The working population of an organization should be viewed and managed as an investment portfolio, a set of valuable assets represented by an asset account in the accounting books. Accordingly, the same investment portfolio management principles apply to human resource management, these are:
- Risk reduction through portfolio diversification, which can be achieved with the balanced hiring of human talent. Efficient portfolio management actions in the market, whose main objective is to build some activities, diversify others, and maintain some more. This requires the investor to combine a series of assets that, with their added value, have great appeal. Converted to human resources terminology, this attractive portfolio will produce a workforce with high potential in their contributions, in the versatility of their skills, job stability, and high quality performance in relation to the goals of the company.
The remarkable fact is that the theory of human capital has entered the corporate world and the challenge for general management is to disseminate and instill that philosophy in managerial practices. Management could adopt the following matrix for the qualification of its human resources:
- High potential employees Consistent performance but limited potential employees High potential employees but with problematic attitudes Low potential and performance employees
Before analyzing these groups in detail to suggest the appropriate management of each of them, it should be noted that each categorization should not be used as a permanent label for the employee, as the employee can change in response to a variety of organizational factors. However, such a classification, validated by periodic observation of employee performance, is invaluable as an instrument to indicate the action required to achieve optimal results in the performance of each group. Thus, portfolio analysis forms the fundamental basis for the entire human resources management function including internal recruitment, promotions, training, and corrective actions.
Management of high potential employees (Stars)
The stars of the organization are often young people of considerable ability who have shown a high level of motivation in their work. Included in this group are former employees with great technical authority and officials of different hierarchical levels who maintain their creativity and productivity. The categorization can include project managers with great potential. Because this group plays a relevant role in the success of the company, it should be carefully identified and strengthened.
Identifying Stars
The main techniques for identifying current, present and future stars are described below:
- Assessment Center Method
This method consists of bringing together selected participants to evaluate their potential and identify them for future promotions. A group of up to a dozen candidates is convened outside the work environment for several days and given simulated managerial decision situations such as case studies, participatory roles, and in-service training. The observers may be former managers of the same company who do written evaluations under the supervision of a specialized facilitator, perhaps an industrial psychologist. After a series of interviews and tests, the results are compared to obtain general averages of potentiality for each candidate. When this method is integrated with the company's training and development scheme,it becomes an instrument to save time and cost in the selection of candidates who do not meet the job profiles.
- Method of the Workforce Review Committee
This is a method by which a High Level Committee, made up of the top managers of a company, makes decisions about the career of its officers and executives. The group meets periodically to identify internal managerial talent based on evaluations of performance, work history, and personal skills. The immediate heads of the evaluated officers make annual presentations to the Committee members on each of their high potential employees. This method forces top managers to commit to the development of their officers and executives and avoids the sudden rise of a "crown prince," favored by a leadership.
- Employee analysis
This method contains a wide variety of performance appraisal techniques by immediate superiors under the direction of a managerial development specialist or industrial psychologist. The job performance appraisal system should be based on the concept of goal setting and includes a measure of potential. Common averaging standards apply to all positions at the same level, and senior management reviews those evaluations. Psychological tests may be included in the evaluation. It is essential that analysts have a full understanding of the positions being evaluated.
- Generic evaluation
There are seven basic factors to assess the potential of a "star executive or official", all with the general consensus that this potential is situational, as it depends on the work environment. Therefore, the evaluation must be present. The basic factors are:
Enforceability: The minimum requirement for high potential is to perform well and meet the objectives of the position in every position that you have held throughout your career.
Intelligence and adaptability: Optimal intelligence is measured by the ability to learn and adapt to different situations.
Availability and stability of permanence: The person who remains in the company and executes the tasks with high potential for a long period has a higher value for the company than the one who is predisposed to retire.
Mobility: A person who is located in different positions of the Institution is prone to increase their potential.
Interests and desires: The person who prefers to stay in a specialized area limits his potential.
Supply and demand: Because the potential assessment is an asset valuation, supply and demand will always affect the assessment. Therefore, searching the job market is crucial to forming a potential average for certain skills.
Work history: The best forecast for potential in managerial positions is past work performance in positions of that nature. A full evaluation of that performance is required. Successful people in previous roles may continue that pattern.
Strengthening "star officials"
The successful management of "star officials" is imperative to avoid frustration. The General Manager must build an infrastructure where these officials are encouraged to apply their skills and thus achieve the maximum update on their own. The following measures and conditions can help guide the budding executive on his way to success.
The "star officials" should be identified in their early stages of work careers through an analysis of the human resources portfolio, creating a suitable climate for their rapid but orderly growth. Place them in intensive, well-structured development programs to avoid future vacancies that cannot be filled.
Managers must adopt challenging and clear goals to discover the qualities of "star officials." An organizational philosophy for human resource development must permeate from the CEO to potential executives.
The attention of the general manager is vital to overcome the stagnation of the entrepreneurial qualities in "star officials" Placing them in positions of assisting more experienced managers is invaluable in training these officials
Systematic instruction and development should be done by all means. First, the most seasoned executives should act as mentors to the youth. Second, they should be assigned special jobs that prevent young executives from stagnation while strengthening their knowledge of the organization's vision.
Praise and encouragement are highly effective motivating forces. This can be achieved through informal contacts between young and old executives, in which work experiences related to their careers are visualized. These are occasions for celebration. It is widely accepted that intrinsic rewards are stronger motivators than extrinsic rewards.
The concept of youth managers' meetings and mentoring are useful tools to keep the "star officials" interested.
A future article will discuss managing low-performing employees and maintaining outstandingly accomplished employees.
