GDP Blog

Hedging your highest risk investment

Posted by Carrie May

May 19, 2016 12:29:35 PM

Following on from last week’s blog, one of the keys to success for any organization is putting forth the proper amount of focused effort and repeating that process.  Accomplishing this requires the right human capital as well as process automation.  Ok, so how do I now hedge my company’s long-term success with the human capital piece of this equation?    

Just as with any investment, you diversify.  Spread the human capital element across very risky, moderately risky and low risk human capital investments.  This week I’ll discuss the riskiest investment you have: any individual you have working for you right now whose immediate departure would cause detrimental effects to your business.  These are typically the employees with the longest tenure and most experience; they have told you that they’ve made a firm long-term commitment to the organization’s purpose; they show the same passion for the organization’s mission as the owner and hold themselves to a high standard of continuous self-improvement. stock-photo-70392605-chickens-with-egg.jpg

How can you identify who these individuals are?  It is very straightforward.  These “key” employees typically arrive or login earlier than most and work later than most others because that is “quite time” to review the day’s events and prepare for upcoming priorities and tasks.  They have a calmness and maturity about them when completing daily tasks and interacting with clients and other employees.  When discussing an issue with the executive team their purpose and explanation is well thought out and meaningful.  (Remember these types of individuals are highly motivated, smart and have utilized every resource the organization has made available before bringing an issue to their internal executive team for discussion.)  How do you hedge your risk in retaining these “key” personnel?  The executive management team must be innovative, creative and willing to allow these individuals to follow a growth path, provide constant support as well as the autonomy to run their book of business or division just like the rest of the business.  This will give them ownership, day to day business challenges, decision-making power and ultimate accountability to run their “business” successfully.  Executives who invest in these types of key employees, will retain their employees for the long-term and earn a healthy return in the end.

Now, on the flip side, all organizations also have high-risk, key employees who have the “appearance” of the qualities you seek (commitment, dedication and self-improvement) but your experience working with them doesn’t quite seem as comfortable.  They have gone through the motions of being successful, moved up in the organization and typically have tenure and manage a team of individuals.  But, appearances may be deceiving.  You need to be aware of which key employees are your highest “flight risk”.  The fact is you already know who they are.  Listen to yourself - for some reason these individuals tend to put you on edge when they walk into your office, need constant coaching and assurance they are doing a good job, never forget to remind you about the recruiter that called them yesterday and have a tendency to keep in touch with employees that have left the organization regardless of the reason for separation.  Again, they are successful at going through the motions in doing what they need to accomplish daily goals and tasks but they have not truly committed to you or the organization.  Nor do they possess the qualities needed by the organization.  So, how do you hedge your risk in retaining these types of employees? 

In managing a business, decisions are made to retain and promote certain employees over others because they possess qualities to help the organization continue growing.  As your business matures and you refine exactly what you are looking for in an ideal employee, the qualities that were important to you five years ago may not be the same today.  The time you used to spend reassuring certain individuals that they are doing a great job and the constant coaching are high maintenance characteristics you just don’t have time for any longer.  You now notice the complaining that you didn’t notice before.  Needless to say you used to blow off their comments about the recruiter calling them yesterday and now you find yourself feeling a weird sense of relief when you hear that.  If you don’t want to find yourself in this situation, you need to have a back-up plan. 

What kind of back-up plan?  Ideally your back-up plan would include trained “bench team members” that have been showing promise.  Also, taking the time and energy to constantly interview and meet other people in the industry is a must.  Your business could be put into serious jeopardy if one day you have multiple key employees walk into your office and tell you they giving you their two week notice.  That relief you felt earlier in the day when one of your employees was joking about the recruiter calling has now turned into serious anxiety…unless you are prepared.  Take a breath, it’s going to be OK … you are reading this.

So, having a bench team is always the safety net you need, but in day to day reality, it’s not always affordable.  As with many small businesses, funds are limited, so the next best option is:  leveraging your “moderate and low risk” human capital investments.  In next weeks blog I will discuss the moderate-risk human capital investments and the role this investment plays in hedging your riskier human capital investment as well as the role it plays in the entire portfolio of your business’s human capital investment.  Remember your broker’s good advice: Diversify, Diversify, Diversify.

 

Topics: Culture

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