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Psychometric Assessment – important business tools that improve the recruitment process

Wednesday, December 17th, 2014

Exanple Psychometric Assessment ReportNew research conducted by The OPG (The Occupational Psychology Group) underlines the importance of using psychometric assessment in the recruitment process.

Thank you to all of you who responded to the recent research questionnaire about psychometric assessment that we helped conduct. The sample chosen was not just based on our client list, but on our wider database of organisations and in this way we have chosen not just known assessment users but a very wide cross section of HR professionals from across the UK.

The research raised some interesting facts, details of which we will be including in the final report. However, what is most clear is the extent to which psychometric assessment is increasingly being seen as a valuable business tool that organisations use to improve their decision making as part of their recruitment and development projects.

68% of respondents use psychometric assessment in their recruitment process

The overwhelming majority of organisations surveyed said that they have used psychometric assessment (68%) whereas only 32% have not. Moreover, most of the 68% expect to use psychometric assessment again in the coming months due to their effectiveness reliability and validity in the workplace setting. This finding is very much in line with other independent research studies into psychometric use.

High reliability and validity

In the main, the reasons for the continued use of psychometric assessment is that they are perceived as being reliable (90% of respondents) and that they work and help in successful decision making. This is especially true if they are used as part of a wider process, as opposed to being the sole aid. We always recommend feedback is combined with panel interviews and professional feedback since areas for further probing are often identified from the psychometric assessment results.

Delivered online

The vast majority of respondents use at least some online psychometric assessment. However for the 46% of organisations that use psychometrics as part of assessment and development centres, significant use is still made of face to face format with in depth feedback.

Start the year with the new cutting edge report on psychometric assessment that will give your recruitment process the best start in 2015. Register your interest by clicking the banner below to receive the report in January before it is published on the Ramsey Hall website in February.

Register Interest for the Psychometric Assessment Research Report

Improving Board Effectiveness

Friday, October 24th, 2014

As boardroom performance is increasingly being assessed and scrutinised it is even more important to make sure that the board is effective and pulling the organisation in the right direction.

It is always important for the Board to lead the organisation forward with an effective strategy and respond to market changes in an appropriate way that makes as little disruption as possible.

Boards need to constantly handle change, inside and out of the organisation. And this is the reason why it is fundamental to know how to deal with that change.

This guide takes a comprehensive look at the following:

1. Identifying disruptive decision making
2. Making changes that lead the organisation forward
3. Dealing with change effectively
4. Constructing a Board that pulls in the same direction
5. Easing changes in to a Boardroom

 

Improving Board Effectiveness - Download the Guide


The 7 Stages of an Effective Recruitment Process

Wednesday, September 10th, 2014

Dominos Dice, lined up to fall - follow these stages of recruitment to set up your organisation for successAs we noted last month research from accountant BDO shows hiring intentions to be at a generational high. Skills shortages, or ‘The War for Talent’ as Mckinsey Consultants famously said, is once again a reality.

Whilst many organisations have found recruitment to be easier in the past few years, a growing number of clients are now reporting major hiring difficulties. “DIY” online advertising, contingent agencies and LinkedIn simply fail to attract the best candidates especially when used in isolation.

Extensive research has shown that selective recruitment is a key contributor to organisational performance, and that taking short cuts at the hiring stage can be a really major mistake, particularly for business critical hires. When Ramsey Hall recruits we always follow the following recruitment process as it is proven to reduce staff churn from an industry average of around 28% in year one to about 2%.

1. Establish a Detailed Brief (Job Profile)

Clarity around role and responsibilities is critical to a successful hire. Often we are asked to advise clients on the job design so that the specification addresses all issues effectively.

 

2. Select an Effective Sourcing Strategy

Choose a sourcing strategy that is cost effective but also likely to yield results. At senior level this normally includes head-hunting to attract passive candidates. As head-hunters we really know our market and can attract candidates who might otherwise be missed.

 

3. Pre-screen Candidates Effectively

Interviewing inappropriate candidates or missing promising applications costs time and money. We recommend an analysis against the brief is the best method.

