Mel Kleiman - Maximizing the Performance of Hourly Workforces

Steve

Hi, this is Steve Hunt with People Performance Radio. Our interview this week was with Mel Kleiman, who is the President and Founder of Humetrics, a company that has focused very much on the hourly workforce, and I've had an opportunity to work with Mel in a different context, we were both at the Workforce Institute, which really studies our own employees, and Mel has some great insights into the hourly workforce, and managing and getting the most out of what is 60% of the labor force in the United States, but it doesn't tend to get that much attention.

A couple of things that Mel talked about, and he talked about a lot, a couple of things I think were really interesting, one is really the importance to treat hourly employees like real employees, and not just like temporary transient employees. He said, there's a lot of self-fulfilling prophecy that goes on where companies treat hourly employees as temporary employees, and therefore they become temporary employees. If you think of them as disposable employees, they'll act like disposable employees, and the best companies don't, they treat hourly employees like full-time employees. Then he talks a lot about what that means in terms of performance management, and really the importance of saying the key to effective performance management in hourly employees is spending time learning why they're working for you, and once you establish that, and say, "I understand why you want to work for me, now let's talk about what we need you to do", it becomes more of a co-operative relationship as opposed to a very transactional event, and I think he really talks about this different mindset of hourly employees, so really some interesting thoughts from a person who has spent a lot of time with a lot of different companies looking at the hourly workforce. So here again, we're going to listen to Mel Kleiman, who's the President of Humetrics.

Hi, you're here with People Performance Radio. Today we're very happy to be talking with Mel Kleiman, who is the President and Founder of Humetrics, which is a company that is focused on the hourly workforce, which is an area that I personally have a lot of interest in, I think doesn't get nearly enough attention, because I'd just like to say the hourly workforce is about 60% of the employee population, where it probably gets about 5% of the attention from the talent management company. I don't know Mel, if you'd agree with that or not, but Mel, thank you very much for joining People Performance Radio, and why don't you tell us a little bit about what you do with Humetrics?

Mel

Hi Steve, thank you very much, and really delighted to be here, and I think you're absolutely right about the fact that we know that the hourly workforce makes up about 60, almost 62% of the workers out there, and we'll talk a little bit hopefully in this conversation about the respect they do or don't get. It's kind of interesting, as I thought about doing this podcast, I began to think about, I almost hate to admit it, but I've been involved in the world of employment and recruiting selection retention for almost 35 years now. I started when I was seven, so you'll all know that I'm still very young, but in reality it's been very very interesting, because I think if we took an HR professional, and we froze them back when I started back in the early ‘70s, and we froze this person, and we thawed them out today, we would find out that everything in the world of HR has changed, probably except the way we recruit, select and retain front line workers. When I began, in my career I begin to remember when we implemented the OSHA, and everybody wondered how would we survive with the law that affected us. I can remember when we implemented the Family Leave Act, and how we were going to survive with it, so it's been kind of an interesting ride, and I think it's going to be a very interesting ride for 2009, I think it's going to be exciting and interesting, and something we'll all look back at and say, "Wow, how did we ever survive them?", so love to be here.

Steve

Cool, well I think one of the things you said that's interesting, that you haven't seen how we treat the hourly worker, you don't think it's changed that much. I guess I'd challenge that a little bit, I'd say in some companies it hasn't changed much in 30 years, but in other companies it's changed quite a bit, there's companies that provide benefits to hourly workers now that they never did before, there's the use of automated selection techniques for some hourly staffing programs, so maybe you can talk a little bit about where you have seen the changes, and where it hasn't changed, because I think if I challenge you a litte you'd say, because I know you've been involved in creating some of the major changes in this area.

