The good, the bad and the ugly

Abstract

This paper will tour the human capital practices for projects, according to the A Guide to the Project Management Body of Knowledge (PMBOK^® guide)—Fourth Edition (Project Management Institute [PMI], 2008), and normally accepted and generally experienced human resources practices, in Canada and the United States. While this document is specific in example to the United States, the same general rules apply for many countries, as they are based on evidentiary standards from litigation, and most countries use relatable/similar standards of jurisprudence.

Introduction

We all know there is art and science to human resources management as defined in A Guide to the Project Management Body of Knowledge (PMBOK^® Guide)—Fourth Edition (Project Management Institute [PMI], 2008). Some of the inputs to human resources management are enterprise environmental factors and organizational process assets. We take them for granted, but what are they, and how do they color/define and/or limit our options and choices as project managers? Collectively, more and more of these issues are referred to as human capital management.

This paper makes reference to terms, conditions, and situations that apply to federal contractors in the United States; however, it applies generally to every company and organization anywhere on the planet. Human capital resource (a.k.a., project team members) considerations will figure prominently in this discussion.

Understand that getting any of these factors wrong means leaving your organization vulnerable to lawsuits. If multiple people get these factors wrong, the company is even more vulnerable. So understand that the problems documented here can lead to serious problems, for you and for your organization. When your resource management people complain that what you want to do is not permitted or will cause you problems and/or delays, it is not done just to aggravate you, or for their amusement. They follow the rules because they are aware of the impact that your actions and those of your colleagues have on potential corporate liabilities.

Statistical Background

While most people find that their eyes cross when it comes to statistics, a key term you will hear mentioned is Two Normal-Equivalent Standard Deviations (2NESDs), which are two standard deviations of any distribution expressed in terms of a Normal or Bell curve. Now, consider the realm of probabilities of all possible outcomes from any action. That area under the Normal curve that is the range between negative and positive 2NESDs is the probability that the outcome occurs by random chance. This is a good thing. See the paper by Warman (2005) for further thoughts on evidentiary standards.

That area outside the range of ±2NESDs (in excess of 2NESDs), statistically speaking, can only be reached by direct action, such as potential discrimination against persons based on race, religion, national origin, sexual orientation, etc. How the question is posed determines how the statistic is interpreted, but basically you are looking for values in excess of:

• -2NESDs for demonstrated bias against a group or person, and
• +2NESDs to demonstrate bias in favor of a group or person.

Since virtually every management decision is recorded, particularly with regard to pay, merit, employment status (employed, fired, hired, internal movement), and some awards, this information can be analyzed and determinations made as to whether acceptable standards of management conduct have been achieved or not. It also means that systemic (that is, company-wide or district-/division-wide) bias can be detected, which goes beyond the project and operational managers to the executive levels. All of this (and so much more) are covered by and implicit in those innocuous words “Organizational Process Assets.”

Note that there is a key defect with statistical evidence, particularly the “in excess of 2NESDs.” If there are too few people (typically fewer than 50) in the calculation, no matter how egregious the behavior, mathematically and statistically, this behavior will not manifest itself so as to rise to the level of “in excess of 2NESDs.”

Title VII and ADEA

The basis of Title VII (Wikipedia, n.d., The Civil Rights Act of 1964) is that it prohibits discrimination on the basis of race, color, religion, sex, or national origin. This has also been extended to prevent discrimination on the basis of age through the Age Discrimination in Employment Act of 1967 (ADEA) (Wikipedia, n.d.). Statistical analysis on decisions may look to see if any one of these factors demonstrates evidence of bias, and decisions falling in excess of 2NESDs may indicate potential liabilities for the organization and/or the manager involved.

The Good, The Bad, and The Ugly

Getting Started

For ease of discussing various business models, human resources teams and resource pool managers (i.e., those performing a human capital management role) will collectively be referred to as human resources in this document.

One of the pieces most frequently left out of budget planning and discussion deals with awards and recognition for project team members; somehow, it is thought that this is HR's responsibility. Explaining a cost overrun due to taking the project team to dinner to celebrate a major success is a sign of bad management, when it should have been part of the budget process. Since some organizations frown on providing goods or recognition of any sort to staff, this needs to be handled carefully and as a function of the size, complexity, duration, and general budget of the project. The recognition and award budget, per person, will be different for a long-running, multi-year, 100+ member project team than for a 3-month project with four people. At a minimum, think quarterly lunch on the team, with ice cream socials or other smaller activities about every 4 to 6 weeks. It should be a function of your corporate culture, and why not improve the culture while you improve the project management practices of the team and the organization? Small “goodies” randomly provided does more for morale than lavish events that frustrate more than motivate (“I could have had $250 more in bonus money instead of this party?!?”).

