Friday, 19 December 2008

HCM in the Balanced Business Scorecard / Strategy Map

 

You can see the separation of the people and business management systems in most businesses' strategy maps.

Most, in fact very, very nearly all, show linkages between objectives in the internal process, customer and financial perspectives.  But there are very rarely connections between people and objectives in the other quadrants.

 

 

Why is this?

It's because what we do in HR, and the deliverables of this activity, ie human capital, affects everything else we do in the business.  Eg having engaged people doesn't just support one objective for operational success, it supports all of the objectives within 'internal processes' and also directly informs objectives relating to customer and financial success.

They're two different systems, see.

But this only works if you think about human capital as the output of what HR does, ie of the people management system.  Still think human capital is just unnecessary jargon?

 

 

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Thursday, 18 December 2008

HCM and business success

 

   I also wanted to pick up on Richard Donkin's comments linking success in human capital management systems and business results. Writing about the Royal Bank of Scotland, Richard asked:

"So were we all wrong? I think the answer is 'no'. The HR team headed by Neil Roden at RBS has done some pioneering work in performance management. The bank's recent decline in fortunes tells us not that HR is ineffective, but that HR's value may be less than is sometimes claimed. It couldn't halt a slide in investor confidence as the bank was engaged in consolidating an expensive purchase of Dutch bank ABN Amro."

 

This is something I come across a lot.  For example, I often use Yahoo! as an example of personalised employer branding.  But I know some people will feel that the fact that Yahoo's business is still in casualty detracts from this case study. And I was even expecting a bit of a back lash against road-kill Woolworth's recruitment team winning a Personnel Today award recently ("if they had been recruiting the right people, they wouldn't have got into this mess would they...").

I don't think these criticisms hold.  HR doesn't have to be operating in a successful business to be good.  And poor HR still can be found in many profitable businesses.

 

Human capital as a bridging concept in the HCM value chain

I've previously posted about the HCM value chain and how this can be used to show that HR can take accountability for human capital, but I think this also shows that HR can't be accountable for business results.

The CIPD talk about human capital being a 'bridging concept' and I think this is absolutely right.  Human capital bridges between two systems - a people management system, and a business system.

The output of the people management system is human capital (creating value), or the human resources required to meet business goals (adding value).  And these are the inputs to the business system as well.

HR can be accountable for the outputs from the people management system.  Ie we can ensure that the business has the capability, levels of engagement etc it needs to be successful.  But what it does with this human capital is largely down to others outside of HR.

 

OK, you might expect some links between good HR and good business, and if poor management or poor behaviours are the fault of poor business results (as I've previously suggested has been the problem in the City) then you'd want to see HR challenging these.

But good HR / HCM can't guarantee business success.  The best it can do is to stack the odds on your side.

 

 

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Wednesday, 17 December 2008

Remaining arguments for investing in human capital

 

   Here are my top five arguments for investing in human capital.  As I noted in my last post, the first of these is currently rather debatable (I think you can make a case for people being less important than cash at the moment), but I strongly believe that all of the other points still apply:

.

1
Human capital has become increasingly important to future returns (and therefore to market value)
2
Human capital will become more important again in the future, and will be key to turning the corner as well
3
Financial capital may have become more important again, but cash still needs people to spend it
4
People need even more support at the moment (see for example this post by Erik Berggren on SuccessFactors' Performance & Talent Management blog)
5
People account for a substantial proportion of organisational costs and this expenditure needs to be optimised.

 

What arguments would / do you use, and how have they changed over the last year?

 

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Tuesday, 16 December 2008

Human vs Financial Capital?

 

The increasing importance of human capital, not!

I used to use this slide, from Baruch Lev at Brookings Institute, in a lot of my presentations to illustrate the increasing importance of human relative to financial capital.

I don't do so anymore.  I don't know exactly what has happened to the graph during 2008, but it seems pretty clear than tangible assets (explained market value) have once again established themselves as a much more significant proportion of overall market value, and that therefore, from this way of looking at it at least, the importance of intangibles, including human capital, has reduced.

We seemed for a while to be operating in an environment where human capital, rather than processes / technology or financial capital, was the key driver for competitive advantage.  I used to argue that this made people management the core business process, and made HR the most important business function too.  However, for many firms, those days have, at least temporarily, gone.

 

Perspectives

So I was interested to see a post on Donald H Taylor's blog responding to an article by Richard Donkin, which noted that "the tired assertion, ‘people are our greatest asset’, has been disproved by the credit crunch".

I think Richard and Don both made good points, and I was particularly enjoyed reading Richard's suggestion that we also need to value, or at least take account of the role of "abstract, human, emotional, constituents - trust, love, anger, panic".

The arguments for and against human and financial capital have also been made elsewhere, for example, in Deloitte Debates.

Deloitte makes the case that although the financial crisis is getting all the attention, the talent crisis didn’t just magically disappear.  However, their counterpoint is that "actuallly, it sort of did. This might sound harsh, but the recent market crash may actually ease the talent crunch by forcing workers to put off retirement for a few years".

Another good point...

 

Summary

My summary of all of this is that is that the human capital / people are our most important asset argument currently doesn't hold as well as it did before.  So as I said earlier, I'm no longer using it.

I don't think it matters too much - there are plenty of other reasons why people should remain an organisation's top priority.

I'll see if I can come up with a list if you'd like...

