Human factor: Boulder County firms’ greatest challenge

LAFAYETTE — What business issue presents the biggest challenge to successful Boulder County businesses?

According to our recently completed survey, human resources are without a doubt the most difficult aspect of business to manage effectively. The overwhelming majority of survey respondents mentioned hiring, training, managing and retaining quality employees as the most pressing challenge faced by their businesses. In other words, the human factor reigns supreme in business management for Boulder County businesses.

The survey, conducted by New Millennium Business Consultants Inc., contacted more than 200 Boulder County businesses from January through April 1999. The survey was a phone interview format, designed to discover what business processes were being utilized in the areas of financial control, human resources, inventory and fixed-asset management, technology management, and sales and marketing.

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Calls were made to businesses with between 20 and 250 employees, and gross annual revenue of at least $1,000,000.

Of the businesses contacted, 63 actually participated in the survey. The average number of years that survey participants have been in business is 22. Therefore, the results of the survey provide an accurate representation of well-established and successful businesses in Boulder County.

The survey consisted of specific questions on various business processes, and a final essay-type question; “What have you found to be your greatest challenge in running your business?”

The focus of this article is the response to that last question, where the issue of human resources dominated discussions. For results and surveyed comments in the areas of financial control, asset management, technology management and marketing, please contacted New Millennium Business Consultants Inc. at (303) 665-2650.

A full 70 percent of respondents felt that human resource issues are their greatest challenge. Comments covered the full spectrum of personnel concerns, including time and duty allocation, training, motivation, compensation, career opportunities and evaluations. The most prevalent comment was the difficulty in hiring and keeping good people. The old clichZ, “It’s hard to find good help” rings painfully true for many Boulder county businesses.

All respondents were asked if they used the following human resource tools: organizational charts, job descriptions, employee evaluations, policy handbooks and training manuals. Of survey participants that felt human resources were their greatest challenge, the following percentages show the use of surveyed human resource tools:

* Organizational charts 50 percent;

* Job descriptions 58 percent;

* Employee evaluations 78 percent;

* Policy & procedures handbooks 78 percent;

* Training manuals 44 percent..

Participants who did not feel human resources were their greatest challenge used these tools at a higher percentage rate across the board, up to 17 percent higher in the case of organizational charts. The human resource tool used the most by these participants was policy & procedures handbooks at 87 percent..

Besides using human resource tools more often, do businesses with primary challenges other than human resource issues do anything else differently?

It appears that these businesses make human resources a high priority, either by having a human resource manager or actively developing human resource tools. Comments include, “We have an excellent human resource manager” and “We feel that our organizational chart is an ongoing document.”

In contrast, human resource challenged businesses made comments such as; “We haven’t gotten to that (Job Descriptions) yet,” “We’re pretty small for that (organizational chart),” and “We know we need to work on employee evaluations, but haven’t found the time to do it.”

Non-challenged human resource businesses not only identify human resources as a priority, but also take the necessary actions to address and anticipate human resource problems. The use of organizational charts is another key item, with non-challenged human resource businesses making a substantially higher use of this tool that their human resource-challenged colleagues.

Well thought-out and researched functional and positional organization charts are the foundation upon which a successful human resource system is built. These tools are often overlooked, but are in fact, a crucial element in defining the human structure and organization of a business. The fact that businesses with a handle on their human resources make use of organizational charts is, therefore, not surprising.

One area of the survey that concerns us is that the percentage of businesses using employee evaluations is actually higher than the percentage using job descriptions.

In other words, there are many businesses in Boulder County that give employee evaluations, but do not utilize job descriptions. This would seem to be an example of putting the cart before the horse.

It was beyond the scope of this survey to investigate this particular issue, but well-defined job descriptions are critical for both objective employee evaluations and a focused hiring process. Could there be a connection between the difficulty in finding and keeping the right employee, and the lack of a proper job description?

Of the surveyed human resource tools, policy & procedure handbooks were developed and used more than any other tool. Eighty percent of all survey participants distribute of have available policy & procedure handbooks. While acknowledging that policy & procedure handbooks are a valuable and necessary tool, our experience reveals that this tool on its own is not sufficient in managing human resources.

At New Millennium Business Consultants Inc. we believe that the human factor is the pre-eminent, and often overlooked component in managing a business.

More than any other element, the quality and motivation of the people involved in a business endeavor will be the ultimate factor in success or failure.

A well-designed human resource system is essential for managing personnel and enhancing the quality and motivation of the workforce. While not every business may warrant a dedicated human resource department, every company should have, at minimum, functional and positional organization charts, job descriptions, employee evaluations, and policy & procedures handbook.

Additionally, other invaluable human resource tools we develop and believe to be very valuable are salary and wage matrixes, discipline policies, training manuals, hiring processes, and reward & recognition programs.

A well-designed and properly implemented human resource system will cause the following improvements:

* Improved employee morale and job satisfaction;

* Develops an informed workforce;

* Creates an equitable work environment;

* Reduces employee turnover and training costs;

* Improves the quality of products and/or services.

These management tools should also be viewed as living documents that are continuously improved to keep up with and reflect changes in the business environment. It seems only appropriate, living tools for your most important business asset: human resources.

Bruce Gillmore and Mick Lierley are the co-founders and owners of New Millennium Business Consultants Inc. in Lafayette. NMBC Inc. specializes in assisting small business owners with improving their businesses. These improvement not only increase profits and reduce the time required to manage one’s business, but they will also improve the overall quality of your life. Bruce and/or Mick can reached via telephone: (303) 665-2650, or by e-mail: mblierley@sprintmail.com.