Belief #1: People are more than just cogs in the wheel

Many business leaders today agree that we need to put people first. Most chief executives trot out the tired adage ‘people are our most important asset’ on a fairly regular basis. But what does this really mean?

Most things I hear said and that read about HR still refer to people’s increased importance in reference to their role in implementing business strategy. Managers know that it is not enough to develop a great strategy, they need to be able to deliver it too. And they know that execution of these plans is increasingly difficult. So they need to engage their people. People are no longer just a resource to be used and expended, they need to be treated as a key asset; being developed and invested in.

I agree that people are central to effective implementation of strategy but I also think people, or at least talent, offer a much more significant opportunity than this. People can be central to the identification and development of strategy as well as its implementation.

The right people, managed in the right way, and supported by the right environment now offer any organisation the greatest opportunity for competitive advantage (or for organisations in the public sector, for transforming the type and level of services that are provided).

This is why the concept of human capital is useful. We should no longer see people as just resources or assets (human resources) but providers of human capital. And increasingly, an organisation’s success is determined by the amount of human capital it has available. Not just because human capital enables it to implement its business strategy, but because of the strategic ambition that human capital enables the organisation to have.

Think about the other sources of competitive advantage which were previously the most important: financial capital and customer capital. When these were each most important, businesses didn’t just think about using them to implement existing business strategies. They have been used to develop new business strategies supported by activities that would have been impossible without them. So why do we think about human capital / people management simply as something that will ease implementation of existing business strategies?

I think we need to be thinking about the extra capability or engagement we could develop in our people, and the additional business benefits this would provide. People management shouldn't just support existing business objectives, it can also provide the basis for setting more stretching or different business goals.

My beliefs about people management

To continue my recent attempt to increase the authenticity of this blog, over the next month or so, I am going to post my top beliefs about people management.

I think these beliefs are probably already quite clear to regular readers and subscribers to this blog, as well as to those who have read my book, and to my clients and other contacts. However, rather than simply present my views about other people’s research and thinking, it may help to see where I am coming from, as a commentator and consultant, if I make it a bit clearer what I do actually believe in.

This may also help you confirm your own beliefs… and you may like to add comments to my blog to agree or disagree with mine…

Strategic Human Capital Management is now available on Kindle

My book is now available on Kindle, Amazon's new e-book, for the amazingly good value of $28.75.

Amazon hopes that the Kindle will become the ipod of reading, and it does seem to offer significant advances over previous similar technologies.

In particular, the Kindle provides access to the web, through mobile broadband which can be picked up from anywhere, not just wi-fi hotspots. So readers can, for instance, check my blog posts on the points I am making on the page of my book they are reading. Or they can easily check what other blogger, or authors such as Peter Cheese, Gary Hamel, Lynda Gratton, Gurnek Bains or John Boudreau are saying about these areas.

88,000 other books are also available, many for just £9.99. And although the Kindle sells at £399, costs will no doubt falls, as its functionality further improves, over the next few years.

It may be difficult to imagine using this advice now, but how many of us could have imagined the ipod and podcasting taking a fairly central role in our lives even just ten years ago?

Then there's the environmental benefits as well.

As well as signalling major changes in reading patterns, the Kindle suggests a very different approach to writing books. This week's Newsweek features an article on the Kindle which includes this quote from Ben Vershbow at the Institute for the Future of the Book:

"The idea of authorship will change and become more of a process than a product."

The article goes on..

"This is already happening on the Web. Instead of retreating to a cork-lined room to do their work, authors like Chris Anderson ["The Long Tail"], John Battelle ("The Search") and NYU professor Mitchell Stephens (a book about religious belief, in progress) have written their books with the benefit of feedback and contributions from a community centered on their blogs."

So what do you want our next book to be about?

Imagination Based Management

I think SHRM President, Susan Meisinger, described the advantages of imagination over evidence quite nicely in August's HR Magazine.

Firstly, she quotes Albert Einstein as stating:

"Imagnation is more important than knowledge. For knowledge is limited to all we know and understand, while imagination embraces the entre world, and all there ever wil be to know and understand."

As AnneLiseKjaer explains, there are no facts (knowledge / evidence) about the future.

Meisinger quotes Thomas Friedman, author of The World is Flat, interviewing an internet expert behind Israel's economic success, as saying:

"We are not investing in products or business plans today, but in people who have the ablity to magine and connect the dots."

Meisinger notes:

"HR professionals have an important role in creating an organisation culture that cultivates the imagination of their workers, taps the power of those imaginations, encourages experimentation and removes obstacles for innovative action."

Absolutely. I think SystematicHR's got some good posts on this.

But my build on this is that HR is more likely to help the rest of the organisation be more innovative when it is being imaginative itself.

So, welcome to the world of imagination based management...

Evidence based management

I was a bit more critical of Philip Stiles' article on global HR than I'd intended, probably because I had just been listening to some mp3 files sent out by the CIPD after the September conference, including one on Phil Rosenzweig on the Halo Effect. And I thought that some of the challenges aired by Rosenzweig applied to Stiles' research.

Rosenzweig emphasises the need for decisions to be based not just research, but good research, which as he explains in his blog , posting on his experience at the CIPD, must be: "well designed, with solid data, and appropriate inferences drawn from the data".

So commenting on in-company research conducted by First Direct (HSBC), he questions whether engagement leads to business performance, or the other way around, and indeed challenges the value of engagement itself: "Engagement is surely important, but by itself is likely to be of little value". Based upon this, he then questions the value of celebrating personal events like births and weddings if this is at the expense of making tough decisions in a business.

