Bad performance management costs £2.29 bn

Following my own post on the need to redesign performance management (music not measurement), TalentQ research suggesting that bad appraisals could be costing Britain's economy in the region of £2.29 billion a year.

Evidence based management campaigner Bob Sutton suggests that “the performance evaluation process is fundamentally flawed fundamentally flawed. That doing it well is like doing blood-letting well -- it is a bad practice that does more harm than good in all or nearly all cases.”

“When people get unfair negative evaluations, it can leave them ‘bitter, crushed, bruised, battered, desolate, despondent, dejected, feeling inferior, some even depressed, unfit for work for weeks after receipt of the rating, unable to comprehend why they are inferior.’ "

He asks: “Do organization just do them because they have always done them, because there is excessive and irrational faith in them, and perhaps because a whole bunch of vendors, consultants, and HR professionals benefit financially (in fact, you could argue that because so many things go wrong with evaluations, that the amount of work they generate is nearly endless).”

The answer has got to be no – they do them because performance management is the central business management process in raising organisational performance. The two main reasons that appraisals are often so poor and that people leave them feeling bitter, crushed, bruised and battered, is that line managers don’t put sufficient emphasis on their people (and that sometimes they don’t have the skills required to support this emphasis), and that performance management processes aren’t designed in a way that’s appropriate for the organization, and the people it employs.

I’ve seen, and been involved in developing, very simple performance management systems (for example, two blank pages of A4), very complex ones (including matrices for calculating performance ratings) and technology based approaches. All of these have worked extremely well in some organizations and failed in others. The key is tailoring them appropriately.

Sutton describes a head of HR who introduced a performance management process “in a way that was consistent with ‘best practices’ suggested by leading HR professionals”. This is the problem. To be effective, HR needs to beyond best practice, and design performance management and other processes in a way that provides best fit.

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Do you have your best meetings in Starbucks?

Interesting programme on Horizon (BBC2) tonight, How to Make Better Decisions.

I thought the guy who writes equations to help people decide whether to chat someone up, or buy a pair of shoes, was a complete quack. Or at least I did, until on came the guy who thinks we make decisions based partly on precognition of the future.

But I was very impressed by the research on priming. Now I know (or at least I have known) a lot of this stuff, and recognise that contextual factors can significantly influence the decisions that people make. But I never thought this could come down to a hot cup of coffee.

Lawrence Williams, a researcher at Yale asked people to hold a drink for them while he took their details. These people then had a short conversation with Lawrence’s colleague, Randy. And they were then asked to decide whether Randy would be a suitable candidate for a project manager role. Whether the drink was hot or cold had a significant influence on people’s perception of Randy, even though they had held the drink several minutes beforehand.

So next time you’re asked out to Starbucks for a meeting, just be aware you might end up making more positive decisions than you’d intended.

Competencies for strategic HR capability development

In the last really major HR development programme I ran (7 conducts of 5 day workshops delivered in different venues throughout Europe), I used Michigan's 2002 competency framework which was superseded last year (this came out before I started blogging so I've not referred to it myself, but plenty of other blogs did, for example Taleo).



But I still prefer a version I and a few colleagues (Peter, Geoff and Roberta) developed a few years ago and that in high-level form is shown here.

At the top is Strategic Partnering which refers to the abilities to develop an HCM strategy which supports an organisation's vision and values, and aligns with, and informs, its business strategy. (This is Michigan's Strategy Architect).



This is supported by:

• Business Know-How: understanding the fundamentals of business and finance - for business in general, and particularly for this business (Business Ally).
• People Management Leadership: this sounds awful, but refers to the leadership of people management activities. All of the HR stuff we know and love, and its more strategic aspects too (Michigan's Cultural Steward, Talent Manager / Organisation Designer).
• Personal Credibility: earning permission to influence (Credible Activist).

The reason I prefer this to Michigan's framework is that business know-how, people management leadership and personal credibility all clearly underpin strategic partnering, and out of the three, it is people management that it as the centre, which I believe is appropriate.