 

 

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Friday, 12 December 2008

This blog / Human Capital ning

 

   In my last post, I started commenting on my recent interview on William Tincup's Human Capital Vendor Space

As I explain to William in the interview, one of the things I want to focus on during the early part of next year is the human capital community ning I set up last year, after a conversation with him, but haven't had the time, or the inspiration to do much with as yet.

I want to start using this community platform to start pulling together, discussing and validating some of my ideas I've been blogging about over the last 18 months, and use this conversation as a basis for documenting what we together think lies at the heart of this approach.  Perhaps a manifesto for HCM?

I would just say though that I think we will need to share some core beliefs to support this document / manifesto, or we won't be able to agree on anything.  For me the key idea at the centre of HCM is that it's about managing people for the accumulation of human capital - and that this becomes the central business goal (business impacts are then the output from human capital, rather than starting point of business strategy itself).

And if human capital is the central business goal, people really are the key to effective business performance, and they need to be treated as such, ie with due care, investment and respect.

It's why I strongly disagree with another of William's posts, calling for an anti-humanity manifesto for HR.  In my view, such a manifesto has got to put humanity at its very heart.

Whether you agree with this or not, I'd really appreciate your participation in this community.  There are already a couple of members who I don't think are going to agree with a lot of this.  Which should of course lead to some rich discussions.  And I'm sure the community will continue to discuss other issues unrelated to the document / manifesto as well.

And from next week, I'm going to become a lot more active on the community too.

You can sign up here.

 

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This Blog: You, Me and HCM

 

     I've recently been interviewed on William Tincup's Human Capital Vendor Space about this blog.

After having responded, I've been thinking further about my responses.

I explain to William that the main reasons I continue to blog are the opportunity to discuss HCM this gives me, but also the internet footprint it provides.  So for example, search in Google for 'McKinsey War for Talent' - which quite a few people do - and one of my posts generally pops up on the front page.

I've not had a huge amount of work from my blog, but I've had some, and it's increasing.  As I say in my interview, blogging is a key part of my business strategy.

But I've been noticing that I've been feeling a bit ashamed of my response.  This isn't the way blogging is supposed to be, is it?  Most of the best blogs make a point of putting their readers first.  They're about providing knowledge, ideas and suggestions - for 'you'.

Some other blogs are about them (ie 'me') but I think this only works when the writer is a bigger names / ego etc than me.

So this blog is about 'it', which in this case is HCM.  I just think it's an important enough area, and one I'm clearly passionate about, that it justifies a blog of its own, even though this may mean my posts may be rather less personal than those from other blogs you may read.

But please don't feel that this focus on 'it', together with some commercial undertones, mean that I'm not interested in your readership and participation.  I wouldn't be blogging if I simply wanted to document my thinking, and I am sure there are many more productive ways I could use my time to grow my business.  I do need and value your comments, and they do help direct my thinking and therefore future posts.

So do please keep on reading and commenting, and if you've not done so, you may want to subscribe to my feed in your reader: http://feeds.feedburner.com/JonIngham.

 

Oh, and do check out William's other interviews, and his interviewees' blogs as well.

 

 

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Tuesday, 9 December 2008

People Challenges in Russia & CIS

Russia conference

О Конференции:

Мировые практики подбора, обучения и удержания персонала

Как успешно справляется Ваша компания с увеличивающимися организационными требованиями и изменениями в бизнес - среде?

Состав престижных докладчиков:

СОВЕТНИКИ КОНФЕРЕНЦИИ

Автор книги 'Strategic Human Capital Management', HR консультант

People Challenges in Changing Business Environment

International HR Conference for Russia & CIS

Moscow, Russia

29th – 30th January 2009

YOUR PRESTIGIOUS SPEAKER PANEL

EXPERT ADVISORS

Author of 'Strategic Human Capital Management' book

I will also be speaking at this conference in Moscow looking at how Russian companies keep their workforces focused and productive, in spite of rapidly changing market environment and economic turmoil.

8th Middle East HR Conference

 

   I'll be presenting at the annual Middle East Human Resources (HR) Conference and Expo running at the Jumeirah Emirates Towers in Dubai on February 25 – 26th 2009.

This year the event will bring together a diverse, international group of the world’s top thinkers in human resources management to discuss the latest concepts and practices from across the globe.

The conference will include sessions that discuss the latest HR innovations and creative techniques. It will also provide information on critical business issues, such as enhancing employee loyalty and retention, employee learning and development, alignment of HR practices with overall business strategies, diversity, development of workforce skills and leadership development.

 

 

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Monday, 8 December 2008

Investing in Bob

 

   Last week's Talking HR show (006) focused on one 'Bob', but today, I'd like to talk about another: a talented young man who has recently started at University and whose tuition costs are being covered by investors in return for a percentage of the student's future earnings over a fixed period of time.

This form of "human capital contract" has recently been reviewed in a Boston Globe article, 'Betting on Bob'.  The article notes that:

"The concept of human capital contracts was originally the brainchild of economist Milton Friedman. In 1955, he wrote a paper, later reprinted in Capitalism and Freedom, proposing that equity-like instruments, rather than debt, should finance higher education.  For Friedman, equity financing was a way to keep government out of the business of paying for higher education."

 

Pros

Unlike with student loans, repayments on human capital contracts are scaled to salary received after graduation.  This means that graduates are freed of the risk of overwhelming debt and are able to pursue socially valuable but low-paying work such as teaching.  And investors face reduced risks of default then under a more conventional loan.  And if a graduate finds a job with a high salary the investors stand to gain more too.