Mmm. Well, my belief is that engagement does have tremendous value, and I know that there is engagement research which indicates causation not merely correlation. But I'm not sure I could ever prove this fact to the level of confidence that Rosenzweig requires.

Of course, Rosenzweig isn't alone in emphasising the value of research based decision making. Jeffrey Pfeffer published a book on the subject, Hard Facts, last year. And see this website.

The Academy of Management Journal's October edition also emphasises the need for this research to come from academic rather than just practitioner periodicals.

Also, a few weeks ago, People Management featured an interview with Rob Briner, who is fairly well known for his view that there is no medical or psychological meaning behind stress, and has more recently been talking extensively about evidence based management.

Briner lists empowerment, TQM, excellence, downsizing, emotional intelligence, business process re-engineering, and what he describes as his current favourite, talent management as fads developed due to lack of clear research evidence. Unfortunately he doesn't provide any evidence for this inference. To me, these are all part of my current tool bag, and I use them when the need arises. Yes, these were probably all over hyped when they were introduced but there were good reasons for these peaks in activity too - companies need to be able to identify and apply new thinking that can provide them with competitive advantage, and organisations that have applied these techniques effectively have and do gain advantages from using them.

In fact, Briner does note that "evidence is only one of many factors, such as past experience and organisational data, that should also shape decisions". I agree these other factors are important - and I do agree that research evidence has its place. But I'd also add intuition and imagination to this list.

So if I favour a more rounded approach to people management to pure evidence-based management, why do I post so frequently on the latest research findings (Watson Wyatt , Towers Perrin and IBM etc)? I'll admit this is is partly because doing this draws a lot of traffic to my blog. More importantly, it allows me to describe my own views and the extent to which they agree or differ from the research findings. And this to me is the real benefit of research - it provides the basis for conversations within organisation about what it is that executives within those organisations believe, and what they're going to do.

And most research studies, even the most informal, and even if there are findings that can be challenged, are usually based upon a central nub of 'truth'. On this, I'd agree with Rob Briner who states that: "You need to look at the picture emerging from the cumulative body of research". When many pieces of research say the same thing, for example that engagement does inform performance, this is enough for me.

You may also be interesting in reviewing my comments on HCM as a decision science (here and here). And I also recommend Lancaster lecturer Anthony Hesketh's challenge of scientism.

Global HR in a Flat World

People Management includes an article written by Cambridge lecturer Philip Stiles; 'A world of difference'.

Stiles' research in multinational companies has found that organisational culture has more influence on HR practice than national culture. To some extent, this contrasts with Hofstede's findings that national culture provides the strongest influence on the behaviour of employees. It also contrasts with Laurant's findings that national culture has an even greater impact in global companies than in domestic ones: "a multinational environment causes people to cling even more strongly to their own cultural values". (*)

Why do I say 'to some extent'? Well, firstly, just because this is what HR practice is, it doesn't mean that it's what HR practice should be.

For example, Stiles notes that:

"In performance management we might have expected a large divergence of views in areas such as pay for performance or merit-based promotion, but we found little
or no difference across the world."

To me this is less about global practice diversity than it is about practice diversity per se. It takes me back to Gary Hamel's point that although in most sectors there are a number of different business models, across all sectors there are very few variations in management practice.

We tend to apply 'best practices' without thinking too hard about their application - to sector, function or geography. As Stiles notes:

"Organisations seek what works - and, for HR in multinational companies, the range of options is limited to a few common practices that are believed to secure high performance... Companies imitate the practices of other successful firms to gain legitimacy".

So just because we don't vary our HR practices across countries doesn't mean they would perform much better if we did.

Secondly, Stiles does note that practices do vary, but that these variations are driven by regulatory criteria rather than variations in values:

"We did see local adaptations of global standards, of course, but these were often to do with a particular country's regulatory practices, labour market issues and stage of economic development, rather than its cultural values."

In my experience, it's often hard to disentangle these: regulatory practices are often a result of cultural values. So I'd argue that values are having an effect.

Thirdly, it turns out the culture itself, does actually make a difference:

"Rolls-Royce recognised that traditional, western-style performance appraisals and forms of upward feedback could be problematic in Asian countries. Other western-based multinational were careful when it came to recognising individual achievement in countries with collectivist cultures. But even here we saw in many cases that the companies took a "non-negotiable" approach to their global practices. The local variations they allowed were minor."

Well actually, these look like quite significant variations to me. And even if they are small, it doesn't mean that they're not important. In my book, I quote Thomas Davenport as explaining:

"God is in the details. Nuances make all the difference. Subtle shadings in the definition of human capital elements are magnified when applied in a strategic context."

I'm still with Hofstede - flat or not, I think cultural issues are bound to have a very significant impact on the way we manage our people around the world.


* = Note Stiles quotes research conducted by Gerhart and Fang which shows organisational differences accounted for more variance in employees' values than did country differences.


PS:



I will be speaking on these and related issues in a presentation at VIEW, the online and “virtual” conference and trade show for HR, Benefits, Staffing, Compensation, and Training professionals, on December 12-13, 2007. The event is 100% online, virtual and free to corporate HR practitioners.

My session on Global HR: Trends and Differences is scheduled at 9.00pm GMT / 4.00pm ET and will be followed by a live Q&A with attendees.

VIEW features all the benefits of a premier in-person HR conference without the cost, travel or hassle associated with traditional events. Attendees will be able to interact with over 1,000 people via chat or email, attend educational presentations by over 40 of the best thought leaders in each of 9 pavilions, visit over 70 booths in the exhibit hall and enter to win prizes. The best part is that it can be done without leaving the comfort of your office (in fact, you attend VIEW from wherever you happen to be, as long as you have a high speed Internet connection).

For more information, see www.hr.com/view.