 

4. Create Objective External and Internal Recruitment Processes

For business critical roles treat internal candidates the same as external applicants and compare them against one another using the same process. This increases the objectivity and decreases bias to the recruitment process so as to keep your options as open as possible.

 

5. Conduct a Panel Interview

Research shows that one on one interviews are unreliable because of bias concerns such as ‘halo and horns effect’ and the notorious ‘gut feel’ approach which wrecks many a recruitment.

 

6. Psychometric Test Candidates

Tools from recognised quality publishers such as CEB/SHL, Hogan, OPP and Saville are excellent predictors of future success when used appropriately. Avoid tools which do not require British Psychological Society level 1 and 2 accreditation. These may lead to an increased risk of results being invalid which may inform you inappropriately.

We also recommend personality profiling is combined with ability testing so that ‘triangulated’ results are available. We can provide triangulated assessment as a standalone service in addition to our other selection consulting activities.

 

7. Use ALL the Evidence to Evaluate Each Candidate Before You Hire.

No one source of data is enough, a good interview has a low correlation with success, psychometrics alone are a somewhat better but a combination of indicators can be really powerful.

 

Expanding Your Choice of Candidates

Lots of organisations make the mistake of having a limited and ineffective resourcing method to get top candidates. This results in a lack of candidate variety which can limit your choices as well as role expansion. An ineffective recruitment process yields second rate results for roles you cannot afford to have second choice candidates. With a little over 15 hiring weeks to Christmas and an average notice period of three months, what are you doing to get ready for the New Year recruitment rush?

photo credit: marfis75cc

Phil Boyle - Managing Director of Ramsey Hall

Phil Boyle is one of the most experienced Executive Recruiters in the UK. He is Managing Director of Ramsey Hall Ltd that is a highly respected and long-established boutique Talent Management Consultancy. It is an SHL Enterprise Partner and amongst the most experienced users of the Hogan series tests. Ramsey Hall also has extensive experience in Board Advisory and Recruitment Process Design amongst other HR services.

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executive recruitment from ramsey hall

 

How to Create and Implement an Effective Performance Management System

Thursday, August 7th, 2014

Performance management lights the way to better managing processes

An issue that often isn’t grasped by organisations is the one of performance management. Too often, those in the organisation that fail to perform adequately, are seen to be seemingly ignored by management. Their poor performance is allowed to continue. They are often “carried” by the rest of their team, or worse, moved into roles that are undemanding or even specially organised for them.

This can seriously affect the morale of a team, as “carrying” an individual usually means extra work for others and generally, poisons the workplace. When working in unionised environments, I’ve been asked on occasion by union representatives, why a colleague (usually a union member), hasn’t been dealt with by weak middle management.

I’ve heard the performance management system in one large company described by the HR Director as the “bedrock” on which the company is built.  In a large corporate structure there is usually an HR system that deals with staff performance which means that it’s difficult for poor performers to remain invisible for long. Moving leadership around so that appraisals are not always by the same person or individuals being placed in integrated project teams, usually shows up poor performance. A person who may be “flavour of the month” for one manager may not be seen as that by another.

What Does an Effective Performance Management System do for an Organisation?

A well run appraisal system, which is reviewed by HR and senior managers, gives an indication of something being amiss. If this happens there are well documented processes and procedures for managers to use that should produce the necessary corrective actions to improve performance. Sometimes managers are encouraged to discuss the results of their appraisals with their peers in the team so that ratings can be “challenged”. This certainly encourages consistency. In the end the performance management system is seen as a mechanism to recognise areas where staff may need some training or development, or even that that person may have skills that are best suited in another role, even one that is of lesser status. Sometimes this is evaluated using a “capability” policy where the skills suitability of the individual are evaluated against the job. It’s only when these options are exhausted that the process may move into a disciplinary scenario.

a mechanism to recognise areas where staff may need some training or development

In the not for profit and perhaps more so in the public sector, there is a perception, probably an unfair one, that poor performance isn’t dealt with. This may be due to rigid procedures that stifle action being taken. Even worse, this can benefit those that are ” time served” and thus expensive to deal with if any decision is made that they have to leave.

