Your top performer has resigned. Now what?

It’s Thursday afternoon. Your employee asked you for a personal meeting. You’re thinking it will be a quick update meeting. Not quite. Your star performer is handing in their notice.

This is not how most of us want to end their week. Receiving the resignation from your top performer can leave you feeling frustrated. So many thoughts are running through your mind. Just what are you going to do now?

Accept and learn

Take a deep breath. It may feel like the end of the world. It isn’t.

You may experience the feeling of hurt and disappointment. After working closely with your top performer, you’ve trained and developed them and don’t understand why they didn’t open up earlier about their plans. The employee may have had their reasons for not sharing them with you. Or perhaps they did all along and you just didn’t listen?

For now, simply accept their decision and take some time to reflect on it.

(No) counter offers

You may not be that ready to accept their resignation. You may consider offering them a counter offer, generally involving a higher salary and/or exposure to specific work and responsibilities.

Some companies categorically rule out counter offers. Such organisations see counter-offers only as temporary band aids. After all, you shouldn’t stop a rolling stone.

Unfortunately, history has shown that most employees who accepted a counter offer will still leave for the same reasons that made them look externally in the first place. Next time around, the company will not offer another counter offer and the employee will leave for good.

In contrast, some organisations may provide a counter offer for top performers in critical roles or working on time-sensitive projects. For these companies, a counter offer closes the immediate need and buys them more time to find an alternative, knowing the employee may still resign in a few weeks or months.

Before committing to any counter offer with your star performer, check with your company’s process and DOA. How long will it take to reach a decision, including answering these questions:

  • Do you know what would make your employee stay (higher salary, flexible schedule, a different project)?
  • Will you be able to match the external offer? Do you want to match the external offer?
  • If not, what non-financial offerings (e.g. new customer, new responsibilities) can you provide? How will you sell these?

Learn from exit interviews

“Employee leave for more money” used to the be explanation. Study over study shows that compensation is not one of the top reasons. For many top performers, a number of events is leading to their resignation.

Organise an exit interview and understand the employee’s motivation for leaving. Exit interviews are ideally held on the employee’s last working day or after they’ve left the company. This way, they don’t have to fear any repercussion for providing direct and honest feedback.

For any exit interviews held by HR in person, careful attention has to be paid to non-verbal cues. Assumptions and interpreting what the employee may wish to say can be misleading. More and more companies therefore use online exit interviews which protect the employee’s privacy and allow them to speak freely.

Implications for the team

While an exit, whether voluntary or involuntary, can impact the team, the disruption can be limited. This is an opportunity to review the team’s roles, responsibilities, processes and workflows.

Most teams generally anticipate some additional work while a replacement is being identified. During this time, support for the remaining team is crucial or a domino effect may be expected.

Managers can spend more time with each team member and modify work goals. At the same time, take a genuine interest in each employee and also help them achieve their personal goals. It’s the latter that also increases employee engagement, something in high demand especially during these times of change.

Just as current work arrangements are being reviewed, focus on making knowledge sharing and succession planning integral parts of running your business. Being pro-active now can reduce the impact of future resignations.

Create a succession plan where you identify those employees who could immediately step in, even if it’s only for a specific period, and who needs to be prepared within the next 6 or 12 months or longer. Do you have any employees who could be cross trained to reduce your dependencies on one individual leaving? Decide what specific training and exposure they’ll require and then start getting them ready. Depending on the transparency levels within your organisation, you may wish to inform these employees about your succession plans while also carefully managing their expectations.

The replacement

As you’re considering the current team structure, you may decide that a replacement is no longer needed. Perhaps you place this role on hold, profiting from manpower savings and only revisit the potential recruitment activities in a few weeks or months.

Should you have determined that freezing the vacancy is not an option, start thinking about the requirements on the role and the ideal candidate. It can be a challenge finding the perfect successor for your star performer. By understanding your team’s needs, you can narrow down on the must have skills, knowledge and experience. You’ll be able to recognise desirable abilities and traits as a differentiator between two (or more) equally suitable candidates.

