CEB ReImagineHR - Research on Performance Management and Reward

The CEB has been running another successful ReImagineHR conference in London, including some of their client case studies and also more of their excellent research.

I think some of the most powerful insights this year focus on performance management and reward.

Performance management:

• Clearly needs to change - only 4% of HR leaders feel they are effective at accurately assessing employee performance
• According to CEB, removing ratings isn’t the way to do it and in fact despite the hype around it less than half of HR leaders are interested in doing this.
• Removing ratings reduces the amount of time managers spend on performance management together with the quality of their performance conversations and negatively impacts employee engagement.

I think the most important suggestion which I completely agree with is that HR leaders should make an informed decision about removing ratings considering both their organisation’s situation and how removing ratings will affect managers and employees.

I am personally very pleased that so many organisations are dropping reviews or ratings as it was never a process I appreciated as either appraiser or appraisee, but that’s beside the point. It really doesn’t matter whether it’s the trend or not - the only thing which matters is what is right for a particular business, and the employees who work in it.

Linked to this, it’s important to note there is never one perfect solutions - ratings helps do some things well and fails at others, no ratings does other things well but suffers different problems too. So I also agree with the CEB’s advice that when organisations do remove ratings they need to take    other appropriate actions to mitigate what may be the negative consequences.

For example to ensure that employees still have a positive perception of pay differentiations, organisations should 1. guide managers to base pay decisions on simple criteria such as performance against role in order to identify employees who should receive the highest awards; and 2. help employees understand how their contributions and the organisational context have informed their pay decision in order to demonstrate how pay decisions were made fairly.

The CEB therefore suggest bigger and easier gains can be made by focusing on other changes in performance management, e.g.:

• Provide Ongoing, Not Episodic, Performance Feedback
• Make Performance Reviews Forward Looking, Not Backward Looking
• Include Peer, Not Just Manager, Feedback in Evaluating Performance

Reward:

The other issue for many organisations is how they reward people appropriately without the crutch of performance ratings.

CEB research suggests this may not be a particularly significant issue as organisations would do better to give a few big pay increases for large differences in performance rather than lots of little increases for small differences.

I agree with this logic too though I worry about the impact of large differentials on the performance of CEB’s network contributors. That could be reduced by paying for different types of performance, for example improvements in, as well as exceptional levels of, performance.
 

But the key comes down, once again, to the power of conversations - enabling managers to use narratives rather than ratings to explain compensation decisions to employees, helping them understand the impact of their performance and contribution.


Another great set of privations and I look forward to next year’s conference.

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Organisation Prioritisation Model

I've finally completed work on my 'organisation prioritisation model' (OPM) which has been in development for the last five years or so. At least I think it is now finished - certainly the only changes I've made to it over the last few years have been very minor. I've also used the model successfully in a couple of OD and HR transformation contexts. And I'm personally convinced it's a major step forward compared to Galbraith's Star model, McKinsey's 7S etc.

• It's more complicated - because the business environment and our organisations are more complicated. However it tries to make things as simple as possible by identifying four core organisational elements separately from the enablers which support it.
• In particular it gives more focus to the role of relationships and means we don't need to focus on something as unmanageable as culture. 
• It's also dynamic, showing how design needs to be based upon clarity around organisational capabilities and principles (what and how) and that this then leads to the creation of human, social and particularly organisation capital.  
• It helps prioritise an organisation's choice of structure based upon which of the core elements are most important. Eg a very people oriented organisation (perhaps one which competes on Kaplan & Norton's learning and growth perspective) may want to use a community based structure.
• The enabling elements separate out reporting arrangements eg self management and groups eg whether we are focusing on teams or individuals from the choice of structure. This helps aid creativity in design of organisation models and means we can be more specific in describing things like holocracy (a group based, top down, horizontal team structured organisation design).

There's loads more I could explain, but which will wait to later posts. However I'm happy to answer any specific questions you might have here.

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Positioning Reward for the Future

Positioning Reward or the Future - with my friends at beqom

November 15th at 3.30pm

Microsoft, 2 Kingdom Street, London W2 6BD

 

Registration is now open - book here.

See you there!

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Techno Dreams in Recruitment

I've been quoted in this article in Recruiter magazine: Techno Dreams Become Reality.

The article explores the use of predictive analytics, serious gaming and virtual reality in recruitment and is well worth reading.

I comment on the role of machine learning:

Machine learning is a part of predictive analytics that is helping recruiters to use technology far more intelligently. “Machine learning raises the potential of being able to analyse even deeper patterns within the data produced within and around recruitment,” says Jon Ingham, people and organisation development strategist at the consultancy Strategic Dynamics. He believes that while recruiters and candidates are busy getting on board with social media and mobile, technology development has hit a plateau – but that is set to change.  

