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In others, HR performs a more expansive role in which the opinion of HR professionals regarding general business problems is encouraged and sought. In these organizations HR is an integral part of how the company does business, and HR affects the bottom line every day.
A business assessment is simply a research report about a particular business issue, function or process that identifies problems and makes recommendations. The problems do not have to relate to human resources or people issues, although they certainly can and often do.
Over the years I have done several business assessments for small to medium-sized companies I have worked for. I have always enjoyed the challenge and the opportunity to contribute in this way.
Every organization, regardless of its size, has a constant flow of problems, from unprofitable business units, ineffective processes or management teams, and high employee turnover to an infinite number of other concerns. It is natural for organizations to make incremental changes to solve problems, but sometimes that is not enough. In some cases it is necessary to take it all apart, carefully study the problem and come up with new ideas.
Consulting companies, Big Five accounting firms and others prepare such analyses all the time, but internal HR professionals can perform them as well and, in some cases, better. While internal assessments are not appropriate in highly technical areas (such as redesigning a jet propulsion system), they work well for a variety of business and administrative issues.
Don Feltham, principal with Burgess and Associates, a human resources management consulting firm in Kansas City, Mo., has been on both sides of the issue. He spent several years as an internal operations consultant for a financial institution and performed business assessments as an outside consultant for over 15 years. He believes HR can effectively facilitate reviews of problems and issues even in highly technical areas with either internal specialists or external experts on the subject.
Phil Jones, SPHR, vice president of HR at Cardinal Brands Inc., a national manufacturer and distributor of office products headquartered in Lawrence, Kan., says business assessments should be an important part of every HR department. Conducting a business assessment is an incredible opportunity to prove or improve your credibility in an organization. It gives you the chance to apply sound business reasoning to a business problem or situation and then recommend solutions to those problems, he says. Performing a business assessment also gives you the opportunity to learn about the core business of the organization. This is simply invaluable information for your job and your career at the organization.
Why Use HR? While HR professionals may not be experts on a particular problem (neither are some consulting companies), they do offer several advantages:
Low cost. Using in-house HR can save an organization tens of thousands of dollars. In small or medium-size organizations, that can be a tremendous selling point.
Third-party objectivity. If a business problem is not directly related to human resources, the HR professional is likely to have about the same level of objectivity as an outside consulting firm. HR has an advantage over other internal people or departments that may be perceived as having their own agenda and motives to tilt recommendations a certain way, Feltham says.
Knowledge of the organizations culture, politics and players. In solving business problems, having a firsthand knowledge of the organizations culture, politics and major players is incredibly valuable. Every organization has its own way of doing things and approaching problems. Since HR is an integral part of any organizations management structure, it has a head start over outside consultants in devising solutions consistent with the culture.
It sometimes is trickier to navigate the assessment in an internal role because you may well have concerns for an ongoing business relationship with people affected by your assessment, Feltham notes. However, the acquaintance with the business, the people and the insight you likely have regarding culture and style are tremendous advantages in getting the assessment completed.
Established relationships/access to sensitive information. HR professionals established relationships within organizations develop trust that gives them better and faster access to people and information than outsiders would have. Since many business problems can be traced back to people, this is a great advantage for the HR professional.
Greater confidentiality/trade secrets. Using an HR professional reduces the risk of confidentiality breaches and external exposure of trade secrets.
Knowledge of the problem. In some organizations, particularly small to medium-size ones, an HR professional may have firsthand knowledge of a problem that has not been diagnosed or even fully recognized by management. This firsthand knowledge of the problem is incredibly helpful in both diagnosing the problem and brainstorming ideas to solve it.
Focus on solving problems, not on project profitability. Outside consultants are inevitably concerned about billing and completing projects within the time and expense anticipated in their bids. HR professionals are not similarly constrained. Instead, they may take the time necessary (within reason) to solve the problem, without concern for profitability of the project. Thus, an HR professional may do a better job simply because they are willing to spend more time, track down more leads and do more work than an outside firm would.
How to Approach an Assessment
Kathy Boas, a principal with DeFrain Mayer, a Missouri-based human resources consulting firm, has conducted many business assessments both as an internal HR staff member and as a consultant. Boas says that one of the most critical steps in a business assessment is how you approach it.
It is important to create a win-win situation. If you go in with the purpose of finding fault or laying blame, you will not get the support you need from the people involved. Instead, you have to create a positive and collaborative environment so you are looked on as a partner that can help them.
Boas recommends meeting with the manager of the department to explain the purpose of the assessment and to elicit support and help. She always tells the manager that she will give him or her regular updates on the assessment throughout the process and the opportunity to read and respond to draft reports. Its also important to have a meeting with the department staff so that they know that the purpose of the assessment is to not create a report card of the failings of the department but to make things more efficient, to solve problems and that their ideas and suggestions are welcome and needed.
One business assessment I completed examined a business unit that was experiencing a plethora of problems:
When I started the project, I was overwhelmed. There seemed to be so many problems that it was difficult to focus on any one thing. After the first few weeks I decided to limit the scope of the report to about 10 major problems. Boas agrees that it is important not to go down too many rabbit trails: You have to focus your efforts on the big problems and work to solve those.
