• Engagement
• Strategic HR
• Productivity
• Complexity
• The Dunning Kruger Effect
• High Potentials

Articles are included from the likes of Accenture, BP, Charlene Li, Gary Hamel, Google, HCL Technologies, MIT, Sainsbury’s, Seth Godin and Strategy + Business.

Tag Cloud

Going through this quarter’s articles, blogs and research, the key word or theme for this quarter is “complexity” and in particular how organisations should be embracing what is inherently complex, rather than trying to simplify and standardise across the board. This desire to simplify can range from high-level decision-making to talent management, where in many cases things are not always as they seem.

Engagement

Regular readers of this update will know that employee engagement has been flavour of the month in corporate boardrooms for some time now. It seems that organisations are waking up to the fact that engagement and the willingness to go the extra mile in terms of discretionary effort is not necessarily down to pay and benefits but a far more complex and intangible set of criteria that require specific insight and understanding of culture, relationships and values.

Given the number of conferences and seminars on offer covering engagement it appears that there is a cottage industry developing to guide senior executives through this tricky area. However, with engagement unlike some areas of corporate development, teaching executives about how to engage their people suffers from a number of inherent difficulties. Firstly, can something as naturally intagible as engagement be taught in a systematic manner? Secondly, do organisations and more specifically, senior executives actually want engagement given the change in outlook and culture it will require?

In a blog post, Michael Specht lists five criteria for successful engagement:

• Involvement in decision making
• Feel they are able to voice their ideas, & managers listen to these views
• Have line of sight between employee performance & company performance
• They have career development
• When the organisation is concerned for employees’ health & wellbeing

To this I would also add strategic and cultural alignment, i.e. the organisation acts in a consistent manner with it’s stated goals and values.

These bullet points reflect the broad consensus emerging for the prerequisites for successful engagement, in particular the Macleod Review (pdf) from last year and Dan Pink’s recent book Drive detail similar requirements. Anyone unfamiliar with Pink’s work can do a lot worse by watching this enthralling animation of a talk he gave to the RSA.

Surely, given the evidence supporting the case for improved engagement is something all organisations are striving for? Well, I’m not convinced that many are willing or able to undertake the necessary changes in outlook and culture to achieve this. Digging a little deeper it appears that pursuing engagement as a key strategy in boosting performance is going to require change or a reversal in corporate attitudes that many executives may find too unpalatable or difficult to achieve even if they wanted to.

By looking a little closer we can actually start to understand what an organisation would look like if it were to really focus on cultivating engagement as a key value. To start off with one of the main requirements of engagement is to give people autonomy or control over their role and an active say in decision-making.

This came up in a provocative blog post by Paul Gillin entitled Gain Control by Giving it Up, where he talks about a new book called Open Leadership by Charlene Li. In her book Li puts forward the notion that the traditional model of focusing hierarchical reporting and concentrating decision making and influence in the hands of a few senior executives is damaging to organisational performance. This is not a new idea but on this evidence I think Li makes a very strong argument.

“Open Leadership will make a lot of people uncomfortable because it proposes that the only way to govern effectively in a transparent business world is to give up control and trust people to do the right thing.”

“Li asserts that today’s business world is too complex and competitive to permit organizations to continue to manage the way they have since the Industrial Revolution. That top-down philosophy assumes that people are idiots who can’t accomplish tasks without instructions, rigid rules and constant oversight.”

“New business leaders set examples, demonstrate confidence and create cultures that tolerate intelligent, well-intentioned failure.”

Li is not alone in her views on the damaging nature of traditional organisa

tional structure, these are reflected in an excellent blog post by Gary Hamel in the Wall Street Journal.

“I believe that many of the tools and methods we use to manage people at work are ill-suited to the challenges of succeeding in today’s “creative economy.” All too often, legacy management practices reflexively perpetuate the past—by over-weighting the views of long-tenured executives, by valuing conformance more highly than creativity and by turning tired industry nostrums into sacred truths.”