However, in smaller organisations this can be compounded. There isn’t the flexibility to move people around and sometimes a weak leader has a poor performer in their team and is reluctant, doesn’t have the necessary training or is unprepared or unwilling to deal with it. They may also not have the backing of an HR professional in the company or retained HR expertise of any kind. The worry of the costs of confrontation or worse, an expensive employment tribunal, also weighs heavily in the minds of the business leaders. There is a fear that if the issue is addressed, something will go wrong, so in the end nothing is done.

In family businesses this can be exacerbated by the values exhibited by the owner. The spirit of patronage that so often benefits an owner managed business and is usually well meaning, can sometimes be misguided and protect those that really aren’t adding anything to the business. The poor performing employee being part of an extended “family” makes it all the more difficult.

Putting a Performance Management System in to Practice

To evaluate how a small to medium sized business can implement a performance management system I spoke to Jill Nieuwoudt, HR Director at Naim Audio. Naim Audio is an advanced manufacturing business in the consumer electronics sector, employing around 180 staff designing and manufacturing high end audio equipment for a serious hi-fi clientèle.

When Jill first joined the business 2 ½ years ago her first task in the new role of HR Director was to create and establish the correct procedures and policies within the company to ensure compliance. She soon realised that in order to meet an ambitious five year growth plan there would have to be an HR strategy that encompassed a thorough implementation of performance management and a new HR system to make it happen.

managers would be empowered to deliver it but with appropriate HR support when neededOnce the groundwork was done in creating the new HR system, all staff were given new contracts of employment and a staff handbook, essentially Naim were starting again from scratch. Alongside this there was a communication programme, which involved open workshops all held in a transparent and open way. Jill also met all of the then 120 staff individually to allay their fears but also to create an awareness of what was going to be required. She set out a stall that things would be very different but tried very hard to retain the culture of the organisation, recognising that as the reason why most of the staff worked there.

Once the policies and procedures were in place, Jill also then went through a process to get management and particularly middle management to begin to own the process. The aim was for it not to be an “HR project” rather the managers would be empowered to deliver it but with appropriate HR support when needed. Jill wanted to work on FOG, (Fact rather than Opinion or Guess) a key part of the management development was to get managers to see that HR issues were not personal but that they were a business process and needed to be managed accordingly. All staff are appraised at least yearly and new starters at the end of their 3 month probation period. HR now monitor all appraisals and sometimes sit in and support managers who are struggling.

Employees on the shop floor are measured according to outputs and “right first time” performance. Those having problems are monitored and given appropriate training and support to rectify the situation, this is monitored for a month. Supervisory staff receive SMART (Specific, Measurable, Achievable, Relevant, Timely) objectives and are measured against them.

One thing Jill is very keen to point out is that performance management is not the same as a disciplinary process and shouldn’t be confused as such. Disciplinary issues such as timekeeping and attendance should be dealt with through the disciplinary process.

It’s interesting to point out that of the 19 staff that have been through the performance management system process at Naim in the last 2 ½ years, only one has left the company. From this result one can see that although it takes time and effort to establish to do and provide the necessary management support and training to make it happen, the results in the end are surely worthwhile. The achievement of getting 18 people “back on track” is truly worthwhile and a very impressive result.

photo credit: andresfranco.netcc

David Seall - Chairmen of the Board of Practice for Ramsey Hall

David Seall is well known to many businesses across London and the South East as an Independent Director and Chartered Engineer specialising in the Manufacturing and Engineering sectors. David worked for many years in the Aerospace and Defence industry and was Chief Executive of the Engineering Employers Federation for London and the South East (EEF South) for over 10 years, working with hundreds of companies.

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Read more about how Ramsey hall can improve the performance of your boards

 

How to Assess & Improve Your Board’s Performance (Part 2 – A Board That Pulls in the Same Direction)

Wednesday, July 23rd, 2014

In the second part of my discussion about the performing Board I want to discuss the activities of dealing with initial change.

Earlier this month I published the first part of this discussion which identified how boards can make decision that causes minimal disruption and encourages a culture that encourages and motivates the whole organisation.

