Wednesday 30 January 2008

The truth about the HR department

The latest 'Why we Hate HR' rant has been run by the FT today.

Private equity boss, Luke Johnson, criticises HR as a 'necessary evil', 'a simple expense, and a burden on the backs of productive workers'.
I don't think Johnson provides a very powerful or coherent argument, and its noticeable that he only seems to see HR's role in connection to employee problems (something to do with his own management style perhaps?).

Anyway, I've recently had my own rant on 'Why hate Private Equity' so I guess this makes us even.

I'm more concerned about the comments made about the article, most of which support Johnson's perspective on HR.

Perhaps we do need more promotion along the lines of SHRM's new ad after all.

Tuesday 29 January 2008

CIPD Talent Management conference

Although talent management is increasingly seen as a critical success factor in businesses, research from the CIPD finds that 74% of organisations do not have a clearly defined talent management strategy.

I've already posted on many of the issues accounting for this finding, for example here.

On 26 February, I'm chairing the CIPD's Talent Management Conference which will mix case studies with expert advice to help businesses deal with this problem.

Highlights at the conference include:

  • Tim Miller, Director of People Property and Assurance at Standard Chartered Bank, on Developing a Talent Management Strategy

  • Mark Roberts, Head of Talent, Tesco, discussing Organisation-wide Implementation and Alignment of talent management

  • Elizabeth Crosse, HR Consultant, Legal Services Commission, on Talent Management for Evolving Business Needs

Other organisations presenting include Cambridgeshire County Council, Deloitte, American Express and Siemens.

Friday 25 January 2008

Benchmarking the HR function

XpertHR cover an IRS survey on HR benchmarking.

It finds:

"Seven out of 10 respondents make some attempt to measure the effectiveness of their HR function. Around half those that do so (33.6% of all panel members) said they use formal measures, while the remainder (36.6%) said they use informal measures.

This leaves around three out of 10 (29%) of our panel working in organisations that make no attempt to measure how effective their HR department is."

Fine, but actually it's only the fifth and last two bars on the graph which measure HR effectiveness (spending against budget, HR's role in decision making process - which I think it an excellent measure - and benchmarking performance against other HR departments).

The other bars relate to:

  • Human capital measures: staff turnover data, absence management data, disciplines / grievances data.

  • HR activity measures: exit interview feedback, time to fill vacancies data.

Results of employee surveys and anecdotal / informal feedback are interesting - these could relate to human capital or HR activity measures depending on whether they ask about the individual (eg are you proud to talk about the organisation with your mates in the pub, are you planning to leave in the next two years), or about how the individual is treated (eg did you have an opportunity to input to your performance appraisal).

Thursday 24 January 2008

The right way to trim the fat

The Work Clinic has pointed out that the UK is the fattest nation in Europe.

Could one reason for this be our focus on short-term thinking? A note in my gym (The Royal Berkshire) explains why diets don't work:

"The problem with many diets is that an extreme reduction in calorie intake is usually involved. When this happens:

- The body perceives this as starvation and your Basic Metabolic Rate drops by as much as 20% in 24 hours

- The body will then turn to its protein stores, which are found in the muscles

- The body will also inhibit the activity on enzymes that burn fat and increase the activity of fat storage

- You can become lethargic, irritable and have poor co-ordination - this is due to carbohydrates being low

- Food cravings can start

Welcome to the world of the yo-yo diet."

Of course, the same advice applies to organisations as well. Restructuring often results in short-term and painful reduction of staff after which the organisation quickly puts the same 'weight' back on.
The only way to avoid this is to redesign the organisation and improve critical business processes, not simply take out heads.
I thought pointing this out might provide a timely reminder given that what was supposed to be Blue Monday turned out to be distinctly black.

Wednesday 23 January 2008

HR in the age of Talent

Interesting research out from the Human Capital Institute / Vurv. This was conducted last Autumn and I know its been presented before now, but I've just caught it for the first time on one of HCI's webinars (or HC-TV apparently).
Quick summary: HR's getting there. But we can still do more to build our expertise, enhance innovation, and most importantly, further develop our credibility.
The first of these two pie charts shows the proportion of HR functions which think they are strategic (66% - the pink and purple segments). The second presents non-HR respondents' answers to the same question. Just 36% of these think HR is strategic.
So, expertise, innovation, credibility... There's obviously not enough HR people reading this blog! Or catching the latest HCI webinar for that matter.
One thing I don't think is going to raise HR's credibility is SHRM's new ad for the profession. What do you think?

Tuesday 22 January 2008

Melcrum employee engagement survey

Melcrum have published results from a new employee engagement survey.

It contains a couple of interesting findings, and some good analysis of how, from a communication perspective, organisations can improve engagement.

Findings first:

  • In most organisations, engagement is just a general philosophy incorporated into the organisation's people practices (54%) rather than being a formal, dedicated engagement programme (27%). This is lower than I might have thought. Engagement is such a critical aspect of human capital in any organisation, and is so poor in many, that it deserves to be treated as a strategic, long-term, heavy investment programme. And I don't know what to say about the 13% of large organisations where it's not on the agenda at all!
  • HR generally has responsibility for overseeing engagement (40%), slightly ahead of internal communication (27%). And I think it's a positive sign that 13% give responsibility to a designated employee engagement team. Just one thing, I would advise giving accountability to these functions too.
  • As shown in the graph, senior leaders are more important drivers of engagement than direct supervisors in small organisations (34% vs 23%) but not in large ones (23% vs 25%). I've already posted on the difference between production and knowledge workers and this difference between large and small organisations seems intuitively right as well.
  • Most organisations measure engagement through standard opinion surveys rather than dedicated research. I think this is a worry as these organisations will be less well informed about the drivers of engagement within their own organisations that those that follow a more bespoke approach. I'll come back and post more about this in the next few days. Once again, I'm left speechless thinking about the 23% of organisations that don't measure engagement at all.