HCM jobs?

In the spirit of authenticity, I should note that although my plan is to focus on consulting through Strategic Dynamics for at least the next couple of years, as I’m making a transition of sorts, it has seemed to be an appropriate time to look more widely as well.

So I’ve recently been talking to a range of consultancies for roles as diverse as Practice Director for HCM at Axon (Europe’s leading SAP implementer) and Client Partner in Leadership Services at Korn/Ferry, but I’ve not yet found a role in another consulting firm that I have felt would enable me to provide as much value as I know I can, and indeed have been doing, through Strategic Dynamics (well, OK, some of them I've not been offered either).

I’ve also considered a return to a corporate HR position. For example, I’ve recently been interviewed by Saxton Bampfylde Hever for a very interesting role: VP, HR Strategy & Planning for a 100,000 employee, UK based multinational.

If you know of any roles like this, or know of anyone who might, or even just someone who may want to talk to me about how we could create more value through their people management strategy and activities, but on an employed rather than consultancy basis, I’d be pleased to hear from you.

For me, the vehicle / contract basis I use for my work is less important than what I do within this work - and what enables me to optimise the value that I add and create. If I can do this best within a corporate role, and can move to this without letting my current clients down, then so be it.

But for the meantime, my main focus will be continuing to go into consultancy work through Strategic Dynamics.

HCM consultancy

As I'm going to be doing more consultancy through Strategic Dynamics, I thought this would be a good time to describe a bit more about the sort of work I do.

Also, I had a very interesting conversation earlier this week with William Tincup and Bret Starr, from US based HCM marketing firm Starr Tincup who have been talking to a number of HR suppliers in the UK this week (see William's new blog). Once we'd talked about the state of the UK's HR / HCM consultancy market, I asked whether they had any advice for me / Strategic Dynamics.

One of their ideas was to set up an HCM ning, which I have started (largely for my own interest and amusement) and you can access here. I must admit I'm not too sure what I do with as yet, however!

They also observed that although I appear strong on intellectual capital, it's difficult to tell from my website and my blog what it is that I do. "You need to make the invisible visible", they said.

This wasn't a surprise to me. I'm continually frustrated that I've not yet found a way to post on my blog about my client projects without betraying client confidentiality (although I'm not sure there will ever be a solution to this). I do need to write up a couple of case studies but other than this, I would simply summarise what I do as follows:

"I help UK / European / global business that already have sound approaches to people management (I'm happy to work on basic, transactional HR activities but don't want this to be the focus of my work) to gain further improvements in the capabilities and engagement of their people, and the effectiveness of their organisations. I do this by working with my clients to:

• Review and develop their people management strategies (through short diagnosis studies, workshops etc)


• Develop strategic objectives and measures for these strategies (often using my HCM value matrix)


• Lead and support major projects to implement these strategies, particularly in engagement, talent management, organisation development etc (I have plenty of experience in assessment, leadership development, organisation design, communication, change management etc)


• Develop the capability of HR Directors and teams to do more of this themselves.

In everything I do, my focus is on providing a significant benefit - helping clients meet their business goals and create human capital / organisational capability that enables them to set different or more stretching business objectives.

So I think what clients get from me is an insightful and collaborative approach, but mainly the ability they need to make the difference through their people."

In many ways, I'm in the same situation with my clients, and particularly potential clients, as these clients, mainly in HR, are when they (you?) have to convince their (your) business colleagues of the benefits of investing in HCM invisibles like engagement.

So, any suggestions, particularly from those of you in corporate HR roles, as to how I can make my services less invisible to you?

In search of Authenticity

In making his move, Andrew reminded himself of the old proverb; "A turtle makes progress only when it sticks its neck out".

I have a mental picture I use to remind me to move forward in life and my career. This is of me, when I was learning to ski, and about to launch down a slope, remembering that I needed to look down the fall line rather than lean back into the mountain - if I didn't want to fall over. It reminds me that I need to embrace change and momentum - to make a move when I know I need to do so.

Some of my regular readers will know that I've been juggling a rather busy portfolio over the last 18 months - my main roles being working for myself (as Strategic Dynamics), as a Research Associate for Learning Light, a Lecturer for CBA in Croatia, and as a Director for Human Capital Consulting with Buck.

This last role has provided me with some good experience while I’ve been developing my own business, and useful development in reward and HR outsourcing (through ACS) - both of which are outside my main areas of experience. It's also been a real pleasure to work with a very talented team.

But it's not been somewhere I want to continue to build my career. So to be authentic to myself, I have recently made the decision to leave and will be concentrating on my own business from the end of this calendar year.

I've still got availability in January if anyone wants to do some work together!

Where's your True North?

One of the key leadership behaviours required to engage their people identified by Towers Perrin is authenticity.

This has been getting a great deal of interest recently.

In Authenticity, Pine and Gilmore, authors of the Experience Economy, argue that businesses / products need to be authentic, noting that consumers choose to buy or not buy based on how real they perceive an offering to be. And the Harvard Business Review has been asking whether outsourcing is killing authenticity.

Perhaps more relevant for HR folks are Rob Goffee’s and Gareth Jones’ Why Should Anyone Led You and and former Medtronic CEO, Bill George’s True North (see http://www.truenorthleaders.com/).

This book shows how anyone who follows his or her internal compass can become an authentic leader. Someone who is genuine, true to what they believe in, and who can lead with consistent values; through their heart as well as their head.

This is the subject of a conversation I had with Invensys VP of Talent Management, Andrew Armes, recently. Andrew is one of the most authentic people I’ve ever met and puts this at the centre of his coaching and process development activities. In fact, for the sake of authenticity, Andrew is in the process of leaving Invensys to set up his own vehicle, Sixth Patriarch, an HR consultancy / executive search firm focused on unlocking individual and organisational performance through authentic awareness and behaviour.

