survey that found that only 20% of employees are truly engaged in their work — heart and soul

and yet he goes on to say that

I talk to a lot of CEOs, and every one professes a commitment to building a “high performance” organization

So why this huge, 80% discrepancy? I think Dan McCarthy get’s pretty close when he talks about helping leaders to ‘connect the dots’, writing that

the biggest reason why we can’t seem to see what’s right in front of us is that our own “worldviews”, or “paradigms” obstruct our vision.

Other people have suggested similar things, Julian Birkinshaw at London Business School, Richard Donkin, Umair Haque and Lynda Gratton have all talked about new perspectives on management.

Why the 80% Discrepancy?

In my mind, the 80% discrepancy between what CEO’s say they want and what their employees report is due to the methods and means (i.e. the paradigm) available to help manage people. The methods and approaches that are used to bring out the best in people are very different to those which are used to run everything else in a business.

What do I mean by this? If you look at the history of organisations (Managing Value Based Organsiations by Dr. Bruce Hoag is one very thorough view), you tend to find the following themes emerging;

• The methods and technologies to do things define people’s day job
• These approaches are more useful if they are objective and can scale
• Subjective approaches are rarely as valuable or important
• New approaches only endure if they have advantages over the old ones
• People with P&L responsibility have the greatest power to decide things
• They also gain the greatest recognition from their decisions (if they go well)!

If we look at current examples of new methods and technologies, many suggest improvements for the organisations which choose to apply them. Improving knowledge management, green strategies, engineering influencing design, full body scanners, more powerful computers and improvements in transportation all correspond to the themes above.

How is this Different to how People are Managed and Empowered?

The biggest difference between the examples above and how people are managed and empowered is between;

• Approaches that are objective or subjective
• Approaches that are perceived to be valuable or not
• Approaches that improve P&L or not

If one looks at the myriad of methods and approaches that contribute to the management of people, it is hard to find any that fulfil the three criteria above completely. This is why there is no shortage of information along the lines of;

• Besides the transformation, why are there massive gaps in HR?
• It’s time for new thinking.  It’s time to take note of new ideas
• HR = Hardly Relevant
• Critical HR Challenges for 2010
• Are Current Selection Tools up to the Task?

While there are many good things happening in people management and HR, I ultimately believe that right now, practitioner’s own world views remain unchanged. Hence the status quo endures, depsite calls for something different.

While practical, micro-level details may well be expanded upon later, I think the recognition of the different paradigms above might be a starting point, or perhaps a stepping stone on a bigger journey…

• Thoughts on 2009
• The Assumptions behind Motivation
• Reverse Norms
• Retention
• Innovation
• The Future of HR

Articles are included from the likes of the Harvard Business Review, Henry Mintzberg, HR Magazine, Jeffrey Pfeffer, MIT Sloan Review, Nokia, SuccessFactors and the Wall Street Journal.

Tag Cloud

Thoughts on 2009

In summing up the past 12 months, clearly the recession and how best to tackle it’s effects has been the headline topic amongst HR and OD commentators. Whilst practical tips are always valuable and there have been many, some of the most interesting articles have taken a wider perspective and have questioned some of the fundamental assumptions we have about the way organisations are run. This quarter has been no exception and some of the most interesting articles are featured below.

As regular readers will know, employee engagement has been a particularly hot topic in 2009. Reading through various articles, this I believe has actually disguised the underlying theme or driver of the discussion. The pressing issue driving the engagement debate is that firms are increasingly searching for some sort of intangible alchemy. How to improve performance once all cost cutting has been made and in particular how to ensure that such cost cutting does not destroy morale amongst workers.

As we will see, the final quarter of 2009 has seen the publication of a large number of articles that continue to question traditionally held beliefs about motivation, innovation, talent management and other central issues to the HR/OD agenda.

First in the firing line and picking up from our previous issue, management guru Henry Mintzberg wrote a piece in the Wall Street Journal about the negative impact of bonuses in organisational performance. In typical fashion, Mintzberg does not mince his words;

“Executive bonuses—especially in the form of stock and option grants—represent the most prominent form of legal corruption that has been undermining our large corporations and bringing down the global economy.”

The key problem that Mintzberg identifies is the use of financial indicators as the sole gauge of a company’s health. Quite correctly in my view, Mintzberg argues that companies are far too complex and the factors influencing their performance too subtle and wide ranging to be accurately understood by traditional financial measures.

“This flawed assumption, though, does far more damage than simply distorting CEO compensation. All too often, financial measures are a convenient substitute used by disconnected executives who don’t know what else to do—including how to manage more deeply.”

Trying to change the mindset from assessing performance in the current timeframe and look towards how decisions will impact the long-term health of the organisation is another argument Mintzberg uses. At the same time as looking forward, it is impossible to disconnect present and future performance from the past. Should current executives be rewarded for the foresight of their predecessors whilst making short-term decisions that damage the prospects for future generations.

Performance is not about what is happening in the current time period, it is as much down to history and ingrained culture and the impact of decisions made today have on future performance.

