People: Human Capital Infrastructure Part I

“First who, then what…” Famous words by Jim Collins, author of Good to Great. Of all the challenges leaders face – strategy, competition, and financial acumen – the people “thing” is by far the hardest. Why? It’s because people are not predictable. In fact, some might say that people are “predictably irrational” (see Predictably Irrational: The Hidden Forces That Shape Our Decisions by Dan Ariely).
If you recall from last month’s article, we are going to be discussing the elements of the Entrepreneurial Operating System (EOS). The six major categories of discussion include:

1.     Vision – last month’s article

2.     People – the next three months articles

3.     Data

4.     Process

5.     Issues

6.     Traction

So, what will it take for us to become leaders who actually enjoy leading their people to the desired vision and mission? A LOT! But, if you follow these steps, you’ll be on the road to having a much easier (and enjoyable) time building the practice of your dreams.

Building your dream team takes 3 major steps:
1.     Develop your Human Capital Infrastructure
2.     Hire the right people and put them in the right seats on the bus
3.     Lead them in a way that you don’t DE-motivate them.


Pop Quiz time! Please answer the following questions and score accordingly. We will tally this up at the end:

1. Does your practice have a professionally (Attorney) written employee handbook that spells out all of the information of your practice and the employees’ rights and general responsibilities?
a.     No = 0
b.     Yes = 3
c.     Yes and Signed By All Employees and Housed Centrally = 5

2. Do you have clearly written and concise job descriptions?
a.     No = 0
b.     Yes = 3
c.     Yes and it’s signed by all employees and housed centrally = 5

3. Do you have clearly written and concise job competencies?
a.     No = 0
b.     Yes = 3
c.     Yes and part of your interview process and performance reviews= 5

4. Do you have job training manuals with checklists?
a.     No = 0
b.     Yes = 3
c.     Yes and signed by trainer and employee = 5

5. Do you have at least annual performance evaluations?
a.     No = 0
b.     Yes = 3
c.     Yes and Specific Development Plan Given to Employee for Upcoming Year = 5

So now add up your score and multiply times 4. If your scores are:
v90-100                   = You have Outstanding HCMI
v80-89                  = You have Solid HCMI
v70-79                  = You have Average HCMI
v<70                  = You have Lots of Opportunity for Improvement

When I first started in my practice, my score was a “0”! Mid-way through my development it was about a “20”! Now, I approximate “100”. Its taken years to get to this point for my practice so I’m hoping with some clear guidance, you will get there much faster. Let’s discuss solutions to the above five questions:

1. Employee Handbook. An employee handbook is essential for both legal reasons and for employee performance reasons.  While I strongly encourage a handbook that is prepared by an expert in employment law in your state(s), there are some interesting tools online that can at least help you get started with what policy decisions you want to make. RocketLawyer.com has a free tool that will allow you to create a semi-customized handbook and receive a PDF version of it. So, instead of taking two to five hours of an attorneys time to walk you through your decisions, you can walk through this online step-by-step process and at least make decisions on how you’d like to structure things like vacation, benefits, employee complaints etc…To start a free sample handbook, go to http://bit.ly/PmcVrs. After you create this, you can then go to a local trusted employment attorney, and have them make revisions based on any additional needs, state requirements etc. Be sure to always call first and ask “how much do you charge to create a completely new employee handbook?” Then ask, “If we have an existing handbook that we’ve prepared, how much do you charge to edit and update?”  You may be able to save a fair amount of money if you don’t have to start from scratch!

2. Job Descriptions. It is critically important that you have clear and concise job descriptions for your employees. They must know their expected roles and responsibilities and will be very useful to ensure that performance meets your expectations. Job descriptions are a snapshot of what their day “looks like”. Writing job descriptions that are quantitative in nature can also be very helpful. For a CA for example, “Answer all phones within the first three rings and ensure that if you are addressing a patient in person while the phone rings, you apologize for the interruption and will re-address them quickly” or “Reschedule, on average 80% of the patients. When a patient refuses to reschedule for the same week, email the doctor to inform him of non-compliance.” Specific targets help you create expectations of performance and when expectations are not being met, you can address them with true quantitative data.

3. Job Competencies. While job descriptions are “what” your employees do, job competencies is “how” they do what they do. It’s been defined as “the knowledge, skills and observable behaviors working in concert to produce outstanding performance.” Competencies can be divided up by “core” (e.g. communication, organization, professionalism etc.) or job specific (e.g. budgeting, sales skills, clinical acumen etc). Job competencies are very descriptive and tell your team how they should be doing their job. Think of an associate and how you would align a job description item (Perform re-exams every six visits) with a competency (communication – “Communicates well both verbally and in writing, creates accurate and punctual reports, delivers presentations, shares information and ideas with others, has good listening skills. Can get messages across that have the desired effect.  Communicates clearly and succinctly using a variety of styles either with an individual or within a group setting”).  Yes, maybe they did their re-exams every six visits but did they communicate the patient’s progress effectively? If you want outstanding performance, you have to be able to have your description and competency infrastructure clearly outlined so you can teach, discuss and measure performance!

4. Training Manuals and Checklists. All of the job descriptions and job competencies should be part of a broader training manual. The manual is a living breathing document in that it always needs to be updated so ensure you have an electronic version that is in one central location and is backed up daily.  Training manuals should outline the key processes for each of the job description items. Normally a great training manual documents the key 20 percent of the processes that get 80 percent of the work done. If you can get to all of your processes being documented, you are that much better off. Training checklists ensures that your trainer and trainee agree that the trainee has been trained. Both should sign off on the training checklist, NOT when the information has been reviewed, but rather, when the trainee feels like they can perform the job task in the way the practice intends it to be performed. Remember, your training is only as good as your BEST trainer, so invest some time and some capital in ensuring you’ve got someone on staff who is a great trainer.

5. Performance Evaluations. When you bring on employees to your team, to ensure the best probability of success within your human capital infrastructure, you must close the loop. You do that by doing performance evaluations. Our cycle is each new employee gets a 90 day review and then an annual performance evaluation. The evaluation should be no more than 10-15 elements that are scored and discussed qualitatively. They should include the employees job specific competencies, core competencies and how their work reflects the practices core values. There are some important considerations with performance evaluations:

a. If you do a performance evaluation and your employee is completely shocked by what they’re reading and hearing, you have not done a very good job of engaging them throughout the year. Having regular, informal conversations about performance is MUCH more important than never having discussions and just doing one formal evaluation at the end of the year. So the lesson, meet with your teams regularly to discuss performance!

b. Make sure if you are scoring an employee quantitatively, you have “calibrated” the scores. Define to them what a “3” or a “4” or a “5” looks like in terms of specific performance. Performance reviews should be self-scored as well as scored by the employees manager. The discussion around scores and comments is more important than the scores themselves. The more the scores align, the more you realize alignment on expectations

c. Having a performance review without a development plan is meaningless. You’ve told them what they’ve done well, you’ve told them what you’d like them to improve on, now have a discussion with them on HOW to improve. Try to support them in having them come up with the solutions themselves. You telling them what to do, as bad as you (I) want to, will not be as impactful as if they can come up with the solution and the benchmarks (time-based measurements) themselves.

In conclusion, you have to have good infrastructure (architecture) to be a successful and sustainable company in today’s marketplace. If you need some work on these above areas, get them done over the next 30 days so you can take the next step in our journey together next month – Hire the right people and put them in the right seats on the bus!