“we should remind ourselves that dogma often masquerades as truth, and that we are often comforted by the deception. There are many who would prefer a lazy ramble along the gentle contours of the tried-and-true then a hard scramble up the rocky incline of the untested and unproven.”

Hamel goes on to cite HCL Technologies CEO Vineet Nayer as someone who has successfully managed to “invert the pyramid” and empower employees so that they are at the heart of the organisation.

“We must destroy the concept of the CEO. The notion of the ‘visionary,’ the ‘captain of the ship’ is bankrupt. We are telling the employee, ‘You are more important than your manager.’ Value gets created between the employee and the customer, and management’s job is to enable innovation at that interface. To do this, we must kill command-and-control.”

This same view of challenging the traditional role of leaders is echoed in a Financial Times article by John Kay:

“Domineering chief executives often fill their boards with cheerleaders, and rarely seek sceptical counsel. An army of professional advisers can hardly wait to get its hands on fees. The independence of equity analysts is compromised by their association with deal-making banks. Both analysts and journalists find their access depends on good relations with the businesses they cover. Many of the worst deals were widely applauded when announced. The modern cult of the heroic chief executive is at the root of the problem.”

To underline the need for radical change in the role of organisational leaders, Gary Woodill argues that traditional management of activities such as strategic reviews, long-term business planning and centralised setting of objectives is a waste of time.

“What is interesting is that new methods have been developed in providing companies foresight, at least for a few years. But most strategic planning is an extension of the past.”

Giving up what we have long held to be productive and positive is something that Jeff Sutherland blogged about:

“Study after study at MIT and around the world show that incentive bonuses cause people to perform worse if they have to do any thinking in their job. (Hopefully, that is most of us.) Of course, all the research shows performance appraisals demotivate people but we still hand out performance appraisals thinking that will help employees improve performance proving that much of what we think and do is fundamentally flawed.”

In her book Li argues that decentralising power is an inevitable change that organisations are going to have to make. I think that many organisations or those leading them run a mile from this concept and most organisations are currently moving in the opposite direction. Advances in technology and the recession have meant that organisations are monitoring and looking to standardise their employees activities on a greater scale than ever.

With greater monitoring and the unsuitability of traditional organisational command and control, mediocrity is perpetuated and people are forced to take a narrow view of their role in the organisation. A blog post by Johnnie Moore discusses the idea of “closing the field”:

“services get analysed by experts and chopped into smaller functional units. Front and back offices are created; some back office functions then get outsourced. Each unit is given its own performance targets. For example, a call centre operator has to clear 60 calls a day. Inevitably, everyone learns to game the system; one way to deal with lots of calls is to cut people off or pass them along – leading to even more calls later etc etc.”

In short, what is required is not a new stratgey to focus on engagement but a new organisational culture that places engagement at its heart to highlight the difficulties in effecting cultural change, Gautam Ghosh highlights a video entitled “Culture eats Strategy for Lunch”.

The reality is that the vast majority of organisations have a culture or organisational structure that suits the command and control mindset. Advances in technology have meant that it is becoming easier and easier to micro manage and standardise procedure to the nth degree. The upshot of this is that it actively disengages people from their role and perpetuates poor performance. My feeling is that faced with the choice of giving up control and influence or maintaining the status quo the vast majority of modern executives will go for the latter.

Part of this is inevitably down to the herd mentality. As with bonus culture, the negative effect on performance is well acknowledged. The reason cited by executives however for sticking with bonus culture is that everyone else is doing it. It will take a brave leadership team to abandon the traditional command and control mindset.

This does not mean engagement will not continue to feature heavily in discussions and in seminars and conferences. Enterprises will still continue to roll-out annual engagement surveys and I suspect many organisations will be on the hunt for marginal increases in engagement, if it means the culture stays the same.

Strategic HR

This got me wondering, if engagement is something that people are happier talking about and measuring rather than executing, what other “sacred cows” are there that are appealing in theory but likely to remain out of reach in the real world? The obvious one would be strategic HR.