Mel

I think that the progressive organizations have realized the importance of the hourly workforce, and have done a great deal in that particular area. I think we can just look at some of the things that have happened in the last 10 or 15 years with automation. I go back to, not even when I started, because we actually started as a psychological testing firm, and you begin to look at it, and at that point in time, when we began to run our psychological assessments, the only place that had a computer that was large enough to do, or happened to be right in Houston, happened to be Rice University, and we were implementing data on punch cards, and you now know that we can put as much power, right now I'm holding a little plug in for a USB port in my hand, and there's more computing power in this plug in than there was probably in the entire computer down in the basement of Rice University.

So we've implemented a lot of technology, and smart companies have begun to recognize that this hourly workforce is not disposable as it has been in the past, but where we have changed, and you have to look at something, if we go back to 35 years, and that's a long time, in reality that's three decades, it's three and a half decades, but we were a manufacturing society, and people worked in plants, and people manufactured goods, and today we're an information technology society, and the front line worker actually has a more important role today than probably ever before, and those companies that recognize it and deal with front line workers, and realize the impact that they have on the customer, are the ones that have really generated the growth and the opportunity there.

We look at companies like South West Airlines, and recognize that they've got some 35,000 employees there, unbelievable success, but again they've recognized that, if we put those employees first, those employees are going to treat the customers the same way we treat our employees. If you look at the Disney model, if you look at the Ritz Carlton model, but the problem is, in doing a workshop or talking to a company, and I sit there and said, "How many of you can name great front line companies to work for", it is amazing how few company names continue to come up, Steve, and that's the shocking part, because in reality, whether the President shows up today or tomorrow at any organization, most people really won't care, but if somebody doesn't clean the restroom, or somebody doesn't wash the dishes, or if the bus driver doesn't show up to drive the bus, I've got news for him—nothing happens. So those companies that are recognizing that are really the ones that are making the major gains in today's environment.

Steve

I think that's a good point, that a lot of companies that have made huge strides in getting more engaged with their hourly workforce, treating them better, but they all seem to be the same companies come up again and again. One of the things I wonder, when you look at the hourly workforce, is, it does get a lot less attention in the talent management press, even though it's a much larger part of the working population than MBAs and things like that, and my question is, do the talent management practices that work effectively in a salaried, "professional" population, work equally well in an hourly population, or are there some fundamental differences if you take a talent management director and drop them from a corporate environment into an hourly work environment—do they need to change their thinking, to say, "Look—there's some fundamental differences between these two workforces; if they are, what are they, if there aren't, what are the commonalities?"

Mel

Let's take the differences: the major difference in the front line, or hourly workforce, is mainly the recruiting, selection and hiring process that takes place there. Unless it happens to be a call center, or unless it happens to be a manufacturing facility, a place where you have a tremendously high number of hourly workers versus some place like a restaurant, or some place like a retail operation or some place else that has a relatively, may even be a larger number, let's say 100 employees, but that's really not a large number. That hiring process is controlled and dealt with by the people who actually manage them, probably not an HR person in that functionality, if you look at maybe a big box retailer, or you look at something like that, they're going to have an HR function, so really the difference is in the hiring methodology, and that may be different, you're not working off a requisition, you're hiring the same positions over and over again, you have a potential for a higher turnover unless you really begin to implement the right kind of systems to reduce it, but in reality the only major differential is in that way we hire those people.

If we now look at what motivates them, what they want out of the job, if we look at performance reviews, and what's important to them, we're going to find out that people are people. There was an interesting study done about a year and a half ago that looked at, what are the key motivators today in this country, and it didn't just focus on the professional, but it focused on the hourly and whatever term you want to use, salaried, hourly, front line, professional, or whatever term you want to look, and they looked across the board, and they said, "What do people want out of a job?", and it was very interesting to identify that the first thing, no matter what age they were, no matter what sex they were, no matter what demographic make up you want to put to them, the number one thing that most people were looking for in a job was a great boss and good co-workers. So if we have a great boss and good co-workers, even if somebody offered us more money, how many of us are going to go leave that situation.

