striving to be more like Him, will help me to achieve these wonderful character traits. I truly believe that these are learned traits...they are easier to come by for some...harder for others..

Thank you for sitting here and reading this post. I was truly inspired to be better after hearing this sermon. Today has been a particularly trying day, so it was good for me to have these thoughts fresh on my mind...

I wish that you all could have been there to hear it. He did a much better job at presenting it than I did. 

Hopefully you have been inspired as well:o)

I hope you all have a great rest of the day. I will be sharing some Easter projects with you starting next week. Can you believe that Easter is at the end of April??

Best of March at Saturday Mornings

Hey Guys! I'm back, and I'm looking forward to sharing some projects with you in the next few days. I wanted to let you know that my Provost Plaque is in the running for "Best of March" over at Saturday Mornings.

Voting is going on now, and will end April 1st. 

Click on the button below to vote!

The price of obesity: How your salary depends on your weight

The world of business is still rife with discrimination. Women get paid less than men, people who are physically attractive earn more and are more likely to be seen as suitable leaders, and race determines chances of promotion. The business world in that sense is no different than other walks of life.

And the latter category – obesity – seems one of the nastier ones. Where discrimination based on race, religion or gender are at least generally looked upon as despicable, it seems much more socially acceptable to look different upon people based on their weight.

Obesity and income

Various studies have shown that overweight people are seen as less conscientious, less agreeable, less emotionally stable, less productive, lazy, lacking in self-discipline, and even dishonest, sloppy, ugly, socially unattractive, and sexually unskilled; the list goes on and on.* The stereotypes run so deep that even obese people hold these same discriminatory beliefs about other obese people. Therefore, it may come as no surprise that research has provided strong evidence that obese people are paid less than their slimmer counterparts.

However, my colleague at the London Business School, Dan Cable, and his co-author Timothy Judge from the University of Florida, suspected that this (generally) negative body weight–remuneration relationship might be different for men than for women. After all, as their overview of prior research on the topic revealed, the body weight standards that our media portray for women are considerably thinner than the actual female population, and often even thinner than the criteria for anorexia. Instead, the body weight standards for men represent a much proportional physique.

In order to examine this conjecture, they carefully collected weight and income data on 11,253 German employees and, in another study, on 12,686 American workers; the latter who were measured no less than 15 times over a period of 25 years, to also see how change in weight was related to changes in income. Then, they split the data and their statistical models into men and women. And the results clearly showed that men were treated differently than women; also when it comes to their income and weight.

Skinny women versus skinny men

Skinny women got paid substantially higher salaries than heavier women, yet this relationship was much less pronounced at the higher ends of the scale. Meaning that a female employee weighing 50 kilograms would get paid substantially more than someone weighing 60 kilograms, but the difference between 70 and 80 was much less severe. That’s probably because – as Dan and Tim put it – “the social preferences for a feminine body have already been violated”; you’re either skinny or not, but once you’re over the (rather extreme) threshold, we don’t care much anymore about the number on your scale.

Yet, this relationship looked very different for men. In contrast to the women in the sample, men of moderate weight would get paid substantially more than skinny men. But such a man of average weight would also get paid quite a bit more than an obese person. Hence, being skinny for a woman would mean more dosh, but for men it would mean less money – all in the order of magnitude of $10,000-15,000 per year.

Skinny men, indeed, are often regarded as nervous, sneaky, afraid, sad, weak, and sick, where men of well-proportioned build are associated with traits such as having lots of friends, being happy, polite, helpful, brave, smart, and neat. Dan and Timothy concluded that the media – in the broad form of magazines, fashion shows, actors and actresses, beauty pageants, Barbie dolls and GI Joes – distort our views of what is to be considered normal, and that the ripples of these views can be felt all the way onto our pay slip and bank account.

* For a thorough overview of all these findings, see Judge & Cable. Journal of Applied Psychology. 2010.

Some Fun Gift Ideas

I know that I said that I was taking a break from blogging this week...I really am.  I had a few moments of not doing anything, so I thought I would share with you guys what I made yesterday for the Homemakers group that I am involved with.

I had to do a presentation about Homemade Beauty products at our monthly meeting last night, and I decided to make a few of the things to hand out to the ladies.

The first thing I made was a Honey Lemon Sugar Scrub.

Here are the ingredients

 2 1/2 cups sugar, 

1/2 cup sweet almond oil, 

4 teaspoons lemon juice,              

 4 Tablespoons honey,

 4 drops lemon essential oil  

Directions: To make the sugar scrub, combine the sugar and sweet almond oil in a large 

bowl and stir well to combine. Add the lemon juice and stir again. Finally, add the honey 

and lemon essential oil and stir again to mix. 

Store in an air tight container.

Another Homemade Beauty product I made was Aloe Vera Lip Balm

This was so simple to make.

I found the little heart containers in the wedding section at the Dollar Tree, and they were half off. I was able to get 20 hearts for $2.50.

Here are the ingredients:

  1 tsp. Aloe Vera gel, 

1/2 tsp. coconut oil, 

1 tsp. petroleum jelly  

Directions: Combine the ingredients in a small glass bowl until well mixed. Heat for 

about 1 minute in the microwave. Make sure to cover the bowl with a paper towel. 

I obviously made this recipe much larger since I was making for 20.

 It should look like this once heated.

Stir and pour into a small container. (I used a dropper from the drug store to pour it into the container.) Let cool completely before use. 

Super simple, all natural recipes for home beauty care. Fun, right?

For more homemade beauty recipes, you can visit THIS link.