 

Cons

Of course, there are quite a few problems with the idea too.  I think the main one of many reviewed in the article is one of 'adverse selection': that students who expect to be well paid in the future (tomorrow's doctors and lawyers etc) have less incentive to get involved than those who don't (eg the future artists and nonprofit staffers):

"Why, after all, would students who anticipate fabulous success sign up to subsidize their less go-getting peers? A student who intends to be a high-flying investment analyst might calculate that the payments on a traditional private loan are likely to take a smaller bite out of her salary than those for a human capital contract would."

 

Examples

This and other problems means that there are only a few examples of firms offering HC contracts:

  • The main one is Career Concept, based in Germany, "which finances about 2,000 students at 180 universities in more than 20 countries, mostly in the EU. Typically, students are obliged to repay between 3 percent and 10 percent of their income over a period of between four and six years".
  • And another is Lumni which has financed about 150 students in Chile, Colombia, and Mexico and is starting to look at the US. "Students pay no more than 15 percent of their income, and in some cases as little as 1 percent, for up to seven years".

 

My perspective -

However, in general terms, I think the idea is sound, and I see it as just one early example of the way in which organisational reward is going to have to change quite significantly over the next decade.

As each individual's human capital continues to become more important, simply paying them a salary and developing their human capital if it aligns with an organisation's own objectives, isn't going to be enough.  People are going to want to ensure their human capital is maximised and that they are rewarded for the human capital they provide.  They may also not trust their employer fully to do this. 

One of the other problems raised in the article was that human capital contracts are a form of indentured servitude. For example, Sandy Baum, a professor of economics at Skidmore College commented, "I don't like the idea of someone owning a piece of someone else".

To me, this is the key benefit that human capital contracts could provide.  Have you noticed how the entrepreneurs on Dragon's Den often value the input of the dragons more than their cash?  Investors in someone's human capital would take care of their tuition fees, but they could be active investors too.

Bob could ensure that his investors are involved in helping him choose his employer, and they will naturally want to ensure he is getting the best possible development, and the right reward.

Organisations may only just be getting used to including helicopter parents in their younger employees' performance reviews.  They may need to get used to the involvement of helicopter investors too.

 

 

 

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Sunday, 30 November 2008

Singapore / Salary Reductions

 

   I've got some experience of salary reductions from the last Russian financial crisis at the end of the 1990s.  They're never going to be easy to implement and so I was concerned to learn from my Singapore hotel that the city state is slashing civil servant wages

I agree with Management Issues that it's interesting to see the public sector taking a lead in doing this.  The UK would certainly benefit from following the lead and doing something about its public / private sector pensions divide.

But there's a growing need for other sectors to start thinking about how they can reduce compensation costs too.  In particular, I think it's the next thing financial services firms need to think about once they've got their heads around 'maluses'.

I'd recommend readers who aren't convinced of the need to make some rather unconventional changes at the moment to consult some great posts by Know HR.  As Frank Roche explains:

"The world economy is in Holy Crap Mode. If you’re clinging to old HR rules because it’s the only thing you know, it’s time to practice this phrase: “You want fries with that?”

 

 

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Wednesday, 26 November 2008

Value Triangle - Business example

   One of the examples of the value triangle I used at Kennedy, and which also supports my other posts on management innovation recently, is the introduction and developments of supermarket (grocery store) loyalty cards.  This is an example I've used quite often for quite some time, but is also discussed in Gartner's book on the hype cycle which I reviewed on my other blog recently:

"Advances in large-scale database technologies had made it economically possibly by the late 1980s to store the full transaction histories of customers.  The early successes of airline frequent-flier programs and credit card reward schemes in the United States had begun spilling over to Europe... In the United Kingdom, the clock was ticking.  A company called Airmiles was already forging relationships with the retail sector to extend the redemption of mileage beyond free flights and into goods and services... 'Loyalty has emerged as one of the main weapons in the food retailers' endless battle to outdo their rivals', declared the London Times in 1995."

The book describes how it was that although second-place Tesco had launched its card first, it was third-placed Safeway with its ABC card that initially gained the advantage:

"Safeway's advantage lay not in the card itself, but in Safeway's technological ability to analyse the data.  Though smaller than Tesco and Sainsbury's, Safeway was widely known as the most advanced, innovative, and aggressive of all chains in its data processing and analytic capabilities.

In the years after launch, Safeway's marketing strategy of focusing on high-spending your families began to yield the changes it had hoped for.  Supported by card data, Safeway's efforts to attract this lucrative segment were producing an increase in average transaction size... But, unfortunately, the financial benefits resulting from these changes weren't appearing fast enough."

What had been an opportunity to create value soon became one to add value - something that would support existing business but could no longer different one organisation from another - and then simply to improve value for money - if that!

Safeway abandoned its card which it now called a "backpack of stones" and a "flashy, worthless piece of plastic".  More recently, it has been taken over by absorbed into Morrisons which had been a much smaller rival.  And Sainsbury's, which had been the market leader, has joined up with Groupe Aeroplan's Nectar reward scheme.

This is a business (vs HR) / business process (vs management process) example of the value triangle, but I think it demonstrates quite nicely how value deteriorates over time - what's creating value today becomes adding value tomorrow, and what's adding value becomes value for money next month.  And the same does apply in HR.  So if you're only aiming at the bottom of the triangle you've got problems, and don't be surprised when you're outsourced!