You may choose not to recruit for the replacement externally and select an internal candidate, although their profile may not be a 100% match. Such a decision may be linked to your overall EVP and HR strategy, focusing on growing talent internally and reinforcing your company’s stand on internal career progression. You’ll provide the internal candidate with an individualised learning plan, acknowledging the support and training they require from you to become successful in the new role.

Make for a smooth exit

While notice periods vary from role and level within the organisation, motivation generally declines quickly after giving notice. It’s best to start the hand over as soon as your top employee handed in their resignation. Agree which activities need to be completed or to whom they need to be handed by what date. Obtain log in details and passwords. Decide who will notify customers about the individual’s departure. When will that communication go out and how?

If your star performer is in a sensitive role, you may wish to put them on garden leave. If you decide that, how will you extract their knowledge and manage the hand over?

Some individuals may ask to shorten their notice period. As tempting as it is to hold them to the entire notice period, be honest with yourself: How much will they actively contribute 9, 10 or 11 weeks into their notice?

To keep the experience with your organisation a positive one, consider agreeing on an earlier end date, especially if brought up by the employee.

You can ask them to take any accrued but untaken leave days. This will reduce your financial responsibility to pay out any such days. Although it may be hard for you to appreciate it, you are, however, giving the employee some time to relax, finish working for your organisation on a high note and start their new job fresh. It all adds up to a positive image of your company and the employee being an ambassador for your organisation even when they’ve moved on.

Finally, wish them well. You may not want to throw a big farewell party. Yet, you may wish to give them a card and say good-bye with dignity and respect. Cherish the good memories you, the team and your top performer shared.

Don’t be caught off guard when your top performer leaves. Contact us today and learn how we can reduce your organisation’s dependency on a single employee. Don’t be stuck in a crisis mode. Be prepared.

How to conduct pre-employment checks

For many organisations, finding talented individuals can be challenging. After reviewing hundreds of CVs and conducting interviews, the recruiter is ready to send out the offer. Stop! Take some time out for the pre-employment checks.

What are background checks?

The hiring team may be impressed by the candidate’s performance during the recruitment process. This, however, is no guarantee for future performance. While assessment centres and ability tests are still most reliable indicators, not every organisation has the resources to conduct them.

In days where candidates do what they can to secure that new role, organisations need to feel confident about selecting the most suitable candidate.

Pre-employment checks can then be used to obtain a more rounded picture of the candidate.

Pre-employment checks may include

  • Reference checks
  • Verification of education
  • Social media checks
  • Police clearance and criminal background checks
  • Medical checks.

Organisations contact previous employers, colleagues or business partners to learn more about their preferred candidate. Reference checks are one way to verify the candidate’s professional past.

Colleges, universities or issuers of professional licences can validate the education stated by the candidate. Hopscotch found 93% of recruiters conducting social media checks as part of the pre-employment checks. For certain roles, police clearing may also be required.

Companies should follow a consistent approach to pre-employment checks which are in proportion to the job to be filled.

What can be asked?

The hiring company can choose to verify solely the candidate’s working history, e.g. the title and dates worked with the previous company. Such checks are generally easily completed. Should the previous employer only allow the confirmation of administrative details (e.g. employment dates), the former manager or colleague may be able to provide a personal reference.

These days, however, fewer organisations allow for behavioural and/or skills references. In such cases, the referee generally answers specific questions asked by the recruiter. These questions often resemble questions asked during the interview, for example:

  • Can you describe their job responsibilities?
  • Did you evaluate their performance?
  • What was their biggest accomplishment while working for your company?
  • What was noted as needing improvement during this performance review?
  • How did they get on with other team members or external customers or suppliers?

What is the legal view?

Unlike in other jurisdictions, there is no clear guidance on the nature of reference checks. In Germany, where written references are provided at the end of the employment, nothing negative may be stated. In the UK, references may not conceal facts from the hiring organisation. The only information French companies can provide is around the individual’s professional skills for their potentially new role. It is probably not surprising that different requirements exist for the different states within the US.