The second section of the report deals with the communication techniques used by organisations to address engagement issues. In order of popularity, these are:

  • Action teams (55%): Linda Dulye explains that these cross-functional employee work teams address critical, red flag issues and recommend measurable, workable solutions. "Team findings and recommendations are presented, face-to-face, to company top management during a day-long working session. The session - which is attended by highest ranking managers of the division or company - is characterized by open dialogue and rapid-fire decision making. Every recommendation surfaced by the employee teams receives a go or no go decision by management. The session concludes with timelines drawn up for the integration of endorsed actions into a master plan. Subsequently, the master plan becomes the responsibility of the teams and management to jointly implement, track and measure impact on a sustained basis." The team is responsible for the ongoing results which drive the ultimate engagement.

  • Storytelling (49%): Tony Quinlan explains "Storytelling is a misnomer. It conjures up the image of a passive audience sitting listening to someone with the charismatic, persuasive power to entrance them. It revolves around a carefully-constructed story designed to carry you out of the day-to-day to somewhere else and change your thinking while you're there. What is on offer here is more powerful and more positive than that simplistic view. And while it involves storytelling throughout, some of the greatest opportunities for employee engagement lie in listening to stories, not telling. The real power and opportunity for using stories in organisations is in listening to stories, helping others to create their own authentic stories and making sense of the stories told." I don't personally get much out of non-contextual parables, but stories based upon real experiences in organisations have huge power to resonate with people's own experiences and gain an emotional and very real response.

  • Appreciative inquiry (29%): Caryn Vanstone explains that "Appreciative Inquiry can be defined as the art of discovering and valuing those factors that 'give life' to an organisation, group or individual – those things that support and enable the best examples of peak performance. It is more than a method; it is a philosophy, or a way of thinking, which leads to a new way of working together – one which is not centred on eradicating the causes of deficit and problems." I'd agree. I've only used discover / dream / design / destiny in developmental workshops but I use AI's strength based who system approach in most of what I do.

  • Message maps (19%): David Grossman explains that this is a "messaging tool to guide individuals and organizations in creating clear, credible and compelling messages that drive awareness, understanding and action. The process of developing a messagemap helps align management to the core messages for an initiative and results in a blueprint of all the key messages that can be used to populate various communication tools — which eliminates unnecessary revisions and saves significant time." Mmmm, I've had a go using similar things myself (as someone participating in a process, not a leader or facilitator of it), and I've not been that impressed. And I'm surprised that 19% of organisations report having used them.

They key to all of this of course, is to be clear about what you're trying to change, to understand the context within your own organisation, and then pick the right techniques for this particular set of circumstances. Pilot to check you've got the right approach, and then stick at it. Too many organisations move onto the next new thing before they're really seen any change take place. These four approaches all have their place, but use them appropriately.

Monday 21 January 2008

Make the most of Blue Monday

Yesterday's Sunday Times noted that today, Blue Monday, is officially the most depressing day of the year - the day when, statistically, our commitment to our present job falls to an all-time low - and is therefore a good time to plan a career break or change.

There must be a few HR practioners thinking this too. Every year, there are more articles on the theme of 'Why we hate HR', and according to last year's Deloitte survey, only 16% of HR executives believe they are highly valued by their business colleagues.

Planning for a career change in these circumstances would be supported by Jeffrey Immelt at GE who emphasises that “HR people need to work for companies where people are valued”, and if they are not, they should leave.

But there is another way. HR can seize the initiative, use evidence from their engagement surveys and whatever metrics the have at their disposal to argue the case for change within their own organisations:

  • Putting human capital first:

  • Developing a best fit strategy to develop this capital:

  • Giving HR accountability to delivering the right type and level of human capital:

  • Encouraging use of the language of people to support the management of human capital:

This could be a Golden Monday if you choose to make it one.

Sunday 20 January 2008

Do you tick off your to do list?

Microsoft / Kelton Research report that most people are 'in love with to-do lists'.

69% of UK and 76% of US citizens currently keep at least one to do list; some manage up to three or more lists concurrently. These lists are seen to be a stress management tool, having a calming effect on people, simply because everything is written down in front of them.

However, to-do list tasks often languish on lists for weeks before getting crossed off. Although US participants said they check off 69% of the tasks on their to-do lists in a week, procrastination is alive and well. On average, the longest an item has stayed on their to-do lists is nearly a month (22 days in the US, and with the longest delay in the UK with 26 days).

Is that all? I keep two lists - one for work related areas (currently just 12 pages - 3 of them noting ideas for future blog posts), and one for home (4 pages). And given their length, you may not be surprised to learn that some of these to do's have probably been on these lists for well over a year. So what? It works for me.

I picked up the habit after reading David Allen's Getting Things Done. Most people I've worked with for any length of time in recent years would be surprised to see me without pad, pen and to do list, ensuring that I always have my full list of commitments and requirements on hand, and can capture new actions as they come up. It's almost become part of my personal brand - and is why I had my website designed as it is.