Indeed as Mintzberg claims, an organisation’s relative success or failure actually has very little to do with the incumbent senior management and the rewards designed to motivate them. Amongst the huge number of variables at play of which current management have no influence over include;

• The impact of previous management teams
• Underlying organisational culture
• External market factors

The current model also assumes that the majority of value in an organisation is added at C-suite level. This assumption is questioned in a compelling article by Erik Berggren and Lars Dalgaard where they state that;

“Organizations that will prosper need to turn strategies into returns. Although the egos in the executive suite may not like the fact that bottom line results are far more dependent on execution (85% vs. 15%) than on strategic plans”

They then go on to say that;

“The greater the manager’s insight into the performance capability of the individuals and the team, the more likely there will be consistent and quality outcomes.”

This sentiment ties in directly with Mintzberg’s assertion that bonuses damage performance because they legitimise the disconnect between senior management and their understanding of what is happening in the business.

I think this article also supports another of Mintzberg’s arguments, namely that organisations place too much emphasis on leadership rather than effective day to day management. There seems to be a direct analogy between what Berggren and Dalgaard are saying about strategy and Mintzberg’s frustration with the glorification of the corporate leader at the expense of less glamorous yet ultimately productive grassroots management.

The Assumptions behind Motivation

Interestingly, Mintzberg’s arguments in this article tie in with a theme we have touched on in previous issues and in particular reflect a talk we highlighted from the Quarter 3 issue from Dan Pink focusing on motivation. In this talk Pink uses scientific research to dismantle the case for the use of financial incentives for improving motivation and performance. Further support for Pink’s position came right at the end of the year in an article by Teresa Amabile and Steven Kramer in the Harvard Business Review. Focusing on employee motivation their findings show;

“we now know what the top motivator of performance is—and, amazingly, it’s the factor those survey participants ranked dead last. It’s progress. On days when workers have the sense they’re making headway in their jobs, or when they receive support that helps them overcome obstacles, their emotions are most positive and their drive to succeed is at its peak. On days when they feel they are spinning their wheels or encountering roadblocks to meaningful accomplishment, their moods and motivation are lowest.”

“As a manager of people, you should regard this as very good news: The key to motivation turns out to be largely within your control. What’s more, it doesn’t depend on elaborate incentive systems.”

Another excellent HBR article, this time from A.D. Amar, Carsten Hentrich, and Vlatka Hlupic touches a similar topic. This time, the criticism is for organisations that seek to gain greater efficiency through tighter control. This is a very relevant topic given current difficult economic conditions. However, citing a number of real life examples where companies were able to boost performance by relaxing controls and encouraging greater autonomy, the authors echo the sentiments of Pink and others in a call for greater levels of independence.

Reverse Norms

Mintzberg’s comments about the difficulty in assessing the health of organisations reminds me of a conversation I had with a senior investment banker a while ago, he claimed that after 25 years of advising companies on acquisitions, mergers, disposals and IPOs he still had absolutely no idea of how to tell a good company from a bad one.

In using financial targets have we consigned ourselves to a spiral of over simplification? Where we are trying to measure the hugely complex with the overly simplistic and basing important decisions on these crude metrics. With all the data and technology available to organisations now, is there an alternative more sophisticated approach to motivation available?

If Mintzberg and others are correct, the question that immediately arises from these articles is how have we ended up in this situation, where so many of the assumptions we have made about motivation and reward are false? One possible answer comes from a blog post by Bob Sutton discussing Jeff Pfeffer’s new book The Human Equation. Pfeffer makes some interesting points in particular about what he calls about “Perverse Norms” and how such norms often emerge and cement themselves in the corporate mindset even though they conflict with the evidence.

Sutton cites the example of lay-offs as having an overall negative effect on performance;

“If the world believes that laying-off employees by the carload is good management and confers status on those that do it with the most vigour, it will be difficult for executives to resist the temptation to conform to the normative definition of “good management” and thereby achieve approval.”

This got me thinking, in his example Sutton cites layoffs, however executive bonuses could also fall into this category, certainly according to Mintzberg. However, during this quarter there have also been other articles questioning the way in which crucial organisational activities are approached.

Retention

Another candidate for being a “perverse norm” is retention. Retention remains a key part of the talent management agenda and for firms it is likely to become more important if and when the economy recovers. The prevailing wisdom and intuition would tell you that the way to hang on to certain people would be to incentivise individuals and make leaving the company harder or certainly less attractive.

Not so, according to a recent MIT Sloan Review article, the authors Elizabeth Craig, John Kimberly and Peter Cheese argue that the best way to attract and retain top talent is to provide them with the tools that will make them most attractive and employable to competitors.

“our research shows that executives intend to stay longest with those companies that offer the greatest opportunities to enhance their employability.”

Interestingly, the ideas around proficiency and progress resonate nicely with the HBR piece on motivation noted above.

“In addition to developing their leadership talents, executives want to increase their value by acquiring knowledge of operations outside their areas of expertise, and by polishing general business skills.”

By making it easier for people to leave or be appealing to other employers, organisations are likely to benefit from increased retention and motivation. This idea of increased autonomy is supported in an article by Rex Davenport where he highlights a recent interview with Jay Cross in Learning Executives Briefing.

“When learning is pushed on people—people resent it.”

Cross then goes on to make the point about the way outcomes are measured;

“First, the metrics that people have been using for the past 30 years— using accounting measures—are totally ridiculous. In the past 40 years the value of the stock market has gone from 80 percent tangibles to almost the opposite, 80 percent intangibles. If you listen to any (experts) they say that intangibles are unmeasurable, that they are too flaky. The ROI stuff is totally bogus and organizations shouldn’t waste their time on it. The proof is not to look at the learning, but instead to look at the changes in behavior that come about as a result of the learning.”

