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Ch 9 – Lisa Wilkinson an Organisational & HR debacle

While the Channel 9 – Lisa Wilkinson case has raised the important issues of gender equality and pay equality, the real issue of “human capital management” procedures and processes has largely been overlooked.  With the methodology and systems available today this situation should never occur and the way it has unfolded is a true debacle – a complete failure, especially because of bad planning and organization.

The NSW Premier Gladys Berejiklian and Opposition leader Bill Shorten have allowed themselves to become caught up in the media frenzy, but blinded by the gender equality aspects they did not address the real issues.  Australia supports the ILO Convention recognising equal pay for equal work, but even so there is a lack of accountability and reward for true contribution.  Despite this support, Governments and many private sector organisations in Australia still utilise incremental pay approaches to base pay.  How can this be equal pay for equal work?  Maxumise has assessed people on the extremes of a “level” and it is not uncommon to find a competence reversal i.e. the most competent contributors being paid the least.

In modern organisational and HR asset management, remuneration is made up of the following three (3) elements:

  1. Base salary for a fully competent person delivering on the expectations
  2. Performance pay i.e. at risk, variable pay linked to contribution above normal expectations
  3. Legal and business based benefits as well as adjustments and “perks”.

In the Lisa Wilkinson debacle, real “business” issues started to emerge when Channel Nine CEO Hugh Marks said: “Today Show is one of the biggest roles there is in Television…”.  Did he mean that it has potential to contribute to revenue, profit, channel 9 image etc.?  “Biggest” is probably not the best term to describe [...]

Goldman Sachs joins HR lions club with a squeak!

Navel Gazing larger Goldman Sachs joins a long chain of icons that are shaking up their performance appraisal process – wow, probably 15 to 20 years late and even then they are just tweaking them around the edges when there are real quantifiable and empowering solutions available.

Where would we be if we managed our other assets like these companies have been managing their people?  Maybe the better question is where would we be now if we had been managing our people assets effectively for the last 20 years?  What if we had included proper position definitions, quantitative measures and empowerment not to mention placing HR assets on the balance sheet?

As the Human Times Monday 30th May 2016 edition (humantimes@humantimes.us.com) reported Goldman Sachs “experimenting with an online system” joins Accenture “more frequent check ins between management and employees”, General Electric (similar to Accenture), Gap, Abode and Microsoft “abolished numerical ratings” with J.P Morgan, Chase & Co and Citi Group making “management changes focussed on retaining junior bankers”.  PwC and Delloite are also changing their performance appraisal system, jumping from one subjective system to another.  These prides of lions are squeaking not roaring.  Just imagine if we managed our finances or stock or physical assets like we do our HR – let’s sit down at the end of the month to casually discuss how we feel about the revenue and profits, what about the cost and how do the stock levels look like to you?

There have been human capital management methodology and tools around for 20 years that define the expectations of positions including measurable outcomes that empower the employees to understand how they are performing and [...]

A Sugar Tax or Social Responsibility on the Balance Sheet

Is there a company out there that doesn’t promote itself as a socially responsible company.  These companies also work hard on increasing their market capitalisation (value), so where does sugar fit in?

 The gap between the book value and market capitalisation is largely unquantified but in reality it is made up of the employee value, often called HR asset value, intellectual capital and the socio-economic contribution.

There are tools to value the HR assets so this is possible, the accountants say they can value the intellectual property (although those innovative inventions are thin on the ground these days) which leaves valuing the socio-economic contribution of the organisation.  This is where the “rubber hits the road” and with some companies the socio-economic value may be neutral or even negative for example tobacco companies, heavy polluters, some alcohol promotions and maybe foods that contain ingredients that the medical profession tells us is “damaging” like excess added sugar etc.  We have been down the path of putting a value on the carbon footprint including pollution, carbon “miles” but did we transfer this to the balance sheet as a socio-economic value?

 I am not an accountant but we are all governed by accounting standards for reporting through standards like GAAP, IASB (IFRSs) and FASB which appear to prevents us from putting these values on the official book value (but they will allow goodwill which can now be impaired to make up for losses elsewhere).  However this should not prevent us from advocating for it, nor does it prevent us putting these values in as a balance sheet notes.  This has been done for [...]