I have tried technological approaches to this, but haven't found a system that works for me as effectively as paper does. However, although I only reprint the list every couple of weeks or so, for the sake of the environment, I am committed to having another go - probably when I get round to getting myself an iphone (rather than Windows Mobile) later on this year.

Friday 18 January 2008

Building organisational capability through learning technologies

I'm presenting on organisational capability at this year's Learning Technologies conference in a couple of weeks time.

The conference is being opened by my fellow research associate at Learning Light, informal learning guru Jay Cross who will be talking about how, in many organisations, learning and development is inadequate for keeping workers knowledgeable and competitive.
Picking up this theme, in my session, I will be talking about organisational capability, the role of learning in developing capability, and how the L&D function needs to change to support this new role.
I quite like conference organiser, Don Taylor's, description of this role as Skills Strategist:
"The skills strategist understands the direction of the organisation, what it means in terms of knowledge and competence, and sets the L&D department’s activities accordingly... From its traditionally isolated position at the edge, it needs to be thoroughly connected with the rest of the organisation. There is an opportunity here to make the language of skills and knowledge as wide-spread in the organisation as that of finance and quality control. Indeed, for success in the private and public sector, it may be that there is no alternative."
I agree that use of the language of people will be critical for this new role to develop. The good news is that L&D is in a great position to help employees and particularly managers and leaders to learn this 'new' language.

MUSIC not measurement in performance management

I've been thinking about whether, if there is a growing opportunity to shift from a top-down, measurement based, compliance focused system of performance management towards a bottom-up, human and commitment focused approach that I've called performance leadership, then whether it is time to start downplaying many organisations' emphasis on SMART (specific, measurable, achievable, relevant and timebound - or variations of this).

SMART helps ensure people know what they need to do and how they play their part in helping achieve the organisation's strategic objectives. It allows the organisation to cascade goals down to all employees, and ensure that there is a good line of sight between them. It aids effectiveness and efficiency. But it does very little to inspire.

Above all, it treats people as a resource (human resources) in the business that can be directed to a company's ends, rather than a unique human being (a source of human capital) that can provide the basis for competitive success and transformation.

So how about MUSIC as a new acronym in performance management?

  • Motivational: focused on what would truly inspire the individual to go beyond simply doing his or her job.

  • Unusual: good performance management systems already stress that performance management objectives should not focus on part of the day jobs, but should reflect new or increased responsibilities or requirements. In performance leadership, we may need to extend this further to ensure that each individual is set objectives that are different to other peoples' or what they have done before.

  • Sensory: one of the reasons that SMART objectives have been quite useful is that they extend the pyschological priming effect that simply having a clear set of goals provides (just having goals can sometimes be all that is needed to make them happen as the brain starts to unconsciously guide action towards their achievement). But this is even more effective when the goals are supported by thinking about the sensory evidence that would come with their achievement (NLP practitioners will know what I'm talking about here).

  • Individual: I've already said that goals should be unusual, and it is their focus on each individual, their own particulaly skills, motivations and interests, that provides this.

  • Congruent: This isn't about people going AWOL, goals still need to relate to the business plan, but they come from the individual and the individual's insight into how they might play the greatest role in delivering the business strategy, than from a piece of paper produced by people at the top of the organisation who don't know the details about what people lower down the organisation do.

Of course, we still need SMART objectives too, and MUSICal goals will probably only apply to a small proportion of an organisation's workforce eg its knowledge workers, its talent etc. But I think for these groups, it might provide a significant human capital led boost.
What do you think?

Thursday 17 January 2008

Value in performance management

There have been a lot of posts on other blogs over the last couple of weeks on new years resolutions and I suppose, slightly similarly, objective setting within organisations.

I've not commented on them as I've not seen anything particularly new or interesting, at least to me. This isn't new either, I developed it while I was at Buck, but it might still be worth sharing more broadly (for more information, see
Campaign for Performance).

The slide is built upon my value triangle but was also based upon additional research.

At the bottom of the triangle is performance appraisal, which provides a means of assessing people against basic standards of performance, rating and ranking them to identify how much they should be rewarded and who should be promoted. This is an essential activity, but focusing here leads to performance management becoming associated with paperwork, bureaucracy and difficult conversations and eventually to it being discredited as an administrative chore.

More important than this is providing and assessing people against clear, SMART (specific, measurable, achievable, realistic and time-bound) forward-looking objectives which have been cascaded down from the top of the organisation. This is the basis of performance alignment, a continuous monitoring process in which both employees and managers take joint responsibility for managing and improving performance. Performance alignment forms part of HRM – it treats people as resources and seeks to align them with the achievement of business objectives.

However, employees want much more than just to play a role – they seek enjoyment, inspiration and meaning from their roles. So managers must remember to treat people as individuals, helping them to focus on what they are interested in doing and what they do best. Performance leadership meets this need by helping people identify compelling goals, harnessing their capability and inspiration in order to motivate them, help them grow and encourage them to stay. Performance leadership works from the bottom-up and corresponds to HCM – it harnesses individual human capital to provide opportunities for transformational change within the business.

Each of these three types of performance management has its place, but my belief is that its performance leadership that will have the greatest impact on peoples' behaviour and organisational results.