Moving this thinking forward a bit, instead of measuring success in a role by the acquisition of more power or responsibility, maybe executives should be encouraged to move in the opposite direction? By aspiring to make ones role obsolete, managers are able to disseminate power to where it needs to be before moving on to the next role. Just a thought!

Innovation

Continuing the theme of perverse norms, traditional attitudes towards innovation came under fire in an article in the Wall Street Journal. In this article, the authors discuss situations where companies should outsource their own innovation rather than trying to deliver innovative ideas internally. This is something that will be a bitter pill for many organisations to swallow who spend considerable sums on initiatives designed to stimulate and boost innovation. For a variety of reasons, some organisations are always likely to struggle with activities that require the type of approach associated with innovation.

One way organisations often seek to boost their innovation is through the use of consultants. This approach is soundly bashed in an entertaining piece by James Gardner. According to Gardner, consultants are the last people you would look to use to help boost innovation;

“The consultant-innovator’s hallmark is such a narrow focus on the business problem that they don’t ever get to using influence to push the next innovative thing. They’d much rather study the issues and create Powerpoint.”

Clearly a generalisation but I suspect that there is more than a grain of truth in this assertion.

Areas such as bonus culture, retention and leadership are clearly crying out for new ideas and a rethink in terms of approach. All of these and more could easily fit into the “perverse norm” category. Whether things will change to any great extent is open to question and in my mind highly doubtful. The current inertia I believe can be summed up in the term bonus culture. Things are unlikely to change because current practices are so deeply ingrained or cultural that any call for change will fall on the deaf ears of vested interests. Interestingly, Mike Haffenden touches on this point in his interview.

Despite the poor prospects of real change, it is worth however noting that all the above examples involve the way organisations manage and engage their people. Whilst we may have the mechanical or systems side of things working well, there is still much to be desired when it comes to dealing with people.

The Future of HR

This brings me nicely on to the final topic for this issue, a quick round-up of thoughts on the future of HR. Always a good source of material even though the debate hardly seems to have shifted in the previous 12 months despite the economic upheaval.

To kick things off, there was a provocative blog post by Gautam Ghosh, where he claims that for HR to survive it has to first of all make itself redundant before transforming itself into a new function. The essence of the post is that technology has made the traditional HR role obsolete and that if the function is to survive, previous activities need to be discarded and new roles adopted. This is an interesting idea and one we have touched on before. From my perspective, this is one of the reasons why will start to see an increase in the number of non-HR trained professionals taking up senior HR positions.

On a similar theme an article in HR Magazine emphasises the need for more business focus from the HR department. I’m sure we will see plenty more articles along similar lines in 2010.

Much of the debate amongst HR practitioners in 2009 has been about the role of Web 2.0 in the corporation. Indeed in many places I have seen the employee engagement debate reduced to “whether we should allow our employees access to Facebook?” question. In my mind this discussion is completely beside the point and belittles the contribution HR may make to the organisation in the future. To summarise this, there was a good blog post by Marc Coleman who took a look at how the Nokia HR department has encouraged an open dialogue with its employees through the use of social networking technologies.

As we move into 2010, it is this aspect of HR technology which is likely to develop. I believe we have reached a limit in terms of surveys, form filling, metrics and dash boards and instead will see further advances in technology such as social analytics which instead of measuring past performance or where a company has been, will enable a more predictive approach to be taken. This is touched on in a blog post by the always interesting John Ingham.

“The challenge for analytics is now more about analysing relationships between data points”

Bruce: So how has 2009 been for you? Is there anything you would reflect on or mention going forward?

Mike: I think it’s been very difficult for everybody. The problems with the economy, the problems with small businesses, the problems with large businesses, the lack of clear leadership and major uncertainty, and reluctance for anyone to really jump on the fundamental problem, which is job creation.

So clearly the government have to start thinking about this, how to create wealth, how to create jobs and if it’s not going to be finance, what’s it going to be?

Bruce: Have you found the agenda changing over the year to reflect the economic environment or has it been more specialist HR themes that have dominated?

Mike: I think it’s interesting. Of course, HR has a huge opportunity to demonstrate competence, but there doesn’t seem to be an initiative. I recall one major consultancy offered early on in the year that the big issue in the crisis was talent, so I’m sure it’s important, but when survival’s the issue, you start to think about performance and cost. I certainly see many organizations tackling costs, i.e. reducing the number of people, and in some ways looking to temporary reforms. That’s been far less well dealt with and in many organizations; it’s a huge opportunity to improve that area of performance and support with the performance of an individual. I think that’s one aspect. The second thing, of course, is the huge scurrying around in the six months in the area of pay and payment systems. A lot of misplaced government attention on bonuses and so-on. The consequence of that means that many organizations have been looking at what we do. Very few organizations have actually made the sorts of changes that you’d think are going to lead to improved performance.

Bruce: Do you think people have missed a trick or an opportunity here?