This central competency is then underpinned by HR Implementation: the ability to execute (Operational Executor).

I wouldn't advise running a programme in the same way today (very few clients would stomach 5 day workshops, although this did send a clear signal about the importance of this training across the HR team). But I'd still base it on this set of competencies.

A strategic HR capability development programme

One of the UK's other HR bloggers, Scott McArthur, has posted on the changing roles and careers of HR business partners, and has also asked through Linkedin about what others have done to develop HR practitioners in their strategic role.

This got me thinking because although I’ve delivered a couple of short workshops on various areas of HR fairly recently (in company and open programmes, and also as part of an executive MBA programme), it’s been about 2 years since I last delivered an extensive programme for strategc HR managers. So I thought it might be useful (for me at least) to map out what I think an ‘ideal’ generic programme might involve (obviously without any organisational context to support this).

Plus I think that changes in the way that learning is being delivered – responding to changes in the workforce, new technology etc (or perhaps just my own enhanced understanding of effectiveness in L&D – would mean that I’d also advise my clients to deliver any major HR capability development programme in a different way to how I’ve done this before.

More thoughts coming up over the next few days.

HR Carnival 26

The 26th HR Carnival has been published on Wally Bock's Three Star Leadership blog.

Do take a look - it includes some good posts including one of mine.

Learning Technology: serious games and virtual worlds

My presentation at Learning Technologies only got as far as talking briefly about what

capability is and how it can be measured.

Most of the rest of the conference was more focused on the technologies that can support learning and I was pleasantly surprised to find that what was definitely hype a few years ago is slowly turning into practice, with some great examples of technology enabled learning (with the emphasis on learning rather than technology) being discussed.

Technology helps learning develop the capability required for effective implementation by increasing the effectiveness of learning. Systems like Saba, Plateau and SumTotal increasingly provide useful information on competencies, gaps and learning opportunities, and link these to other aspects of people management and development. Just-in-time learning or performance support helps people learn precisely what they need at a particular point in time to do a new or specialist job, that they would otherwise have likely forgot. And mobile learning helps involve much broader populations in learning in those organisations that have dispersed and out of office workforces.

But technology also helps learning develop the capability required to help the organisation take advantage of new opportunities by enabling people to learn in new ways - particuarly through being able to do things that would not previously have been possible. So for example, by using serious games and virtual worlds, organisations enable their employees to demonstrate behaviour, to experiment and reflect, and to practice new types of behaviour, without risk (whether this be from loss of face or physical danger - as in the screen shot here), enabling their people to make and learn from mistakes.

There are some great opportunities for all organisations here.

Learning Technologies: measurement

At Learning Technologies, I talked about organisational capability having two roles in enabling business results: supporting implementation, and generating new opportunities.



If we’re looking at the top arrow on this slide, implementation, then identifying the capability that will best support the organisation is fairly straight forward and depends on measurement. All you need to do is analyse what capability, and the supporting competencies you need to deliver specific business goals, measure what you have and identify the gap.




Identifying organisational capability is more difficult when you’re looking at the bottom arrow, in order to provide new opportunities. Here measurement is less useful partly because it’s not always clear what you need to measure and therefore you’re likely to end up with lots of data on different competencies which can obscure rather than highlight opportunities. Plus you may note get the cause and effect results you expect (which was what Jay was talking about).

Instead, it can be useful to remember that people are emotional beings, and use an emotional, lateral, intuitive approach like visualisation, metaphor or Appreciative Inquiry to identify what people think is important to the organisation.

Learning Technologies: capability

At Learning Technologies, I talked about organisational capability having two roles in enabling business results.

The first is through supporting implementation. Organisations are increasingly realising that it is often not the quality of their strategy but their employees’ ability to implement this that will make the difference.

In his book, Execution Ram Charan defines this ability to execute as ‘the missing link between aspirations and results’.

But secondly, and even more importantly, the link applies the other way round too.