Monday 14 January 2008

Accounting for People in Australia

Remember Denise Kingsmill's Accounting for people review of human capital management reporting in the UK?

Consultancy Mettle's blog has commented on an Australian Financial Review examination of HCM disclosures in the Australian ASX50:

"The results show great discrepancy between the top performers and those companies that are yet to see value in reporting on measures succh as staff satisfaction, culture, personal development and leadership competencies/attributes."

Well, the fact that this review found discrepancies at least suggests that things have moved on since Kingsmill found virtually no reporting.

George Bush on HCM in the Middle East

Interesting to see George Bush speaking on human capital while in Abu Dhabi (he is obviously talking about economics rather than HR, but the same points apply):

"In any society, the greatest resource is not the oil in the ground or the minerals beneath the soil. It is the skills and talents of the people. Or as one Nobel winning economist calls this human capital. Across this region, you have an abundance of human capital - in the men and women who are your citizens. By strengthening your education systems and opening your economies, you will unlock their potential, create vibrant and entrepreneurial societies, and usher in a new era where people have confidence that tomorrow will bring more opportunities than today."

It's good to see him speak at least some sense.
Also, just to note I'll be in Dubai on 31 March and 1 April to chair and present at Fleming Gulf's 2nd annual HR Strategies in Banking and Finance conference. I'm staying on for business meetings in Dubai and Abu Dhabi on 2 and 3 April - do get in touch if you're reading this and you want to meet me there.

Factors for ultra - success in HCM

I didn't post on Success Factors' recent IPO, but I noted the posts of many other blogs that did, for example, zdnet. I thought SF's success was well deserved and reflected HR's growing interest in the latest, integrated technologies.

Even though SF's share price hasn't performed that well recently (see the Human Capitalist's recent post on this), I still think SF, Taleo, Authoria etc will continue to benefit from this trend.

Knowledge Infusion did a good presentation on this at the initial VIEW last month - including this graphic on the types of integration desired by different organisations.

So I was pleased to have an opportunity to met online with SF last week. They took me through their new release called ULTRA, and I have to say it was very impressive.

This graphic illustrates the power of some of the potential integration (see also this and this) - here comparing performance management data (quality of employees) with recruitment data (sources these employees were recruited).

A key requirement for the success of these tools is clearly how well they engage line managers in their use, and I could see managers getting a real kick out of some of the new functionality. I particularly like the system's extension towards web 2.0 type functionality, for example, tagging. And also the extra humanisation and collaboration provided through the 'Faces' application (letting you search for people you may have met but whose names you don't know).

I also recommend reading SystematicHR's post on ULTRA.

Sunday 13 January 2008

Partnering opportunities available

I’ve got a few small projects underway at the moment, but none which are yet the basis for long-term relationships focusing at a strategic level on really helping organisations to do something really impactful over the long-term (for example, tacking the chronic problem in talent management.
So if you’re a practitioner who has been reading my blog, and you want to partner with me to do something really exciting, making a significant difference to the performance of your business and transforming your credibility in the organisation, give me a call!

Saturday 12 January 2008

A&R and HCM

I've often thought that artists and repertoire (A&R) in the music industry should provide an interesting parallel with HCM (vs HR) in people management.

A&R recruits artists, songwriters and record producers, handles contractual negotiations and so on. Increaingly they don't get involved in recording sessions or making creative decisions relating to the recording which is overseen by a record producer, so there's some similarity to the split in responsibilities between HR and the line manager.

Artists are the major revenue drivers for music companies so in theory at least, they need to be supported in a very progressive and enabling sort of way, developing their human capital over the longer term.

As talent and human capital continues to become more important, employees need to be managed in this way too.

So is A&R the future of people management? Well unfortunately, probably not. There's plenty of evidence to suggest that relationships with artists often haven't been that wonderful (for example, this and this).

Robbie's new strike at EMI is the most recent evidence of A&R difficulties.

Based upon my previous posts on private equity, and my comments made above, it might appear obvious that the music business and private equity firms aren't natural companions (particularly one that employs former BBC bureaucrat John Birt as an adviser).

Robbie’s manager has accused EMI's new boss, Guy Hands of Terra Firma, who has previously pledged to drop recording artists who are not working hard enough, of acting like a "plantation owner" who had stumbled into the record industry via a "vanity purchase":

“They do not have anyone in the digital sphere capable of doing the job required. All we know is they are going to decimate their staff."

Yes, a new approach has been needed in the music business now that most people download their music, and CDs are rapidly following vinyl into antiquity, but turning a music company into 'mean, lean music machine' and demotivating all of the star talent, doesn't sound to me like the right approach.

Private equity and HCM

OK, maybe that was going a bit too far.

Using this updated diagram from one of my earlier posts, I think the key thing in HCM is to have a position, and then support it. This is much more important than what this position is. There is plenty of room for different positions, and many different ones can work.

What the diagram shows is that HCM in private equity will work, as long as there's a clear strategy on making money (which obviously there is), the firms employ people who want to make money too (cheatas from my previous post) and that HR processes support both the strategy and the cheatas.

OC in the middle is organisational capability - the particular focus that the firm is going to be built around which in this case is efficiency and a laser like focus on profit.

Friday 11 January 2008

Private equity and people management

Last week's Economist also ran a good article on mergers and acquisitions and private equity, Whither the great wave?.