Mike: Well, I think the pay thing is fascinating. If there is a link to pay and performance and I’m not sure that there is, then I think it’s generally accepted that what we’ve been doing over the last 10, 15, 20 years has not been right. But I don’t see many people offering much of an alternative to the way we should pay people. So, if big bonuses are wrong, what should we do? If long-term incentive plans aren’t right, what should we do? If incentive retention payments aren’t right, what should happen instead? I’ve not seen anybody come out with a real sensible approach as to what should happen next. The reason for that is a lot of people seem to have a significant vested interest in not changing. So, the consultants that have been doing very well. The chief executives have liked it quite a lot. HR people are quite happy about what’s going on. So, why would you change?

Bruce: Do you think those incumbents will present any serious debate going forward?

Mike: Well it seems a little bit like turkeys and Christmas. You don’t really get people vote to give themselves less money. You’re not going to get consultancies to vote them less consultancy fees and HR directors are not really pivotal in the decision making process. So, I think it’s going to be pretty much steady as you go.

Bruce: Do you, just thinking about the kind of missed opportunities, and the opportunities that have presented themselves over the year, do you have a reaction to the CIPD’s attempt to articulate a new thought, new visions for the profession with their kind of re-casting of the HR function?

Mike: I think the CIPD is in a very difficult set of circumstances. This is an organization that deals with junior people and people who are not in the private sector. So, consequently, their views are not always seen as being followed by significant players and I think Jackie Orm’s initiative to involve more senior players has been a good one, but I just don’t think that they’re going to be leading the charge. I’m not sure that their initiatives are going to drive things on so much.

Bruce: Do you think anyone else it taking up the slack?

Mike: Yeah, I think some of the US academics are doing really quite interesting work. We’ve been working with Pat Wright from Cornell and Pat is a thoughtful, helpful academic who is working with some UK businesses to move things forward. I think he lacks the showmanship of Ulrich, which is probably a good thing. On the other hand, I think he’s got some good thoughts and good ideas as to HR’s way forward. There are a number of HR directors who, I’m not saying are following him. But they are certainly agreeing with him in practice to do some of the things that they’re doing. But the CIPD, I just don’t think is on the same page.

Bruce: You’ve spoken before about the view of classic four box model around people in organizations. Is that something that you think may help enhance either the function as a whole or of practitioner’s views within it?

Mike: Much of HR’s effort and initiative has been focused on improving the person, and yet very often, the people are pretty good as they are, but the context in which they’re employed leaves a lot to be desired. We find that there is not enough work in terms of improving the organization, but lots of work on improving individuals through coaching, through 360 degree feedback, through training, through whatever else; but very little in terms of looking at the organization’s design, in terms of process improvements, in terms of creating an environment for people to flourish and do well and those sorts of things, which are arguably harder to do. So, in the four boxes you might have very many government departments bottom left, possibly managing not very good people in an environment which isn’t great. Bottom right, you might have a number of the banks that have great people, but tend to do everything they can to stifle their initiative. Top left you might have some of the sandwich makers or McDonald’s who don’t necessarily hire the best people, but create a great working environment where people consistently delivery outstandingly well, and there are a number of bloody good organizations in the top right. Good organization, good people. That’s where I think in the top two boxes are where an organization should be aspiring and not too much to do with improving their people, of course you need good people to do it, but essentially it’s about creating the context of the previous approach.

Bruce: From a HR point of view, how much of this do you think is about getting the basics right and how much do you think is about more advanced or more sophisticated practices?

Mike: I think it’s both. I think many organizations don’t get the basics right. The basics to me would be simple processes, treating people well, communicating clearly and directly, and that’s not always about good things. It’s about telling people what is expect of them, what you want them to do. It’s about ensuring that people work together as a team and that an emphasis is placed on team dynamics as well as the individual. So, I think, yeah, there’s a lot to do in basics. Equally, some organizations have got fairly complex things. If you really need international processes, these can be quite complex, quite difficult, and some of that does require subtle or sophisticated management. I think it’s a combination of those things, but I do find many organizations get it wrong most of the time.

Bruce: Would make any recommendations or thoughts to advance these ideas? Obviously Ulrich’s work has been championed for awhile, but do you think there’s any simple or even complicated theme that’s emerged as to progress the function from your point of view?

Mike: I’m not a big Dave Ulrich fan. I’m certainly not enthusiastic of prescriptive solutions to problems. Each situation needs to be judged accordingly and appropriate measures taken. It needs clarity of thought. It needs analysis and it needs determination to get things done.

Bruce: Do you think that the day will ever come when HR is having meaningful impact on cash flow statements or financial measures, across the profession rather than worst examples?

Mike: I think that’s a million miles away. The best HR directors are however very influential within their organizations. There are some outstanding examples of people who have made a substantial contribution, but HR’s role in the strategic direction of the enterprise is inevitably not the same as the chief executive’s. In some cases, they are a strong supporting act and in other cases, they’re just not involved. And the ones that are involved are far fewer than the ones that would like to be.

Bruce: Do you think there are any HR activities that either could be, in principle, or have been in the past taken to share holders or run by the CEO?

Mike: I think the whole issue of talent is important. and if look at Tesco’s pipeline of people coming through, it’s phenomenal! Compare and contrast with Mark & Spencer and some other organizations. Tesco have done incredibly well at bringing in good people, moving them through the organization, and putting them into positions of prominence.

