Monday, May 13, 2013

Make your lay-off decisions carefully.

Indian domestic Airlines have started charging overweight cabin baggage. Travel light! This is an old mantra.
I was wondering if there is a formula to calculate depreciation of human resources like we have formula or convention to calculate depreciation of asset. We all have heard of Peter Principle which says.."In a hierarchically structured administration, people tend to be promoted up to their level of incompetence," or, as Dr. Peter went on to explain in simpler terms, "The cream rises until it sours."

Like we do performance ratings, the 360 degree feedback, can we not have a rating for depreciating human resource value? The simple calculation of depreciating ROI on human resources over period of time.

The exact ROI on human resources should be Value added to the organisation minus value lost over a period of time. Off course, we need a benchmark for each position per year or effectively per semester to calculate, the depreciation value of human resources.

Take an example, if an Associate continues to do the same task at same levels and proportion with same level of results and also keeps getting salary appreciation YoY, would that not mean a Depreciation on Human Resources?
Same is true with Senior Executive Positions, Managers at all levels and functions.

We hear lay-off decisions and many a times they are due to poor performance or due to falling in the danger zone of Stack-ranking or Forced -rating scale, or Bell-curve.

Based on my experience and also tonnes of anecdotal evidences, we have found that Managers get promoted when team does good job and team gets fired when team does not do a great job! Managers escape the noose. Are Managers Caesar's wife? Someone above suspicion?
The sword of Damocles always falls on the voice less! 

If a company does not know how to lay-off or cannot answer exactly, why the lay-off happened, they have no right to hire next, at least morally, ethically....

They can follow the below principle...

Practical principles:

1. When in doubt don’t hire, keep looking.
2. When you know you need to make a people change, act.
3. Put your best people on your biggest opportunities, not on your biggest problems.

You fired! Now what?

Creating a climate where truth is heard:

1. Lead with questions, not answers.
2. Engage in dialogue and debate, not coercion.
3. Conduct autopsies, without blame.
4. Build “red flag” mechanisms.
5. If our decisions are not transparent, we lose trust and so suffer attrition and remember  when attrition happens, out of exiting employees, 80% are your best performing employees.

Make your lay-off decisions carefully.

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