Once again, this quarter has seen a plethora of articles and blog posts outlining the key role HR has to play in the organisation of the future. Research conducted by Google was highlighted in a HR Magazine article where a persuasive argument is constructed from the data for the role of “human systems director”.

“As collaboration and innovation accelerate, thanks to new enabling technologies, elements of the HR and IT functions will integrate and HR and IT roles will shift as they adjust to the ideas economy.“

“HR will need to ensure employees are motivated to collaborate and innovate, with the study finding that 34% of HR personnel agree they will need to learn new skills to foster a sense of corporate community”.

This viewpoint is supported in an article from Fast Company, which discusses how HR is theoretically at least, well positioned to play a central role in the organisation of the future:

“HR was once thought of as the hiring, orientation, and birthday party crew. But, not anymore, not in today’s interconnected, globally competitive world. Smart organizations are realizing that strategic talent recruitment and human capital development are the new differentiators. Bringing HR to the senior strategy team is gaining currency.“

“The wisdom to embrace strategic HR demonstrates not just that people are the central resource for an organization, but that their calculated, mission-driven development is at the center of competitive excellence.”

Like the support for engagement all these points are highly compelling and make strong intuitive sense, however is this viewpoint reflected in reality by the visible actions of organisations? Are we seeing a more diverse cadre of HR executives emerging who are capable of delivering a more strategic alternative and abandon the traditional role of HR? These visions of the future strategic capability are put under scrutiny in a Wharton survey:

“It’s puzzling and a little surprising,” says Wharton management professor Peter Cappelli, co-author of the research along with Yang Yang, a Wharton post-doctoral fellow. “Everyone says that HR executives need broader experience as well as more business experience, but it looks like it is still a ’siloed’ career.”

The article suggests that HR continues to see itself as a profession within the organisation. However, if it is to reach it’s strategic goal, this needs abandoning in place of a more general role requiring a broader level of business experience:

“professionals approach problems differently than leaders with more broad-based experience. “General purpose business executives are trying to figure out what makes sense for the organization, while a professional acts like an accountant or a lawyer with a standard set of solutions to problems. The business executive says, ‘Let’s figure out what works for our business and makes the most sense for us,’ rather than turning to a standard tool kit and rolling out an accepted solution.”

Buried at the bottom of the article is this very telling paragraph:

“Within human resources management, the authors also examined the type of HR experience that led most often to the top job…..Notably, the biggest increase in experience was in employee surveys, which the authors suggest could indicate a greater emphasis on “HR metrics” in the years between 1999 and 2009. Salary and benefits are the major cost for most companies, and Cappelli suggests that top management is concerned with measuring and accountability when it comes to this large outlay.”

This is very interesting and in my view about as far as you can get from a trend towards a more strategic role for HR. If the people at the top of the HR tree are the ones who owe their lofty positions to their ability to number crunch and interpret the data for the board what chance is them either abandoning this role in favour of a far more strategic alternative.

Similar themes are highlighted in a HR Magazine article by Chris Roebuck, in arguing that the transactional side of HR can be outsourced, he goes on to say:

“So what does HR need to do so survive, in both public and private sector? Propose change and savings before they are thrust upon you. Assess what HR is really there for and deliver appropriate structure and strategy. Proactively focus on key organisational deliverables above all else.”

In other words this strategic HR debate is analogous to the difficulties in tackling engagement. The people at the top of the tree i.e. people who need to execute this are the ones least capable or inclined to actually deliver the required changes.

Interestingly, just as I was writing this update Sainsbury’s announced that it was creating a new Customer Service and Colleague director role for Gwyn Barr. The role seems to subsume HR within it and blends customer’s and colleagues together. You can read more about it here.

Productivity

It can be argued that the organisations requiring the most radical change are the largest ones where the culture of command in control and standardisation is most heavily entrenched. Ironically, these are the types of organisation who it can be argued would be the ones to most benefit from an increased focus on engagement. As Allan Englehardt highlights in his blog:

“Large companies with ten times the number of employees are only a quarter as productive as their smaller competitors. Employee productivity is a big issue. If all the FTSE-100 companies achieved their average profits per employee, then the index would generate almost £1 trillion of additional net profits for the economy.”