The last five years have provided a great ride for private equity but this is now entering a more challenging period. Activity has slowed dramatically following the credit crunch and returns are likely to reduce.

However, private-equity firms are still sitting on record amounts of capital and continue to be able to raise large sums and so smaller deals should continue.

I think a more important reason for being bearish about private equity's future is about whether this model provides a sustainable way of running organisations.

Firstly, as more people seek meaning in their work, do private equity firms and the companies they manage provide working experiences and environments that meet people's needs? Particularly as more millenials enter the workforce? I think less and less people are motivated purely by cash. And a heavy financial focus doesn't usually lead to very wonderful behaviour.

Business Week also had a good article on this last year, Perform or Perish, and an even better cover story podcast.

In this, Business Week journalists discussed two types of employee:

  • Cheaters, whose traits are aggressiveness, insistence on high standards, the ability to hold people to account, being driven by numbers

  • Lambs, whose traits are listening, developing talent, being open to criticism, treating people with respect (it's not that cheaters can't do these things, but it won't be their strengths).

It's rather pejorative language, because you need some of both sets of behaviours to be fully effective. I'm a natural cheeta but have learnt that lanb behaviours are often more successful over the longer term.

However, Business Week quoted research finding that only cheaters survive in a private equity environment.

Secondly, private equity reduces the ownership of the organisation experience by employees, except at the very top. So it acts in an opposite direction to Charles Handy's call to separate company funding and ownership.

And thirdly, private equity firms only make investments for liquidity, none for the future (for example, creating value / human capital management). So given its required focus on the long-term, I can’t see talent management for example, ever succeeding in this environment.

These are the reasons I expect 2008 to be a less successful year for private equity than 2007.

More on global HR challenges: Japan

Last week’s Economist carried a very interesting article on businesses and people management in Japan, Sanyora, salaryman.

Short-term and part-time contracts, mergers and acquisitions and demographic change are all contributing to changes meaning that Japanese employees are increasingly unwilling to accept boring jobs, provincial postings, late night / early morning drinking and their other hardships that come with the corporate paternalism of earlier decades. Work-life balance is starting to make waves.
God job too! In December last year, the Economist ran another article, Jobs for life, looking at 'karoshi' or death by overwork in Japan. In November, a court ruled that a Toyota employee was a victim of karoshi when he collapsed at work at 4am after 6 months of putting in 80 hours overtime each month.
The employee's widow thinks Toyota's success has less to do with its efficiency and flexibility than it has with the free overtime Toyota receives from its workforce. I understand her sentiment but think this is unlikely - long-hours in Japan as in the UK and elsewhere doesn't generally produce greater productivity Indeed the more recent Economist article notes that little work actually gets done in evening working - employees just don't feel able to leave before their bosses.
So its a positive sign that the salaryman system seems to be on its way out. But the cultural and systemic norms linked to Japan's seniority-wage system will take careful unpicking.

More on global HR challenges: Russia, China…

In my recent VIEW webinar on global HR trends, I talked about the challenges of people management in emerging economies. In their recent talent management article, McKinsey provide a colourful description of the sorts of problems employers face in some of these countries:

‘Poor English skills, dubious educational qualifications, and cultural issues – such as lack of experience on teams and a reluctance to take initiative or assume leadership roles.’

Look at this graphic presenting the proportion of graduates organisations and recruiters feel they would be employable. Three of the biggest economies: Brazil, Russia and China come out the worst.

Take Russia – organisations feel able to employ just 10% of graduates for engineering and generalist management positions. From my two years based in Moscow leading HR support for five countries in the former USSR, I am not unaware of some of the challenges managing people there, but I was still shocked by this.

Or China – where only 3% of relevant graduates are seen as employable for generalist roles. This supports the Economist's view (in the World in 2008):
'Much of the shortage of qualified staff is the result of the education system, which has not been able to keep up with China's fast-evolving labour market. The schools system still teaches by rote, producing people who foreign employers often say are inflexible, lacking in creativity and initiative.'
Again, I understand where these figures are coming from, but given the rate of growth and recruitment demands in China right now, these are very scary figures indeed.

Thursday 10 January 2008

Using the language of people

In my last post, I advised moving from HR’s current focus on using the language of business to the language of people. This is a language based on emotions and stories that resonates with employees.

There is a good article which relates to this in today’s FT, comparing the oratory of Barack Obama to the US’ other Presidential candidates. Have a look here.

Business language is good for driving efficiency and effectiveness, but it does little to gain people’s engagement. HR's going down to the wrong road if its just tries to become more and more business-like. As I’ve said before, what it really needs to do is to encourage and develop the rest of the business to speak the language of HR, or really the language of people and relationships.

(I do, by the way, see the irony in this recommendation when I’m more guilty than most in often using very technical and not particularly inspiring language. What can I do? – I’m trying, but I'm still an engineer at heart.)

More about the talent problem

I’d like to add some further interpretations to my previous two posts (here and here) on McKinsey’s latest talent management article.

To me, a major reason for the short-term focus in talent management is that organisations are approaching this as a HRM rather than HCM strategy.

As the slide attempts to show, the difference is that HRM is about implementation. It reacts to short-term business priorities, emphasises the management of a business resource, and assumes that people can be managed and monitored through facts and metrics.

HCM is about new opportunities. It puts people and their human capital front and central, looks at accumulating this human capital over the longer-term, replaces business language with the language of people, and focuses on enabling rather than monitoring their performance.