Even after prioritizing the problems, I decided that this was too much work for one person and asked for help from another HR staff member. To find out and discover more about each problem (including possible solutions to each), we did the following:
Administered a questionnaire to all employees. A written questionnaire was developed and given to all employees regarding the business processes, what they did in their job, who they worked with, how well the business units worked together and many more questions.
Conducted a time study. All employees were asked to complete a detailed timesheet of their time at work. The time logs were analyzed to see if staff members time was spent in a manner consistent with their job descriptions and managements expectations.
Interviewed employees. Every employee was interviewed and in-depth notes were taken. We asked what workers liked and disliked about their jobs, how they could improve processes, procedures, productivity and efficiency. One question Boas asks is: If you had a magic wand, what would you do right now that would have an immediate and positive effect on morale, increasing revenue, etc. She tells them that, for the purpose of the question, the sky is the limit and encourages them to brainstorm creative ideas and solutions.
Interviewed and communicated to management staff. To keep the lines of communication open, management staff were interviewed many times. In addition, regular status meetings were held with management regarding what the business assessment was finding and what possible actions could be recommended. In addition, before the report was completed, management staff were given the opportunity to comment on a draft. In some cases the report was changed to accommodate their suggestions.
Interviewed key external players. Interviews also were conducted with external players including financial players, key vendors and anyone who could offer relevant information. Again, we learned a great deal of information from outsiders.
Reviewed business records. An extensive review of business records was conducted, including budgets, annual reports, customer service reports, production reports, job descriptions, shipping/invoicing reports, collection reports, payroll and time off reports, and many other historical records.
Observed. Time was spent in the business unit observing processes and employees doing their jobs.
Reviewed research reports, industry statistics, books/studies and surveys. A complete review of books on industry statistics, research reports/studies, surveys and other information was completed. The Internet is an invaluable tool for completing this work.
Benchmarked other organizations. An extensive benchmarking questionnaire was completed. Using this questionnaire, 30 other organizations in the same general business were contacted and were asked about their processes, organizational design, staffing levels, turnover rates, production volumes, etc. Twelve agreed to participate. To encourage organizations to participate, an anonymous summary of the information was offered to each participant. This was some of the most compelling research information compiled and greatly helped generate creative solutions as well as establish trends and bench.marks with which to compare our business unit.
Surveyed customers. A customer survey questionnaire was written, and more than 300 customers were contacted. A total of 70 customers were reached for comment. A summary of these results was included in the report.
The business assessment took five months to complete. The final report exceeded 50 pages and included more than 60 recommendations in nearly every area, including systems, staffing, organizational structure, training, customer service, production, purchasing, collections, shipping, quality control and others. Based on the assessment the business unit obtained a 20 percent increase in staff, salary increases for some employees, additional infrastructure resources, a new organizational design including a completely new unit and much more. Management instituted nearly all of the recommendations.
Two years after the recommendations were implemented, the business unit substantially increased revenues, productivity, efficiency, quality and other measurable standards. Employee turnover was the lowest of any unit in the organization. Employee morale rose to high levels, higher than before the assessment. Satisfaction within the organization with the business unit was greatly improved as its management became more proactive.
Do I Have What It Takes?
Assessing any business problem is difficult. It takes self-confidence and guts. Feltham notes that while it is important to have some idea of what you are getting into, you need to be careful about assumptions that you may have or be given regarding the nature of the problem. I have found that the perceived problem source can be a symptom of other issues on many occasions. It is important to often ask what and why in the course of the assessment and let the answers guide your analysis.
It takes a genuine interest in the project and a desire to leave no stone unturned. An assessment is a lot like a good murder-mystery novel. You have to do a lot of research, ask a lot of questions, investigate and look for clues anywhere you can find them and make recommendations and suggestions on whodunit and how to solve it.
While a business degree is helpful, general business experience is essential. You need to have some understanding of how a business operates to ask the right questions and come up with solutions that are practical and can be implemented, Boas says. Youll need great organizational skills, a lot of time, and good oral and written communications skills.
Why Should I Do This?
There are certainly rewards and risks in undertaking a business assessment. Assessments can be personally fulfilling and are typically unlike other common projects for HR professionals. Doing an assessment can expose HR professionals to knowledge, people and resources they never had access to before. A business assessment also can be great for career growth. Businesspeople (including HR professionals) who are able to solve problems have a tendency to rise to the top. Human resource people will gain respect for developing expertise in areas beyond HR.
Business assessments also include some downsides. They can be risky, particularly if done in an area you know nothing about. There is considerable stress involved in learning a new area and trying to solve problems. If you already have a full-time HR job, you may be facing a tremendous amount of overtime. It is also possible to make recommendations that will worsen the problem. However, if you do your research well and make reasonable, well-supported suggestions, the chance of making a situation worse is typically very small. Remember, in most cases, you will be working with management and other employees who want to resolve the problems you are studying.
Brent Roper, SPHR, is senior manager of human resources at the National Association of Insurance Commissioners in Kansas City, Mo. He has a masters degree in business and is a licensed attorney. He can be reached by e-mail at
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