An often ignored element of the project management plan/human resources plan (HRP) is how performance feedback will be provided, and how performance problems are to be addressed/ resolved. There is this belief that every employee will be a superhero, perfect in every way, when they are added to a project team. The reality is that you will on almost every project have unsung heroes and those who should be stellar but in this project environment are partial to total duds. Not having a formal coping mechanism is understandable on a small project team that only lasts for a few weeks, but on a multi-year, multimillion dollar “bet the firm” type of project, you need to have a clear process, preapproved by HR. Otherwise, any problems will soon take the majority of the project manager's time to the exclusion of all else, rather than the smooth transition that was initially envisioned.

It is not just discipline and termination decisions that need to be in the HRP, but also awards, promotions, and any other HR interaction, and this HRP needs to be approved by HR. The last thing you want is to be in the middle of an award or termination event, with HR now needing to be brought on-side, rather than their having been your active partner throughout the event life cycle. Communications, anyone? And an analysis of 2NESDs can apply to these decisions too, making the planning of their management all the more important.

Human capital risks are, in my experience, the least frequently addressed risks on a project; they are normally discussed and considered only in times of crisis, rather than in advance as part of the management plan. With clearly articulated and communicated processes and norms, a natural result will be to include such unpalatable risks as the loss of key talent, performance problem resolution, and all of the other issues that come with human capital. What are the vulnerabilities with regard to knowledge and skills that the team faces—do you have any sole contributors without whom the project would be damaged or might fail due to the lack of that knowledge and experience? If you don't know that answer, you haven't managed for the risk to the project. This is where succession planning arises in most organizations, so that they are not left with a situation in which a key resource has left the organization or retired, while they now have no further access to the knowledge and skill set of that individual. Succession planning is best done by HR, but for long-running projects, expect that you as project manager will be called upon to do your part in implementing the process.

To repeat other content here, include as part of HRP the processes of adding and removing staff resources to and from the team, addressing performance issues, providing awards for stellar performance (and likewise deciding when they must be withheld), and determining how and in what fashion performance reviews will be addressed for the team. The bigger the team and the longer the project runs, the more important this part of the plan becomes! Not addressing these items at the beginning and securing HR agreement with these plans is a sure way to be in the middle of a critical stage in the project and be consumed by now having to make policy and secure approval for actions that legitimately should have been addressed before another person was added to the project team.

The Good

This is where you want to “live” as the project manager.

Appraisals

Project managers generally would rather have root canal without anesthetic than have to touch performance appraisals. As mentioned earlier, identifying the measurable goals and objectives for staff as they join the project team, and on their release from the project, providing feedback on those goals and objectives makes the process as “pain free” as possible. HR will thank you for timely feedback, and employees can correct any gaps/gaffes/misunderstandings with their manager while the work is still fresh in everyone's mind. Awards and promotions can be based on these reviews, so there are consequences to problems with their accuracy.

Worse still, these results can be subject to statistical analysis, and evidence of bias can be detected from these results, especially when they are perfunctory in nature rather than fact-based and acknowledged as accurate by both parties. For small organizations and teams, note that no matter how egregious the results, the bias may not rise to the level of statistical significance (that is, in excess of 2NESDs).

One of the best approaches I've seen in the handling of this dreaded process is drawn from a number of projectized organizations. Each employee's assignment was documented on a sheet of 8½ by 11 inch paper: the left-hand side of the sheet was the assignment's roles, responsibilities, benchmarks/goals, and critical success factors, while the right-hand side was the assessment of performance toward that assignment. Given that most assignments were measured in weeks, this meant that at annual appraisal time, the final appraisal document was complete in all details, due to all of these assignment sheets, except for a summary of performance for the year (based on these sheets) and the training/development plans for the coming year.

Awards (not Rewards)

A clear, written policy on awards is essential to avoid charges of favoritism/bias. If managers do not follow standardized processes for the granting of awards (or for withholding them), this can build frustration on the part of staff, and may even be evident in a statistical test showing bias in granting awards. It is too easy to start out being too liberal with awards and, over time, reduce the number/size of awards granted for the very same behaviors/performance, especially as business financial pressures tighten. If there are sufficient awards made, even in a small to medium-sized organization, bias can be determined if there is a pattern of excessive awards given to a particular group of individuals. Plan on how and under what conditions awards can be granted, and do not avoid the question by not providing awards. People don't need a great deal of recognition to feel good about the company and the project, so make use of this mechanism to build and keep loyalty and satisfaction, with the project and the company.

