Investing in Employees Part 1 – Short Term Transactions or Long Term Partners?

In this two part blog series, I am going to examine different perspectives of employees. The continued (and often exclusive) emphasis on short term earnings and current quarter results often and easily spreads into decisions around employee management and investment. The short term view of employees is that they are temporary resources that we engage to deliver a certain defined service. When that service is no longer needed, the employee is expendable. Employees are viewed as short term transactions.

This construct may certainly be valid for a subset of employees, especially if a business has large swings and is “large temporary project based.” Employees may be needed to simply fulfill a large non-recurring contract. However, there is a real need to view a significant part of the employee base as long term partners.

Long time employees who have strong loyalty to the enterprise serve many important roles. Often they are the ones who have a deep understanding of the entire enterprise and how everything works together within the company, and grown into general management roles. Other employees develop a strong expertise of industry dynamics and fulfill strategic planning and market planning roles. Others develop a deep relationship with the client base and are the sales leaders. And some become experts and senior advisors and specialists within a certain function of the company. In Part 2 I will explore the generalist vs specialist dynamic a little deeper.

Very importantly, enterprise organizational and employee development tools and processes need to address long term employee partnership as well as short term transactional skills. There is frequently a gap here. When I meet with clients, many have robust programs for employees to develop skills in their current jobs. Annual development plan reviews often focus on skills to enhance or improve current job performance. But are employees also engaged on discussions of five or ten year career growth?

This is a typical short term skills building cycle, but a longer range career planning component needs to be added to employee development programs

Employee development processes need to have balance between the short term and long term and include a long range career growth component. That is what Total Engagement Consulting offers companies with our Career Road Mapping Services. We provide a construct and process for enterprises to offer employees long range career planning customized to their enterprise. This will increase employee engagement and productivity, retention and building long term employee loyalty and partnership.

Look for part 2 next week and also check out earlier blogs around career road mapping:
• Link: Introducing Career Road Mapping Services
• Link: The Business Case for Career Road Mapping / Skills Development

Also take my 11-question career road mapping / skills development quiz to see where your enterprise stands in the area.

The Business Case for Diversity

One of the three core expertise areas I offer in my consulting practice is diversity management with a specialization in the LGBT (Lesbian, Gay, Bisexual and Transgender) workplace and marketplace. Earlier this week I published a similar blog on another area of expertise titled “The Business Case for Career Road Mapping / Skills Development.” Click on that title to link to the article.

Senior corporate leaders and stockholders expect to see a financially based business case for practically any business initiative, and this of course would include corporate diversity programs. Can I show with actual dollars how investing in diversity initiatives (for example, targeted constituency marketing, benefits programs, management training, sponsoring employee network groups, supporting community organizations, targeted recruiting…) can add to a company’s bottom line? Absolutely yes! I agree this is important and can be done.

Many studies on diversity management highlight that robust diversity initiatives positively impact employee engagement / employee productivity, employee retention, and constituency sales. As an example, I will use LGBT diversity programs since that is my area of specialization within diversity management, though the methodology could easily be used for any other constituency (Women, Black, Hispanic, Asian …) or even for cross-constituency programs.

For this example, I will use a 2,000 person business with an average employee salary of $40,000 and annual revenue of $250M. And I will conservatively estimate that 6% of employees and business revenue is from the LGBT constituency.

PRODUCTIVITY CALCULATION: number of employees x constituency percentage x average salary x percent productivity gain = productivity gain in $. For example, with 2000 employees with 6% being LGBT, salaries of $40,000 per year, a 5% productivity gain nets 2000 x .06 x $40,000 x .05 or $240,000.

ATTRITION SAVINGS: number of employees x constituency percentage x average salary x time for fully onboarding new employees x decrease in attrition percentage = saving in attrition $. For example, again using 2000 employees at $40,000, if it take 2/3rds of a year for onboarding and you can avoid 5% of the LGBT population from departing, the savings is 2000 x .06 x $40,000 x 2/3 x .05 or $160,000.

REVENUE GAIN: annual revenue x constituency percentage x percent increase in constituency sales = potential revenue gain. For this example with $250M in revenue, the potential net new revenue from a 5% increase in LGBT market share would be $250M x .06 x .05 = $750,000.

So overall in this case, bottom line we are looking at executing LGBT diversity programs providing a net expense savings of $400,000 and net new revenue of $750,000 to the business.

In addition you would get the “soft” benefits of overall higher employee morale, being able to attract the best talent as word spreads and your enterprise is viewed as an “employer of choice,” and overall community good will.