Interesting stuff, Englehardt goes on to speculate that this could be due to:

“Bigger companies may have more meetings with more people attending slowing down decision times, innovation velocity, and productivity.”

Complexity

It would be remiss of me to not mention the articles that have come out discussing the BP oil leak in the Gulf of Mexico. Particularly pertinent to themes already discussed in this issue is this piece over at HBR, where the authors discuss whether:

“much of this disaster actually have been the result of a massive organizational failure not of people but of design?”

In particular the authors focus on the reorganisation of BP’s operational structure in a programme implemented when CEO Tony Hayward took over.

“And reality is complex. When it comes to decision-making, any universal imperative that forces sub-organizations to flatten and pushes teams to expand in size regardless of local circumstances is foolish. This wasn’t obvious at the time. BP raked in record profits over the past two years — although it also developed quite a record for safety violations. But the oversimplification of management structure — which played out on rigs as well as in cubicles — was a disaster waiting to happen.”

It would appear that a corollary of acknowledging complexity is an increased acceptance of what Charlene Li termed “well intentioned failure”. Coming back to an appreciation of failure, in an interesting article over at S+B, this another example of advocating an appreciation of complexity, the authors argue that trial, experimentation and a willingness to accept failure is a key element of delivering sustained innovation and effective collaboration:

“The speed and complexity of the global business environment calls for a new appreciation of a systems-focused view of the world, one that recognizes the interrelationships of people, processes, and decisions — and designs organizational actions accordingly. The intellectual roots of systems understanding are very diverse, but they converge around three interrelated assumptions. First, because many of today’s organizations are complex and ever-changing, static solutions that try to lock in any ongoing management solution are likely to become new sources of destabilization themselves That is why organizations need to be dynamic — capable of adapting to unexpected developments.”

“Second, organizations must have a capacity for widespread experimentation and trial-and-error learning if they are to be self-correcting. Finally, although a systems view requires an understanding of how all the parts fit together as a whole, it also depends on an intimate understanding of the parts themselves. This is because change in any part of the system or in its outside environment — including the other systems to which it is connected — can produce profound ripple effects. Significantly, these assumptions all recognize the importance of human participation in decision making.”

In a blog post Seth Godin refines this outlook with a good take on the different type of failure that can actually strengthen an organisation.

By simplifying and standardising, we remove our ability to tailor local solutions, this stifles innovation and ultimately disengages staff. Simplified structures enable easier decision-making but that does note necessarily equate to better decisions. To further support the argument against standardization, there was a good article over at Accenture that argues that businesses need to take a bespoke approach to employee development across the board:

“Given the realities of today’s complex business environment, it is no longer possible to satisfy a workforce with one broad, standard approach to managing talent. A perfect storm of events and trends is pushing organizations to abandon the traditional employment compact along with the one-size-fits-all approach to human resources.”

“But in an era of growing diversity, more complex knowledge work in which jobs are increasingly difficult to standardize, a shortage of qualified workers and talent-driven competitive advantages, today’s generic people practices will be quickly rendered obsolete—and increasingly detrimental to the bottom line.”

The Dunning Kruger Effect

Over the past couple of months there have been a number of articles discussing the Dunning Kruger effect, this all started with a New York Times interview with David Dunning I must admit that I had not heard of this before but it certainly raises some questions about talent management. There is a Wikipedia definition and Kevin Hoffberg has a blog entry, which summarises the NYT interview:

“When people are incompetent in the strategies they adopt to achieve success and satisfaction, they suffer a dual burden: Not only do they reach erroneous conclusions and make unfortunate choices, but their incompetence robs them of the ability to realize it. Which led to my observation: if you’re incompetent, you can’t know you’re incompetent.”

In other words:

“We’re not very good at knowing what we don’t know.”