For those of us who have more to do in this area, Bill George recommends creating a personal development plan centred on five key areas:

• Knowing your authentic self


• Defining your values and leadership principles


• Understanding your motivations


• Building your support team


• Staying grounded by integrating all aspects of your life.
  

Not easy, but certainly worth doing, if we want to both get the sorts of business results we need, and to live our lives in a way that will make best use of our time on Earth.

Playing to Win in a Global Economy

Watson Wyatt's Global Strategic Rewards Report (2007/08) notes the difficulty organisations around the world are experiencing in attracting and retaining their employees, particularly those with critical skills and those rated as the highest performers.

The report also notes that we need to better understand the wants and needs of employees.

Employers think the key drivers for people to join their organisation are, in order: career development opportunities (47%); base pay (46%); employer reputation (44%); company culture (34%); nature of work (26%). Employees themselves believe these drivers are nature of work (44%); base pay (31%); job security (30%); employer reputation (23%) and length of commute (23%).

Similarly, employers' views on drivers for retention are: base pay (52%); career development opportunities (47%); promotion opportunity (45%); relationship with supervisor / manager (35%); work/life balance (24%). Employees say the true drivers are stress levels (37%); base pay (33%); promotion opportunity (25%); career development opportunities (23%) and work/life balance (22%).

SHRM recently found a similar lack of understanding of drivers for employee satisfaction. HR professionals noted that these are relationship with immediate supervisor; compensation; management recognition of job performance; benefits and communication between employees and senior management. Employees said the factors were compensation; benefits; job security; work / life balance; and communication between employees and senior management.

As well as employers' lack of understanding of their employees' needs, both reports note that HR tends to think people and longer-term issues are more important than they are.

SHRM: "It remains a challenge for HR professionals to balance the relational aspects of job satisfaction with tangible rewards, such as benefits, compensation, job security and flexibility."

And commenting on Watson Wyatt's report, Richard Donkin in the FT notes:

"Employers, for example, failed to grasp the importance attached by employees to the nature of their work. This intrinsic satisfaction to be found in a job was overlooked by managers, who believed that opportunities for career development would be of prime concern. The distinction is important because the latter assumption relates to future possibilities while it seems the immediate concern of employees is for the here and now of their work."

The reports also reinforce Towers' finding that a range of organisational factors have more impact than employee's relationship with their line manager (although it could be argued that an employee's experiences of these factors is felt through their line manager):

SHRM: "HR professionals viewed employees' relationships with their immediate supervisers aer the most important aspect of employee job satisfaction, while employees placed it eighth on their list."

I think there are some potential flaws in these surveys. The first relates to how well employees understand the basis for the decisions they take. Secondly, in my experience, drivers for joining, satisfaction and retention vary from organisation to organisation. This means that employers' / HR's views of their own employees' needs could be closer than these reports suggest, the actual situation being disguised by the process of averaging. Nevertheless, I think the findings do ring broadly true.

Watson Wyatt point to two further pitfalls linked to this lack of understanding:

• "Misguided investments - Companies and employees have divergent perceptions of the reasons for attraction and retention, so the changes that companies make may not align with employee priorities.

• Poor execution / implementation - Employees may not understand the changes that employers are making."

The last point is a clear concern given that only half of employers say that they communicate reward plan designs.

I would add one further pitfall to this list, from Towers Perrin's recent report on performance management and reward, that there is too much 'timid tinkering' in the design of reward systems where what s really needed in much more fundamental and innovative change.

However, Watson Wyatt's report did identify good news too: organisations are already stepping up their actions, and particularly those focused on the critical employee groups identified in the report:

"To reduce turnover, companies are increasing both their efforts to survey employees (40%) and their responsiveness to the survey findings (37%). Organisations have also implemented off-cycle increases (32%), improved work-life balance (29%) and increased the use of recognition programmes (29%).

Companies are approaching turnover among top-performing employees differently, most often with accelerated career development opportunities (50%), off-cycle pay increases (49%) and rotational assignments (37%)."

Towers Perrin Global Workforce Study 2007

Towers Perrin’s new report provides some interesting insights into engagement

1. Engagement has a significant impact on business and financial performance.

2. Engagement has a significant impact on retention. 51% of engaged staff have no plans to leave their organisation compared to only 15% of disengaged. (Actually the bigger problem may be that 50% of disengaged employees are not looking for a job and are therefore contributing to the ‘living dead'. Towers suggests these staff “may need to be driven out with a crowbar”.

3. Employees are eager to invest more of themselves to help the company succeed. 63% say they set high standards for themselves and 88% say they enjoy work that will allow them to learn new skills:

“Our study paints a picture of a workforce that is energetic, ambitious and committed to working hard and giving its best. This lays to rest several persistent stereotypes: that employees are loyal only to themselves and their careers and are looking to do the minimum to get by.”


However people will only make this investment if they see the personal ROI:

“While the nature of that ROI differs across countries, cultures and demographic segments, there are common elements in terms of people’s desire to be challenged at work, to grow and learn, to feel pride in working for a socially responsible organisation and to make a real contribution.”


4. Despite these positive indicators, the global workforce is NOT highly engaged. Only 21% of employees are engaged compared to 38% who are either disenchanted or disengaged. In terms of global differences, Mexicans proved to be the most engaged, followed by Brazilians and Indians. US respondents ranked fourth. The last engaged workers were the Japanese, followed by residents of Hong Kong and South Korea.

In summary, there is an “engagement gap – between the discretionary effort companies need and people actually want to invest and companies’ effectiveness in channelling this effort to enhance performance”.