Compensation

As you may well realize, the project manager is not running a project independent of the organization; rather, it is an important part of the organization, regardless of whether or not you are part of a projectized organization. Patterns of discrimination likewise can inadvertently be drawn from the organization as a whole, leaving the project manager guilty of bias, by “doing the right thing.” Only by understanding how your actions as a project manager can impact the organization can you be both a “team player” and at the same time keep yourself (and thereby your organization) out of trouble. One need only look at the headlines weekly to see examples of this issue.

The rules are numerous and varied on the Fair Labor Standards Act (FLSA) (FLSA of 1938) interpretations, but broadly speaking, if staff are executive, administrative, professional, and/or computer scientists, then they are generally exempt from the mandatory overtime provisions of the FLSA. A common misunderstanding is that the FLSA exempts these staff from any compensation for more than 40 hours worked per week. The FLSA rather does not say that exempt staff may not receive compensation for additional hours worked, just that the compensation formula is not legislated and is left to the employer to address in an equitable manner. “Fee basis” (think piecework) likewise can be abused, and the definition tortured out of all semblance to the legal definition, to get around the need for compensation of extra hours (over 40 per week) worked. Know what “exempt” means for your position and your staff, and what the corporate policy is on additional hours/days worked.

Development

This is one of the biggest bones of contention for most people. Ideally, we live in an ordered world, where a year in advance, the need for training can be identified and planned to be delivered at just the right time for the new skill to be used when it is needed. Experience, however, indicates that either staff have to pick up the needed skills on their own after being assigned to the new project, or the training is delivered several months before the work actually begins, making the training at best a distant memory. Only in large organizations does one see development used incorrectly as a reward for a few, rather than as a means to improve the productivity/”reach” of an employee. A good appraisal system will identify these development need(s) in advance.

Even on short-run projects, there are typically opportunities for some workers to “stretch” and take on new tasks or learn new skills. How you are going to develop your team can be as important as the initial selection of team members. The promotion of a “learning culture” (Conner & Clawson), where people are responsible for their own learning and for helping one another learn, especially in unanticipated situations, can improve the net knowledge of the team over the life of the project. Staff not normally involved in performing certain tasks can learn from more experienced members of the team on how to perform these tasks, which will lead to an increase in the talent pool capable of performing that task. You do not want to lose a resource for some reason, and then discover that no replacement exists to keep the project moving forward. Development monies can likewise be subject to statistical analysis.

Hiring (and the Broader Resourcing Activity)

If you are in the enviable position of having a talent pool from which you can draw your project team, Congratulations! For most project managers, however, you have a few key resources in-house, and the rest are either term employees or contractors, depending on company culture, budgets, and project duration. Basically, you need to plan for the best, expect the worst, and prepare to be surprised. People can and will surprise you (but hopefully only in a good way). What you need for the unpleasant surprises is to have a prearticulated policy on terminating those who do not work out within 30, 60, or 90 days. Many companies now use Temp-to-Hire or Term-to-Hire hiring, so that problem contractors or term employees have their contracts cancelled, and only the stars are retained, being converted to an indeterminate employment. It can cost you some good people, however, who are already indeterminate status—why take a risk when you have a steady job? Think about how you can make the “deal” sufficiently irresistible to these people, who are probably the most desirable employees for your team and company. They have the knowledge, skills, and attitude of the type of person you need and want on your project and for the long-term in your company. They also are resistant to changing jobs without a really good offer, so you are buying stability, to your project and your company. Note too that Temp-to-Hire/Term-to-Hire are often used to bypass normal selection procedures, and can lead to a lack of adequate record-keeping (i.e., no applicant pool established for this hire). HR is your partner in acquiring staff and can help lay out your options and choices to minimize later problems in acquiring team members.

The stakeholders are one of the sources of project risk. Especially in the current economy, but at any time, people want to be helpful, and generally cannot say “no” to requests dealing with employment opportunities. In the United States, with various antidiscrimination regulations, federal contractors are expected to process all employment applications in the same fashion to allow for adequate record keeping. For most organizations, this means that all requests must be processed through the same system, and be indistinguishable from all other employment applications. Generally, there are so many applications that methods such as statistical sampling (or other appropriate data management technique as defined by Definition of an Internet Applicant [2005]) are used to select enough candidates that meet your requirements, and in an autonomous, impartial fashion.

Expect that your HR team will require that all applicants, without exception, must go through the standard application process and register for any open positions at that time. It just is safer for the organization and easier for everyone to follow this path.

HR is a critical stakeholder (if that isn't already apparent) on every project. Get agreement with HR on your plans before you are in a crisis. Re-read this paragraph if you find yourself in a hiring crisis.