And if you're aiming at the top of the triangle, don't think that one creating value idea is going to be enough - you need to continually seek out more value, and find different ways of doing things before your competitors catch up.

And you need to find the right way for your organisation, and at the right time.  Gartner's book describes how Tesco's rather different approach to its own Clubcard catapulted the chain into a market leadership position and still creates value for them today.

"What set the Clubcard apart most significantly was that every quarter Tesco mailed vouchers and discount coupons to its customers... The mailings created what the company called 'emotional loyalty'.  Though expensive, every quarterly mailing generated a sales uptick... that paid for the mailing."

The key difference in Tesco's approach was their realisation that "card data would be worthless unless a company was willing to change the way it did business on the basis of what the data was saying".

This is a key sign of creating value - it's about fundamental change, not tinkering around the edges.

Of course, the key question at the moment is does creating value still matter now?  Should we still be thinking about creating value or is value for money king?  I'd suggest that creating value is even more important than ever, both in business and in HR.  What do you think?

 

 

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Saturday, 22 November 2008

Kennedy's Retention Summit, Orlando

I enjoyed Kennedy's retention summit even more than the main recruiting conference - shame so many people had left!

I thought my fellow presenters (shown from L to R: Derrick Barton, Center for Talent Retention; Greg Smith, Chart Your Course International, Carla Major, Vice President, Human Resources & Community Relations, Harrah's Hotel & Casino and Dick Finnegan., Finnegan Mackenzie, The Retention Firm) presented some great ideas on retention best practices, and I tried to help people think about some best fit, creating value opportunities as well.  I'll come back to these sometime over the next couple of weeks.

 

 

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Tuesday, 18 November 2008

And the best bit of the conference...

  ... meeting fellow bloggers Michael VanDervort, Laurie Ruettimann, Joel Cheesman and Kari Quass.

 

Best wishes to you all (and Laurie, say hi to Mr Scrubby from me).

 

 

(Also see http://strategic-hcm.blogspot.com/2008/11/kennedy-recruiting-conference-adidas.html).

 

 

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Kennedy Recruiting Conference / Adidas Employer Branding

 

    I didn't see that many presentations at Kennedy's Recruiting conference - the pull of the sunshine was just too strong.  But my favourite of those I did was from Steve Bonomo and Steve Fogarty at Adidas as this was a great combination of insight, perspective and practical experience.

Bonomo and Fogarty explained, referring to Frank Lane’s book, Killer Brands, that a brand enables a company to "derive a disproportionate amount of success… because of a compelling and differentiated expectation that comes to be associated with its name".

A true killer brand "will be chosen over competing brands—in any category, in any country, at any time, and often at any reasonable price" and its constituent elements include:

  • Choice: every $ you spend or will ever make depends on choice
  • Expectations: every choice that will be made depends on expectations
  • Focus: is that single, differentiating factor
  • Alignment: is connecting everything you do in perfect harmony
  • Linkage: getting that focus, that expectation carried in the minds of your people.

 

The key to this is the 'differentiating factor' - to find something about your company that is different in your organisation from others / its competitors, and different in kind not simply in degree.  Bonomo and Fogarty recommended that people should "pull, grab, tear the essence of brand from your corporate bureaucracy and bring it to life!".

This can then be built, with design, simplicity and beauty into all relevant delivery mechanisms, eg job templates, recruitment posters etc.

For Adidas, the differentiating factor is the love of sport.  Someone asked a good question - that finding this differentiating factor is relatively easy if you're into spots, or are the US Army, or Cirque de Soleil, but more difficult if you're in transportation.

Like Bonomo and Fogarty, I lean to the view that although it may be more difficult, it will still be possible.

I think the differentiating factor falls out of an organisation's big idea, or BHAG, or what I think it often more motivating, an organisation's mojo.  As I've previously posted, I think this can come from something which is absolutely central to organisational strategy (like an interest in sport), or something which is a complementary focus to the main business strategy - something that will fit beside and support (if not drive) the strategy, but which will be more motivating for employees, eg corporate social responsibility (maybe the solution for the transportation firm).

Whatever it is, I also agree with Adidas, it needs to go way beyond the "canned speeches" organisations often use for this type of thing.

 

 

 

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Thursday, 13 November 2008

HR Carnival 13 November 2008 / Communityship and Culture

 

   The new carnival is being hosted by Alison at Ask a Manager.

My own post is on social leadership, or communityship, and comes from my Social Business blog.  And there's a few other posts which refer to this subject too.

The Career Encouragment blog notes that as the workplace is communal, in order for an organisation to move forward, we have to work together on things.

Talented Apps has a review of Seth Godin's latest book, Tribes: We Need You to Lead Us.  I haven't read this yet, but I think this quote shows the opportunity for communityship, both within and outside of organisations:

” Tribes are about faith - about belief in an idea and in a community. And they are grounded in respect and admiration for the leader of the tribe and for the other members as well. …There are tribes everywhere now, inside and outside of organizations, in public and private in nonprofit, in classrooms, across the planet. Every one of these tribes is yearning for leadership and connection.”

 

I also liked Rick's post on culture, posted at Flip Chart Fairy Tales.  And I feel similarly about his quote that:

"If I hear one more person say that ‘Culture is the way we do things around here’ I will be sick. As a definition of culture it is all but useless. If that’s all it is, you’d just change the way you do things and be done with it."

