HR Administration

HR Lessons From America’s Fastest-Growing Private Companies

By Lynda Zugec

Jan. 6, 2015

It may seem paradoxical that finding and keeping key talent is an issue given the high unemployment rates of recent years.

According to the U.S. Bureau of Labor Statistics, the unemployment rate in 2010 was 9.6 percent and has steadily decreased in the years since. Increased hiring is leading to stiffer competition, leaving many organizations desperately seeking new and creative methods of attracting and retaining talent.

Many employers searching for that elusive key may be overlooking what’s right under their collective noses: Growing your organization exponentially lies in how you manage your human resources.

Most Surveyed Companies Agree …

80 percent of those surveyed responded “very good” or “excellent” to:

  • The ability to effectively interact with others to produce outcomes.
  • The ability to accurately assess the needs of other people.
  • An understanding of the goals and objectives of other people.
  • An understanding of the informal structure of the organization.
  • The ability to respect the values of others.
  • The ability to apply effective verbal/nonverbal/written communication.
  • An understanding of the communication pathways within the organization.
  • Knowledge of, and ability to, address individuals’ differences.
  • The ability to understand/overcome communication barriers.

Source: Workforce Consultants' Human Resources Practices survey

My organization, The Workforce Consultants, surveyed the Inc. 500, an annual listing of the 500 fastest-growing private companies in the United States, to discover their secrets to success. In an effort to learn how organizations can increase profitability, we asked questions surrounding strategic capabilities; organizational development activities; change management processes; training opportunities; performance management systems; leadership development programs; and the use of HR technology.

According to the survey, just over 50 percent of the Inc. 500 are looking for innovative ways to increase their ability to fill performance gaps. This has led these companies to consider where and when employees work and how to engage them most effectively. Topping the list in the management of talent pipelines is leadership development.

Inc.500 leaders have learned that developing leadership should not be an afterthought. If it is, you may run into some surprises. Over 80 percent of respondent organizations in the Inc. 500 maintain that their ability to lead by example and maintain a clear vision of the organization’s future is either “very good” or “excellent.”

And speaking of the future, consider some predictions from Inc. 500 survey respondents:

  • Increasing globalization coupled with the ability to work remotely will open the door for key talent to look outside their immediate physical reach for opportunities. In order to attract talent, organizations will need to be more malleable in “where” and “when” work gets done. The ability to have work done “around the clock” will become an increasing reality.
  • Key talent will seek out work arrangements that take into consideration the lifestyle they want to live. This includes more flexibility in schedules, an increase in remote work, and concepts such as unlimited time off and unlimited vacation. There will also be an increase in freelancers, consultants and individuals seeking project-based contract work and an associated need regarding how to best manage such a workforce. Although this presents less structure than in the past, managing such a dynamic workforce effectively will give organizations an edge against competitors.
  • The way in which work will be done will change considerably. Frederick Taylor and Scientific Management Theory will still prove influential in some industries and markets but a more holistic view of individuals and their relationship to work will drive the success of emerging and visionary organizations. Organizations that perceive people as “people” rather than “employees” will adopt practices that engage and retain the best and brightest.

A challenge concerning leadership is in developing promotion strategies. Nearly 30 percent of the organizations surveyed indicated that they had a “fair” ability to do so. That signals a need for big improvement. Results indicate that the current leadership of the Inc. 500 is strong but will need to be developed in the coming years to maintain desired levels of growth.

Top 10 2015 Workplace Trends

The Society for Industrial and Organizational Psychology surveyed its nearly 8,000 members to reveal the top 10 workplace trends for 2015:

1. Mobile assessments: As technology continues to expand and develop, mobile assessments will be tapped for selection, performance management, and training and development decisions. It is increasingly important for organizations to understand how technology, including social media and social collaboration, is changing the science and practice of selection, recruitment, performance management, engagement and learning. Industrial-organizational psychologists will continue working to design assessments that are valid and reliable regardless of how and where they are delivered.

2. Continued use of HR analytics and big data: Industrial-organizational psychologists have long recognized the value of science and data analysis for improving business and HR decisions. With the automation of collection and storage of data, more advanced hardware and software, and larger databases, empirically based big data predictions will become increasingly fundamental to workplace decisions.

3. Integration of work and nonwork life: Reduced boundaries between work and home life as a result of new technologies (such as wearables, social media, smartphones, Google Glass) pose challenges for maintaining a healthy work-life balance. Industrial-organizational psychologists are continuing to study the effect of new technologies on work-life balance and if and how these technologies can be used to improve it.

4. Increasing implications of technology for how work is performed: Technology is radically transforming all aspects of work. Industrial-organizational psychologists will help organizations understand the implications of these changes and what they mean for the future of certain roles, the employee experience, collaboration, management styles, performance management and HR processes.

5. Organizations will continue to do more with less: With declining budgets the past few years and stakeholders calling for better management and performance of organizations, resource optimization has become core to many organizations’ business strategies. Industrial-organizational psychologists are working to help organizations identify innovations that allow them to reduce costs, increase organizational efficiency and, in general, do more with less.

6. Increased need to manage a multigenerational workforce: Four generations make up the current U.S. workforce: Generations X and Y; baby boomers; and the silent generation. They come to work with differing perspectives, assumptions and skills. Industrial-organizational psychologists are continuing to research and implement methods that maximize the potential advantages of these differences, such as increased employee learning and team collaboration.

7. Emphasis on recruiting, selecting and retaining potential: Industrial-organizational psychologists expect that organizations will need to increase emphasis on recruiting and selecting new employees this year, while still retaining top talent, due in part to a strengthening economy. Industrial and organizational psychologists will continue to contribute to these processes through the development and validation of legally defensible selection procedures and training/development programs as well as the identification of key attributes of the roles, positions and organizations that top talent find most desirable.