UAE-based employees may, however, request an “end of service certificate” from their employees when leaving the organisation. Art. 125 of the UAE labour law of 1980 requires the certificate to include

  • date of appointment and date of termination
  • total period of service
  • nature of work performed
  • the individual’s last pay plus allowances.

Under UAE law, companies may be reluctant to provide additional information, especially if it could be seen as disclosing confidential or proprietary information. Future employers may have to remove questions in their reference checks document to ensure compliance with local legislation.

Unless the company selects a UAE or GCC national, employees will need to be sponsored. Verification of the candidate’s diploma or degree may be required, if these haven’t been attested by the appropriate authorities already.

As pre-employment checks can be time consuming, hiring companies may seek support from verification companies or social media check software.

How to conduct them?

  1. Companies should disclose at the beginning of the recruitment process that pre-employment checks (including social media checks and other checks) will be performed.
  2. Most companies conduct their pre-employment checks prior to issuing an offer. However, some organisations issue a conditional offer requiring the successful passing of any checks and only conduct them afterwards.
  3. The recruiter should obtain the candidate’s permission to conduct reference checks before contacting the provided referees. If in doubt, these referees may need to be verified (e.g. via LinkedIn) prior to emailing or calling them.
  4. Time may be tight for referees. The referee should be able to answer the set of questions within a reasonable timeframe. It may be easier for the referee and faster for the recruiter to conduct the check over the phone than email.
  5. Each referee will need to be asked the same set of questions. Questions need to evolve around the vacancy and the candidate’s professional abilities and competencies for this role.
  6. To avoid any bias, any social media check should only be performed after the interviews with the candidate.
  7. Police clearance or criminal background checks should also be conducted at the end of the recruitment process and only if the role or other requirements demand it.

How to handle the feedback?

Negative feedback may be taken as a red flag. At the same time, it is only one piece of information and should be weighted against the other data points (e.g. interviews, assessment, other references) when making a final decision.

Noticing inconsistencies with previously submitted information (e.g. differences between the candidate’s CV and the referee’s information), the recruiter should clarify this as soon as possible. It could be a typo or a misunderstanding.

During a phone call, this may only require a few additional questions. Once any miscommunication has been ruled out, the recruiter and the candidate may need to discuss them. If the candidate can’t explain the inconsistencies, an organisation may see it as a warning sign.

Overly positive feedback may be too good to be true. In such cases, the recruiter could ask what the candidate could have done better. As most (all) individuals can still develop themselves further, the referee may not disclose everything if nothing comes to their mind.

Pre-employment checks can provide an independent insight into the preferred candidate. They can improve the chances of selecting an individual fit for the role and organisation. At the same time, companies need to remember that they are no guarantee the hire will be successful. They will still need to invest in the individual’s onboarding and induction.

To learn how you can improve your pre-employment checks, contact us today.

Succession planning – What’s the next role?

If your Finance Director has to be hospitalised, do you know who could take over now? Your top sales person just resigned, who in your organisation could to fill this role?

The departure of a key employee can leave an organisation in a state of uncertainty. Succession planning is the answer to reduce such interruptions and provides stability.

What is succession planning?

Succession planning more than a mere replacement planning. It takes a comprehensive and integrated approach to identifying and growing the talent pipeline to “fill business-critical positions in the future”. It identifies the next generation of leaders and has also become a common tool to tackle skills shortages.

As both small and large businesses need to ensure business continuity, succession planning can be seen as a form of risk mitigation. Preparing and developing existing employees for their next internal move can reduce potential disruptions to the daily operations and reduce the financial loss caused by an employee’s departure or unavailability of talent.

Lay the foundation

It’s all about the role. Dave Ulrich reminds us that succession planning doesn’t start with people. “It starts with the requirements of the position.” While some companies focus solely on the top of their house, others go down deeper in their organisation and cover every role. A third approach is to address only business-critical positions. Any organisation will therefore need to decide its very own approach to success planning.