In my opinion, it is by using this perspective that talent management will have the sort of impact that McKinsey believes it needs.

HR's role in talent management

What should be HR's role in ensuring that talent management is effective, and how well are we performing in it?
In Management Consultant International, Kennedy are upbeat, finding that HR has been successful in gaining executive attention for talent management and pointing to 'a current trend of elevating the role of human resource professionals'.

This is unfortunately not what McKinsey have found:

'Our research confirms the idea that HR's influence is declining. The executives we interviewed criticised HR professionals for lacking business knowledge, observing that many of them working in a narrow administrative way rather than addressing long-term issues such as talent strategy and workforce planning (see graph). As one HR Director explained, senior executives "don't see us as having business knowledge to provide any valuable insights. We're doing many things based on requests, and they don't see HR as a profession." '

According to McKinsey, 58% of all line managers believe that the HR function lacks the wherewithal to develop talent strategies in line with a company's business objectives!

The need is that:

'Human resources should asset its influence over business strategy, and provide credible and proactive counsel and support for the chiefs and line managers of individual business units. Only HR can translate a business strategy into a detailed talent strategy: for instance, how many people does the company need in order to execute its business strategy, where does it need them, and what skills should they have?'

I don't really understand why we're not doing this. What are we waiting for?

McKinsey's War for Talent: still a strategic priority ten years on

It was ten years last year that McKinsey's seminal War for Talent research was conducted, but a decade ago this year that their research was published in the McKinsey Quarterly. Now this journal has published an important update based upon more research undertaken in 2006 and 07.

In this latest article, McKinsey find that the talent management problem remains as business leaders believe that competition for talent is only going to increase. In fact the problem has become more acute. This is driven by three external factors - demographic change, globalisation and the rise of the knowledge worker, but also the enemy within - short termism: too much time is spent on 'today's business' with little value attached to building for the future (see also my earlier post on this).

The consequence of this short-term focus is that most talent management programmes have been 'insufficient at best, superficial and wasteful at worst' and therefore that expensive efforts to address the problem have largely failed.

This is compounded by 'minimal collaboration and talent sharing among business units, ineffective line management, and confusion about the role of HR professionals' (I'm going to come back to this in my next post).

The article is a depressing read. Talent management shouldn't be this hard! As McKinsey advise, organisations just need to to 'ensure talent management is addressed as an integral part of a long-term business strategy, requiring the attention of top-level management and substantial resources.'

Supporting this, they also recommend:

  • Investing in the whole workforce, not just the 'A' players to support inclusiveness
  • Developing multiple employee value propositions for different groups of staff
  • Bolstering HR.

Perhaps 2008 will be the year that companies finally start to seriously tackle this problem. If they need to, they should certainly think about asking McKinsey to help, although I come slightly cheaper.

Wednesday 9 January 2008

Best companies for Leaders

I’ve just been sorting out the various surveys I’ve reviewed during 2007. I think one of the best of these on leadership was conducted by Dave Ulrich’s consulting firm, RBL, together with Hewitt and Fortune magazine earlier this year. The survey finds that leadership development is increasingly important, particularly within what were identified as top companies for leadership. These companies make leadership a critical part of the company’s organisational fabric. So for example, they are more successful in attracting the quality of leadership talent they want (95% of top companies vs 57% of other companies say that they are successful or very successful in doing this). These benefits translate into higher company reputation and business performance. I particularly like this quote about Ken Chenault at American Express (number 19 in the North American list of best companies for leaders) published in Fortune this September:

"You couldn't be blamed for rolling your eyes when American Express chief Ken Chenault says, "People are our greatest asset." CEOs always say that. They almost never mean it. Most companies maintain their office copiers better than they build the capabilities of their people, especially the ones who are supposed to be future leaders, and for decades they've gotten away with it. But now their world is changing profoundly - and at long last we're going to find out which self-proclaimed people-cherishers actually mean it."

These changes mean that the bar to gain advantage through leadership development has been raised. Most companies do identify top talent, conduct talent reviews, do succession management, and develop talent in multiple ways. Top companies do more, and “although the gap between good and great is narrowing… the Top Companies continue to differentiate themselves”.

The survey emphasised that to move ahead, organisations need to do more that just develop individual leaders at all levels – they also need to create a differentiated model of leadership that is right for their organisation and which provides a common language and way of thinking for people within the organisation. Doing this also provides the basis for a leadership oriented employer brand .

I think two major paradigm shifts are required as well. Organisations must see leadership as a vehicle for enabling their organisation to move in a different strategic direction. So if their business needs to enter a new area, a key question needs to be whether the organisation possesses the necessary leaders to deliver this strategy.

To make this work, leaders need to demonstrate a passionate and unwavering commitment to leadership. And they must spend more than 30% of their time and effort directly on leadership issues. In fact CEOs at the top companies spend 60% of their time on talent. And at American Express, 25% of an executive’s variable pay depends on talent development.

And more generally, organisations need to understand the value of their human capital. As Fortune note: “Even given the credit crunch, money for investment is more abundant than ever. It isn’t the scarce resource in the business anymore: human ability is.” And Hewitt explain “Organisations need talented people a lot more than talented people need organisations.”.

Tuesday 8 January 2008

Leadership and social acumen

Still catching up on a few things from last year.