For those who like to get into the detail, Dunning Kruger is discussed in another blog entry from a sceptical Tal Yarkoni.

I’m sure that there is something to the Dunning Kruger effect. For organisations, I think the main implication is in the field of talent management, in particular how we evaluate how well people are at doing specific tasks and more importantly how we predict how people will do in other more challenging tasks. All this talk of complexity got me thinking that unlike in the old days where objective or mechanical tasks were the norm, i.e. how many widgets you can make in a particular time, it was pretty easy to tell how well an individual was at a particular task. In such cases the Dunning Kruger effect would have a limited impact because objective comparison of performance is relatively simple.

However, for most activities in modern organisations, outputs are subjective in that success or failure is difficult to accurately gauge or quantify, allied to this is the seeming interconnectivity of everything. This means that it is much harder to isolate the specific drivers of performance. In other words performance in most activities ends up measured in shades of gray rather than in black and white.

This can lead to all sorts confusion and problems when it comes to understanding present and predicting future performance. This becomes even more complex if you throw in the Dunning Kruger effect. If we can’t accurately tell if we are good at something ourselves what chance has the organisation of effectively identifying those most likely to succeed.

High Potentials

The difficulties in effectively developing an effective talent management programme are highlighted in this recent HCI article:

“programs aimed at this class of talent are usually organized around some sort of annual nomination process and offer targeted leadership development opportunities such as business rotations and special stretch assignments. But despite the prevalence of these programs, most haven’t delivered much in the way of results. Our recent research on leadership transitions demonstrates that nearly 40% of internal job moves made by people identified by their companies as “high potentials” end in failure.”

In discussing ways in which organisations can improve:

“The “high potential” designation is often used, at least in part, as a reward for an employee’s contribution in a current role. But most people on your leadership track will be asked to deliver future results in much bigger jobs – a consideration that often gets overlooked when senior management anoints talent.”

In my view, it’s not necessarily the size of the future role but the circumstances surrounding it. There are so many variables that affect individual and group performance that it is no wonder that so many organisations struggle with effective talent management and succession planning. In many cases organisations are failing to take into account intangible factors that influence performance, issues such as key relationships, cultural fit and values all play a significant part in performance.

Well, that’s all for this update. As always any comments and feedback is most appreciated.

• Mergers, Acquisitions and Human Capital
• Motivation and Engagement
• Myths surrounding Top Talent
• New Ways to Engage via Social Network Analysis
• Limits of Understanding around Managerial Behaviour
• Passion and Purpose
• Innovation Constraints
• Managing Tacit Knowledge

Articles are included from the likes of Deliotte, Gary Hamel, Henry Minzberg, HR Magazine, Karen Stephenson, McKinsey and Strategy + Business.

Tag Cloud

As regular readers will be aware, over the past 12 months we have been highlighting those writers, commentators, bloggers and academics from a range of disciplines who have consistently questioned the ways organisations manage their people. This covers topics from engagement, motivation and talent. Undoubtedly the global recession has brought these issues into sharp focus, however there are few indicators that organisations are actively re-assessing their approach to their interaction with their employees.

Many of the topics covered in this review are the issues that we are coming across at Four Groups. In particular our methodology, 4G, represents a new approach to:

• Boosting engagement and motivation
• Optimising performance via networks and relationships
• M&A Integration
• A new approach to management through new technology and organisational understanding

These are all key issues currently facing organisations and we are always keen to show how our approach can help deliver tangible results. Please contact us if you are interested in learning more about 4G.

These will also be topics familiar to regular readers, however, as with the old adage, if you shout loudly enough and long enough, people will begin to take notice. There have been some signs that this debate is emerging from the online muddle of internet chatter and may in time reach a more mainstream audience. Certainly, we are starting to see more consensus emerging from a variety of sources.