It’s important that the Board is a mixture of complimentary behaviours, management styles and finally expertise. A diverse team held together by agreed values is the most effective one to have.

One where honest debate is encouraged and programmes and actions collectively agreed and then implemented. Most importantly this Board must have the ability to think strategically and be agile enough to make reasoned tactical decisions.

It’s probably a utopian view, which rarely happens all of the time, but we have all at some time or another been working within a team that is constantly moving forward and everyone is pulling together.

 

board room assessment is an essential part to improving your boards performance

 

Constructing A Board That Pulls In The Same Direction

Putting a Board that can work in this way together requires a methodical approach. An assessment of the Board both in Executive and Non-Executive functions should be undertaken to avoid an ad-hoc approach that may have to be repeated at another date with all of the problems that that entails.

Perhaps the first thing to recognise is that not all of the current incumbents will be the right people for the future. It’s important not to personalise this as nearly all people who may not be right for one team can be the ideal fit with another.

That’s why it’s important when the Business Leaders have recognised this, that those no longer part of the company’s future are helped with structured programmes such as outplacement to get them on the correct career path. So many businesses forget this or reluctantly agree as part of a settlement. It’s actually a sound investment as it protects the reputation of the business and may even create business opportunities at a later date.

Easing The Changes Into The Boardroom

One problem that often occurs is that more than one person on the executive team needs to be replaced. Many Chairmen and NEDs take the “easy” option of doing this in a sequential manner saying “so and so can leave now but we need to wait six months before we can make any other changes so as not to disrupt the business”.

Unsurprisingly this usually doesn’t help things at all as the whole executive team remains unsettled knowing that further changes are inevitably in the pipeline. Strategic initiatives are put on hold and of course underperforming executives remain in situ. A radical solution would be being honest and up front with executives and engage with them in the process. Rather than suddenly exiting them from the business, work in a “grown up” way for them to work out a programmed notice period to help with continuity and give them time and help to find their next position or career choice. Not only is there less risk with this option it also is seen as more humane and respectful and reduces the “collateral damage” caused to other employees and customers.

By exiting executives over a long time period there’s also a great opportunity to get a “handover” to the new executive and phase the outgoing executives commitment out over a period of time so as not to leave a continuity gap. In my next article I will discuss how to get the right fit and build a team dynamic that creates a performing Board.

photo credit: JasonParis cc

David Seall - Chairmen of the Board of Practice for Ramsey Hall

David Seall is well known to many businesses across London and the South East as an Independent Director and Chartered Engineer specialising in the Manufacturing and Engineering sectors. David worked for many years in the Aerospace and Defence industry and was Chief Executive of the Engineering Employers Federation for London and the South East (EEF South) for over 10 years, working with hundreds of companies.

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Read more about how Ramsey hall can improve the performance of your boards

 

How to Assess & Improve Your Board’s Performance

Thursday, July 10th, 2014

I read recently a quote that stated “people don’t leave organisations they leave bad bosses”, well perhaps that’s not true for all cases but it must hold water for a fair proportion of them.

At least it may be a reason that employees start looking for alternative employment. It may be that the employee doesn’t like their line manager’s style or probably they have a problem with the leadership of the organisation.

Disruptive Decision Making

It’s been proven that most people exhibit the symptoms of stress when they feel they have no control over their daily or working lives. Thus, although business leaders often suffer from stress or burn out, it’s most often found in the lower tiers of the organisation. We’ve all seen or even been party to decisions that seem quite logical or sensible in the Boardroom that then cause distress and chaos when introduced within the company. So it’s very important that the leadership of an organisation is seen to be doing the right things and to be working together as a team. Nothing causes more damage than disunity and lack of confidence within the leadership team. That includes both executives AND non-executive functions.

discover about how to increase your Board's performance whilst sustaining a company culture that drives your organisation forward

 

Leading The Organisation Forward

It’s essential that the Chairman and Chief Executive, or business owner in a private business, create and nurture a team that can take the business forward or indeed manage successfully in tough times. Touching upon that, it’s also important to have the right people in the right place during the various stages of the economic cycle. Particularly in a private business it’s imperative the owner doesn’t recruit in their own image or exhibit behaviours that discourage direct reports from challenging them. Part of this is valuing diversity within the management team.