One of December's most provoking blog posts was Gill Corkindale's Harvard Business blog on the leadership crisis in the UK. Looking at the prime minister, the chancellor and the government, the Bank of England and its governor, and a couple of football managers (you can probably guess which ones), Corkindale notes a long string of leadership failures. Most of them, to me, see to have developed through these leaders being too remote from their organisations – a lack of social connection. Lisa Haneberg’s blog, Management Craft has alerted me to Ram Charan’s latest book, Leaders at all Levels. Charan's explanation of ‘social acumen’ may help leaders build the sorts of networks they need if they’re to avoid the sorts of problems that currently seem to be so common in the UK:

"Leaders who possess it are not loners or bookworms. They have an innate desire to work with diverse people and naturally cultivate a broad range of social networks that permeate the company, including subordinates, peers, and superiors. As these leaders develop their social acumen, their networks often extend beyond the business to include customers, suppliers, regulators, politicians, and various interest groups. The relationships tend to be durable because they are built on trust, and that trust allows information to flow both ways, exposing the leader to new ideas and different ways to see things. The social networks also allow him or her to energize and synchronize people's energy and actions and to do a better job managing a crisis than would otherwise be the case."

Social acumen isn't yet a common topic in many leadership development programmes, although rotating leaders across the organisation or bringing them together into formal leadership courses, may provide the basis for some of these networks to evolve.

Wednesday 2 January 2008

Reward, happiness and performance

And there is a third article from last year's Employee Benefits magazine I wanted to comment on before time moves on too far. This is from the October edition. And I wanted to refer to it not because it includes insightful comments from me (it doesn't) but because I thought it was a really interesting survey that probably demands more attention that it got.

The survey, conducted by YouGov, found that 59% of employees are happy in their current job role and 54% are happy with their employer. Looking at how happy an employee is on these two scale provides the matrix in the attached slide:

The survey found startling differences between ‘total happys’ and ‘misery guts’. For example 87% of total happys but only 10% of misery guts are committed to their organisations.

Comparing employee satisfaction with different elements of the employee value proposition (EVP) against their happiness with their employers shows that reward, recognition, communication, career development, line management and the working environment have most impact on happiness with the employer. Reward, benefits, recognition and career development are identified as critical improvement areas as these have a high impact on happiness and come with generally low levels of employee satisfaction.

Focusing more specifically on benefits, out of a list of 24 benefits, total happys get 4.3 and misery guts just 2.8:

“Analysis identified that the benefits which result in employees being most satisfied with their benefits package are: a bonus, private medical insurance and flexible working. In fact, the survey showed that 85% of employees who get all three of these benefits are satisfied with their benefits package, 37 points above the average. Other specific benefits which have a big impact on satisfaction are discounts on the organisation’s own or other company’s products and a pension (final salary of other occupational pension such as a stakeholder or group personal pension).

Other benefits, such as free car parking, access to free counselling, employee share schemes, sports club membership and season ticket loans are all ‘nice to haves’ but it is really the five high impact aforementioned benefits which lead to the most satisfied employees. Furthermore, there is a whole ream of benefits which, in overall comparison, have little effect on benefit package satisfaction (but may meet other HR objectives).”

These benefits which have little impact on satisfaction includes life assurance cover, retail vouchures, healthcare cash plans, critical illness insurance, car allowances, personal accident insurance, optical care, luncheon vouchures, income protection and crèche provision / payment for childcare.

YouGov’s findings contrast with those in Human Resources magazine’s August 20007 survey which found a correlation between benefits and employees’ perspective of their employers as great places to work. This found that homeworking had the greatest impact on engagement. Employees who spend 10-30% of their time working from home feel 13% more engaged than those who do not. Profit related pay, sabbaticals, flexible benefits, duvet days and gifted days also have a positive impact on engagement. However, free private health and free or subsidised sports facilities did not produce any noticeable improvements in engagement.

Of course, it is possible to make a number of challenges to these findings. There are three main questions that occur to me:

Firstly, supporting last year’s Towers Perrin Global workforce study, but contrasting with Gallup's Q12 results, YouGov find that satisfaction with line management (at a high 65%) does not have a high impact on happiness with the employer. So does engagement come mainly from the individual?, the line manager, or the organisation?

Secondly, this research seems to contrast with previous previous research showing that happiness does not have a connection to performance. For example, Herzberg’s theory would suggest that as a hygiene factor, benefits can improve satisfaction but are unlikely to impact engagement. It’s an important question because most organisations probably don’t really care, from a capitalist rather than a humanistic perspective, whether people are happy at work or not.

In this survey, happiness does seem to have an impact on levels of commitment, motivation, engagement, advocacy, loyalty and customer focus. However, do benefits and other HR deliverables cause happiness which then causes commitment, or are happiness and commitment both outputs of these deliverables. Or does commitment cause happiness? And where does being seen as a great place to work fit in, as given Human Resources' varying findings, this is obviously measuring something slightly different.

These questions reinforce the need to construct a strategy map / value chain to try, as much as possible, to understand that interconnection between elements such as HR deliverables, satisfaction, happiness, engagement and business results.

Also it is important to remember that even if we had a clear answer to this question, different organisations and different groups of employees respond in different ways, so although this type of research provides an interesting straw model, each organisation also needs to construct a bespoke model of what they believe causes what for themselves.

Thirdly, despite the positive correlations between benefits, happiness and commitment, there is always the potential problem that emphasising financial benefits will have a negative long-term impact on commitment.