5. Engagement depends more on organisational factors than it does personal characteristics and other factors (geography, industry and employee segment etc):

“Personal values and work experience factors have less of an impact on engagement than what the company does – particularly the extent to which employees believe senior management is sincerely interested in their well-being… Organisations can make a huge difference in engaging their people.”


The key influencers are rewards, learning and development, strategic direction, senior leadership, image and reputation, and innovation.

6. Developing a best fit, high performance culture is important:

“There is no one right model for a high performance culture – there are many, depending on an organisation’s strategic priorities.”


7. Senior leaders have an important role:

“People’s views about the company are also shaped more by what senior leaders say and do than by what the individual’s direct bosses say or do. This too contradicts conventional wisdom.”

This findng / conclusion echoes my own perspective and experience with engagement, and was supported by research conducted by myself and colleagues when I worked for Penna. This showed that for knowledge roles at least, key engagement factors tended to be work life balance, senior leadership, organisational value and then the line manager's role (in that order). However the finding directly contrasts with Gallup’s perspective that the line manager has the most important role in engaging their staff.

One potential reason for these differences may be the way that the various tools define engagement. I’m going to have a longer look at this over the next couple of weeks.


Towers’ findings indicate that senior leaders are not making the most of this opportunity. Only 49% of workers say that senior management’s actions are consistent with their values and just 38% say that senior management are sincerely interested in employee well-being. Only 10% agreed that “senior management treats is as if we’re the most important part of the organisation” (the core concept in HCM). More than half felt “senior management treats us as just another part of the organisation to be managed” (as in Human Resources) or “as if we don’t matter” (Personnel).

To engage their people, leaders need to make the leap to a more inspirational and engaging style of leadership (see graphic):

Unlocking the DNA of the Adaptable Workforce / 3

IBM provide some useful drivers of employee retention.

However, interestingly, their report almost completely overlooks engagement. For this, we can look at the recent Towers Perrin report and 'll post on this later on today…

The new frontier of human capital measurement

InfoHRM have just launched a report on human capital measurement in Europe.

(Actually I would argue that the report is about HRM / HCM measurement, as it is the management of human resources / human capital, not just the human capital itself, ie all stages in my HCM value chain, that is being measured.)

European HR leaders emerge as agreeing strongly that HR measurement will increase in importance over the next 5 years. Against this, they are extremely concerned with the ability of current measurement systems to meet the increasing demands of HR reporting and analytics.

Over 75% of organisations still need to make the leap from measuring efficiency to effectiveness, and many have still to move from process-based metrics to human capital impact measures.

I think what InfoHRM are saying is that these organisations still largely to move from cell 2 to cell 8 in my HCM value matrix:






For true HCM, I'd suggest organisations really need to think about measuring human capital itself in cell 11. And although I have concerns about an increasingly heavy focus on measurement in taking organisations to HCM (creating value), I agree that it is a hugely important enabler in moving from Personnel, with its heavy focus on activity and efficiency (value for money) to Human Resources' focus on effectiveness (adding value).

So I think InfoHRM's report is a useful intervention to encourage organisations to make this journey.

I just don't think these organisations should confuse this with getting to HCM.

Unlocking the DNA of the Adaptable Workforce / 2

Building the adaptable workforce also requires the ability to identify the location of experts, and to encourage collaboration between people to innovate, share knowledge and solve problems. Interestingly, organisational reasons (silos, lack of priority etc) are seen by IBM as much more important barriers to effective collaboration than difficulties with technology

And as well as focusing broadly on the entire workforce, adaptability requires the use of talent management with a greater emphasis on segmenting and targeting talent throughout the entire employee lifecycle (ie my vs Peter Cheese's definition of talent). To do this effectively, organisations need to become more innovative in the ways they attract, motivate and develop employees.

Focus is also required on what in many organisations is a leadership gap. In fact, an inability to develop future leaders was cited as a critical issue by over 75% of IBM’s survey respondents. However, developed leaders need to be given challenging roles that allow them to apply their new skills if they are not to be lost to competitors (echoing the finding in Watson Wyatt’s Human Capital Index that development can have a negative impact on business performance unless it is put to good use).

IBM also believe that managing this kind of talent market requires a structured, analytical approach: “A more data-driven, fact-based method to hire, pay and reward top performers”.

“If the workforce is truly to be valued as an asset, much like financial capital or brand equity, the entire C-suite, not just HR, will need more robust and accessible information about current and future talent needs, employee productivity and resource availability.

No matter how much respect the C-suite may have for the CHRO, until the HR organisation has access to workforce data and information with the same level of timliness, consistency and validity as the financial or operational data available to the CFO or the COO, its insights will not hold the same weight.”

This argument doesn’t work for me. Human capital may be just as important as financial or brand capital. But this doesn’t mean that human capital is like financial or brand capital, ie should be treated in just the same way as them. Management of financial management involves cause and effect relationships. Management of human capital requires an understanding of
complexity.

Again, I’m not against measurement and analytics, but I think these need to be conducted very strategically, and often qualitatively. And I simply don’t believe that more or even better measurement is the difference that will make the difference in HR’s strategic impact. The magic is in truly developing an adaptable workforce (or whatever you decided is going to be your organisational capability, perhaps even something that will make you seem a bit strange?), and using measurement as an enabler to this.

Unlocking the DNA of the Adaptable Workforce / 1

Through this recent global survey, IBM have developed four themes they believe need attention in the global economy.

Finding that only 14% of their respondents believed their organisations are very capable of adapting to change, IBM identify ‘developing an adaptable workforce’ as their first theme. To make improvements here, organisations need to be able to predict future skill requirements, be able to identify and locate experts and be able to collaborate across their organisations.