It’s still appalling how few women take their rightful place on the Board particularly in the manufacturing and engineering sectors. It’s also important that the team has created a business strategy that all colleagues can buy into and understand what they have to do to make it happen. It’s also important that the leadership agree a set of values to underpin the behaviours they want the organisation to stand for and, crucially, they are seen to live and breathe those values in everything they do.

The second part of this discussion  focuses on how a boardroom can deal with change to prevent as little disruption within the organisation as possible.

photo credit: Tyler Merbler cc

David Seall - Chairmen of the Board of Practice for Ramsey Hall

David Seall is well known to many businesses across London and the South East as an Independent Director and Chartered Engineer specialising in the Manufacturing and Engineering sectors. David worked for many years in the Aerospace and Defence industry and was Chief Executive of the Engineering Employers Federation for London and the South East (EEF South) for over 10 years, working with hundreds of companies.

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Read more about how Ramsey hall can improve the performance of your boards

 

How to Reduce the Risk of Future Failure by Using Effective Succession Planning

Thursday, June 26th, 2014

When succession planning it is important to choose a successor that fits well within the organisationThe recent debacle at Manchester United shows how important the need for succession planning is. The decision to allow Sir Alex Ferguson to anoint his “chosen one” successor, David Moyes in the role without a full and open recruitment process did not prove to be a success. Obviously there were other mitigating factors contributing to the failure but it does look from the outside that perhaps the wrong person was chosen.

Those with longer footballing memories will remember the debacle of Brian Clough’s forty four day tenure at Leeds Utd when he replaced Don Revie (who in turn was not an amazing success in the England job!). It was clear now that there was a colossal clash of cultures with Clough going to Elland Road, so just choosing the then most successful manager, to run the then most successful club wasn’t as obvious decision as it appeared at the time. In fact Leeds lost their position of dominance as a result.

So it’s clear that either handing succession planning to the current incumbent or just grabbing what you think is the best candidate out there without a considered approach is probably not the best idea.

How to Choose the Right Person to Succeed You

Interestingly most organisations don’t succession plan very well. This probably goes back to the fact that many don’t do thorough risk management. Within a process of evaluating risks the issue of what happens to key staff should loom large. The chance of this happening, the effect of it, plus the proposed solution and who is responsible for carrying it out is essential as part of the risk management process.

This risk management is essential both in owner managed “family” businesses and particularly charities, where all too often the Director of Chief Executive leaves and the Chair is left holding the baby after the notice period has been served and before a new incumbent can be found. This places even more pressure on the recruitment process and the temptation to “cut corners”. In a family business it’s key to be developing family members over a long period of time so that they can build up the knowledge and experience to be a success in the roles they and the owner would want them to do. It’s also essential that they are supported by the right cadre of senior staff to make their appointment a success.

Risk management should be part of the “Management Review” system that is built into the processes and procedures that determine the operation of the enterprise.

So the key to start with in succession planning must be to have evaluated the risks to the enterprise of key staff leaving and have a plan in place both temporary and long term to manage it. Both the Chair and The Chief Executive should discuss this at regular intervals to determine strategy.

When a key member of staff leaves it’s not always straightforward that the individual is replaced by a “clone”. It could be an opportunity to change the management structure or bring in someone with a different set of skills and approaches that will help develop the enterprise strategically. Aligning the recruitment to strategic direction is key. “Buggins’ turn” or promoting from within or grabbing someone quickly from outside will not do.