The second thing that came up there, which was rather interesting, they wanted interesting work, and that's interesting, it was no matter who they are and what their job, I think we all want to do things that are interesting and further, they wanted growth and opportunity, so it was interesting, and finally, which was very very interesting, is they wanted a work/life balance. Now recognizing that, none of those four really dealt with it, and no matter where their job, they all wanted the same things, so it's kind of interesting that we can take, once we've hired them, we can take the same processes, and we should be taking the same processes, such as performance reviews, such as continual feedback and growth, such as educational opportunities—we need to be giving that every worker, no matter what position they're in. Does that answer your question?

Steve

Yes, so you're saying, the difference is operationally in the hiring practice, just because of the way companies are structured in hourly workforces, you don't have a big support network to help with hiring, you're really saying the manager, the person that's going to manage them, is probably the person to hire them, and often they hire them the same day they meet them, which typically doesn't happen in the salaried sector, operational differences, but you're saying, once you have people in the company, there's more similarities than differences, in terms of we should be looking at applying a lot of things that motivate professional employees, with hourly employees.

My guess though, that the challenge, most companies say, "Yes, but a lot of these hourly employees, they're only going to be here maybe three to six months, and a lot of them are college students or whatever, they see this job not as a career, just as a place to make money", and how does that influence what the performance development system should look like, I mean when you've seen companies do that effectively, what have they done? Have they been really successful at treating hourly employees like real employees, and not just like temporary employees?

Mel

I think you've really pegged the point, Steve, when you talk about, they have a mindset that literally goes in that says, whether they happen to be college students or not, whether they happen to be 65 or not, they have a mindset that says, this is short term, and it then becomes a self-fulfilling prophecy—why would you want to work for somebody who looks at you as a disposability product? It's like Kleenex, why don't we just blow our nose and throw it away? That's not what we're looking for, those companies that recognize that their front line worker is in reality, in most cases in this country today, that contact point between the customer and the company, and whoever that employee is really makes the effect. Let's go down to the lowest common denominator, and let's talk about fast food, or let's talk about convenience stores, let's talk about those places who have a propensity to have high turnover, and you begin to look at who is your contact? When you get frustrated, do you get frustrated at the President of McDonald's, or do you get frustrated at the person behind the counter who served you the sandwich at McDonald's...

Steve

Can we stop for a second, hey Jim, I'm losing Mel, he's going away—are you having any issues?—because I just lost it for a second, he was blanking in and out, so I want to make sure—can you talk for a second again Mel?

Mel

Sure, I'll be glad to—does that help do something at this point in time?

Steve

Yes, no that's better, I can hear you now, but just when you were talking there and making that point. OK, I'm going to pick up back on the question to say—so start right on the point where you'd said, "I think the point …", so I'll start with the question Mel, and you can just answer.

Mel

Start with the question, whatever, we'll go the same way, that's fine.

Steve

OK, so what I'm hearing you say is that, really when you look at hourly employees, yes, there are some differences in terms of how they're hired, that in terms of the hiring process, you don't have maybe the infrastructure available and very often the person hiring them is the person that they're going to work for, often hiring them the same day, but where there aren't so many differences, people are people first, and they're looking for the same basic things, and what really companies should be looking to treat hourly employees as regular employees, and not just like temporary or throwaway employees, so maybe you could talk a little bit about that, because the reality is that, at the same time, a lot of hourly employees are only going to be there for three to six months. How can companies effectively fully engage this workforce, given its somewhat transient nature?

Mel

Well, I think Steve, first of all, your comment is a mindset, and it's a self-fulfilling prophecy that says, "Hey, these employees are only going to be here for three to six months, why train them? Why do anything to retain them, why do that?" And yet, let's reverse the process, and say, OK, what happens if you don't train them and they stay? What happens if we don't give them some progression and they stay, all we've got is a bunch of average employees at that point in time, we shouldn't be hiring somebody unless, let's assume we are an Astroworld, let's assume we are a Hickory Farm, that is only looking for that three month employee, but in reality the smart three month employee is that one who will come back for three seasons in a row, so we should be building a process that says, "Hey, we are always looking for the best people", and then give those people something that is going to want them to come back to us.