 

Culture's such a loose phrase, and has been so overused that it's now a very nearly valueless concept.  For example, Ulrich's definition, "the identity of the firm in the mind of your best customers, your firm brand or reputation", is a definition of employer brand, not, to most peoples minds, of culture.

One aspect, as Rick notes, is beliefs and assumptions.  These, and values, are at the heart of what culture is generally seen to be about and is often, but now always, what people mean when they talk about culture change*.  But then if that's what we mean, let's say what we mean.

Or it can be different aspects of Johnson and Scholes' cultural web, for example the organisation structure (real or intended) - as in Charles Handy's power, role, task and person focused model.  It's almost always vital to unpick these different elements, and understand which one or ones need to change.  I quite often use Hofstede's or Schein's onion models for this.

And I think the three elements of organisational capability: human, organisation and social capital (the product of social leadership / communityship - see above) provide a useful breakdown too (because each of these three elements need to be managed / developed in very different ways).  So in big organisational changes for example, when we're already dealing separately with values, structure, business processes etc, the word 'culture' is often used to refer to social capital.

Quite often we're really talking about alignment between these different elements, and between these and the business strategy or organisational capability.

Whatever it is, understanding precisely what we're talking about is the first step towards being able to change it effectively.

 

* By the way, I think changing values, beliefs and assumptions is nearly impossible, unless 1.  there's enough impetus behind it - a big idea, BHAG or organisational mojo that helps clarify, articulate and focus thinking about what the change needs to be (and ensures the desired state can be a competitive differentiator).  Or 2.  an awful lot of energy, commitment and time going into it.  Or 3.  It is allowed to emerge from the organisation, rather than being sold from the top down.

 

Wednesday, 12 November 2008

HR consultants as bad as spam!

 

BT share price   I've just been thumbing through today's People Management, and spotted a piece by Alex Wilson (Group HR Director at BT*), 'How I got where I am today'.

Wilson notes:

"I get fed up with consultants constantly beating at my door suggesting they have the solution to all my ills. They think they can transform my life and the company but I get so many of them it’s just a pain – the equivalent of spam."

 

I do understand the problem, but spam we ain't.  Companies can learn about 'best practice' from listening to other practitioners, and sharing knowledge between themselves.  They're more likely to get 'next practice' (Rosabeth Moss Kanter's phrase) from those who are looking for, and learning from, opportunities to transform a variety of organisations (innovation generally coming from a mix of different experiences and perspectives), ie consultants.

Companies that ignore this opportunity are going to suffer as a result.

 

*   BT shares at lowest level since flotation (one cheap shot for another).

 

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Tuesday, 11 November 2008

Leadership Code

 

Ulrich leadership code   Ulrich's new book deals with the basic aspects of leaderships, or common rules, that he suggests can be effectively used by all leaders, regardless of their context or organisation.

It's a rather strange area for Ulrich to focus on, as he has already said that it is the piece above the leadership code, the leadership brand, that differentiate one firm from another (and therefore provide a basis for competitive advantage).  But then, the basics are clearly important too.

The code consists of four parts, mapped out by two dimensions: time (near and long-term) and focus (individual and business), providing a model which will ring a bell for most HR practitioners), plus a further area: personal proficiency, at the centre.

These provide five rules for leadership:

  • Strategist: shape the future
  • Executor: make things happen
  • Talent manager: Engage today's talent
  • Human capital developer: build the next generation
  • Personal proficiency: invest in yourself.

 

Ulrich emphasises that this model provides a comprehensive structure and guidance for developing leadership capability, and that this is an improvement on a traditional shopping list of leadership attributes.  But I'm still going to suggest an update to his model.

Firstly, I'd like to add another area of focus on the horizontal axis of the model which is the social aspect of an organisation, and responds to the points made by Henry Mintzberg, Gareth Jones and Rob Cross, and which I've discussed on my social business blog.  This would extend the horizontal axis to include individual, social and business perspectives.

And then, I'd also want to add something on organisational effectiveness too (Ulrich himself has commented that organisational development requires a greater focus in comparison to talent management).  And I'd move the strategist / executor focus to the centre of the model.  So I'd end up with three areas of focus on the horizontal axis of Ulrich's model, corresponding to human, organisational and social capital, providing something like this:

My leadership code

 

OK, this model isn't based on the same level of meta research as that conducted by Ulrich and his colleagues, but I do believe that organisation design / development, and the management of people and the organisation for the accumulation of social capital, are increasingly important aspects of any leaders' role.  So I think they should be included in the code.

(The leadership brand, to me, is then simply the alignment of these same aspects around a particular organisational capability, rather than simply a looser linkage to a shorter-term business strategy.)

 

Tuesday, 4 November 2008

HR competencies and 360

 

HR Competencies   If any of my HR readers are interested in receiving a more specific 360 on themselves or their HR team, I recommend those provided by Dave Ulrich's RBL.

These tools use the competencies produced in the 5th round of the Michigan HR competency study which are also the basis for Ulrich's book, HR Competencies.

I have used the previous and now this version of the competencies with clients several times, mainly underpinning HR capability development projects.  But out of the two versions, it is the latest one that works best for me.

