Only Human

What CFOs Should Expect from HR

Wed, 16 Jun 2010 09:54:24 -0500

by Jakob Franzen

For many of us in the Austin area, we are very familiar with the start-up cycle of businesses. We know the challenges that face the leadership team from the very beginning and what plagues them through growth. One challenge that I’ve seen all too often is a CFO who is unsure what they should expect from their HR leader. This can be problematic since HR typically reports to the CFO in a start-up environment.

When selecting the HR leader for the company the CFO should look for a particular level of business acumen and have certain expectations of the individual. HR leaders should know the cost of the company’s human capital. These costs break down into the cost of pay, the cost of benefits, and the cost of recruiting and replacement. While there are other costs as companies get larger, these are the basic costs we should all be familiar with in the start-up.

Cost of Pay
The HR leader should know what the annual salary budgets are based on the company’s chosen pay philosophy (lead,lag, or lead/lag.) These budgets should also include cost contingencies for growth and replacement. Your HR leader should understand the relationship between your pay structure and the market. A market comparison requires at least three sources of solid survey data. Often times, HR leaders in start-up companies are tempted to lean on informal networks or HR clubs for information. This can lead to inaccurate pricing of positions. It can also leave the company vulnerable to charges of price fixing.

Cost of Benefits
In this day and age, benefits are becoming an expensive and complex offering. You should expect that your HR leader is working with a reputable broker and doing true cost comparison of health and welfare plans. Often times, small company plans are regulated by statute and cannot be changed. Where the employee population is large enough and where the laws allow, the HR leader should be working with their broker to craft health and welfare plans that complement the company’s pay strategy for an effective total compensation package.

Cost of Recruiting and Replacement
Most start-ups have a plan for growth. There is an expectation of where the company needs to be in the short term for talent levels. Your HR leader should understand where these growth areas will be within the company. They should be able to speak intelligently as to whether this growth will occur in the technology, operations, or administrative areas and what that cost might be. Of course attrition is something that must be accounted for as well. None of us likes to think that our employees may leave us, but it happens. There is a cost to attrition and your HR leader should know what that cost is.

It is important to note that there is another dimension of HR that balances out the hard numbers, but the hard numbers cannot be ignored. A solid business foundation to the HR function provides the perfect base for HR programs and strategies. As a CFO, you should be comfortable expecting these skills in your HR leader.

Messy Management

Fri, 11 Jun 2010 11:09:46 -0500

by Jakob Franzen

Because our company is focused on leveraging the workforce for solutions we tend to get tagged as a purely HR centric consulting firm. The fact of the matter is we provide consulting across a variety of management disciplines. For us the key is that everything originates from the people employed in a company. Managers make decisions about employees, employees make decisions about customers, etc. Because companies are highly organic, the management of them can get a little messy from time to time.

As I think back across my career I can definitely label much of what I’ve done as interesting and unique. Upon closer examination, I can label what I’ve done as cleaning up messes. This is certainly not to say that these messes were created intentionally or even out of a lack of ability. They were, nonetheless, messes.

People inherently bring their own agendas and biases to the table and unfortunately they can sometimes affect our decision making. Over time, much to our chagrin, we find ourselves down the wrong path -- in a mess.

A recent engagement comes to mind. I had the opportunity to turn around a team who had suffered greatly under poor leadership. Working with the team and allowing them to shine based on their own skill set, I was able to guide them to a transformation that ensured their profitability as a department.

Moving from messy to magnificent is no easy task. However, it is an achievable task. It’s what we do.

Supporting the Business

Mon, 8 Mar 2010 09:54:20 -0600

by Jakob Franzen

Part of the role of the HR professional is that of coach. Managers in any organization look to HR for guidance in managing their teams. To do this well requires an intimate understanding of the challenges facing the manager. This can be, at times, difficult to grasp for the HR professional. Instead of coaching and guiding, too often I have seen HR fall into the role of taking on mangers’ responsibilities in an effort to show a tangible value. I see this as a critical mistake. Part of the role of any manager is being able to manage their employees. The value that HR can bring is guidance for the manager in being able to make appropriate decisios. Many HR professionals focus on the buzzwords of “value-add” and being “invited to the table.” In all honesty, many do not understand the concepts behind these comfortable phrases. To collaborate with mangers means that HR has got to understand the business. An HR professional in any company should know at any time what the current challenges are for the company in its market. They should have an understanding of the current issues that are facing managers so that they can formulate appropriate collaboration and guidance methodologies. Being involved in the business decisions of a company, being “invited to the table,” is something that HR professionals must earn by showing they have an understanding of the issues facing the business.
HR professionals need to embrace their business acumen. They need to take initiative to insert themselves into the business. Pay attention to opportunities that are well suited for their abilities, and then jump in!
Networking within the company is also key. Knowing what issues are facing your managers can go a very long way. It also helps you engage in a very important aspect networking -- being able to help.
Finally, HR professionals need to know their strengths and weaknesses. They shouldn’t be afraid to lead when their strengths are required, but also shouldn’t be afraid to follow when someone else has the skills needed to lead.

Leadership and Managing People

Mon, 1 Mar 2010 09:42:30 -0600

by Jakob Franzen

Good leaders are products of their experiences and the mentors who have guided them. So often I see people seeking a formulaic approach to leadership. They want to follow a recipe that will result in good leadership. If only it were that simple. We are inundated with books and treatises on a variety of ideas about leadership. Many of them offer keen insight into leadership ability, but ultimately you have to assess your own environment and the people you work with in order to lead them.
It’s important to keep in mind that a good leader doesn’t do the work for his or her team. Often I have seen competent professionals hired only to be stifled by micro-management. I have found that a key to making sure an employee is successful is by letting them do what they know how to do do. A key component in leading is to understand the talents on your team. I have had the privilege of working with team members who excel much more than I do in specific disciplines. My role in these situations was to provide them with general guidance and remove obstacles that may be preventing them from being successful.
Development is key. A good leader should understand how his staff members want to grow and provide them with opportunities for that growth. That means more than signing them up for a class or a workshop. It means giving them work assignments that stretch their abilities and more importantly, giving them accountability for the success of their work. Leading is listening, understanding, planning, and allowing action.