Current Resources: Introduction and Basic Factors Driving Growth, Profit and Competitive Distinctiveness through Organizational Health What Is the Human Factor Contribution? The Human Factor Contribution or HFC is a fresh way to describe a special combination of managerial beliefs, practices and tools that all focus on building a healthy organizational culture which drives performance, efficiency, effectiveness and morale. Fresh research and stunning examples of the HFC in practice in real businesses like yours challenge many of the traditional approaches to good management. HFC is a challenging road to explore as it may clash with the owners and manager's view of what proper management is. It requires owners and managers to face their own demons and anxieties and blind spots in order to create a work environment that releases, drives and focuses the heart and energy of their employees. HFC focuses on values and how they can shape culture. HFC requires a clarity of purpose and direction that suffuses the business. HFC incorporates the power of open book management. We have touched on these ideas with Small Giants, Firms of Endearment, Cults of Brands, Frist, Breaking the Rules and the Great Game of business. What we have not done is integrate these resources and fine tuned them for your business and then help you install them and develop them for the benefit of your success. REX believes that in a competitive or even hyper competitive marketplace the HFC can become a powerful competitive advantage that is not easily copied. Why Human Factors? Your business success depends on your organization being smart and being healthy. Patrick Lencioni, the key note speaker at IHRSA 2011 says being smart means you are knowledgeable about marketing, sales, numbers, personnel, operations and make good decisions in these areas. This is the traditional business school curriculum. Hardnosed, practical and focused on results. A healthy organization has meaningful and transformative organizational culture. The acronym TACTILE (Trust, Authenticity, Caring, Transparency, Integrity, Learning and Empowerment) is used to describe the culture of a Conscious Business by Raj Sisodia. REX believes that the way for you to deliver distinctive and engaging customer service, the way for you to drive innovation and profits, the way to recruit and keep the very best staff ALL DEPEND ON THE CULTURE THE LEADER(S) SUPPORT. It is so critical, and so challenging to design and build a TACTILE culture that REX is focusing on this topic throughout 2011. Since choosing my career as a management consultant some forty years ago, I have sensed a huge opportunity for businesses to explore a new business model, especially service businesses, which invariably adopted the manufacturing model to a service environment. This leads to what Len Schlesinger and James Heskitt of the Harvard Business School have called the Cycle of Service Failure. They point out that service businesses do not have the inherent leverage of a manufacturing business model with its dramatically higher margins. Thus service businesses, where labor is the largest cost, end up economizing here and undermining the service. Even if service businesses spent lots more on labor, they would not break through, because in using a manufacturing model of labor, the service industry creates its own problems which cannot be solved. It is like driving your car engine faster and faster with our switching to a higher gear. You burn huge amounts of energy, and only go a little faster and never reach top speed. Patrick Lencioni (introduced to REX groups in 2000) articulates this: 'Traditional management principles-regarded as virtually sacrosanct-simply do not do the job well enough. All too often, by focusing intensely on such things as marketing, sales, strict personnel policies, and the bottom line, companies end up with employees who are miserable and unimpressive financial results.' There is a distinct disconnect between most people's personal lives where they enjoy a relative amount of freedom and satisfaction and their professional lives , where, constrained by politics, rules, regulations, conflicting egos, and management's expectations, they feel out of place and unhappy. Real success is more about hiring and retaining good people than it is about business management. These statements are anathema to the hardnosed business owner. Yet we are seeing emerging evidence that supports the human talent view. In 1999 REX groups were introduced to the twelve questions in First, Break The Rules by Marcus Buckingham and Curt Coffman. This may be the most extensive research on good management ever conducted. The result stated quite simply that the highest productivity and the highest morale came from how managers treated their staff. Not training, not accountability, not job descriptions, not performance reviews, but rather clarity of expectations, recognition, care and having a best friend at work. Lots of soft stuff. Several years later this work is combined with customer loyalty research into a magnum opus on 21st century management Human Sigma, which elucidates how to select, train and coach your staff to maximum performance while simultaneously engaging your customers at the highest level (highest retention). Although REX introduced this work to all its members over three years ago, only one a health club owner has had the courage to seriously use this model to great effect. (A presentation on this will be made at the REX All Roundtable Conference on March 15 in San Francisco.) Bo Burlingham's insightful book Small Giants: Companies that Choose to Be GREAT Instead of Big clearly reports on the practical benefits of leading a business where human talent is nurtured along with community commitment. And finally we have the research of Raj Sisodia in Firms of Endearment where businesses take their customers to heart and end up outperforming the Great Businesses in Jim Collins Good to Great by three times. This soft management approach drives huge profitability, it seems. Why Focus? The natural agenda that a REX group zeros in on is largely operational, tactical and short term focused. This is the result of how our human brains are constructed. We give more importance to what is most immediate. See the REX Briefing on Procrastination to learn how our natural, short term focus leads to procrastination and how this undermines customer retention and weight loss and all self improvement. A study of Fortune 500 executives revealed that on average they only spend 2-3 hours a month on strategic issues. This is a bit like driving by looking out the side window instead of the wind shield. Unless a conscious focus is made on longer term, more strategic issues they will slip by you. The beauty of a strategic focus is that losing a pound a week can drop your weight fifty or a hundred pounds. The same is true for your business. Small persistent changes guided by a long term strategy can transform your business. Your REX group is the most likely process that gets you thinking strategically and keeps you on the diet! Invariably mature REX groups report great benefit from longer, deeper dialogues on important topics than rushing through two dozen operational issues. What We at REX believe it is our responsibility to bring its members break throughs, especially from other industries. Human Talent will be a focus of each REX meeting in 2011. We are compiling a bibliography of research, assessments to help you focus, tools and methods to implement the various components of this powerful strategy. Your REX Chair will share these with you before and during each REX meeting in 2011. Desired Result First, to open your minds to the productive payoffs in radically different ways of hiring, and managing all your people. Second, to help you focus on the areas of greatest payoff for your business. Third, to support changes in your business in the ways you address human talent so that deep benefits are produced for your business, your staff and your customers. HFC Support Materials Reading Materials have been selected for the whole year. An annotated list is available. There is more here than many of you can consume in a year of reading so we are indicating a set of core readings, searching out audio versions that you can listen to in your car or while falling asleep in bed or while working out! In addition REX is preparing summaries of most of the materials. A set of Management Meccas is prepared for you to visit. These are organizations like Zappos, or Nicks or Gainesville Health and Fitness who are on the path of implementing HFC successfully. Visiting for a day or two or more is a way to learn about HFC directly and practically. REX will work to enable meetings at these sites. Assessments to help you identify areas of improvement and progress are being designed and modified for your use. Discussions will be formulated on key issues for your REX group to grapple with and explore to help you deepen your understanding of HFC Accountability will be a part of this year long focus where each REX member will be encouraged to work on installing appropriate HFC elements in their business. Progress and problems will be tracked at each REX meeting.