“The drivers of these changes are around IT analytics, particularly when blended with machine learning systems to deepen the amount of insight we can generate quickly and easily,” he says. “The next five years will be really exciting as these technologies take hold.”

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Hot topic: Paying bonuses

There's an interesting piece in HR Magazine today questioning whether bonuses are an effective reward mechanism.

The article includes comments from Craig Newman, chief executive of Woodford Investment Management which gave up paying bonuses last year. Their conclusion was that bonuses are largely ineffective in influencing behaviours.

There are several more recent examples which relate to this too.

The Wells Fargo scandal is probably the biggest of these. And also the most stupid. If you pay people bonuses to sell bank accounts without motivating other behaviours or creating an ethical culture guess what's going to happen? People will sell more accounts. Even if their customers don't know about them.

Or actually equally powerfully there is the example of ride operators at Alton Towers being paid bonuses to minimise downtime. With understandable if terrible results.

Bonuses can work, but only if you set measures carefully and you understand how people are going or are not going to be motivated around these.

I like Peter Cheese's comments that "we need to go back to the fundamentals, starting with how we evaluate performance beyond just delivery of numbers, how we assess performance, making it clear and simple, how we recognise and encourage good performance beyond just paying more, and how we create fairer payment systems."

I'll be speaking about some of the opportunities to do this at a session with beqom and Microsoft in London on 15th November.  Come along if you can - I'll share more details with you shortly.

The beqom Total Compensation platform is used globally across all industry sectors by over 100 large companies such as Microsoft and Vodafone. It addresses all Performance and Compensation aspects such as Salary Review, Bonus, Long-Term Incentives, Commissions, Benefits, Non-cash rewards and all key drivers towards Employee Performance and Sales Performance.

HR, Sales and Finance organizations leverage the platform to drive performance, retention, cost optimization and... happiness among their people.

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#SEanalytics HR Analytics - part 2

In part 1 of this post I described the typical data and technology oriented approach to HR analytics and then ran out of space sharing my personality analysis from IBM Watson.

You can do analytics this way, but lots of organisations don’t have the data or technology. And even if you do, I think you need to combine with my way too.

But that's not the only way of doing things. It is technology and data which is causing change in analytics but it’s not the best place to start doing analytics.

Another of Thursday's speakers noted that most of our analytics are transactional not strategic. But we understand the value of strategic analysis so why not do this instead? I therefore suggest that analytics should really be based on strategy, questions and insight.

So yes, it is the question which is important, and these questions should come from your strategy.

Importantly, identifying the right strategic questions isn't going to be about listening to the questions the business is asking – they won’t know what they need to know, at least not as well as HR can do. And it isn’t just about understanding the way the business operates, it’s also about having deep insight into how people can be developed, motivated and aligned etc.

The key to doing it is plotting your HR strategy out as a value chain, a bit like the balanced business scorecard / business strategy map. I use a value chain that is the framework used in the CIPD's Valuing Your Talent work. However, the reason that it’s important is the fact it’s a value chain, not that it provides standardised measures (I'll post again later why that's a distraction).

There are four reasons for suggesting this:

• It helps clarify and communicate your HR strategy. This is important because the real difficulty in doing analytics isn't the measuring, the data cleaning or the statistics. Instead of this it's being clear about what you're trying to do and therefore what you need to know. The value chain format helps this to happen. 
  

• It focuses on outcomes as well as activities and as well as the business. As I noted earlier, you need to understand and provide insights into people not just the business.
   
• It helps identifies how each of these objectives can be measured, or better, assessed - hence my focus on evidence not just metrics.
   
• It makes predictive or at least descriptive analytics easier.

Descriptive analytics is simply looking back up the value chain trying to work out why something has or hasn't happened, ie doing root cause analysis. You won't necessarily have data for all of these potential root causes but basing descriptive analytics on a strategy map means that at least you're looking at the most important things and also that you are more likely to already have good data (at least on the outcome and  the main relationship with this, since you will already be measuring what's on the strategy map).

Predictive analytics can include several different things. However to be worthy of a different name I think it has to involve more than understanding data relationships which have existed in the past and then trying to extrapolate these into the future, especially as with increasing complexity this is getting harder to do. To me, it should involve looking further down the value chain at the consequences of particular actions which could or could not be taken. I call this branch effect analysis (the opposite of analysing root causes).

The issue with this is that even if you can extrapolate into the future you might not have the data to do this, particularly if you're trying something new.  So predictive analytics may need to be based upon:

• Continual case (start to measure now to do analytics later)
• Comparative case (use benchmarking and research to show benefits other organisations have achieved)

A lot of maturity curves suggest may take 10 years from start of the journey to doing predictive analytics, after jumping over or through a brick wall. It doesn’t have to take that long – the value chain is the key to being able to do it now.