High potential employees vs. all employees. Focusing on high potential employees for succession purposes allows companies to provide very targeted development opportunities. In times where budgets may be limited, this may appear as the appropriate way of making the most of such constraints.

To not be restricted to a small group of employees, most companies consider all employees for their succession planning. This sets the basis for a fair review of previous performance.

Companies need to keep in mind that not all high performing employees also have the potential and/or aspiration for a higher level role. They may, however, be a potential candidate for a lateral move.

Internal vs. external candidates. For some companies, succession planning is closely linked to talent management and only internal candidates will be considered for senior roles. Existing employees are already living the organisation’s culture and values and technical expertise can be taught.

While an external candidate may bring a fresh perspective and new skills, they may not fit into the team, potentially taking the company back to square one.

The individual’s readiness. Organisations need to differentiate the employee’s readiness to take on a new role. This review illustrates the organisation’s internal talent pool and simultaneously the training and preparation requirements for each role.

The immediate readiness would be for emergency covers on a temporary basis or for a start in the new role today. Medium-term readiness could be around 12-18 months while a long-term successor, e.g. for a senior role, may require 3-5 years. It’s been reported that the former CEO of McDonald’s, Jim Skinner, coached and prepared his successor Don Thompson for almost 7 years. The preparation for GE’s current CEO, John L. Flannery, who took over in August 2017, was started in 2012.

Top management support. In a crisis, decision making often concentrates on immediate needs rather than strategic and sustainable solutions. To benefit the most from succession planning, top management needs to own this process and align it to the long-term objectives of the company. Their expertise will also need to be shared as part of the internal coaching and mentoring.

Not having the right talent in house can substantially influence the organisation’s competitiveness, potentially to the point of not being able to stay in business at all. Which company can afford this?

Integrate succession planning with core HR programmes

Insights from the performance discussions. Moving away from the dreaded performance reviews, line managers are urged to give more timely feedback. The continuous conversions provide an opportunity to review an employee’s behaviour, attitude, skills, knowledge, experience and talent (BASKET).

They can further learn about the individual’s career aspirations, although not every employee may have the trust in their line manager to honestly share their ambition.

The more an organisation understands their employees’ BASKET and career goals, the more can this be reflected in the succession planning. Under the traditional approach, an employee may not have been considered for a position while the additional insights also highlighted transferable skills of the individual, making them a suitable candidate.

Identify gaps. Reviewing the requirements for the identified future roles, an employee may have certain BASKET gaps. The regular feedback and the structured performance discussions can be used to reveal these while constructive 360-degree-sessions can be utilised for a more holistic assessment. After all, an employee will not only work with their line manager but a variety of individuals. Based on these gaps, HR can prepare a customised development plan for the employee.

Provide development opportunities. Whether this is by coaching, mentoring, training and special assignments, companies should utilise all development channels and can apply the 70-20-10 model. Here, 70% is linked to experience, for example gained from stretch goals or working on certain assignments or taking the lead for a particular project. 20% of the individual’s development comes from coaching, mentoring and knowledge sharing with others and the remaining 10% from formal training programmes or webinars.

The training and development initiatives for the future role should be integrated into the regular learning activities as arranged by HR and the current department.

If no central training system is used, the company needs to ensure the effective usage of resources. Communication between HR and the current department needs to be smooth to avoid booking the same training course twice.

Regular succession reviews. For smaller organisations, succession planning and performance management may be done on post-it notes stuck on a white board. This works for some.

However, for an organisation that wants to be more efficient, agile and/or grows, a home grown succession and skills database, tied together with performance and training elements, may be more appropriate.

For larger organisations, specific and integrated succession planning modules from vendors like SuccessFactors, Workday or Saba may be more suitable.

Depending on the organisation’s industry, an annual succession planning meeting will not suffice. Review meetings on every 3-6 months may be more appropriate.

