Manage the people you have
In decades past companies could thrive without having to pay much attention to their people. There were enough capable people out there queuing up for a job. Today that has ceased to be the case. The population is ageing, young people’s expectations have changed and we are gradually evolving toward an economy where a company’s human capital will become the main asset for competition. The problem is that most companies, especially small and medium sized companies, still manage their people as if we lived in the boom years of the 1950s. Bart Gonnissen, founder and CEO of Select Human Resources, outlines the major trends in the HR business and how Select HR is playing into these trends. Gonnissen’s main point is that companies need to take a more balanced approach to their people issues, focusing both on recruitment and the development of the people they already have.
“I’ve been in the business for 20 years now, but got into it somewhat by accident. I’m an economist by training and first started work in the 1980s as an auditor. In the early 90s I first came into contact with the sector when I worked on the IPO of Creyf’s, a recruitment agency. Following the listing they asked me to step in as CFO. Over the next 12 years—up to 2002—I helped develop the company into a leading European HR specialist. At the time, Creyf’s only offered temping services of blue collar workers, which is commodity business—price is the only differentiator. Hence our strategy was to expand into value-added services and to open offices in cities across Europe. In those 12 years we grew the company’s revenues from about €80 million in 1990 to €1,5 billion in 2002. By then we were active in 10 countries and offered a full suite of HR services. Following my time at Creyf’s I spent 3 years at the Carestel group, helping them restructure the company.
Quality instead of quantity
By 2005 I was ready to return to the HR sector because I was convinced that there is still much opportunity in it. But I wanted to pursue a different approach. The typical high street recruitment business is a volume business: in order to grow you have to open more offices and employ more people. When I launched my company, Select Human Resources, I did so with the express intent to limit the number of employees to 100 people. We only hire quality people with experience and deploy them across the entire value chain of HR. Our core strength is that we are able to tailor our services to the needs of our individual clients. This means that our consultants have had to learn to be real consultants again; to really listen to our customers and respond to their needs. We launched the company in April 2005 and today in 2010 we have exactly 99 people and generate about €35 million in revenues. Our position in the market is robust; being based on quality and a tailored approach to service delivery.
War for talent
The scarcity of talent will only get worse; we need to make no illusions about that. What surprises me is that so many companies still do not seem to understand the implications of that problem. People are not queuing up anymore to work for you; economic crisis notwithstanding. And this problem will only get worse as our population ages. Companies therefore need to realise that their people —people to be hired, as well as the people they have onboard at present—are the key to their future survival and prosperity. Hence it is absolutely critical that companies concentrate on their people development strategies, on managing the flow of people through their organisation, from pre-employment to employment to post-employment.
Manage the people you have
With the exception of some multinationals it really is striking how few companies are actively developing and motivating the staff they already have.
I would guess that about 1/3 of the average company’s employees currently have their CVs on a job board or in the database of a recruitment company. I suspect that when the economy kicks in again we are going to see a lot more volatility in the job market. Once they receive a better offer they’re off. This is reality. The only way to counter this is to manage your people in such a way that they are motivated to stay with you. But most companies do not see it that way yet. Instead, the HR strategy of most companies is still focused almost exclusively on recruitment. But given the increasing scarcity of talent, this is not a sustainable strategy. Consider our recruiting business for example. Most of our recruitment work involves moving people from one employer to another. That’s crazy if you think about it. It certainly prevents us from accepting all companies as clients in a particular sector—say banking or engineering–because then we would lose fishing ground for finding people. It is absolutely essential that at a policy level we start focussing on creating a larger inflow of engineers and technical profiles.
I see a very important opportunity for growth for Select Human Resources in the development phase of HR services, such as competence management, career path planning and training; that’s our sweet spot. Pre-employment services like recruitment obviously remain very important but they will need to come in balance with employee development services.
Good management of human resources is tremendously important. Some employers start to understand this, but many don’t; to their detriment, because the cost of bad HRM is tremendous. For example, hiring the wrong person is hugely expensive if you add up all the time, effort and money spent on correcting such mistakes. Also, companies often underestimate the potential for developing people. Too often, employers simply equate skills with a particular diploma. Besides the fact that some qualifications are scarce, they are also not always a guarantee that the person has the skills or competencies to do the job in question. That’s why leading HR managers are placing more emphasis on competency management, on mapping and developing the competencies of the people they already have. That can be a far more efficient and effective way of working, which also counts for the recruitment phase.
Programs to develop staff can also attract youth. They are often looking for an employer where they can develop and grow as professionals.
Balancing security and flexibility
Today’s economy demands flexibility. The different types of labour contracts allow a certain level of flexibility, but employers need to apply a well thought approach. Temporary or interim contracts as they are called in Belgium can help when staffing requirements fluctuate permanently, or when sudden peaks in demand occur. Employees can be hired and put on leave within a few days. That does not mean that companies can rely purely on these ‘interim’ contracts. Both employee and employer often demand more security. In cases where companies need temporary staff, but also need the security that those people will stay on board at least until the need is fulfilled, employers can offer secondment contracts. Also the employee can prefer this level of security. These contracts can be combined in such a way that people start on a temp contract, or in secondment, and later on be migrated to a permanent assignment. A rapidly growing practice in engineering and ICT is one where specialised secondment agencies offer permanent contracts to engineers, and are subsequently deployed at client locations for project-driven work, or for a specific period of time. The employees have all the benefits— e.g. a stable employer, company car, insurance, pension, etc — while the end customer has less burden, and more flexibility.
I suspect that secondment companies will increasingly begin to identify themselves as training and development companies, in the sense that they will be offering a suite of training and certification services for their employees, to help them develop their competencies while not working on projects. Again, however, secondment is simply one solution.
Ultimately, the vast majority of companies will still rely on a core group of permanent employees and these will need to be managed exceptionally well. That’s the crux of it. As a company manager, your employees are as important, if not more important, than your capital. That’s why the term ‘human capital’ is appropriate; it may sound like consultant ‘speak’ but it really makes the point well. The winners of the future will be the companies that excel in all facets of people management, across the three phases of employment: pre-employment, employment and post-employment.
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