Bruce: Sure. Do you think that’s because of the people, per se, or do you think it’s because of the economic environment and the respective business model?

Mike: I think it’s easier at Tesco, because you’ve got opportunity. You’ve got spaces that you can put people that are moving forward into. So, if you’ve got jobs for bright up and coming people to move into, then it’s easier than if you’re a contracting organization. Under the latter circumstances, the people that are entrapped and they’ll go somewhere else. But if it’s expanding and growing, you can hold on to good people and move them as you go forward. But a lot of this is about harboring your resource. But then as an investor in an organization. I’m always interested in the quality and caliber of talent that that organization has got. If you think of it as your investment portfolio. I’m not going to put money into an organization that has got duffers running it.

Bruce: Do you think there are other themes apart from talent that are of broad interest to shareholder community?

Mike: Yeah, I think remuneration strategy must be important and the way people get paid is important. I think those are the two important areas.

Bruce: Where do you think HR fits into the wider organisational picture?

Mike: Well, it’s never actually been clear as to what our contribution might be. We’ve got four domains that we think HR provides tangible contribution. The four would be, the HR operations delivering the basics, which I think HR has done very well. The other three areas would be talent management, performance management, and creating the right kind of environment for good people to flourish. I think we’ve done far less time in those areas, and a lot of it’s to do with lack of expertise and an inability to actually make an impact. There are clearly exceptions to that.

Bruce: Do you think there will be any new HR technologies coming along to help the HR to more effectively function in these areas?

Mike: I think that certainly, software tools can be helpful in terms of managing talent, but I think that some the fundamentals are going back to basics and getting a grasp of principles of social science, how people work together collectively, looking at cause and effect, looking at things that cause improved performance and looking at things that cause people to grow and develop in organizations. We know all this stuff, but simply choose not to apply it.

Bruce: What would be an example of something that you think is known but isn’t applied?

Mike: The cult of the individual exists in many organizations and yet we all know that success comes from having effective teams. I think creating environments of team goals, team incentives and team culture is important to success. So, how would you create this environment where people are brought into the shared vision, the shared purpose and deliver accordingly? I think there’s something also about the fact that this year has been very difficult for people in work and I think that creating an environment where people do still get something from it, where they still enjoy what they’re doing, and can regard work as being positive rather than negative is important as well.

Bruce: Thank you very much for your time Mike.

Mike: Thank you.

1. Focusing on the ‘unstructured, intangible and typically unmeasured’ will lead to the greatest increase in profits and problem solving over the coming years.
2. Benefiting from working on the ‘unstructured’ will only be fully realised when it is possible to see this in the context of new technologies, processes and practices. In other words, the emergence of a new paradigm or theoretical approach.

‘Unstructured, Intangible and Typically Unmeasured’

Gartner and others have suggested that

as much as 60% of an organization’s processes are unstructured – and probably also unmonitored, unmanaged, unknown and unruly

In a similar vein, John Hagel of Deloitte writes that

In a rapidly changing world, the knowledge that matters the most is tacit knowledge… Accessing this kind of knowledge requires long-term trust based relationships and a deep understanding of context

The CIPD then offers us the following

The intangible value of an organisation which lies in the people it employs is gaining recognition by accountants and investors, and it is generally now accepted that this has implications for long term sustained performance

There are of course many more examples, one of the most recent being the contrast between Israeli and US airport security. The Israeli’s focus on intangible, human factors, having established successful processes, while the US still focus on the tangible, to the detriment of the more subtle¹.

If only 40% of processes within organisations have been mapped, or are formal enough to commit to ERP programs, for example, that leaves the majority of an organisation’s activity which might be better tackled from a different perspective.

New Technologies, Processes and Practices

The obvious candidate to fulfil the brave new world of intangibles is Enterprise 2.0 and its collection of internet technologies. While the potential exists for E2.0 to be open, democratic, disruptive and transformative, the jury is still very much out on this.

By way of contrast, perhaps Gary Hamel best sums up the status quo. Quoting research from Towers Perrin on engagement, he writes

barely one-fifth (21%) of employees are truly engaged in their work, in the sense that they would “go the extra mile” for their employer. Nearly four out of ten (38%) are mostly or entirely disengaged, while the rest are in the tepid middle. There’s no way to sugarcoat it—this data represents a stinging indictment of the legacy management practices found in most companies

Interestingly, Gary’s recommendations aren’t a million miles away from other recent suggestions on the subject

We’ve got to get management’s dirty little secret out of the HR closet and into the boardroom. And second, if we’re going to improve engagement, we have to start by admitting that the real problem isn’t irksome, monotonous work, but stony-hearted, spirit-deflating managers

These thoughts reminded me of a point made by Rick where he writes

That the HR function needs to become more strategic is a mantra I first heard over twenty years ago when I started working in HR…

Just because senior executives are starting to see the importance of managing human resources it doesn’t mean that they will give Human Resource managers a seat at the top table. It might even be that the HR function never becomes strategic at all and that HR professionals are relegated to a support role while someone else does all the interesting stuff

I think Mark and Seth’s points light the way ahead, but I wonder how long it will be before people management benefits from something as exciting as ‘artists taking over from the technicians‘…

Footnote

1. Finding spending comparisons between Israel and the US is easier said than done.

The piece focuses on leadership, giving up power as a leader and witnessing corresponding improvements in performance. There are also case studies from CSC and ANADIGICS showing some attractive financial improvements as a result of this new way of working.