According to a study by Maarten Vansteenkiste from the University of Leuven in Belgium, published in the British Psychological Society's Journal of Occupational and Organizational Psychology, and described in HR Review, employees who value material success, status and power more than helping others at work or developing their talents are less likely to be satisfied at work. Dr Vansteenkiste commented:

"The current ethos in many organisations today is to reward workers with material benefits, but this research shows this could be counter productive for both the organisation and the employee. Although these benefits may appear to be great motivators they, rather paradoxically, are not. This is because material rewards divert employees away from recognising/attaining other less tangible goals that are important to maintain good mental health, such as good working relationships with colleagues, autonomy and job satisfaction."

There's still an awful lot we don't know about HR!

So in 2008, this blog will continue to share interesting and useful research and helpfully contribute to helping raise understanding of how we can help raise the performance of our organisations through our people.

See also:

Tuesday 1 January 2008

Increasing the impact of benefits through total reward statements

Secondly, I was quoted in Employee Benefits’ October issue providing advice on strategies reward and benefits practitioners could implement to increase (rather than just measure) the return on their investments.

'When proving their worth to finance and managing directors, ammunition for benefits practitioners can come in the form of salary sacrifice. The national insurance (NI) savings that an employer can make via salary sacrifice benefits such as pension contributions, bikes for work and childcare vouchers can show the powers that be that benefits are not just a cost. Jon Ingham says: "A great way to improve the return from benefits provision is to reduce the costs of perks. One way of doing this is via salary sacrifice."

NI savings through salary sacrifice can then be spent in other areas of the organisation outside HR, re-invested within employees' pension funds or used to fund a new project such as flexible benefits.

Another tool that can be used by benefits professionals to add value to the organisation is total reward. By communicating the entire employment package to employees, including pay, bonuses, benefits, working environment and career prospects, the theory is that staff become more engaged and, in turn, more productive and are less likely to leave as they appreciate the full value of what is on offer. By tracking staff turnover rates, benefits professionals may be able to prove that their total reward initiative has indeed made an impact.'

I think it's the second of these two strategies that has the greatest potential impact.

Research conducted by the Corporate Leadership Council (Employee Engagement Framework and Survey, 2004) has found that engagement consists of two main factors. Emotional engagement (the extent to which employees value, enjoy and believe in their jobs, managers, teams or organisations) encourages people to exhibit discretionary behaviour that goes beyond what can be required or mandated and to act as advocates of the organisation. Rational engagement (the extent to which employees believe their managers, teams or organisations are acting with their financial, developmental, professional or other interest in mind) influences how likely they are to stay.

There is little benefit in convincing people to stay with an organisation if they are not emotionally involved enough to go the extra mile while they are retained. So generating emotional engagement must take priority over gaining the rational kind. Organisations can develop this engagement, and encourage discretionary behaviours, by better understanding and influencing the psychological contract they have with their employees. The psychological contract outlines the employer’s and employees’ expectations about what the employer will provide in return for an employee’s contribution (including greater benefits for higher contribution). Emotional engagement comes from delivering on this psychological contract in everything that an organisation does.

But having successfully gained its people’s emotional engagement, how should an employer convince these fired-up employees to stay? One approach to improving retention is to formalise and articulate the psychological contract as an employment value proposition (EVP).

An EVP clearly spells out what employer and employee should each expect to receive from their relationship and, hence, demonstrates to employees why they should continue to work for the employer. The organisation can then use the EVP as the basis for ongoing communication with its employees. For example, it can provide them with total reward statements which describe the real benefit that employees receive from the ‘benefits’ that are provided to them. Total reward statements are most effective when they really do cover the whole spectrum of total rewards, including:

  • Compensation: base and incentives
  • Benefits: health and wellness; pensions, other
  • Career and development opportunities: including training but also areas like advancement opportunities and job security.

However, statements can also be extended to support the full EVP - describing, for example:

  • Work content: practices and people’s employment experience
  • Organisation: image and culture
  • People: the quality of other talent in the organisation and the social networks that exist between them.

Whatever the extent of the information total reward statements provide, ideally, these statements should be personalised to each individual. This can be done, for example, by taking account of a person’s unique circumstances and achievements, for example attendance on training courses or recognition scheme awards.

Organisations are increasingly finding that drivers of engagement vary from individual to individual. This variety is only going to increase in future as organisations continue to diversify their workforce by sex, age and nationality etc. in response to their increasing need for talent.

There are two main consequences of this. First, it means that rather than trying to address the employment-related interests of all of its employees, an organisation’s overall EVP must specifically focus on meeting the needs of its most important talent.

Second, simply personalising total reward statements to reinforce a standard EVP may no longer be enough - the EVP itself may need to be tailored and agreed with each employee, or at least those who have been identified as being within the organisation’s talent pools. This means that the total rewards, benefits and other elements of the EVP to be received by these key individuals (depending upon their actual performance and contribution etc.) must be agreed with them, and that a summary of the rewards and other benefits they have already received needs to refer back to what had earlier been agreed.

So, as a very simple example, a talented individual who wants to work on high-profile projects needs to be given this opportunity, and subsequently, the summary of the benefits they have received should outline the opportunities these projects have provided to them. A summary statement for someone whose engagement comes from developing their own direct reports might focus more on the particular accomplishments of that person’s team.

(Note, much of this post was published by my previous employer last year).