So there you go. You might now better understand why Watson thinks Im authority challenging and somewhat inconsiderate (at least to prevailing wisdom)! But I hope you will have found some of these ideas useful too.

#SEanalytics Mission Critical HR Analytics 2016 - part 1

I'm speaking today at Symposium's HR analytics conference.

I've been pleased that although several of the sessions have been focusing quite hard on data, conference chair Peter Reilly has already suggested we really need to focus on the question. This is what I'm going to be talking about later on.

I put the emphasis on data down to the prevalence of the analytics maturity curve, which one of the other presenters is using in their session (I had expected more to do so).

These are typically presented as an arrow moving from data and matrics through to forecasting and prediction, and often include a brick wall at some point to illustrate the tricky bit in the journey.

I advise against using them. Actually I don’t like any sort of maturity curve as I believe that each organisation needs to find its own path. And I particularly don’t like the analytics one because I think the three factors it’s build upon – technology, data and analytical tools, particularly the use of statistics, are the wrong things.

Also, although it is usually presented as an arrow it really involves a cycle - using better technology providing better data requiring better statistical analysis needing better technology etc etc. We've talked about some of this earlier on as well and I don't deny that the latest insights from machine learning and artificial intelligence are fantastic.

Actually one of the speakers suggested that automated personality tests were pretty terrible – I don't agree. This is my Twitter personality analysis from IBM Watson and I think those of you know know me will probably agree it's really very good. I just don't think it's the key approach in analytics.

Personality Profile*: @joningham

You are informal, somewhat inconsiderate and shrewd.

You are energetic: you enjoy a fast-paced, busy schedule with many activities. You are authority-challenging: you prefer to challenge authority and traditional values to help bring about positive changes. And you are philosophical: you are open to and intrigued by new ideas and love to explore them.

You are relatively unconcerned with both tradition and taking pleasure in life. You care more about making your own path than following what others have done. And you prefer activities with a purpose greater than just personal enjoyment.

*Compared to most people who participated in our surveys.

Data Behind Your Personality

Big Five

Openness 68% (± 5%)

Adventurousness 97% (± 4%)

Artistic interests 60% (± 9%)

Emotionality 26% (± 4%)

Imagination 65% (± 6%)

Intellect 98% (± 5%)

Authority-challenging 98% (± 7%)

Conscientiousness 25% (± 7%)

Achievement striving 87% (± 9%)

Cautiousness 57% (± 8%)

Dutifulness 35% (± 5%)

Orderliness 18% (± 6%)

Self-discipline 46% (± 4%)

Self-efficacy 91% (± 8%)

Extraversion 65% (± 5%)

Activity level 99% (± 7%)

Assertiveness 97% (± 7%)

Cheerfulness 28% (± 9%)

Excitement-seeking 57% (± 7%)

Outgoing 76% (± 7%)

Gregariousness 51% (± 5%)

Agreeableness 30% (± 9%)

Altruism 69% (± 6%)

Cooperation 54% (± 7%)

Modesty 2% (± 5%) - yeah OK, I suppose I am posting up my own Twitter personality!

 

Uncompromising 28% (± 6%)

Sympathy 75% (± 9%)

Trust 96% (± 5%)

Emotional range 21% (± 8%)

Fiery 32% (± 8%)

Prone to worry 34% (± 5%)

Melancholy 33% (± 5%)

Immoderation 17% (± 5%)

Self-consciousness 29% (± 5%)

Susceptible to stress 21% (± 8%)

Needs

 

Challenge 84% (± 8%)

Closeness 9% (± 7%)

Curiosity 70% (± 11%)

Excitement 12% (± 10%)

Harmony 18% (± 10%)

Ideal 33% (± 9%)

Liberty 32% (± 13%)

Love 54% (± 9%)

Practicality 47% (± 8%)

Self-expression 18% (± 7%)

Stability 4% (± 10%)

Structure 33% (± 7%)

Values

Conservation 6% (± 6%)

Openness to change 69% (± 6%)

Hedonism 10% (± 13%)

Self-enhancement 36% (± 9%)

Self-transcendence 23% (± 7%)

#HRCongress Designing People-centric Organisations

As my bog tagline says, HCM is all about people centred HR.  Therefore I'm really pleased I'm going to be speaking at Stamford Global's new HR Congress in Amsterdam.