The biggest expense we have is in this recruiting, hiring and training process, if we have a, even if it only takes us a week or a week and a half to train somebody, by the time you recruit them, by the time you hire them, by the time you do all the other things, you've probably got somewhere in the neighborhood of $1,500 to $2,000 invested in this employee, and then they walk out a month later or three months later, or some research that I think you were even involved in a couple of years ago at Unicrew, said I think that the number one quit day was the 14th or 15th day on the job.

Steve

I remember there's a study we did a few years ago, that said the most likely day for people to quit hourly jobs is on the 14th day, which probably appears right after they get their first pay check, is my guess.

Well, when you look at companies, can you give some examples of companies that have effectively done performance management, career development, with hourly employees?—how have they done it? What have they done that has allowed them to fully engage the employees, yet balanced against the reality that you can't invest as much money in hourly employees just financially than you can as professional employees, because there's so many of them, and they do naturally have higher turnover rates. I agree that it is somewhat of a self-fulfilling prophecy, but there's also this reality, you're never going to get hourly employees at a level of retention that you have salaried employees, for most companies.

Mel

No, you won't get down to 6% retention, a 6% turnover rate, and yet unless you happen to be in a manufacturing facility or something like that, but as a front line worker, you normally won't get that, but the key is, for example, there's a little grocery store group out of St Louis called Deerburks (? 18:06), and Deerburks is a high-end grocery store company, with about 13 stores, their turnover rate between front line, between part-time and full-time hourly associate, is somewhere in the neighborhood of 27%, OK? That's an unheard of number—why do they do it?—because they are into making sure performance reviews take place on time.

I think one of my favorite quotes came from a gentleman by the name of Les Wexster (? 18:37), and Les Wexster was founder of (??? 18:43), and Les Wexter's quote says, "Any task that is redundant or repetitive needs to be automated", and so when you take things like performance review and you automate them, and you do them when they're supposed to be done, and you let people know why their job is important, and that's really what performance reviews do, they let people know how they're doing, but I think at the same point in time they let them know their job is important. When was the last time you let a front line worker understand how important their job was, and how it fits into the entire values, goals and objectives of the organization? Those companies like Ritz Carlton, who do that, have absolutely proven that the return on the investment is far superior to any investment they make in the retention of these people. There's a great opportunity here, Steve, that's the neat part about it.

Steve

I think there really is an opportunity, I really like the way you frame it to say, having a serious discussion with people around their performance, what that communicates is that we care enough about what you're doing to spend some time talking to you about how to do it better, whereas to have a formal review process is really saying that your job is important enough that we've invested in providing tools to help you become more effective.

Mel

Let me just give you a very quick example, totally out of it, but something that always affected me. I swam in high school, and there was a period of time, and I will never forget my coach, and there was a period of time that my coach, Coach Neilson (? 20:13), just was riding me absolutely unmercifully, I mean he was riding me and riding me, and I'd come home at night, and I was frustrated, I said, "I'm going to quit", and my dad said to me, "Why are you going to quit?", and I said, "The coach is riding me", and he said, "Let me tell you something—the day he quits riding you is the day he quits caring about you", and I think we forget that sometimes, when we care about people we are going to give them the feedback they need to do a better job, it doesn't mean you always focus on the negative, but the minute you put—what happens when you quit caring about somebody, you give them no feedback.

The number one reason probably that front line employees quit is they get no feedback, or the only feedback they ever get is the negative one—why don't we do the performance review, and in fact most companies wait with hourly associates, they wait too long to do it. If you wait six months to do a performance review on a job that normally turns over in 14 days, you're probably too far into it.

