Dick Beatty on Differentiated metrics for a Differentiated workforce ~ Strategic Human Capital Management (HCM) Blog

Saturday, 14 November 2009

Dick Beatty on Differentiated metrics for a Differentiated workforce

I had some quite long conversations with Dick Beatty at the InfoHRM conference. It’s the first time I’ve really talked to someone who I have posted on quite extensively, and who has also already read my work, which I found quite interesting!

This is my summary of Beatty’s presentation. I’ll come back to whether I’ve changed my views of his approach at all later on.

How do you build great organisations through metrics? Beatty often speaks to CFOs. Where, how and who creates wealth for a firm is a major issue. Understanding how HR can create value for business. How do we use culture and talent to impact the bottom line? We need to score on the bottom-line of the business, rather than the HR scorecard.

CEOs care about two things:

1. Strategy

Every HR person wants to be a strategic partner / player. But what does strategy mean? It’s about value creation - customer value and economic value. Firms provide society with value which society has the option to choose upon. The better we serve the better our customers like us. The more we can do this in the way our customers like, the more our shareholders like us. HR doesn’t think enough like a real strategist.

2. Data analytics

Numbers are the language of organisations. You can’t win arguments through moralsuation. Strategy needs to drive measures. Measures need to drive decision making. Think of surveys as communicating to your workforce about what is important. Don’t ask about things no one cares about. Needs to be interventionable – able to intervene to do things differently.

We want to get to the table. What do we have to bring to the table and how do we get invited back? There are various measurement frameworks: Saratoga, Jack Phillips, John Sullivan etc. But these focus on getting the answer and then figuring out what we’re asking.

A better approach is to figure out what are the qs that are worth asking?

If you had the right data you could intervene and get the right solution.

Differentiation

Eg Avis ‘we try harder’ – why not try different? Strategy is about customer value and uniqueness. So how do we differentiate the workforce? Where do we make extreme investments in talent?

We’re entering an economic era of great volitility – customer requirements are changing. It’s causing us real pause in how we build organisations. A big implication is workforce agility. Firms need to ask how do we minimise fixed cost? Well, the biggest cost in most organisations is the workforce. Financial services: 91%; Oil & Gas: 16%; Average about 70%. A good example is IBM’s On-demand strategy / on-demand workforce.

How do you build great organisations through great talent systems?

The key questions are:

1 How are we going to grow? Where do we play? How will we win? If you don’t know where you’re going any plan will get you there.

2 How do you use resources to execute strategy? Need systems to do this. If you loose inventory no one cares too much. If you mis-manage the workforce they do. How do you build a resource management system for the management of the workforce? There are stars in the workforce but you also need a star system to do this. Manage your workforce like a portfolio and leverage its return. Look at talent as a supply chain. What’s our inventory and what are we going to do about it?

Strategic capabilities

We need to look at the enterprise the way investors look at the enterprise.

What are you going to differently to get different? Organisations don’t do things differently - people do. Get people to change or change the people.

We tend to think about culture / talent as lag variables. (We’ll do it once we grow). This is too late. We need to think about customers / what customers need in order to grow. How are we going to win the future? Past is not necessarily the guide. What experiments do you want to create to give you information on this?

Capabilities - bundles of information, processes and people [really core competencies but he thinks HR people get confused about this word.]

You can invest in 3, maybe 5 of these things. These things need to be strategic – creating customer and economic value.

What roles are strategic? Have an impact on these capabilities?

Think like customer – why are we here, where are we going? These questions are relevant to the business and the brand. Your brand better align with culture. If sending a brand message need the workforce to exhibit this in every interaction with a client.

Strategy drives capabilities

Strategic roles

Strategic roles are found within strategic capabilities. For example: compare Nordstrom vs Costco – different capabilities so different strategic roles.

Jack Welch at GE wanted all A players. Beatty told him he was crazy – you can’t afford all A players. And you don’t need do everything to A level. Ever tried to get decisions if everyone things they’re the smartest kid in the room?

There are three types of work in organizations — strategic, support, and surplus (used to be strategic, now not needed)

- Strategic work creates customer and economic value. Only about 15% of the positions in your firm (not 15% of employees) have an impact on your firm’s strategic success. Not many roles but maybe a lot of people – Lockheed Martin has 15 strategic positions – but one of these has 10,000 people.

- Performance variability in strategic work causes firms to underperform — and is a strategic opportunity! Reduce variability in roles most important. The bell shaped curve does not help you, it hurts you.

Line managers impact the firm much more than we do as HR. Hold them accountable for talent they’re responsible for. Hold them accountable for HR work - selection, performance management, reward etc. Give them a 90% appraisal on how they do things (from the people they’re managing).

Top talent is going to be looking around. People who stay aren’t going to be the ones we want. There’s more talent available now than there will be for a generation. Get a move on and recruit in line with the strategic direction of the firm.

A right hire is someone who loves what you do, wants to do what you do. Start the hiring process outside of the firm.

Pepsico moved to 66/34 balance between results and leadership stuff 4 years ago now 50/50.

The real issue in performance management is how well does the leadership execute the performance management system.

We’ve over designed, over metric’ed these things. Make them simpler.

HR capability

Many HR ―professionals:

- Don’t think like business executives or strategists

- Want to treat employees the same

- Spend considerable time defending or trying to fix poor performers

- Many entered HR to ―help people

- Many have never learned that strategy is about differentiating products/services on the outside and resources (including people) on the inside

- CLC research suggests applying business analytics is the thing we do least well.

In the Q&A, I asked Dick whether he thought this approach would apply everywhere – particularly the idea that you shouldn’t invest in C players. My concern wasn’t so much the UK, but other European countries where equality and inclusiveness are more valued. Dick thought so. I’m still not so sure.

Note that I’ve got no problem prioritising the A players. This is a fundamental part of a lot of the work that I do, and the Human Capital Strategist programme that I deliver for the HCI (in UK and Europe) etc. But I don’t believe this needs to mean than you withdraw support from the people you’ve labelled ‘C’ (eg by not bothering to give them feedback etc).

Your thoughts?