Other speakers include:

• Dave Ulrich, Professor of Business, Ross School of Business
• Lynda Gratton, Professor of Management Practice, London Business School
• Erin Meyer, Professor of Organizational Development, INSEAD
• Paul Sparrow, Professor, Director of Performance-Led HR, Lancaster University
• Tampa Chandler, CEO & Author, PeopleFirm
• Konstantin Korotov, Director of the Center for Leadership, London Business School
• Rob Briner, Professor of Organizational Psychology, University of Bath
• Paul Turner, Professor of Management Practice, Leeds Beckett University Business School
• Ian Bailie, Global Head, Talent Acquisition and People Planning Operations, Cisco Systems
• Peter Baker, CHRO, Damco
• Marie-Pierre Defoin, HR Director EMEA, Rockwell Automation
• Dominique Ben Dhaou, Senior Vice President HR Talent Developement, SGS
• Sandor Janosi, Head of HR Europe GE Global Operations, GE
• Charles Kidd, Global Direct Learning and Talent Developement, Belmont
• Mark Levy, Global Head of Employee Experience, AirBnB
• Nigel Miller, CHRO, Edelman
• Hala Morcos, L&D Professional
• Martin Oest, Former Head of Strategic Workforce Planning and Analytics, Metropolitan Police
• Miriam Ort, VP Head of HR, PepsiCo
• Angelique Plugge, Innovation Driver, ING
• Nienke Schaap, Founder & CEO, Inukzoek
• Rob Schokker, General Manager HR, 3M
• Ido Shikma, VP HR Europe, Prologis
• Luk Smeyers, CEO & Founder, iNostix
• Andrew Spence, CEO, Glass Bead Consulting
• Mark Vlaanderens, Sr. Director, Head of Leadership, Talent & Learning, Philips
• Joy Jinghui Xu

That's quite a line up!

I'll also be involved in a couple of other things at the conference, including working with Lynda, Mark and Ingrid Eras Magdalena, VP, Global HR at Belmond as judge for the new HR Excellence Awards.

Ticket pricing for the conference will start at just €595 for the first 100 seats! (corporate HR leaders only.  So do book and I look forward to seeing you there.

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Symposium Mission Critical Analytics

I'm back at Symposium's Mission Critical HR Analytics conference in September.

My session is on:

Focusing analytics on HR strategy using evidence based insights

• Understanding what questions to ask to ensure analytics has a major impact on the business
• Using data and other evidence as the basis for insight creation
• Simple but strategic approaches for descriptive and predictive analytics

Ie I'll show you how you can do simple but strategic analytics, and without the need for great technology, clean data or having to wait 10 years until you've got these.

(If you want more detail around this I"m also doing a training session the following week.)

You can also see a summary of my session on employee engagement analytics last year.

Other speakers include:

• Peter Reilly, Principal Associate, Institute for Employment Studies
• Edward Houghton, Research Adviser, Human Capital and Metrics, CIPD
• Julian Thornley, Global Head of People Experience, Travelex
• Tim Cowley, Head of HR , FirstGroup
• Neil Parkinson, Senior HR Analyst, CBRE Limited
• Ben Hawkes, Advisor, HR Analytics, Shell

Sound good?  Come along...

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Let's stop the 'generation blah' blah

One of my most fun pastimes on Twitter is tweeting about generations.

I don't know if it's just the people who follow me but I always attract a couple of responses complaining of over generalisation and stereotyping.

People do make too much of generation differences and often misrepresent the research.   My favourite worst example of this was a presentation in Saudi Arabia using generic suggestions about generations from the USA.  If you understand that generational differences are based upon very different experiences people have in their lives, particularly whilst they were teenagers and their brains for rapidly changing, then you'll recognise that's nonsense.

Sorry but a Saudi teenager has a very different teenage experience from one in the States, particularly if they're a woman.  Indian teenagers will have had a different experience again.  It makes no sense to extrapolate from one (usually the US) to another.

Here's a good summary of the issue.

At TechHR it's happened twice (actually several responses to two tweets).  Once in response to a tweet about someone else's presentation and comment, and once a retweet of an HR magazine article about graduates.  Well sorry the presenter was talking about generations and the article was about graduates.  What can I do?  Particularly in 140 characters.

As well as being vaguely annoying the responses are unhelpful for two other reasons.

Firstly we have to be able to talk and tweet about things,  You might not agree with what I or another speaker are saying but its important I'm able to state it without snarky responses.

Secondly - and again, you might not agree - but generation differences are real.  It's just that they're not the only difference which exists.  People of different genders are different, different national cultures are different.  So are people of different religions, experiences, perspectives, orientations and all sorts of different things.

Actually you put all of that together and the only way to respond to people and their differences is to treat each person as an individual.

That doesn't mean it's wrong to try to disentangle the differences between gen y and baby boomers, or men and women etc etc.  So let's just not do the generation blah blah thing.  Please.

Photo credit - Satya Sinha

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