I've even grown to prefer it to my own version.  It's the credible activist competency that makes the difference for me, which is why I link it to 'creating value' in the value triangle.  The competency is about being both credible (respected, admired, listened to) and active (offers a point of view, takes a position, challenges assumptions).  RBL note:

"HR professionals who are credible but not activists are admired but do not have much impact.  Those who are activist but not credible may have ideas but will not be listened to."

 

Yes, but for me, between the two it is the activist part that will really make the difference.  This is why I put strategic partnering above personal credibility in my own competency framework.  But I think activism offers something even more important.

Within HR we all know we need to be strategic, but there's still a surprising range of perspectives about what being strategic means.  Not that there's anything wrong with that, I just think all senior HR people need to have their own beliefs about what's important, about how they personally, and how their function will be strategic, and then develop and implement their strategy in line with this belief.  Which is to me what activism is about.

Yes the belief will need to be tested and moderated over time, but I think this will result in significantly  better outcomes than not having a clear belief to begin with.

I'm delivering an HR leadership programme around this activist perspective in Hong Kong next month.  I'll let you know how it goes.

 

Monday, 3 November 2008

Human capital in the Middle East

 

   Ernst & Young's Middle East Human Capital Survey 2008 has found that the human capital function is gradually becoming a strategic partner to regional businesses.  55% of respondents (up from 35%!) indicated that HR is involved in strategy development and effective people management in their organisations.

This is good news given that greater economic growth in the Middle East means that it is becoming "even more explicit that an organisation’s people make all the difference. To maintain competitive advantage, businesses need to invest in people and adopt strategies, policies and practices oriented towards the development of human capital".

However, Middle East HR functions clearly still have some way to go to be real strategic partners:

  • Only 59% of respondents formally link performance development plans with performance assessments
  • Just 44% have a proper succession plan for creating an effective leadership pipeline
  • Only 27% use 360 degree feedback as a developmental tool.

 

If this applies to you, I'll be back in the UAE at the end of November, and hope to visit other countries in the Middle East next year.  So get in touch.

And for 350 degree feedback, see this post and link.


Support for 360 degree feedback

 

   I don't normally like to write about my consultancy support in this blog, but I guess the purpose of the last couple of posts and the survey that supports it, has been to raise interest in this area, so it seems perhaps overly reserved not to mention my perspectives on 360° feedback, and my services in this area too.

I've used various 360° tools for some time and remain convinced that they add significant value to a performance management process.

Firstly, a rounded view of performance is always going to be better than a ‘top down’ one, and so this helps deal with some of the issues raised in the recent WSJ article.

But going, beyond this, 360° feedback also helps encourages an open, feedback culture.  Of course, there's lots more that can be done in this area too, and I've often thought another useful management innovation would be the use of a freephone number of probably a web system which people could use to give feedback on anyone's behaviour real-time (a bit like the lorries that ask people to give feedback on their driving perhaps: rate-my-management.com ?).

But I think the greatest value of 360° feedback comes from its focus on ‘soft’ issues (e.g. management behaviours) which are not easily measured in other ways.  And for this to add value, the approach needs to be introduced carefully and appropriately - eg don't introduce it now to give more focus to behaviours so that you can cut salary increases, or to find out who you can sack!  Do introduce it, if you want to start putting more investment into your leaders and other talent groups to prepare for the next upswing.

In addition, to ensure uptake within the organisation, the focus needs to be as much on the education and communication before the process and the follow up afterwards, as on the feedback process itself.  And this is where my role tends to focus, as well as helping update competency systems, develop questions, providing feedback and coaching around action plans etc.

And the tool I recommend, if my clients don't have their own, is from Couraud - you can find more information here, or there's also a link from the side bar of my blog.

I like the tool for a number of reasons, but in particular because of the way that it combines both quantitative and qualitative feedback about observable behaviours. Any good tool is going to ask a number of quantitative questions about relevant behaviours and to also gather qualitative comments that allow the respondent to pick out any particular areas they wish to comment on.  But this one, also adds some interpretation to the comments, which I think adds a lot of value to it.

 

Sunday, 2 November 2008

360 Degree Review / US Elections

 

   Given that my last post on the UK party leaders has gone out just before the US elections, it's an obvious follow-on to consider what would have been the feedback on Barack Obama and John McCain there.

This is my impression:

  • Authenticity: Obama ahead, given more consistency over the campaign
  • Vision: Obama ahead, as McCain's differentiation from Bush seems to have reduced
  • Hires great people: Obama ahead (Palin, ahem!)
  • Resilience: McCain ahead (off the scale)
  • Sees what's around the corner: A close tie
  • Executes to completion: Too early to call!

 

I don't think this election is going to be won just on leadership competencies, but I do think Obama's likely stronger showing on a leadership 360, is one of the reasons he received my vote (and those of most of the rest of the world).

If you're interested in this agenda, I recommend the Wayne Turmel (the Cranky Middle Managers)'s insightful post, Two Faces of Leadership, also included in the recent Carnival.

360 Degree Review: UK Party Leaders - Feedback

 

Party Leaders 360   Thanks to all readers of this blog who contributed to the recent 360 degree feedback survey conducted by my friends at Couraud (on Nick Clegg, Gordon Brown and David Cameron).