Organisational Capability isn’t just about implementing business strategy, it’s also about providing the basis for new strategic and opportunities.

This is illustrated in the slide.

The top arrow provides an organisation with the ability to implement business objectives. The bottom arrow develops new capability that enables the organisation to set different or more stretching business goals.

The top arrow is about taking the business plan and saying, OK we need to be more innovative, or have better leaders or whatever, in order to implement this. The bottom arrow is about looking at your people, and saying, we have some really collaborative people, or a great shared mindset, or whatever, and if we developed this, that could really provide us with a great competitive advantage.

The bottom arrow is much more transformational that the one on the top (those readers familiar with the value triangle may recognise this as the created and added value levels of the triangle). So learning will have a lot more impact if it focuses on developing capability that will support new opprtunities and strategies than just implementing the current business strategy.

Learning Technologies review

I picked up some useful pointers on using learning technologies and social media when I was presented at this year’s Learning Technologies conference last week. , but my main take aways were from the sessions more focused on learning itself.

Jay Cross was spot as as usual – have a look at Nigel Paine's live blog on this.

I particularly liked Jay’s points on the need to think about organisations from a biological rather than a mechanistic perspective – based upon “Einstein’s and Bohr’s contributions, but also because ‘we can feel it in our guts that (the machine model) isn’t true anymore’ ”.

This means that predefined organisation design can only take us so far – “things are too complicated to be engineered, but nature will find a way” – so we need to trust that everything will work out for itself – without a master pan. This fits with a lot of my consulting experience, but Jay expresses the new world more colourfully.

It also means that the use of measurement is naturally limited - “you can’t predict anything, because you can’t be sure what people are able to do”. This message didn’t seem to get through to everyone – the conference featured some fairly heated discussion about how we should best measure learning, and the rights and wrongs of Kirkpatrick, but little on whether we really need to bother measuring learning that is increasingly informal, and outputs that are increasingly intangible, at all (or certainly in a mechanistic way).

Still, it was a really excellent conference, and I was delighted to be part of it. Well done Don, and all concerned. My next post will cover some of my post-conference thoughts on the role of technology in learning and the development of organisational capability.

The role of Capabilities in Talent & Organisation Performance

Another FT article that caught my interest this week was Lucy Kellaway's tirade on Accenture's use of jargon in communicating the launch of its book, the talent powered organisaton, in a Second Life event recently.

Now I won't pretend to know what Accenture's new Talent & Organisation Performance service line means by its 'growth platform agenda' but I suspect that Accenture senior executives (senior partners) are quite clear, and that this means something much more precise than just growing the firm's revenues (although I'm sure that's part of it too).

But the need for organisations to “expand their talent management agenda from a narrow and tactical focus on human resources activities around the employee life cycle, to a broad and strategic focus on highly integrated systems of capabilities fundamental to business strategies and operations” makes perfect sense to me.

It's not the people centred language that I think organisations need to use much more in communicating with their staff, but then Accenture senior executives aren't quite the same as most employee populations.

To me, Accenture's use of the word 'capabilities' is terminology, not jargon, and the role of 'highly integrated systems of capabilities' is in fact, exactly what I was talking about in my presentation at Learning Technologies this week.

Capabilty is a similar concept to core competence, but whereas core competence focuses on business processes, organisational capability deals with management processes. As example, Hamel and Prahalad, the originators of the term core competence, explain that 3M’s core competence is expertise in substrates, coatings and adhesives. An organisational capability perspective might identify 3M’s capability is innovation, and the fact that this is innovation in substrates is a secondary concern.

'Repositioning', 'differentiating', 'integrating' and 'evolving' capabilities are all about influencing organisation, social and human capital (ie HCM - sorry about the additional jargon / terminology, Lucy) by aligning the people the organisation employs and the HR processes it uses around the organsation's capabilities (see this post).

Capabilities are important, because they provide the key to effective implementation of business strategies, and also the basis for identfying new strategies and opportunities (creating value). They're certainly important enough to deserve their own terminology.