Over and above the financial improvements, perhaps the most interesting aspect of the article is the idea of “mutualism.”

Mutualism involves measuring workers not against revenue or other numerical goals, which we have observed to be ineffective as motivational tools, but against qualitative values such as trust, responsibility, and innovation.

And it implies that leaders don’t dictate vision or strategy; instead, they enable employees to create a common vision through, for example, off-sites for discussion of strategic issues and regular feedback and education. Hitting numerical goals has been the natural outcome.

It will be interesting to see if methods such as mutualism increase in popularity and adoption over the coming months.

The first factor which determines the success of this is the ability of something to enhance the economic contribution of people management activities.

The second factor is the ability of the new approach to change people’s day to day activities for the better.

Put another way, the acid test of any new method or technology is its ability to convey a sense of intuitive value within minutes, deliver something meaningful in a few hours and ensure that these benefits are sustained over the quarters and years.

What History Teaches Us

Looking back over history, there are many examples of new technologies and methodologies which both increased value and changed processes.

• Henry Ford’s Production Line
• Containerisation and Transportation
• Just in Time Manufacturing and Supply Chains
• Derivatives and Securitisation
• Enterprise Resource Planning
• Personal Computers
• Six Sigma
• The Internet
• Mobile Phones

In the main, all of the above have enhanced the economics of the organisations who have employed them. Likewise, they have been significant enough to change the operations of a function or organisation and potentially create a strategy that a CEO can take to shareholders.

It is also worth noting that despite the relative age of the examples above, all are still all very much in use today.

Creating a Context

Naturally at this time of year, there is no shortage of conversations with thoughts for the coming year, along with reviews of both 2009 and the decade that has just passed.

Researching the HR Profession of the Future

Perhaps the most significant contribution to the conversation came from the CIPD and Jackie Orme’s speech in November.

That link between culture, leadership and sustainable performance is exactly the focus of our Next Generation HR research… In particular, the need to deliver both short- and long-term results in a way that protects the future. We’ve got an impressive and varied array of organisations taking part in the research. Some are on the stage this afternoon. But they’re all helping us to identify the beginnings of the big shifts that will help define the HR profession of the future.

While these ideas have merit and the research is aways going to increase relaibility, I think the real opportunity lies elsewhere. Likewise, a small survey by Jon Ingham suggests that there are other things to take into account including Social Business and HR 2.0, amonst others.

HR and Technology

What is missing from this is a focus on new technologies or methodologies which impact both the economics and processes of an organisation who adopts them.

There has been a lot of talk around social media and HR. The implications being seen as potentially very positive and transformative. While social media and Enterprise 2.0 is potentially highly disruptive, its very nature suggests that it alone won’t re-cast people management or the perceived value it offers. For me, it is a case of ‘watch this space‘.

Laurie, Michael and Dennis all get this and Steve examines things through the broader lense of ROI (we need more powerful equipment – did someone just turn on the LHC?).

JP then chimes in with an idea that combines the technological (platforms) with the intrisicly human (trust).

Stewardship, my word for 2010, is based on platforms. Those platforms need to be underpinned by trust. Not the trust of physics but the trust of biology. Because that is how value is going to be generated.

Now that’s more like it…

Happy New Year!

The two highlights from a HR perspective are below.

1. 9.08 – A brief mention of the possibility of Enterprise 2.0 increasing levels of human capital
2. 3.15 – The idea that Enterprise 2.0 tools help increase the effectiveness of human-centric managers

Embedding the video didn’t seem to work, but the full interview can be watched here.

Reading the post, I was struck how much of what is said could apply equally to HR as much as it could businesses as a whole and with this in mind, here are some of my own re-writes from Karl’s piece (my changes are in bold!).

The web and social media is going to empower and change EVERY ASPECT of HR

The way human beings are motivated to connect and create value has changed (no re-write on this one!)

HR has to realize that it is a co-creative eco-system that includes employees, partners, competitors and customers and the way people are motivated to create and realize value is the only measure of success

It’s important to mention how HR needs to change as it is one of the greatest impediments to change for a corporation as it is where the culture of value creation is created

Extracts follow and the full pdf is online here. From a HR point of view however, the takeaway seems to be twofold;

• New technologies and organisational designs lead to improved performance
• Collaboration curves may make it possible to enable larger numbers of people to create greater levels of value, increasing returns to scale in the process

From John’s blog;

The real challenge is to figure out how firms, caught in a pincer move between more powerful customers and talent, can create more economic value and improve their own profitability.

Given the profound performance deterioration that firms have experienced over decades, it is time to step back and reassess our most fundamental assumptions about what is required to be successful in business. If we have any hope of turning this longer-term trend around, we must be prepared to challenge our current approaches to business.

In particular, we believe that the two foundational catalysts driving intensified competition – digital infrastructures and public policy shifts favoring economic liberalization- also create the conditions for dramatic performance improvement.

We believe that for the first time, given a combination of new digital infrastructures and new institutional architectures, it may be possible to turn the experience curve on its side and for the first time generate performance curves with increasing returns – the more participants, the more rapidly performance improves. We use the term collaboration curves to describe this new opportunity.