Not too surprising, since it was conducted before Gordon Brown's recent resurgence, David Cameron has been scored most strongly on each of Jack Welch's leadership competencies, with Nick Clegg somewhere between him and Gordon Brown - who trails the other leaders in each competency with the exception of resilience.  Couraud's feedback report notes:

Resilience (This person stands firm, come what may)

The majority of reviewers consider this to be Gordon’s strongest area, scoring him above average for the group (which consists also of Gordon’s counterparts, David Cameron and Nick Clegg).  However, many reviewers qualify their praise. Typical comments are “Gordon soldiers on in the face of adversity”, “he is resilient – in the same way as a rhinoceros hide is resilient” and “even in the face of appalling opinion polls he seems intent on keeping going at his own pace and to his own agenda.”

Though he “stuck out 10 years with Blair and is firmly determined to keep his dream job”, the cracks are beginning to show and there is a sense amongst some reviewers that this strength in resilience could be undermined by perceived policy U-turns. Some comment that for Gordon it has become “self preservation at all costs” and “he’ll hand on because he risks annihilation if he goes to the country”

 

Email me (info [at] strategic [dash] hcm [dot] com) if you'd like to receive a copy of this, or all three, feedback reports.  And contact Couraud here if you'd like more information on getting similar reports for leaders in your own organisation.

 

Writing in the Sunday Times today, Michael Portillo argues that Gordon Brown's personality traits are falling out of focus.  I don't agree.  I think Brown will maintain a stronger position in the polls while the economy remains as volatile as it now, but his lack of leadership competencies are going to strongly influence voter's behaviour at the next election.

 

Saturday, 1 November 2008

HR Carnival 29 October 2008 / bogus performance reviews

 

     A spooky halloween's carnival is being hosted by Dan McCarthy at his excellent Great Leadership blog.

Do read Steve Roesler's 'Why This Is An Important Moment For HR', posted at All Things Workplace (I think this is a more optimistic view of HR's current role than my experience leads me towards, but I think this is much closer to the mark than the latest 'Why we hate HR' rant on BNet).

And then read Wally Bock's thoughts on abolishing performance reviews at Three Star Leadership.  Bock refers to a recent Wall Street Journal article which suggests performance reviews are 'ill-advised and bogus' and should be replaced by 'Two-side, Reciprocally Accountable, Performance previews'.  Bock is absolutely right in explaining that it's the ongoing conversation rather than the formal set-pieces which are important, but I think, although I don't agree with ditching performance reviews, that WSJ makes some good points too.  However, I'd ditch the rather ugly name, and unfortunate acronym ('TRAP'), and just call this coaching, which I think needs to be part of any performance management system worthy of this name.

You can read some of my thoughts about making performance reviews more valuable in this postJessica Lee's reaction to the WSJ article, posted on Fistful of Talent are here.

And do check out the other posts on Dan McCarthy's carnival as well.

 

Wednesday, 29 October 2008

Arranging a proactive exit

 

Career partnership graph   The final, linking, process in the career partnership cycle...

Organisations (line managers, supported by HR) typically use rather reactive approaches to retain their staff. In HRM, companies are generally at least proactive in discussing opportunities within their organisations, but there is still a tendency to pretend the outside world does not exist.

So the unwritten rules in many organisations state that if an employee identified as talent and their line manager see a marvelous job for the employee advertised elsewhere neither person can mention the fact that they have seen this.

Only once the employee has resigned does the organisation take action. At this point, they will use exit interviews as an attempt to re-recruit the employee. If this fails, they will maintain ongoing contact with the ex-employee for six months or more following their departure, in case the career move proves to be unsuccessful. If this does not work, they will invite the ex-employee to join their alumni network hopefully to encourage them to rejoin the organisation again at a later date.

A more proactive, HCM-level approach to retention recognises that the best development opportunities can sometimes be found elsewhere. In this approach, organisations encourage their career partners to review their long-term career development needs and how these needs can best be met – internally or externally. At the appropriate point, organisations may even want to proactively encourage their partners to leave, in order to rejoin as even more valuable talent at a later date.

As the graphic shows, the organisation gains less value from the career partner initially, but gets substantially more value (the coloured areas of the graphics) from them over time.

Implementing this approach would fundamentally alter the talent career dynamic and make it absolutely clear which organizations were operating as true employers of choice. It would also enable organisations to make the most of their career partners and these partners to make the most of their careers.

I'm not suggesting that this approach would be appropriate for many organisations, particularly at the moment, as planning horizons are understandably short-term, but I think these and the other examples from the career partnership cycle, show the opportunity for innovation in management processes.

 

Delivering on a personalised deal

 

Matching expectations   Continuing my explanation of the career partnership cycle...

An HCM perspective recognises that we all have different, individual engagement needs, which will, as the slide (I think from Denise Rousseau although I can't place the source) shows, go beyond the 'standard' EVP offered by an organisation.

I think this diversity of needs is only going to increase. People who see themselves as investors of their own human capital are going to be increasingly interested in what they are getting in return for their investment and how this meets their own individual needs.

Organisations are increasingly going to have to personalize their support, particularly to their most important people (eg their career partners).

Therefore, to engage career partners, organisations need to clarify each individual’s needs and then articulate these, together with the organisation’s requirements of the individual, in a tailored, personalised version of the organization’s EVP.

The performance management process can then be extended into a two-way ‘deal management' process in which delivery against the personalised EVP is the ‘parallel agenda’, on a par with the business agenda as a topic of conversation between the organisation and its career partner.