This supports recent findings by InfoHRM that only 14% of organisations are prepared for the potential loss of skills, corporate knowledge and leadership that will occur within the next five years. In fact 79% already report a big gap in their talent pipeline, and 40% say that this is already an acute problem for them.

Don Taylor has already posted on how capability management and the support or usable competency frameworks supports effective skills planning and management.

I’ve also already posted on the value of competency frameworks to support integrated HCM systems.

Forrester explain the point well in the Forrester Wave: Integrated Performance and Compensation Solutions, Q3 2007:

“Well-defined corporate and job-specific competencies are the glue that binds performance, succession, and career development planning. In an integrated environment, employees can be assessed, promoted, and compensated based on the achievement and development of competencies that have been proven to affect bottom line results.”

But there’s clearly a push-back against their use.

Jason Corsello, the Human Capitalist, has argued that competencies are overrated.

And I’ve also already commented on Bersin's findings that many organisations are using more generic profiles rather than competency frameworks to drive HCM systems integration.

I still think competencies can be a big enabler towards the adaptable workforce. But I do agree that it’s essential that they are developed and managed in an appropriate way.

As IBM note,

“When developing a formal skills management approach, organisations need to strike the right balance – tracking the appropriate number of skills without creating competency models that collapse under their own weight.”

Mobilising Minds

Mobilising Minds , written by two consultants at McKinsey provides more evidence for S curves.

Noting the current environment of increasing complexity, the author's suggest that today’s companies are built according to the 20th century world, and:

"Primarily to mobilise their labour and capital assets – not the intangible assets that enable profits per employee to rise to levels never seen before."

The authors recommend that CEOs and their top management teams devote "a large fraction of their total capacity to the internal task of design and building the needed organisational capabilities".

I’ve already posted extensively on my view of these capabilities. The McKinsey consultants see them being mainly focused on mind power: "intangible output of thinking employees, those who use subjective thinking and problem solving to do their jobs".

The challenge then is "to convert opportunities from the latent mind power that already exists in its workforce".

This is seen to be largely a matter of placing organisation design at the centre of strategy (rather than hoping that an organising model will evolve through serendipity) to enable the flow of intangibles through the organisation.

In particular, this organisation design should encourage:

- formal networks to enable people to collaborate, for example in communities of practice

- talent marketplaces which allow managers seeking talent and job seekers to find each other

- knowledge marketplaces which allow employees seeking particular kinds of knowledge to find those ‘author workers’ wanting to build their personal reputation – for example, through internal blogs.


(This focus on organisation design reminded me of Dave Ulrich's points when recently updating Michigan’s HR competencies that "HR may be placing too much emphasis on talent acquisition at the expense of organisational design".)


These aren't terribly difficult requirements, and so the authors declare themselves:

"Quite comfortable believing that even the average large company should be able to target improvements of 30 to 60% or more simply by investing in designing and building the strategic organisational capabilities needed to mobilise mind power."

S Curves - Evidence

A couple of reports I have been reading recently support my view that we are moving to a new sigmoid curve for people management. I'll post more fully on these reports later, but I note the key points that relate to S curves below:

Firstly, Tower Perrin's 2007 Global Workforce Study, 'Winning Strategies for the Global Workforce'.

Noting that "the fundamental element required to thrive and grow in today's business environment is people - the energy, ingenuity and engagement of your workforce", Towers' report proposes that "senior leaders need to make the leap to a more inspirational and engaging style of leadership".

I think a ‘leap’ suggests a move from one S curve to another.

Why a leap? Well, it's clear that leaders are not "walking the talk" when only 37% of employees believe that "senior management treats them as valued and respected contributors".

The potential to engage employees is clearly there - "employees are eager to invest more of themselves to help the company succeed (and will do so if they see the personal ROI)". So why aren’t we leveraging this?

Well, Watson Wyatt’s global strategic rewards report 2007/08, ‘Playing to Win in the Global Economy' suggests that many employers are being slow to wake up to the changing demands of the workplace and employment. Too many remain wedded to traditional assumptions.

Thirdly, IBM's Global Human Capital Study 2008, ‘Unlocking the DNA of the Adaptable Workforce', quotes IDC analysis which states “With low unemployment, aging population, and employees’ weakening allegiance to the workplace in many economies, companies are expected to look to revamping their human resources and talent systems, and 2007 could emerge as the turning point for these changes.”

They conclude that “The Human Resources function has a unique window to make a strategic business contribution by shaping the adaptable workforce. If there ever was a time and an opportunity for HR to prove its strategic mettle, it has arrived.”

So are we at the turning point? Can you see the window of opportunity? And have you made the leap yet?

The Talent Powered Organisation

I’ve just started this new book, written by Peter Cheese and colleagues at Accenture.

I’ll come back to the key points in this book again later, but I thought I would post now on Accenture’s, and my own, definitions of talent and human capital.

Peter Cheese’s definitions first:

Talent refers to the “total of all the experience, knowledge, skills and behaviours that a person has and brings to work”. It is therefore “an all-encompassing term to describe the human resources that organisations want to acquire, retain and develop in order to meet their business goals”.

Human capital “conveys a greater sense of the value attached to the employees of an organisation, and a wider sense of economic contribution than is inspired by the term ‘talent’ ”. It “tends to be used when we think about the strategic, economic and financial aspects of talent, particularly how human capital contribution could be permanently increased by investing in human development”.

Peter Cheese also notes that “ ‘Human capital has fallen out of favour in some quarters.” This is supported in Tech Republic responding a post ‘Why human capital is insulting’ yesterday.