• Shifting the Organisational Pyramid
• The McLeod Review on Employee Engagement
• The Leader/Manager Debate
• Line Managers who Lead
• The Intrinsic Motivation of Autonomy, Mastery and Purpose
• The Irrationality of Human Behaviour
• Tomorrow’s HR Professionals – A Multi-Disciplinary Background

Articles are included from the likes of Harvard Business School, Henry Mintzberg, HR Magazine, McKinsey, the McLeod Review, the Partnership Institute, Personnel Today, Strategy + Business and TED.

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Shifting the Organisational Pyramid

The general consensus of commentators from a broad spectrum of disciplines is that the traditional organisational pyramid is not fit for purpose. See below to find out more. We are also seeing a notable increase in articles and blog posts focusing on recruitment in the upturn. Whether this is wishful thinking or a genuine sign of improving economic times remains to be seen.

On a continuing theme from previous updates, there can be no doubt that this year’s hot topic is employee engagement, whilst an acknowledgement of it’s importance is widespread, there remains considerable uncertainty around putting an effective engagement strategy into place. Furthermore as the discussion develops, it is becoming increasingly hard to separate engagement from other organisational issues such as; leadership, talent management and innovation.

The McLeod Review on Employee Engagement

July saw the release of the UK government backed McLeod Review looking into the impact of poor employee engagement in the UK. Undoubtedly this is a strong endorsement of the positive effect of engagement on performance. However, there has been criticism from some for the lack of new insight or practical suggestions. I think that this is slightly missing the point and the report is far from the “recycled rubbish” claimed by Nicholas Higgins. In a similar vein, Personnel Today explicitly criticises the lack of practical suggestions. In my view, the job of this report is to make CEOs sit up and take note and raise what is traditionally seen to be a “soft issue” up the corporate agenda. The report is also meant to raise the issue of engagement for businesses of all sizes, again I think this is something that it achieves. As a first step in an ongoing process, this report gives HR directors the evidence to support the case for taking a serious look at engagement.

Although short on new ideas there is no doubt that the Mcleod Review brings together lots of data and evidence supporting the argument for an increased commitment to engagement. A good summary by John Ingham can be found here. There is nothing revolutionary in the report and it is easy to see why some in the industry are frustrated by it’s lack of specifics. However as a document making the quantitative case for increased investment in engagement it is pretty solid and for those not directly involved in HR and its related disciplines, it is a good introduction.

Despite the shortcomings, the conclusions reached by McLeod are likely to resonate with many. In short, McLeod is calling for a more sophisticated approach to people management. The report openly argues that due to amongst other things changing demographics and technology, engagement is not something organisations can approach with a one size fits all mentality. True engagement is focused on the needs of each individual. Furthermore, if organisations buy into this assertion, the role of line managers has to evolve away from the traditional administration/assigning tasks role to a more collaborative/coaching type approach, as McLeod states;

“Many people we spoke to identified managers’ approaches and behaviours as key factors in disengagement – as one respondent said, they sometimes act as “a great impermeable damp-proof course.” Jeff Kelly, of the Partnership Institute, told us at a round table discussion for this review: “There is a territorial problem and a comfort zone problem. Many feel comfortable with managing staff on an adversarial basis and don’t want to give it up.”

My feeling is that what is being called for in the McLeod Review goes much further than encouraging organisations to adopt a formal engagement programme. If organisations are to fully realise the benefits outlined in the report it is going to require a complete rethink in the way corporations manage and engage their people.

Curiously enough there have been a number of other articles published this quarter that I feel more explicitly reflect the findings of the McLeod Review. Interestingly, these articles are all written by people from a variety of backgrounds or disciplines yet the underlying message is very similar.

The Leader/Manager Debate

To kick things off, Henry Mintzberg has created a buzz with a look at the perennial manager/leader debate. This was also a topic covered in the previous issue. In this article Mintzberg is critical of the traditional role of corporate leaders who he brands as aloof and disconnected from the workforce, therefore having little idea of what is actually happening in the organisation. It is this disconnection that hampers so many organisational initiatives. In Mintzberg’s view, corporate America is overled and undermanaged.

True leadership is something that may only be required on an ad hoc basis, in particular during times of uncertainty or dealing with specific challenges or unknowns. These are the challenges which we most associate and value strong leadership with such as charisma, determination and vision. Effective management on the other hand is something that requires a more mundane yet equally valuable approach.

“As Stanford University emeritus professor James G. March put it: “Leadership involves plumbing as well as poetry.” Instead of distinguishing leaders from managers, we should encourage all managers to be leaders. And we should define “leadership” as management practiced well.”

At the heart of Mintzberg’s criticism is that the traditional corporate pyramid encourages and supports this disconnection between leaders and the rest of the organisation. Jamie Notter has an good summary of the Mintzberg article and picks up on his assertion that organisations need to review the usefulness of the prevailing hierarchical model of organisational design.

Line Managers who Lead

The notion of line managers who lead is explored in this recent McKinsey article. An idea that is coming from a similar direction to Mintzberg, instead of training managers in process and administration, they can improve productivity by empowering the people around them. In this way managers can be seen as catalysts to creativity, innovation and devolved decision-making. In particular managers need to address the issues that are of particular relevance to them and their people. This can be anything from dealing with interpersonal issues to customer relationships. The article goes on to say;

“To unlock a team’s abilities, a manager at any level must spend a significant amount of time on two activities: helping the team understand the company’s direction and its implications for team members and coaching for performance.”