The 9 Keys to Effective Succession Planning

1.   Have key staff positions as an integral part of the risk management process

2.   Evaluate and quantify the risks of losing key staff

3.   Have a plan in place to deal with those risks that is in alignment with the strategy of the enterprise

4.   Structure times to regularly review the plan

5.   If it happens take the time and effort to manage the recruitment (or promotion) process properly

6.   Make sure that the definition of the role and the experience and personality of the person to do that role aligns with the strategy

7.   Use external help or opinion to test and evaluate your thoughts and approach

8.   Consider restructuring your team as part of the process. A person leaving can be an opportunity not only a threat.

9.   Make sure that the person recruited fits the dynamic of the team and the way you want the team to develop.

 

image via toddwshaffer

Read more about Succession Planning in our white paper which explains what organisations can do to help implement a plan.

 

Download our succession planning white paper

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David Seall - Chairmen of the Board of Practice for Ramsey Hall

David Seall is well known to many businesses across London and the South East as an Independent Director and Chartered Engineer specialising in the Manufacturing and Engineering sectors. David worked for many years in the Aerospace and Defence industry and was Chief Executive of the Engineering Employers Federation for London and the South East (EEF South) for over 10 years, working with hundreds of companies.


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How to compete in the “War on Talent” when Unemployment Rate is low

Tuesday, May 20th, 2014

UK unemployment Rate & The War on Talent

A lack of people and a high demand for talent is not what any business wants to see; however this is happening as we speak to thousands of organisations everywhere. This is when most organisations realise that they really are only as good as their people, yet many do not invest the necessary resource that is needed in their recruitment, selection and assessment activities.

Being confident your candidates are capable

Our team has been asked by many clients to design recruitment processes which attract high-quality candidates, cost effectively and which minimise the risk of costly recruitment errors.  It is a demonstrable fact that when analysed using longitudinal validation studies, interviews alone lack recruitment reliability and validity.

By far the most effective methodology is to combine a panel interview approach with a range of objective online assessments such as Hogan or OPQ using both personality and ability tests.  This gives you an opportunity to look beyond the CV or application form to a more comprehensive understanding of the candidate’s potential and not just their past attainment.

Attracting scarce or in demand skills

Too often organisations are trying to cut recruitment costs assuming good recruitment is easy and just a commodity service.  The reality is that good recruitment will make or break your organisation. A good executive search consultant is not a recruitment agent; they do not sell you candidates.  Instead, they are highly qualified professionals who offer real advice around the role design, package to offer and they then provide an appropriate shortlist.  They are not “CV shufflers” but consulting experts.

A good executive search firm or ‘head hunter’ are able to locate candidates using every method possible so that a high quality shortlist is obtained.  They will also include any internal candidates in the process so that a benchmark may be established.

Often candidates may be located oversees so a good executive search firm will also have a global network, in our case INAC.

Selection

Using objective personality assessment such as Hogan or other established tools which may be supported by more in depth panel ability testing is vital. This may also be supported by further in depth ability testing as appropriate and best practice interviewing to ensure that the candidate chosen to fit the role is right for your organisation.

A critical activity and not an admin function

For critical hires organisations need to see recruitment as a ‘value added’ activity which can help build high performance through selective recruitment. Be aware of the “CV shufflers” and low end administrative recruiters who devalue the process.

Good selection practices are proven to help build business performance particularly when implemented in conjunction with other ‘people’ practices.

In summary

  • Use a variety of methods when vetting candidates through the selection stage
  • Benchmark candidates, throughout the search process
  • Use the right tools & people to get the shortlist that you want e.g. psychometric testing
  • Make sure you identify what skill set & personality you want to fill the role, pre selection
  • Don’t get “sold” by potential candidates, make sure they fit within your organisation and that you are happy with them

 

When it comes to helping you make the best recruitment or promotion decisions few organisations can match Ramsey Hall’s breath of expertise or experience.

We provide the following services:

  • Executive Search & Selection includes assessment with each short listed candidate.  Our global reach in complimented by our global network membership of INAC
  • Psychometric assessment carried out online or as part of an assessment level for all recruitment levels usually using SHL or Hogan tools and deployment decisions
  • Capability assessment and executive assessment for ‘in house’ recruitment and development decisions

If you would like any further information on any of the above why not call us on 023 8023 6944 or
020 7288 2444 or 016 1848 0048 for a chat.