As I said in these comments; for me at least, HCM is about managing people in a way that accumulates an intangible called human capital in order to drive competitive success (‘managing people for human capital’, not 'managing people as human capital').

(And I would argue that this is terminology, not jargon.)

Human capital’s link to economic and financial success is an important aspect of the concept, but I think we need to define it by what it is (an intangible capability) rather than what it provides (the basis for competitive, economic and financial success).

Talent, again for me, relates to people with specific and important skills or other attributes, and therefore relates to one or more sub-groups of the full employee population. Talent will therefore provide a sub-set of an organisation's full stock of human capital (but based upon the Pareto principle, my provide a substantial proportion of it).

When I get time, I will develop these points in my wiki but (whether or not you agree with me or Peter Cheese, or you have a perspective of your own) please do feel free to add your thoughts or other definitions there too.



For those of you in search of further information on talent vs human capital, I'd also recommend
Don Taylor's post on the subject.

'My Budget Day' - an opportunity for Employers of Choice?

Insurance provider AXA is launching My Budget Day later this month - a national programme designed to encourage all UK adults to commit one hour a month to sorting out their finances.

The company is calling on all UK employers to make a commitment to helping employees take control of their finances by giving them one hour off work each month to spend on personal money management. The company has pledged this to its 12,000 UK employees and is asking other employers to do the same. The initiative is supported by both the CBI and the UK's largest union, Unite. Personnel Today has also run a very favourable story.

There are certainly some potential merits in this initiative, for AXA, and any other organisations that choose to implement it.

Providing employees with time off to manage their financial affairs helps to show that AXA cares about its people and to position it as an employer of choice. It shows that AXA understands that work and life are separated only by a very porous boundary and that if staff are stressed in their non-work lives, this stress will percolate through into the organisation as well.

Life is certainly getting more difficult, complicated and more stressful and I think organisations need to recognise this.

I certainly understand the need for sound personal financial management - I've just had my report and accounts returned to me for more work by HMRC!

But other areas of life are complicated too. One of my main frustrations is the post office's new charging system. I am sure that as a nation, we waste more value standing in line to weigh and measure envelopes than the post office saves us through their own increased efficiencies.

So why are AXA focusing on financial management here? Because of the sector they are in, of course. And this isn't just about the PR benefits of this scheme. It makes a lot of sense for AXA to ensure that all of their staff spend time on their own financial management, just as AXA's customers must do.

But for other organisations, there are a lot of other areas they could focus on to show their staff they care. CSR / green initiatives in particular, are likely to resonate with staff at this time.

So while I support AXA's recognition of potential stress contagion between work and life, and their proactive actions to manage this, I wouldn't suggest that other businesses feel that financial management needs necessarily to be the focus of their energy to deal with these issues within their own organisations.

So my question is, what are you going to give your employees one hour off per month to do?

Complexity in HCM (sigmoid curves / 2)

One reason I think that the new people management S curve is less rather than more measurement focused is because of the nature of the elements we are dealing with.

Personnel and HR Management have dealt mainly with tangible aspects of people working in organisations – for example, absence / attendance, hard skills etc. The management of these elements depends on fairly clear chains and systems of cause and effect relationships.

Human Capital Management focuses on human capital, for example, leadership capability, engagement, wellness, etc, which are all intangibles. The management of these intangibles will demonstrate the attributes of complexity: cause and effect being distant in time and space.

In the November edition of Harvard Business Review, Thomas Stewart describes these complex circumstances as:

"Where the truth is not immediately evident even to an expert but emerges over time, where cause-and-effect relationships are not well established, where positive results come from offering incentives rather than issuing commands, and where, consequently, the tools of influence and decision making are subtle and ill-defined."

Providing a Leader's Framework for Decision Making, David Snowdon and Mary Bone compare complex to just complicated contexts:

"In a complicated context, at least one right answer exists. In a complex context, right answers can't be ferreted out. It;s like the difference between, say, a Ferrari and the Brazilian rainforest. Ferraris are complicated machines, but an expert mechanic can take one apart and reassemble it without changing a thing. The car is static, and the whole is the sum of its parts. The rainforest, on the other hand, is in constant flux - a species becomes extinct, weather patterns change, an agricultural project reroutes a water source - and the whole is far more than the sum of its parts. This is the realm of 'unknown unknowns', and it is the domain to which much of contemporary business has shifted."

They explain that in a complex environment, leaders must guard against temptations to "fall back into habitual, command-and control mode" and to "look for facts rather than allowing patterns to emerge".

Measurements don't help because "though a complex system may, in retrospect, appear to be ordered an predictable, hindsight does not lead to foresight because the external conditions and systems constantly change".

Instead, leaders must:

• Probe, sense, respond
• Create environments and experiments that allow patterns to emerge
• Increase levels of interaction and communication
• Use methods that can help generate ideas.

HCM – a right brained approach to people management?

The right brain vs left brain test - do you see the dancer in this link turning clockwise or anti-clockwise?

I’d come across this wonderful test in HR Circles a couple of weekends back, but neither my wife or I could make the dancer turn anti-clockwise, so I dismissed it as a bit rubbish. However, on Friday afternoon (my office bans access to blogs, but they don’t know about Google Reader, ha ha!), I read Scott McArthur's rant stating that he did see her rotate clockwise, and I decided to have another go.

I won’t say quite how long I tried to sort it out for myself, but eventually I asked some of my colleagues to state their views. One of them, Nick, said he thought she was turning in a clockwise direction. When we talked about what we were each seeing, the way to change the movement of the dancer became quite apparent, although making the switch still proved quite hard.