Mergers, Acquisitions and Human Capital

I’m going to kick off this update with a brief look at some recent articles focusing on M&A. I think this topic is important because in many ways poor M&A integration is a microcosm of many of the problems that can emerge from dealing with human capital issues. With M&A transactions, everything is accelerated and the spotlight quickly highlights any failures in communication, cultural understanding or purpose within the organisation. Whilst many organisations pride themselves on the slickness of their management of deal flow, whether an acquisition actually achieves it’s original aims is often overlooked and this failure throws into sharp relief some of the dislocations and lack of cultural and organisational awareness that can seriously erode value.

On the other hand, mastery of M&A integration on a systematic basis would seem to imply the following:

• Clear goals articulated by the leadership
• Strategic input and collaboration from all areas
• Ability to combine strategy and execution seamlessly
• Clear understanding of culture both within the organisation and the target
• Efficient communication channels
• Management that is able to engage at all levels

These are all issues which are being focused on in wider organisational discussions but have particular resonance when looking to integrate newly acquired organisations.

Unsurprisingly, recent articles looking at this subject have focused on the human capital side of M&A integration. All the empirical evidence indicates that this is the area where value is either created or destroyed. An article in HR Magazine draws on a recent report from Hewitt Associates. Pointing to an increase in deal activity in 2010, the key to M&A success lies in the ability to manage the human capital side of the deal:

“Stephan Vamos, European leader of Hewitt’s Corporate Transaction and Transformation practice, said: “As we examine the reasons why companies aren’t achieving their M&A goals, it’s not surprising that the inadequate management of leadership and talent issues is at the core. Put simply, poor human capital management can be a true deal-breaker.”

Given the historically high number and frequency of these transactions, there is little sign that organisations have got a grip on these human capital issues. Over at Deloitte, there are a number of articles discussing the failings of organisations to effectively manage all aspects of the people side of the M&A process, from due diligence through to integration. Perhaps because it is seen as a process that organisations have found this so difficult. Instead, acquires should maybe look to take a more bespoke approach to their acquisition.

Taking a more flexible and tailored approach to each transaction is the focus of an article over at the McKinsey Quarterly. The authors advocate the use of small and agile M&A teams to screen and transact deals. For larger corporations, a big M&A team capable of filtering and transacting a high deal volume has been the norm. However, by using smaller, permanent M&A specialists, a more flexible project-driven approach is required, bringing in specific expertise as and when required:

“If the essentials for the governance and execution of M&A are in place, many companies can carry it out successfully with a small, experienced team that pulls in resources project by project. Companies with large, standing M&A teams typically have a formalized approach to M&A decision making – an approach different from the one for standard investment decisions.”

“Large corporate M&A teams can work through deals more quickly, but they can sometimes get so focused on finding the next one that they lose a clear connection to the strategies of the business units. We have observed organizations where even business unit managers directly affected by a deal come to the table relatively late.”

In a similar vein, back at Deloitte there is an interesting article on the selection of the M&A leadership team. Again, highlighting the intangible nature of such a process and the fact that organisations have tended to focus on the process rather than the people:

“Leadership – and leadership selection – is not an exact science and can’t be reduced to facts and formulas. Subjective factors such as personality and chemistry are ultimately what will drive behavior and results.”

Clearly, if you are going to write about M&A integration, human capital issues are the ones to cover, these are the issues that are most poorly defined, where there is little consensus and hard, tangible data is so hard to uncover.

Given recent technological advances and understanding of key intangible issues such as social networks and culture, there is an opportunity to take a fresh look at this topic and develop a new taxonomy of M&A integration to enable each organisation develop it’s own approach. What is certain however is that people are complex and represent the greatest challenge to the vast majority of M&A transactions.

Motivation and Engagement

Moving on from M&A to broader organisational issues, the continued focus of many commentators is motivation and engagement. Indeed there is evidence that this discussion is emerging in the broader media. For example in January, the Times ran a piece challenging the orthodox perception that bonuses are an integral and essential part of corporate life. This article draws on many themes we have covered in previous issues, in particular Dan Pink’s arguments about the lack of any hard evidence of the effect of cash bonuses on boosting performance:

“Companies succeed through teamwork but bonuses propound the idea that success is all down to individuals; the scramble for taking credit and claiming your bonus destroys co-operation between colleagues; and, critically, bonuses distract employees, managers and companies from the basic truth that the best work is done by people who enjoy what they do.”