Many organisations are nervous about having this sort of conversation, fearing that it they help articulate and agree to particular engagement needs, they make themselves hostages to fortune.  That is, they may not be able to deliver on what has ben agreed and demotivate their people who would then leave.  My response would be that they are going to demotivate their people anyway.  A least if the individual EVP has been discussed, they have some chance of meeting these needs.  If it's never been articulated, there's almost no chance of doing so.

 

PS We'll probably touch on this topic on show 004 of Talking HR, "Engagement and Business Performance", which this week will be broadcast on Friday (31st October, at 3.00pm GMT).

 

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Tuesday, 28 October 2008

Recruiting career partners

 

   The first stage in the career partnership cycle is managing the relationship with external career partners then recruiting or re-recruiting partners when the time is right.

The organisation needs to manage carefully its relationship with its career partners while they are not employed: keeping in contact with them; engaging them; checking that they are being looked after and possibly influencing the development they are receiving from their current employers.

The organisation also needs to recruit the best possible talent into the external partner group (or potentially directly into the internal partner group).

An HRM / adding value approach to recruitment involves reactively searching for talent to fill a particular role when a vacancy occurs. Doing this allows an organisation to recruit good talent but it cannot guarantee the best talent – these people are not likely to be available during the timeframe in which the organisation is recruiting.

An HCM / creating value perspective develops recruitment into an ongoing and proactive process that aims to find the very best people whenever they are available. Once the organisation has identified people who might have the same attributes as those in the partner groups, these people can be assessed, probably informally, although the stronger the employment brand the more formal and competitive the assessment can be made. The assessment can also be used to benchmark people in the partner groups against the external talent that is available. This means that the organisation is able to resource internally with knowledge of all options and to plan succession externally as well as internally, transforming the level and quality of talent that can be made available.

If the people who have been assessed show that they do have the required attributes, they can be invited to join the external partner group and then be recruited into the organisation when the time is right for both parties (see my previous post on head farming).

 

Monday, 27 October 2008

Career partnership

 

005 Career Partnerhsip   One management innovation I’ve suggested, my own version of a rumspringa, is what I call a career partnership. This is an approach that could apply to those people whose own human capital forms a major input to organisation capability.

Of course, these talented people are not only ever going to work for this one organisation, but there might be a basis for a new type of relationship with them.

An HRM / adding value approach to talent management suggests that an organisation should employ people who fit within its various talent pools for as long as possible. The organisation knows these people will leave in a few years time and it tries to guard against them doing this as much as it can. This often seems to involve keeping people identified as talent as busy as possible, so that they do not have time to apply for other jobs!

An HCM / creating value perspective to talent management also recognizes that these individuals are going to want to leave at some point, if only to gain more variety in their careers. However, rather than fighting for a few more months or years of service before these people leave, the organisation looks longer term and effectively says, ‘Look, we know you are not going to work for us for the next ten years. But we’d very much like it if you would work for us for ten years during the next twenty. We’d like you to partner with us during this time. During some of this period you will be employed by us and at other times you won’t. But we’re going to keep a special relationship going with you throughout.’

The focus of this approach is on maximizing the lifetime value (not the length of a single employment contract) of people in the partner group. An analogy using customer rather than human capital is relationship marketing’s focus on maximising a customer’s lifetime spend (rather than the revenue from an individual transaction).

An organisation needs to focus on engaging all its career partners, not just those partners that are in employment at any one point in time. This means that organisations actually have to maintain two partner groups: an internal group and an external one. The external group consists of people who have previously worked in the organisation’s internal partner group, or have been invited to join the external partner group for later employment when the time is right for both parties.

In this way, an organisation’s relationship with its career partners changes from being a single transaction to an ongoing cycle, in which the individuals move out of and back into employment, potentially several times...

 

Sunday, 26 October 2008

A Career Runaround

 

   Writing in Talent Management magazine, Mike Prokopeak compares the Amish practice of 'rumspringa' to the tendency of most organisations to try and protect their people from the outside world.

"When Amish teenagers turn 16, they are allowed the freedom to explore the world outside...  During the rumspring, they experiment with life among the 'English', as they call anyone who is not Amish.  Parents don't expressly encourage their explorations, but they don't expressly forbid it either.

It would stand to reason that a culture so cloistered would do its best to shield its young people from the influences of the outside world.  But the Amish take a different view.  They see rumspringa as a chance for youth to explore their options before they make a conscious commitment to settle down and live a fully Amish life."

 

Prokopeak suggests that organisations should maybe encourage their high performers to explore their options - even if these opportunities lie elsewhere.

I helped one company look at this sort of approach a couple of years ago.  They had a lot of senior managers who had plateaued and no longer seemed that engaged.  We provided them the opportunity to reflect on where the organisation was going, they type of people and skills it would need in the future, and also the sorts of opportunities, and reward, that they would probably be able to tap elsewhere.

The belief here was that the organisation would benefit from having a smaller number of highly engaged, aligned and focused individuals, rather than the higher number of currently less engaged.

As Prokopeak notes, implementing this sort of approach requires a very strong culture based on a high level of trust (and social capital):

"What keeps them coming back?  Part of it may be pressure, but it's more likely their strong bonds with family or the comfort and support their culture provides that brings them back.  Their parents place a profound trust and freedom to choose in their hands, which deepens their commitment to their way of life."

 

It also requires a long-term perspective to talent management - accepting the short-term hit of the potential loss of high performers for the longer-term gains of attracting the very best people and engaging them while they remain in employment.