If you’ve now had a go, and for at least those of you who have been paying attention to my blog, particularly to my own rants against excessive measurement, you won’t be surprised to learn that I see the dancer rotating in a clockwise direction.

I guess this perspective was also partly behind my gradual move from chemical engineering into HR. OK, HR can be left brained too, but it doesn't normally require partial differential equations!
So am I simply biased against measurement because from a personal point of view, this isn’t the way I think?

Well, I’m sure this plays a role. But I also strongly believe that HCM, or whatever we want to call people management in the new sigmoid curve, has to rely on a right brained, rather than a left brained approach.

Sigmoid curves in people management

One question I was asked in Jakarta was how participants could convince their Chief Executives of the need for qualitative evaluation when these Executives most likely come from a quantitative perspective / function (ie Finance) themselves.

I provided some suggestions for doing this during the presentation. However, I wonder whether these ideas really provide the right answer to this question.

I think instead, that I would go back to the inputs I made on the S-shaped or sigmoid curve described by Charles Handy. This curve describes the typical lifecycle of products, companies, economies, jobs and people. The curve shows how progress starts slowly, picks up over time and increases more rapidly as positive feedback loops take effect. Eventually, however, the curve plateaus out and a new state of temporary equilibrium emerges as negative feedback takes control. Finally, this leads to decline and death. However, for products and for jobs at least, there will often be a second curve.

Handy explains that the increasing pace of change means that these new curves are proliferating and that their life cycles are being completed ever more quickly. This is leading to increasing dissonance and confusion. Handy believes the paradox of change is that the movement from one curve to the next needs to take place when there is the least apparent need for it. If people wait until they need to change, resources and energy will have already been depleted. At this point, they have momentum for change but little capability to achieve it.

In Jakarta, I provided one example from a session I had attended at Henley Management College earlier this year. Here, Mark Thompson, Director General at the BBC had used S curves to illustrate the changing nature of broadcasting. The BBC are competing against other organisations in three different S curves: analogue, digital and web. Each of these require different strategies and investments, which is behind the organisation’s current budget challenges. So for example, in the digital curve, the BBC needs to at least maintain its current number of channels, even though in the on-demand future of the web S curve, for which the BBC is developing its i-player, channels are largely irrelevant.

Andy Grove’s Strategic Inflection Points (Only the Paranoid Survive), and Malcolm Gladwell’s Tipping Points refer to the same thing.

I’ve also recently referred to Gary Hamel’s use of S curves to support his views about the future of management.

My guess is that the next S curve isn’t so rooted in financial and quantitative disciplines as the current one. So do we make our case for the future of people management using the type of language that’s in use today, or do we focus on educating the rest of the business in this new, qualitative, people focused language, to help them move onto the next curve?

I think to get real, transformation change, we need to bite the bullet and go for the later of these.

Think differently about autism!

I have a nephew with autism and would like to highlight a new campaign being run by the National Autistic Society.

The aim of the campaign is to raise awareness of autism and the problems encountered by autistic people in their everyday lives. The attitudes of others can make a world of difference to autistic people and a little understanding can go a long way towards helping autistic people to navigate their way in a world that, for a lot of them, can be a very worrying and confusing place.

You can help this campaign by simply looking at the campaign website to find out a bit about autism and gain some understanding of the difficulties that autistic people face. And it would be great if you could also forward this note to as many people as possible to help raise awareness.

Many thanks for your time.







Dear Supporter

The NAS is the leading charity for people affected by autism and is committed to creating a world where autism is understood and where people affected by autism receive the help and support they need.

We want to change how people think about autism - so today we have launched our new think differently about autism campaign to create greater understanding of autism.

We need your help to get as many people as possible to think differently about autism and join the campaign so we can make a real difference for people affected by autism.

There are loads of quick and easy ways you can support the campaign and help spread the word.

Visit our campaign website http://nas-autism.org.uk/re?l=bks3tpI38hi4adI1 to sign up to our government petition and find out about other ways to support the campaign.

Watch the first of our four campaign films and then forward it to your friends and family.
Encourage everyone you know to visit the website and support the campaign.

Coming soon…

In spring 2008 the campaign will focus specifically on the issues facing adults with autism and campaigning for the UK government to take action to address the desperate lack of services and support for adults with autism. We will keep you updated on how you can support this part of the campaign.

For more information about the campaign please email us at thinkdifferently@nas.org.uk or call and leave a message on 020 7923 5788.

Thank you for your ongoing support!


The National Autistic Society 393 City Road, London, EC1V 1NG, United Kingdom.Tel: +44(0)20 7833 2299, Fax: +44 (0)20 7833 9666, Email: nas@nas.org.ukVAT registration number: 653370050; Registered charity number: 269425 © The National Autistic Society 2007.

Mind Bullet from Strategic HCM

I would just like to take this opportunity to congratulate Martin Lukes, as a fellow blogger, on his promotion to Chief Exective at a-b glöbâl.

Somehow, I can’t see things progressing smoothly however!

Indonesia Human Capital Forum (Questions and Answers)

I've just finished my presentation on 'Human Capital to drive Business Excellence' at the Human Capital Forum in Jakarta (alongside US based business excellence / Baldridge consultant Mark Brown).

It was an excellent event - extremely well organised, sponsored by a knowledgeable and articulate Minister form the Indonesian government and attended by 300+ participants, armed with a large number of high quality, probing questions, which I think says a lot for the Indonesian HR profession and business management teams.

I didn't get through all of the questions that were asked me, so once I have received these from the organising committee (*), I will add my answers to these questions to this post. Participants can also email me any additional questions direct, or can provide your questions as a comment to this post (click on 'Comment' below this text).

Thank you all for your great participation.

* = I'm afraid we weren't able to track down these questions.