This article also cites Henry Mintzberg’s recent arguments about how bonuses in the form of cash and stock options have had a universally negative impact on the global financial system.

Perhaps most interestingly, this article references a new book by Boris Groysberg questioning the assumption about the portability of talent in the financial services industry. In his research Groysberg has found:

“Exceptional performance is far less portable than is widely believed,” he says. “We found that mobile stars [bankers who leave one company for another] experienced an immediate degradation in performance that persisted for at least five years. Thus their exceptional performance at their prior employer appears to have been more firm-specific than is generally appreciated.”

Clearly, this has significant implications across a wide range of organisational activities from recruitment to talent management. This also implies that talent and success is a far more complex and subtle equation than is commonly assumed. Even if Groysberg’s research stacks up, I can’t help but feel that things will continue as they have been. Ultimately as we will see below, there are far too many vested interests to challenge the status quo in such a fundamental fashion.

Myths surrounding Top Talent

So how have we ended up here? Should employers get so concerned when employees threaten to leave if their demands are not met? In the UK, this has particular resonance with the state owned banks RBS and Lloyds both paying out large bonuses on the premise of needing to retain key talent. Maybe as Groysberg states, it is time to call the bluff on the myth of top talent.

Not only do we have significant vested interests in keeping up the current attitudes to pay and bonuses. The cycle also becomes self-perpetuating as a new generation of managers ascend the corporate ladder. In an interesting blog posting at Flip Chart Fairy Tales, Rick points towards a culture of executive entitlement as a cause of current economic difficulties. Drawing on the BBC as an example, these arguments could easily apply to other sectors or organisations. One particular example is the willingness of executives to sanction large pay increases for their direct reports:

“Eventually I came to realise that executives liked to raise the salaries of their direct reports because it helped them to justify their own pay increases. Their bosses would then collude with them for the same reasons and so on up the management chain. Underpinning this attitude is a sense of entitlement.”

Like Groysberg Rick argues that it is time to call peoples bluff over salary or bonus demands:

“The BBC could get away with paying its people a lot less and most of them wouldn’t leave. Many executives, if they spend long enough in the large monopolistic bureaucracies, come to almost believe the justification for their own high salaries and perks. They and their peers become caught up in a self-reinforcing myth in which they convince themselves that they really could command even bigger salaries elsewhere and that they really are so crucial to the organisation that it must pay ever more exorbitant amounts to retain them. For the truth is that few senior executives are as talented or as irreplaceable as they like to think they are.”

So, if bonuses are not an effective incentive to improve performance and retaining key talent is not as important as organisations believe, what steps can enterprises take to motivate and engage their people to greater productivity?

New Ways to Engage via Social Network Analysis

Regular readers will recognise that we are coming back to issues around engagement and the lack of it in current organisations. If there is going to be any sustained change in the way that organisations manage their people, what strategies or actions are going to replace the current incentive culture? Again, we are starting to see an element of consensus emerge. Previous issues have shown us that ideas of progress and achievement are key to this equation. A HBS article reinforces this idea:

“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.”

This has positive and negative implications for the majority of organisations, on the plus side as the authors note:

“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.”

However, this presupposes that managers are capable of systematically developing the necessary skills and desire to fully tap into this potential for increased engagement.

What other ideas are out there that can help organisations manage and engage their people? In addition to a more holistic approach by managers, technological innovation also holds the key to potential ways that organisations can better manage their people. One area that holds much potential is Social Network Analysis

Over at Joshua Letourneau’s blog there is a very interesting interview with Dr. Karen Stephenson, where she discusses her research into Social Network Analysis. Although recorded in 2008, there are a number of very interesting points about the importance of understanding networks in being able to influence organisational performance.

