I believe that the standard for excellence is rising in all areas of the building material supply business, and human resources is no exception.
I am often asked, “How is your company at human resources?” In the past, my answer typically was “Oh, we love people. We are great at human resources!” But I have come to realize that “loving our people” is no longer enough to give us world-class HR. All companies respect and value their people, but the mere act of doing so does not make a company great.
At Hancock Lumber, we believe we must become much more focused, analytical, and disciplined about our human resources management in order to continue to grow, so we are implementing an organizational development plan. The focus of the plan is to increase clarity about what we expect from our employees in each job function and to support those expectations with metrics, training programs, incentives, and coaching tools that enable our people to be successful. We call this initiative our “2006 Accountability Plan,” which has seven basic components:
Roles and responsibilities. We are updating our documentation of the most important roles and responsibilities of each job function in the company. The objective is to simplify and focus on the most important expectations and to communicate those expectations more clearly to our employees.
Metrics. For every job function, we are identifying the leading metrics that will be used to evaluate performance. This will focus our employees on the most important indicators that can and will be measured to help evaluate performance.
Critical assessments of performance. We are in the process of standardizing and sharpening our processes for evaluating performance. We then are using the results of our assessments to tactically identify training needs for individuals and in some cases to identify what hiring solutions are required in particular areas of expertise.
Targeted management training. Our critical assessment process has identified two priorities for our managers and supervisors in the areas of process control and collaboration. Process control (Six Sigma) training is essential to standardize processes, eliminate waste, and reduce variations. The result will be a more “scalable” organization that operates more efficiently with fewer mistakes and is easier to grow and expand. Collaboration training is essential because we see in our future an organization where no individual, department, or location works alone. Every part of our company is now intertwined; the ability of managers to work as a team is going to be essential to future success.
Aligned incentive compensation. The concept here is “pay for performance.” Every employee in the company participates in our “Performance Gold Incentive Compensation Plan,” which ties their monthly bonus opportunities to the key metrics identified as the top priorities of their job function. The goal is to more closely align the paycheck of the company with the paychecks of our employees, and the ultimate plan is to move away from a traditional tenure-based pay system and toward a metrics-and skill-based system where employees earn more money by learning new skills and achieving targeted metrics.
Communication plans. In the early years of a small business, communication plans with employees are largely informal. As a company grows, however, new, more formal plans are required to ensure effective communication with all employees. We have documented and standardized our communication plans to make sure we are passing and receiving the right information to and from our employees. These plans include a variety of communication events, from “daily huddles” of production and sales teams to “monthly performance incentive” and “quarterly divisional review” meetings.
Recognition system. We are working to strengthen the recognition system of the company by identifying, standardizing, and expanding the ways in which we recognize and thank our employees for exceptional performance. Elements of the recognition system include years-of-service awards and stewardship awards.
Today's growing organizations require complex, world-class HR programs. Loving our employees and administering their benefits is not enough. Organization development is a critical skill set for lumber dealers that are growing or intend to grow in an increasingly competitive business environment. —Kevin Hancock is president of Hancock Lumber in Casco, Maine, and is chairman of NLBMDA.