Steve

I agree with you, I think that makes a lot of sense. One of the challenges in an hourly population is just the sheer diversity, I mean in one store you can have a 17 year old high school student working next to a 67 year old retired employee next to a college student, next to somebody who maybe speaks English as a second language, enormous diversity of education levels, demographic backgrounds, and people have different expectations of what they want from a job, why they're working there. How do you deal with that, saying, "Boy, we've got such a diverse employee population"—does that affect what you have to do in terms of how you engage with those employees, how you select them and how you manage them?

Mel

I don't think it has a major impact on the way you motivate them, and the way you manage them. Let's break it down to one very simple statement, people do things for their reasons, not your reasons, so when it comes to managing people, and we've got to spend a whole lot of time talking about generational differences and what you're bringing up, but recognize that we manage people not as a group, but we manage people one on one, and unless we do performance reviews, unless we find out what these people want out of a job, and we help them get them, if I help Steve get what he wants, Steve is going to help me get what I want, so what does that college student want? Unless you have a sit down conversation with him, I don't know what Steve is looking for as a college student, all he really wants to do is he needs flexible hours, and he wants to be able to go to school when he needs to go to school, and if he needs to study for a final, he wants to get off for it, so what do I need to give Steve?—I need to give him some flexibility in his schedule.

Mel happens to be 67 years old (that's not true, but let's assume he is), and what is Mel working for?—Mel really wants to be there from the morning, he's a morning person, he wants to be there at 7.30 in the morning, he wants to work till around 11.30 or 12.00, and then he wants the rest of the day free, but he'll be there every single day. What does he want to be treated with?—he wants to be treated with respect for what he knows. And what about the working mother who says, "I have got to be out of here at three o'clock, because I've got to pick up my kids at school, and there's no way I can stay past three."

Now, unless you do performance reviews, unless you have the conversations with these people, unless you get the feedback, you're never going to know that, but once you know that, and you manage it, then you've got a workforce that isn't going to leave you in 30 days or 60 days or 90 days, because they can't get that any place else.

Steve

Well, I think what you're saying is that that performance review should really start with asking them, what do you want from this job, before you start talking about what the company wants from the job, that's a really great observation, because in fact you will find people wanting much different things in an hourly population, in those examples you've provided.

When you look at companies that are out there, you gave an example of the one, that grocery store company that's done a great job of performance management, when you look at the common theme of the people don't quit the companies, they quit their managers—when you look at managers that are really effective at working in hourly populations, are there any things that really stand out about those managers, and are these things that are different from what you might see managers working with professional populations?

Mel

They're absolutely the same thing that you see managers working with professionals that are also working with hourly. There was a great study done a couple of years ago by Coca-Cola, and it was tied into, Cubby did it for them, and it looked at what makes great managers in the grocery industry, and the same thing that makes great managers in the grocery industry makes great managers in any industry, and what they did was, so was interesting in the study, is they normalized the stores, and so that if somebody had a store because it was a brand new store, and it looked like they were doing fabulous, but really were only doing C grade, that manager, even though the store was producing at A level, was really only a C level manager, and the interesting thing about that study showed that some of the things that make great managers were, number one was communication skills, they were willing to communicate not only the good news, but they were willing to communicate the bad news, they continually kept the line of communications open, that was one of the things that made a really great manager—the ability to build relationships with the people they worked with, and the people who worked for them. Their ability to hold people accountable was one of the things that made managers really high level managers, is holding people accountable, but letting know what they were accountable for as part of it. Those were two of the things that stood out immediately to me.

The other one, which was rather interesting, it was kind of a similar point, was they were great at giving recognition, and they recognized that what most people want out of a job is do want recognition for doing it, either right or wrong, but they wanted recognition, so those were three of the things that stood out there, and I think that goes across the line, no matter who you're talking to.

Steve

Yeah, I would agree, you probably have to deliver it more quickly, because managers, often hourly managers, will have, I've seen as many 15 direct reports and 20 direct reports, so they have the techniques, but what they're trying to accomplish is largely the same.