This prompts the question, is the traditional top down business model fit for purpose in the 21st Century? To highlight this confusion between management and leadership, one particular criticism outlined by Mintzberg in another article is what he refers to as leading through information or “deeming” as he terms it. This is where leaders deem that certain targets need achieving, such as sales need to rise by 10% or we need to cut 15% of staff. By any definition this is not leadership and as such is unlikely to engage or motivate employess apart from through fear.

Dismantling the organisational pyramid is also the topic of a Strategy + Business article. Ostensibly discussing talent management, the theme is the same as Mintzberg’s argument and calls for a fundamental reassessment of how organisations engage with their employees. The article argues that the traditional career progression structured through an organisational pyramid structure is outdated and not fit for current and future demographics. Instead organisations need to take a more sophisticated and flexible approach to career development based on the individual.

The Intrinsic Motivation of Autonomy, Mastery and Purpose

Further evidence to support a radical reappraisal in the way organisations structure themselves is outlined by Dan Pink who delivered an entertaining TED talk, well worth the 20 minutes if you have the time. In it he discusses the failure of bonuses and incentives to improve performance. Contrary to popularly held beliefs in the corporate world at least, the basis of Pink’s talk is that traditional monetary incentives fail to boost performance in all but the most mundane or mechanical tasks. Citing a number of scientific sources, Pink states that the traditional reward structure used by organisations is not an effective means of motivation. Clearly this view undermines many of the assumptions that organisations implicitly make about motivation and performance. In getting rid of the traditional carrot and stick approach, Pink focuses on three areas of what he terms “intrinsic motivation” of autonomy, mastery and purpose.

In discussing the role of autonomy, Pink is another to go against the orthodoxy and directly criticise the traditional organisational pyramid which concentrates decision-making in the upper echelons. By removing self-direction, organisations are undermining the ability of employees to fully engage with their work. At the same time feelings of unfairness are likely to grow. Clearly, Pink is suggesting that organisations need a fundamental rethink in the way that they motivate their employees. As Pink repeatedly summarises;

“there’s a mismatch between what science knows and what business does.”

The Irrationality of Human Behaviour

As if that isn’t enough, we are continuing to see an increase in articles focusing on the “irrationality” of human behaviour. In a posting on the Harvard Business School site Jim Heskett kicks off a decent discussion about a recent HBR article by Dan Ariely. Again, this has significant implications for our approach to management theory and assumptions about human behaviour.

“Reactions to our efforts as managers reflect what each individual receives in relation to what he or she perceives and expects. Because this is highly subjective, the argument goes, generalizations (many of them currently taught in conventional courses) about how to manage are practically useless. Instead, managers should encourage employees to set their own goals, appraise their own achievements, and reach their own conclusions about how to improve. Managers should also spend more of their time inspiring (through stories) and devising engaging activities from which employees may, to some extent, choose.”

Are you starting to see a theme here yet?

Whilst there is no shortage of new ideas being put forward, within the HR specific press, the focus has been more inward and arguably more pessimistic over recent months.

Tomorrow’s HR Professionals – A Multi-Disciplinary Background

In particular, HR Magazine in the UK has run a series of articles that have a generally pessimistic view of the furture for HR. The debate seems to have moved on from the rallying cry for HR to be provided with a seat at the top table to a questioning of whether the function can actually make a strategic contribution. For example, David Woods cites a Logica survey with the headline figure claiming that 70% of HR Directors feel that they do not have sufficient information to avoid a widening skills gap. Given new technology and information available to HR professionals, is there any excuse for this?

Elsewhere , Maurice Duffy muses on the future of HR. In a strongly worded article, he articulates a potential future for HR where it is able to contribute significantly to organisational effectiveness. Unfortunately, Duffy is sceptical whether the majority of current HR practitioners are capable of delivering this vision. As Duffy states;

“My view is that HR is populated with too many self-seeking, blame-shifting blockers and manipulators who kill the enlightened view and restrict and choke organisational progression. You know them – the pen- pushing administrators and positioners, who tell the business what it cannot do, build processes and systems that inhibit or dilute any sensible simplicity that is a key requisite in the current world where change, speed and innovation are the new business imperatives.”

On a similar note, Rhonda Eckert has a blog post asking whether HR is in danger of becoming extinct? She echoes Murray in her assertion that tomorrow’s HR professionals are going to come from a multi-disciplinary background. Maybe not the end of HR but possibly signifying a shift in the experience or requirements for HR professionals.

Likewise, Jan Kingsley at ASPEL talks about the fragmentation of learning and its possible resolution, saying;

“L&D is becoming more specialised with people developing specific competencies and skills in discrete areas, for example, becoming specialists in coaching, facilitation or learning design. This is being driven in part by customer and client expectations, but also the use of technologies which makes the whole issue of learning much more complex. Navigating this maze of information and techniques and overcoming their inherent complexities will be a major factor in making L&D much more effective.”

While debates on the specific themes will no doubt continue, the possibilities for HR and leadership going forward are intriguing and imply a number of changes. While the recession has almost forced people to reflect on their organizations and practice, the seeds of the future may well be taking route already.