8. Changing face of diversity initiatives: Simply having a diverse workforce may not be enough to give your organization an edge in today’s workplace. To make the most of a diverse workforce, leaders need to know how to properly use such diversity. Industrial-organizational psychologists are finding that programs that value and leverage such concepts as inclusion and equality have more effective managers, drive greater productivity, and attract a more diverse workforce.

9. Growth of Corporate Social Responsibility Programs: The measure of a good company has traditionally been its revenue or stock price, but more companies today are also being judged by what they give back to their local and global communities. Corporate social responsibility programs are becoming a business requirement for organizations that want to be seen as responsible citizens. Industrial-organizational psychologists are finding that these actions affect how people feel about companies, their purchasing behaviors and the attitudes of the employees who work there.

10. Changes in laws may affect employment-related decisions: Changes in current laws and regulations and the passage of new ones have the potential to affect numerous HR and organizational practices. Industrial-organizational psychologists will continue to ensure the programs they implement align with these and related legal standards.

—Lynda Zugec

Thriving in the future will largely depend on organizations navigating the complex world of leadership. The ability to sift through the multitude of definitions and leadership development programs available and choose the approach that provides maximum benefit is not an easy task. But that’s the reality they face.

Inc.500 executives realize the necessity of career development to empower employees, drive business success, and ensure a talented pipeline but are grappling with the execution of such programs and the overall process. Less than half of Inc. 500 respondents said that their organization’s ability to identify relevant competency standards and develop an enterprisewide training plan was “very good” or “excellent,” while the majority remarked that these abilities were either “fair” or “good.”

A significant number of respondents revealed that their organization does a “fair” job at combining instructional and educational methods. In order to support talent pipelines, many of the Inc. 500 reported efforts to incorporate strategic human resource planning but are experiencing hurdles in doing so. Part of the struggle is due to the fast-paced environment, high rate of growth and changing market demands these organizations experience on a daily basis. Innovative methodologies that incorporate some flexibility will be important to ensuring talent pipelines are flowing as desired.

Inc. 500 survey respondents recognize that:

  • The ability to foster leadership skills will become increasingly relevant. Corporate social responsibility, integrity and ethics will guide more leadership decisions in the coming years. Organizations that overlook such items of critical importance to emerging notions of leadership will be playing catch-up.
  • The availability of instructional methods and educational materials is continually expanding. The vital piece will be in determining who needs training/education, at what level, and when. Organizations are hesitant in approving instructional and educational materials given the resource and time commitments required. Relevant here is the notion that “If we train them, they will leave.” The flip side? “We don’t train them and they stay.”
  • Using human resources as effectively as possible will become more critical to business success. If organizations don’t get this right, they won’t succeed. Period.

Leveraging HR Metrics

Linking HR to finance and the business as a whole is a challenge for many organizations; the Inc. 500 are no exception. Finance believes HR needs to speak the language of business, which is numbers. These numbers need to be tied to business and financial results. Talent and workforce analytics along with big data willcontinue to be a pain point as organizations struggle to quantify the benefits of human resources practices and policies.

  •  It’s become obvious that investment in workforce analytics will rise. Pressure on quantifying HR activities will continue to intensify and world-class organizations will be likely leaders in this space. HR will also need to measure and predict performance more accurately and use these findings to keep business leaders apprised of workforce needs.
  • As HR technologies become more sophisticated, HR metrics will become more readily available. Understanding what the numbers mean and translating them for varied audiences will become a required skill.
  • Business goals will link directly to workforce strategies and the ability to obtain quality data will be of utmost importance.

Incorporating the Right HR Technology

As many in the Inc. 500 will attest, utilizing readily available HR technologies can save a substantial amount of time, but only if it’s the right technology for their particular organization. There were 300 exhibits and 60 new product announcements at the HR Technology Conference and Exposition last fall in Las Vegas. Deciphering which HR technologies are most effective is critical, one which Inc. 500 companies are tackling. According to the results of the survey, more than 50 percent of the organizations felt they had a “fair” or “good” understanding of trends within the learning technology industry with an aim to increase their understanding to a level of “very good” or “excellent.” Similarly, when asked about their knowledge of the limits and potentials of various types of technologies, some 50 percent seek to raise their current level of awareness.

It’s clear that cloud-based HR technology is the new norm. The number of cloud-based HR technologies in the market will continue to grow. Finding the right ones to incorporate into a business will be critical as they will save time and resources that could be directed elsewhere.

Some organizations will continue to seek integrated HR solutions, but standalone cloud technologies and applications still bring advantages, such as greater flexibility and ease of use. There will be a greater demand for mobile access to HR technologies and HR applications as well.

Greatest Strengths of the Inc. 500

The greatest strengths of Inc. 500 companies include communication, interpersonal relationship building and collaboration. In light of the changing nature of work and the increasing need to work with (and through) others, it may very well be these skills, which are allowing the Inc. 500 to thrive.

Given the success of the Inc. 500 and the way in which they operate, these key strengths are likely what is enabling, and sustaining, their growth. If you are not already fostering communication, interpersonal relationship building, and collaboration, get on this – straight away.

About Our Survey

The Human Resources Practices survey on the Inc. 500 was conducted between 2010 and 2014. A total of 22 percent of organizations from the Inc. 500 participated.

Lynda Zugec is the managing director at The Workforce Consultants, a network of industrial-organizational psychologists and HR professionals. Comment below or email editors@workforce.com. Follow Workforce on Twitter at @workforcenews.

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