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Talking Trash

Talking Trash | Human Resource Executive Online Using HR practices to enhance an organization's bottom line doesn't necessarily require innovation. Waste Management's revamped HR recruiting policies were straightforward and simple, but they paid dividends in employee engagement and in ROI.

Monday, March 30, 2009
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As tempting as it is to write another column about the economy (AIG bonuses come to mind), it is a bit of a relief to be able to focus on something more positive. In this case, it's a simple story about some straightforward HR practices that save some serious money for an employer.

There can be a lot of money in garbage, especially for Waste Management, a $13 billion company with 47,000 employees. It picks up trash, runs landfills and operates recycling facilities. The company has as many as 22 million customers. That's a lot of trash, a lot of garbage trucks and a lot of employees to run them.

Truck drivers are a key job in the company, not only because there are so many of them, but also because they have a lot of control over the business outcomes. Truck drivers play a big role in determining productivity because they control the pace of pickups.

Driving big trucks requires some skill, and managing routes and traffic under schedule and deadline pressures gives the drivers a lot of autonomy over the way they do the job. That's as one might imagine, though it is easy to take these apparently low-skill positions for granted.

Into the story come Jay Romans, Waste Management's senior vice president for human resources, and Bob Creviston, its vice president for human resources for the Midwest region, with an effort to get much more serious about managing these jobs. They develop a plan to reduce turnover and improve engagement of employees, starting first with the trash-truck drivers.

None of what happens next is rocket science, but the key lesson here is to see how big an effect there can be from straightforward practices.

What Bob put in place began with a program for standardizing and rationalizing the recruiting and selection process, sold at the highest levels of the company -- to the CEO -- based on a realistic assessment of the potential return on the investment.

The program began with standard companywide profiles of the critical roles in the company's non-management workforce, one of which is the driver. From there, it went to the development of a standard "recruiter playbook," describing every aspect of how to find candidates and select them across the company.

Crucial to this was a virtual "university" to teach recruiters the process and efforts to enforce 100 percent compliance. Important parts of the program included outsourcing the initial assessment of candidates to a specialist vendor, realistic job previews for candidates who make it through the initial assessment (so they know what they are getting into -- scaring away the wrong ones) and a simple one-day, onboarding process.

The reason one could expect a big return from this simple set of processes is that hiring is really easy to mess up.

Decentralized hiring managers all think they know what they're doing, and they all think their own way of doing things is just great. The main reason they continue to believe that is because they rarely are confronted with information that shows them whether what they are doing works or not.

Getting hiring managers to use standardized practices requires some executive attention, which is where the CEO's endorsement comes in. Waste Management also reinforced their practices with another simple arrangement, a dashboard for local managers to see the outcomes on employee-performance measures such as absenteeism and turnover.

Another step in the process, and one that goes toward continuous improvement, was to focus attention on employee engagement: Measuring it, showing line managers what the effects were of having more engaged employees, and rewarding route managers (drivers' supervisors) for improvements in those scores.

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It's hard to capture all the benefits of this new approach, but here's a partial story.

Focusing just on the drivers, turnover fell from 15.7 to 12.8 percent one year into the program (this was before the economic crash when cutting turnover was hard to do). The cost savings just from that reduction in turnover totaled $18 million.

The CEO this year told the company to focus on improving hiring and engagement because it had the highest return on investment of any of the investments they were making as an organization.

For our purposes, there are several important conclusions from this story.

The first is how much money can be saved at the lowest level of the company, with positions that are often seen as disposable. "What does it matter how we fill jobs like those that anyone can do?" It turns out that it matters quite a lot.

The second conclusion is that these changes don't have to be rocket science in the sense of radically new ideas. Just getting them executed consistently is enough.

And finally, you can sell investments in human resource innovations at the highest level of the company and on the same playing field as other business investments if you have a credible story backed up with reasonable financial estimates of the payoff.

Peter Cappelli is the George W. Taylor Professor of Management and director of the Center for Human Resources at the Wharton School of Business. www.talentondemand.org.

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