Start your succession planning today

Succession planning reinforces an organisation’s commitment to their employees. It shows the company’s investment in employee development and creates career paths upwards and sideways.

Hiring from within the organisation can be a cost-effective recruitment tool. Internal candidates have already proven their cultural fit and can be acquire the missing skills and knowledge through a personalised development plan.

Overall, succession planning prepares an organisation for the unexpected and gives the company stability and sustainability required during disruptive times.

Can your company afford not to implement succession planning? We prepare organisations for the unforeseen by creating customised HR solutions fit for their business now and in the future. Contact us and find out how we can support your company.

Maximise a limit merit budget

For many organisations in this region, the 2018 merit rounds will bring new challenges. As in other parts of the world, merit budgets are limited while employees are experiencing a rise in cost of living. Since 1 January 2018, VAT has been added to most areas of our life. Employees have already asked last year how companies will compensate them for these increases?

Most companies still wait and see what other companies are doing and are planning to provide a merit increase only. Any cost of living increases may follow at a later stage. With budgets already set for many organisation, companies can still be creative and maximise a limited merit budget by using one or a mixture of the following course of action:

  1. Peanut butter approach
  2. Differentiation by performance
  3. Targeted increases
  4. Lump sum awards

The peanut butter approach

The peanut butter style provides the same percentage increase to every employee. It is generally taken by organisations wanting to give an equal increase to cover the employees’ cost of living, especially since the implementation of VAT. While managers are not involved in the process and no additional calibration and approval meetings, the process is reduced substantially. HR and Payroll can implement the new salaries almost instantly, freeing up resources for other projects. However, such increases become a mere cost of living adjustment rather than a merit increase.

Differentiation by performance

Companies may want to support their performance-driven culture by linking it to financial rewards. These organisations provide different increases for the different performance ratings. In general, a low performing employee would receive no increase or only a minimal one. In contrast, the efforts, achievements and behaviours of high or top performers are recognised with merit increases equivalent to 2x or 3x of the budget.

An effective performance management system is a pre-requisite for any pay-for-performance programme. While some companies set a fixed increase for each performance rating, the trend is to enable managers to determine the increase from a range. In the latter case, a realistic timeframe needs to be set for managers to provide their recommendations and calibration before the increases can be communicated to employees and executed by Payroll.

Targeted increases

Similar to differentiated increases by performance, organisations can provide targeted increases for certain employee groups. This could be for critical roles which create value in, for example, improved quality, financial performance or customer satisfaction. They could also be of a strategic impact where roles are linked to the organisation’s capability to maintain and strengthen its position. Other employee groups could include high performances, high potentials, individuals on the succession plan, hard to replace or employees with hot skills or those low in the salary range.

Knowing which roles, skills or individuals should be focused on, HR and management can identify an appropriate merit increase. For simplicity, all increases to the identified groups can be of the same amount (peanut butter approach), yet, such increases may not lead to the desired motivation boost amongst the workforce. Should the company wish to differentiate between these groups, the proposed merit increase can be distinguished based on certain factors, like the contributions made to the organisation and the implications and risks of leaving. This process, however, can easily be over-engineered, leaving to a lengthy planning and implementation period which, at times of a limited merit budget, may be counterproductive.

Lump sum awards

As merit increases not only increase the current salary, they also add costs to other salary-linked elements like bonus, end of service benefits, pension or social security contributions. For companies to control the rising long-term cost implications, lump sum amounts can be paid.

Even here, companies have options around the payout: For all employees or just specific employee groups. A flat amount or varying amounts based on a points system (e.g. for performance or criticality of the role or individual).

Each approach has pros and cons as explained above and HR teams need to their overall objective when identifying the appropriate one (or a blended one) for their business. Linking it to the company’s culture is as important as getting top leadership buy in before communicating the chosen way to management and consequently employees.