Generally, any approaches other than statistical sampling (or other appropriate data management technique) to handling applicants for employment leave your organization vulnerable to sanctions for failing to follow federal contractor requirements. And HR specialists get enough grief from their line managers for giving those managers too many candidates (typically more than 10) to review, so it is in the HR specialist's best interests to appropriately sample the population of applicants, trusting that the least qualified will be filtered out automatically, before presenting a list of candidates to managers for consideration. Understanding the hiring process (or engagement process for contractors) can be a critical success factor in obtaining the best resources for your project, and HR will appreciate your cooperation and understanding!

Promotions

Experience shows that bias in promotion is generally not statistically detected unless you are working with very large organizations (use 10,000 as a working number), since this is not otherwise a near-daily occurrence. It is likewise harder to analyze, as there is often just an announcement of a promotion, without there being any prior announcement of the opportunity. This does not mean, however, that there has not been a careful and documented review of the possible pool of candidates and selection of the most qualified candidate. Key here is that there has been a careful and documented review, for without documentation, favoritism charges can arise. Even if there is no statistical evidence possible to support the charge.

So you have the best team in the company and the best policies: why, then, are people leaving? Some managers feel threatened when staff leave, rather than embracing two key facts:

1. They must have done something right in developing the staff member so that they could win a promotion elsewhere
2. They have an opportunity to “shake up” and retool the team, to improve the chances for success for the project

There is a great deal in the literature on motivating staff, but all of the tricks and techniques in the world come down to one basic tenet: People want to be acknowledged and respected, and treated as a valuable member of the team.

The Bad

These are the cases where things are not going according to plan, and problems, though still minor, are surfacing in the project.

Appraisals

How to deal with the poor-performing staff member or one totally unsuited to the project is a project manager's nightmare, if processes and plans are not in place to address these situations. A little forethought and planning initially can save hours/days later in the project. Releasing staff from the project “for cause” becomes another factor that is subject to statistical scrutiny, and if you are not protected by previously defined policies and agreements, particularly with HR, litigation may be the next step for the employee against you and the company. Having had an employee sue for wrongful termination a few years ago (he lost), expect to have every decision and interaction challenged. If you have preapproved plans and procedures, however, the chance of the suit being successful is significantly lowered, unless your plans and/or procedures are illegal or demonstrate institutional bias.

Communication

It is never sufficient merely to distribute milestones, work packages, etc., but especially when there is staff new to the project it is necessary to communicate the processes and norms for the project, such as the awards process, performance feedback frequency and form, and any other aspect of the management of human capital on the project. Just as good organizations have a New Employee Orientation process, a similar process is recommended for project teams, so that the needed “level set” occurs with staff; this allows everyone to have the same message and direction for the project.

Newsletters, flyers, status e-mails—anything is acceptable in communicating successes and progress made by the team, both to the team and to the larger company, all of whom have some level of interest in the project's success and progress. What is needed is a balance that works for the stakeholders and those with any interest in the project, so that the right communications occur at the correct frequency. I put Communications in with “The Bad” simply because it is so rarely performed correctly and in a fashion that works for the various parties. Expect too that there will always be someone who has a pet peeve about the fashion and frequency; you cannot satisfy all of the people all of the time.

Departures and Staff Replacement

“We'll hire a replacement if someone leaves” is generally not an acceptable answer, and is more akin to wish-fulfillment. To clarify this point, just think about the oft-used expressions, “Wishing doesn't make it so” and “Hope is not a strategy” (Page, 2002). If you don't consider human capital issues in your risk plan and an issue arises, the project manager can be suddenly focused for an extended period on HR issues, when the risks and their attendant responses could have as easily been addressed in advance, and without the related pressure. It is always easier but incorrect to assume that you can deal with the problem when it happens. However, the point of planning your risk responses is that when the unthinkable happens, you have some measure of a plan to fall back on to help you cope successfully with the crisis. Think of the prompt and decisive reaction by Johnson & Johnson to the “1982 Tylenol Scare” (Wikipedia, n.d.) and how their market share rebounded accordingly, but with the effort and depth of detail involved adjusted to a level more meaningful to the size and scope of your project.

Staff replacement issues are no different typically than hiring, except the skills and experience requirements may be more sharply focused to cover the “gap” that has occurred in the project team with that person's departure.

Development Plans

These are used, formally and informally, whenever less than fully satisfactory performance is determined to exist. The idea behind these plans is to give the staff member the needed knowledge and experience to allow them to improve their performance. Typically, after a pre-determined period, if the development plans have not had their desired effect, the staff member is removed for cause from the project team. At best, they are reassigned to another area or project, but in the worst case, their employment is terminated.