The last couple of questions I have, one is, this down economy, it's like we can't do a podcast interview now and not talk about the economy—are you seeing that affecting the hourly population? How do you think the downturn in the economy is affecting hourly employees in terms of their attitudes, and especially retail, retail's just getting killed right now—if you were in charge of a retail, if you were director of talent management for a retail organization focused on their hourly operational work for us, what would you be focusing energy on right now?

Mel

I would be focusing my energy on, we have to be better than we have ever been before in our entire life. I would be focusing my energy on training, I would be focusing energy on feedback, I would be focusing my energy literally on saying to my workforce, "We have got to make sure that we are executing with perfection"—the same message I would give my managers, we can't be second-best, this is actually interestingly enough, this downturn for some companies is totally a negative, this downturn for other companies is going to be totally a positive; the strong organizations are going to become much stronger at this period of time, again I do a lot of travelling, so I fly a lot, and it's interesting to me, I think the company that's going to come out of this downturn as an absolute major winner literally, first of all's going to be South West Airline, they're slowing down a little bit of their growth, but they're not retracting, they're saying, "Hey, we've got competition that's running scared—why don't we take market share away from them?"—that's number one, so I think that, as an organization, we just have to execute with perfection more than we've ever executed before, and those companies that do are going to come out way ahead.

I will go back to a story I haven't told in a long time, I was in Houston in 1983, and in 1983 the energy industry collapsed in Houston, Texas, and we were foreclosing in Houston, which has not been affected by this last housing boom, but in 1983 we were foreclosing somewhere between 3,000 and 4,000 houses a month in Houston, Texas alone, and we were in total shock, and I developed a presentation at that point in time called "Survival Skills in the Decade of Change", and I woke up one morning and I said, "This is absolutely ridiculous, I hate doing this presentation", and I changed the title from "Survival Skills" to "Winning Skills in the Decade of Change", and they literally were exactly the same points, but we put a positive spin on it rather than a negative spin. We found out, survival isn't any fun, so why go after it?—so what I'm saying to everybody listening to this podcast, the same things it's going to take to survive are the skills it's going to take to win in this next year, and those companies that really focus on things like communication and time management, and making a tough decision, and customer service, are those who are going to win, and we may lose some business, and we may do some other things, but we're going to gain more than we lose, so that would probably be my closing remark Steve, I don't know if that was where you wanted to end.

Steve

No, that's great, I think so the point is, with the hourly population, I think now is not the time to, what you're saying, if I may paraphrase, is this isn't the time to scale back, you can't spend as much, but it's the time to really rally and say, "This is where good management is going to be critical with this hourly population, because we can't—good enough is not good enough in this economy".

Mel

No, the last point there is, you can never do more with less, that's an impossibility, you could always add Hamburger Helper to it to make it better, and just as a point, I think that we have to look at every job out there right now, and in effect, we say, "Can we do this job differently?", and we have to look at it, "Can we do it better?", and you really need to ask your employees, "Can we do our job better? Can we do this differently?"—because they're the ones doing it every day, but I think that this is an opportunity, and not because of what you do, but I think this is an opportunity that we always have to look at automation today, we have to look at every single job, and say, "Why are we doing it this way?", and "Can we do it differently?", and "Can we do it better? Can we automate it? What is going to make it work more effectively and what's going to be better for our employees and what's going to be better for our customers?"

Steve

Absolutely, well I think that's a great point, and Mel, thank you very much, I think it's a very interesting conversation around the hourly workforce, so hopefully have you back on a future podcast, we can talk, and maybe at the end of the year to see if your predictions were correct, talk about who the winners and losers were, but we've been talking with Mel Kleiman, who is the President of Humetrics, and we'll have Mel's contact information on our podcast website.

Mel, thank you very much for appearing on People Performance Radio.

Mel

Thanks for having me, and have a wonderful year.

Speaker

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