When facing financial challenges, companies win by communicating a transparent overview to their employees. It helps to manage employees’ expectations and reiterates the company’s philosophy for success. Line managers need to be supported by HR and be prepared to communicate potentially harder messages to employees not receiving any pay increase.

HR teams together with line managers should also look at non-financial rewards to recognise, motivate and retain while being challenged by a limited merit budget.

Do you want to ensure your limited merit budget achieves the desired outcomes? Are you uncertain about which approach is the right one for your company? Call us on +971-52-2516322 and find out how we can help you maximise your merit budget motivating and engaging your employees.

HR documentation – Why you need to take it seriously

For many companies, February/March is the time when HR teams are supporting management with the reviewing the annual salary adjustments, setting performance goals and identifying actions for low performers. Unfortunately, it’s also the time when HR teams are asked to terminate a low performing employee.

While local legislation provides employers with different options to terminate the employment relationship, companies are open to financial and legal risk if no or insufficient documentation is in place. And yet, HR teams are underestimating the importance of keeping complete and up-to-date personnel files and HR documentation.

Legal requirements. UAE Federal Law No. 8 of 1980 (as amended) or, in short, the Labour Law prescribes content an employer needs to keep in the employee’s personnel file. It’s mainly basic personal information, the salary history as well as any penalties, injuries/vocational diseases and details around the termination. In addition, the employer needs to keep records of 3 different leave types (annual leave, sick leave and other leave). The legal requirements can easily be fulfilled, although there are still HR teams that don’t have these fundamental records in place.

Financial risks. HR teams without proper documentation for the statutory requirements or in case of any disputes expose their company to fines and compensation. Financial fines vary as outlined in the labour law, other laws and statutes.

Dismissed employees may be able to claim for compensation if their termination is perceived arbitrary. To prove the decision was qualified, HR teams needs to present supporting written documents to the court when such a dispute is heard. Verbal presentation of such is not permitted. Should there be no documents, it’s an easier decision for the court to award compensation to the dismissed employee, payable by the former employer.

Legal risks. In addition to the financial risks, the courts may suspend the company’s operations or even imprison the HR Manager if no adequate documentation is available. Previous cases have shown the extend of personal liability of an HR Manager and it’s not worth the risk.

In the case of a disciplinary procedure, the company may issue warnings. The first warnings may be given verbally and, upon repeat of the unacceptable behaviour and/or actions, in writing. By not documenting the verbal warning or filing the written warning in a timely manner, HR teams expose the company when the dispute is brought up to the court. The same risk exists if an internal hearing has been held but the decision has not been communicated to the employee in writing.

Best practices. A number of global companies like IBM and Google have altered their approach to performance management and are moving away from the 2-3 formal discussions per year. Instead, the trend is focus on forward-looking skills improvements and immediate feedback. Although these companies may no longer demand lengthy evaluation reports, they still require managers to document the “feedback chats” in a short, yet, precise paragraph, often entered into an electronic performance management system or sent to a specific email. Who remembers what feedback they’d given to one of their 8 direct reports 7 months ago?

Companies are also spending substantial amounts on increasing their HR services and reducing delivery times through cloud-based systems like SuccessFactors and Workday, which support the HR team’s e-filing efforts. While not every organisation has the budget or the need for such a system, HR teams need to identify the following for their record keeping:

  • What are you documenting? Besides legal requirements, consider performance, rewards and recognition, job changes, learning and development plans and outcomes, violations and warnings.
  • How are you documenting? It should be factual, non-judgmental, objective and fit for purpose. Don’t forget to date and sign it.
  • Where are you storing the documents? Consider whether it needs to be in paper-based personnel file or can be stored electronically, on company premises or in a secure offsite location.
  • When are you documenting? Consider not only when you are creating the actual document (e.g. timely to the actual event) but also whether you’re filing electronic documents immediately or batch file paper documents on a daily basis.

Do you want to improve your documentation standards and procedure, be compliant with the labour law and save valuable time? Call us on +971-50-5516322 and learn how an efficient process can reduce your risk of being exposed to financial and legal risks.