Reassignment

Like any employment decision, this too is subject to statistical analysis. Reassignment can occur for a number of reasons, from the end of a project, to removal for performance problems, through conflicts and problems with other team members. In some cases, this is a positive action, to provide the opportunity for development and skills enrichment for the person, but in most cases, it is a form of administrative discipline.

Reduction in Salary/Grade (RED decisions)

This is like any other employment decision, and is subject to statistical scrutiny. It is most typically associated with a disciplinary action, although reorganizations and the new trend of “career dial up/dial back” (Melbourne, n.d.) makes voluntary decisions also a factor; it is no longer a reasonable assumption that RED decisions are due to disciplinary action.

RED decisions could also occur due to reorganizations and reassignments of tasks and resources, where a previous position has been moved, and as a result, the salary and responsibilities are reduced. In larger organizations, with a strong classification and staffing history, people who are in RED situations typically have first rights of refusal on openings for which they are qualified at their old grade/salary. The longer your project runs, the greater the chance you will be looking at this possibility. Is it in your risk matrix?

The Ugly

Appraisals

Having written a fully unsatisfactory appraisal on all factors on a government employee, I may be believed when I say that the situation can get (and can be) Ugly. Problem performers, for whom all efforts to improve their performance have failed, also fall into this category.

Development Plan

If the previous development plan did not work for any of a number of reasons, there may be a need for a further development plan to potentially salvage the person. In most cases, this will not be necessary, but I have been part of a situation where this was warranted. Everyone involved is aware that this is the “last chance,” and the tension it causes should be a concern for the project manager. Tread carefully, and try to mitigate the impact on all persons impacted, since it has an influence on the performance of a variety of team members.

Release/Termination

An ugly situation for a project manager is when the recommendation to HR is for the release/termination of a team member. Paperwork, meetings, documentation, a whole subproject is suddenly thrust into the project manager's lap as management reviews the evidence to ensure that their exposure is limited should the person sue.

The project manager further has the problem of explaining (but not too much) the change in resources, how this gap will be covered by the remaining team members, and the plans (if any) to replace that person. In some cases, expect anxiety to run through part or all of the project team, and in some cases, “survivor guilt” by those who were involved in the decision to release/terminate the individual. Handle the team with care and support, and you should come out on the other side as a team.

Reductions in Force (RIFs) or Layoffs

This has been an ongoing topic in the media for the past year. Statistical analysis can be used to determine if those who are selected for layoff due to a RIF are one of the protected groups under Title VII and therefore if any evidence of bias is present.

Throughout the Project

You need to regularly scan the health of your project for signs that you may need to pull out your risk responses or to update them. If a new company is coming to town that is looking for resources such as the ones that you have on your team, you need to be watchful that you suddenly do not have a number of key staff leave for that company. How you have planned for this possibility determines the impact to your project, from minimal (aka good planning) to the early and unsuccessful termination of the project due to a resource crisis (aka bad/no planning). Sickness and death can be a surprise that no team necessarily avoids, so how you cope largely depends on the risk responses that you have pre-planned. “Surprise!” is not a project manager's favorite word.

Ending the Project

Time and again, long after projects have ended, managers are pressed at annual appraisal time to find someone (anyone?) to provide feedback on employee performance on the various projects on which staff have worked during the year. It takes little time and effort but eases everyone's burden to ensure that any new resource on a project is given a statement of objectives and measures to assess their performance. When these people leave the project, this statement is amended to document that person's performance and benefit to the team. This becomes even more important if the person is released early from the team because of bad performance or simply “not adequate” performance.

Most HR organizations will be looking for this information, at a minimum, but it is easy, in the pressure of closing out the project administration, to overlook or avoid providing this important feedback. This does the employee and the project manager a disservice, and reflects badly on the professionalism of the project manager.

Topic and PMBOK^® Guide Cross-Reference

Statistical Calculations

While it is easy to talk about ±2NESDs, the calculation itself may not be so easy. One of the best methods of calculating whether there is bias or not is called the Rank-Sum technique; this test is also known as the Mann-Whitney or Wilcoxon test. A more comprehensive treatment is found in multiple sources, but one of the easiest to access is at http://en.wikipedia.org/wiki/Mann-Whitney_U for those of a statistical “bent.”

Notes and Cautions

As is always the case when dealing with evidence of bias/discrimination, specialist/legal advice is needed, as the circumstances and details often are crucial to an understanding of each case. What may appear to be bias in one case may in fact not be, or it may not rise to the level of actionability. All information presented herein is at a high level and on the facts as presented, for information purposes only.