Matthew Davis is a Chartered FCIPD and Chartered Marketer FCIM qualified HR/Human Capital consulting professional

Matthew Davis is a Chartered FCIPD and Chartered Marketer FCIM qualified HR/Human Capital consulting professional. Experienced in most aspects of resourcing, business psychology, performance management and organisational development consulting as well as team leadership and budgetary management.
 

 

Thanks to kevin dooley via photopin cc for the image


Ramsey Hall’s Weekly Round Up (9 May 2014)

Friday, May 9th, 2014

A car being manufactured

Here for you is a weekly round up of Talent Management and Human Resource related articles on the web including: news, blogs, advice, tips and more.

Industry News

Automotive sector enjoys popularity surge in the UK

As technology is advancing at such a fast rate, the automotive sector has had to accelerate innovation in order to keep up making it an attractive area to work in.

Growth markets are changing in the Consumer segment

Due to an increase in consumer confidence we are now seeing the light at the end of the very long tunnel that was the recession.

Interesting Articles

Why 85% of Employees are Ready to Leave

Retaining employees for your organisation is very important, not only to give you you the competitive edge but also to retain valuable skills and employee loyalty.

Six Differences Between Customer-Focused Companies and Operations-Focused Companies

Being customer focused as an organisation can bring you a lot of benefits, if you’re not there may be a lot you can learn to give you that edge in retaining your customers and growing your market?

Advice and Tips

Seven Ways to Give Better Performance Reviews

Do you know how to give a good performance review? For many employees this can be scary phrase that they can dread so it’s important that you make them as effective as possible.

 

 

Come back next week for more Human Resource and Talent management related content from around the web.

Did you find anything in the world of HR or Talent Management on the web? Comment with them below.

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What Manufacturing and Engineering Businesses Can Learn from the Service Sector

Tuesday, April 15th, 2014

The service sector has a lot to teach the manufacturing and engineering businesses

It’s been interesting for me over the last four years to see how my career has continuously intertwined with the service sector.

It’s surprising how often the deep divide is between manufacturing and service although I do see some companies bridging that divide.

Some enlightened manufacturers have realized that they can add value, and significant margin, by offering more services to their customers as opposed to just simply delivering the product.

Some have added through life support, some the ancillary supply of consumable materials. Others have cone the whole way and amortised the delivery and servicing of their products so that the customer pays for the product on a usage or “annuity” basis.

The key thing manufacturers can learn from service businesses is that most service companies deliver what is essentially a commodity service. Think of lawyers and accountants doing their daily work. The customer has a multitude of options and there’s little IP to differentiate anyone.

The service company frequently has to ask itself “why me?’ why would a customer choose me over my competitor? This creates an essential tension that makes a service company work harder to retain customers or to win new ones.

One often sees service companies looking at different delivery and pricing models, models that improve the customer experience.

I often see service companies attending events to learn from what’s going on in the real world and forge relationships that could benefit their business in the future, either by partnering or even acquisition. Service businesses seem more than happy to share business prospects and customers too if this adds value to their customer. The term “networking” is often overused and abused but many individuals in service companies have significant networks to hand which they can use to grow business or help their customers by referral. They realize that they must get out of the business as often as possible to be able to learn and to grow. This is often outside of “normal” working day.

In contrast some manufacturers seem unconcerned with what’s happening outside of their key relationships with customers or the daily machinations of producing products on time. I know from personal experience that life on the shop floor can be all consuming and it’s tough to find time to take opportunities outside.

In the end the businesses that are introspective will lose out to the enlightened ones that have embraced the approach used in the service sector and correspondingly have achieved greater and faster business growth.

 

What other industries do you think can learn from the service sector? Reply by commenting on this post below.

Make sure to follow Ramsey Hall on LinkedIn to discover how you get the best from your people

David Seall - Chairmen of the Board of Practice for Ramsey Hall

David Seall is well known to many businesses across London and the South East as an Independent Director and Chartered Engineer specialising in the Manufacturing and Engineering sectors. David worked for many years in the Aerospace and Defence industry and was Chief Executive of the Engineering Employers Federation for London and the South East (EEF South) for over 10 years, working with hundreds of companies.

 

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