Is Australia’s Economy of Scale Adequate for the Future?

Turnbull team cartoon low

Australia has an increasing imbalance between the economic contribution from its “residents” and the cost of providing social services and government administration.   Are there lessons we can learn from the past and how do we move forward?

In the mid 1990’s Australia lost most of its manufacturing base.  Not only were jobs lost, but the need for highly specialised skills, together with the problem solving expertise to create unique innovative solutions in these industries evaporated.  The car industry limped on under the “Button Car Plan” with government incentives to share components such as body pressings.  Entities like Kellogg, with raw materials on its door step, changed structures and redefined traditional “jobs” to outcome based contributing elements (positions), empowering their employees.  Whilst Kellogg’s workforce nearly halved at the time, some manufacturing was retained and survived a further 20 years.

Government reviews at the time considered what options could be adopted to retain some of the exiting manufacturers as competitive businesses.  The findings in each sector were similar; firstly the need for investment in new technology including robotic processing, and, secondly the production and processing scales for efficiency were many times the Australian domestic demand at that time. 

I remember being at a presentation for new piece of equipment for a communication company.  When a slide showing the optimum output for the smallest model was displayed the CEO thought there was a misprint on the capacity as the minimum recommended output was 10 times what they required and they thought they were big a player.  The equipment supplier then suggested they [...]

Infrastructure and Asset Maintenance is failing us – who is to blame and does HR have a role.

Professionals Australia provided a link (as part of their Better Infrastructure campaign) to a very humorous YouTube clip from the US Last Week Tonight with late night talk show host John Oliver: Infrastructure (HBO) Mar 2 2015.

This topic would be funny if it was not so serious but what has it to do with human resources? The clip raises the question, who is John Oliver really making fun of, is it just those maintenances engineers or is he criticizing the organisation’s broader “good governance”.

The John Oliver clip is brilliant at getting across the message of the importance of infrastructure maintenances from a retention of the value and safety aspects. While it is probably not difficult to find a measure like Return on Assets (RoA) or something like this in most organisations, it is not as easy to find measures on how well we are looking after those assets. In a Human Capital Management approach to organisational management it is critical to have a balance between all the measures. While the John Oliver clip highlights the obvious importance of looking after the infrastructure, it is the practical setting of the level of this maintenance and monitoring that we find is essential, but unfortunately often missing. In organisations Maxumise often find two (2) gaping holes when it comes to asset management. The first hole is the human asset value – why isn’t this included as a real and significant assets in all organisations? Secondly there are rarely any maintenance measures for the assets including infrastructure, plant, equipment and yes the human assets who also need to be maintained.

Professionals Australia describes John Oliver clip as “an informative and humorous insight [...]

Human Resources are True Assets

The value of the HR asset can be calculated and an increasing number of organisations are putting the HR assets onto the balance sheet, although currently only as a balance sheet note, but it is still used and reported on. In the valuation of our company the HR assets explains the gap between book value and market capitalisation, and that gap is made up of human capital and other intellectual capital.

This places the focus on increasing the value of our people and to do this we need to define the structures and positions correctly incorporating a performance management system that empowers the employees; letting them produce the outcomes using initiative and innovation. This will progressively increase the competence and therefore increase productivity i.e. an increase in HR asset value.

To be in a position to allow the organisation to place the HR on the balance sheet (Note) the organisation must have a clear strategic direction/focus, be outcome focussed and the key HR programs must be integrated:

  1. Strategic Planning – current and future capability and performance frameworks;
  2. Structure Management;
  3. Role design (size) and position evaluation – a precise form of the old outdated “job” evaluation e.g. point-factor
  4. Employee Management; management of an incumbent’s performance achieved against the performance set in the role description
  5. Performance Management system;
    • The performance measurement envelope – target, high stretch and danger
    • Performance achievement management – predictive modelling and performance reward calculations
  6. Recruitment and Assessment – acquiring and matching people against role design;
  7. Learning and development based on competency gap
  8. Strategic Reporting including HR asset value as a “balance sheet” note.

Maxumise is a consulting company with over 20 year history of Assisting Organisations Improve their Performance through the better management of resources, particularly human resources.

Maxumise provides a Human Capital Management methodology as well [...]