In particular, Dr. Stephenson challenges another widely held organisational belief. Namely the relevance of the organisational chart as a reflection of an organisation’s structure. Arguing that these charts fail to take into account the key social networks that underpin organisational culture and performance. It is only now however that we have tools to begin to understand and identify key networks.

Even so, there are few organisations that have a clear understanding of all the networks and connections that enable them to get things done. This has particular implications for any organisational change programme where embarking on such a programme without a clear understanding of social networks is like starting a journey with half a map. This is a key view shared by Four Groups and underpins our work with 4G.

Limits of Understanding around Managerial Behaviour

In recent issues, we have heavily featured some articles from Henry Mintzberg. This quarter he has given an interview to Strategy + Business that dovetails nicely with the above findings. Here Mintzberg points to failures of management training as a root cause of poor organisational performance and in particular the paucity of research relating to managerial behaviour:

“I think it’s amazing how few people are actively researching managerial work – empirical studies of what managers do – as their main focus. Many people are concerned with organizational issues, but because they don’t actually study what managers do, they lack insight into the essence of organizations.”

According to Mintzberg, this lack of tangible research is compounded by an unwillingness to act on it even where it does exist:

“Where there is reliable management research, it doesn’t always get recognized or translated into practice. For example, we know that the most effective companies and organizations are those that embody the importance of being communities. People in these companies are committed and respected, and when you unleash that kind of energy, it’s quite remarkable. But most conventional management practice and education has gone in completely the opposite direction. It’s becoming more mercenary, more individualistic, less community oriented, and less nuanced.”

In this interview Mintzberg advocates a learning process that instead of focusing on the teacher/student dynamic, instead encourages learning by getting students to draw on their own experience in dealing with problems or issues.

Passion and Purpose

Mintzberg’s comments are consistent with a number of other articles published this quarter. Indeed one thing that has been noticeable has been the number of articles calling for managers and organisations to take a more holistic or passionate approach to their work. In a couple of blog posts over at the Wall Street Journal Gary Hamel raises some interesting points about purpose.

“I believe that long-lasting success, both personal and corporate, stems from an allegiance to the sublime and the majestic. Viktor Frankl, the Austrian neurologist, held a similar view, which he expressed forcefully in ‘Man’s Search for Meaning’ “For success, like happiness, cannot be pursued; it must ensue, and it only does so as the unintended consequence of one’s personal dedication to a cause greater than oneself…”

“But I know this customers, investors, taxpayers and policymakers believe there’s a hole in the soul of business. The only way for managers to change this fact, and regain the moral high ground, is to embrace what Socrates called the good, the just and the beautiful.”

In a further post, provocatively titled Management’s Dirty Little Secret, Hamel asks:

“why are we complacent when confronted with data that suggest most managers are more likely to douse the flames of employee enthusiasm than fan them, and are more likely to frustrate extraordinary accomplishment than to foster it?”

Clearly warming to his subject Hamel goes on to say:

“Given that, we have to wave goodbye to the ‘knowledge economy’ and say hello to the ‘creative economy’. What matters today is how fast a company can generate new insights and build new knowledge – of the sort that enhances customer value. To escape the curse of commoditization, a company has to be a game-changer, and that requires employees who are proactive, inventive and zealous. Problem is, you can’t command people to be enthusiastic, creative and passionate.”

Innovation Constraints

Hamel touches on the role managers have in encouraging innovation. In an interesting blog post, Jeffrey Phillips, discusses the innate difficulties in managing this process. In particular he highlights five key constraints preventing senior management from effectively promoting innovation. These are:

1. Most senior executives are not innovators themselves
2. Most senior executives are guardians or keepers of the corporate culture
3. Most executives are focused on short-term targets and goals
4. Many innovation programmes are focused on encouraging senior executives to generate new ideas rather than the people who have most contact with customers
5. The size of many organisations means that articulating a clear innovation strategy becomes very difficult to co-ordinate

I think that there are some interesting ideas here, certainly the first and fourth points tie in very explicitly with an emerging consensus on innovation that we have highlighted in previous issues. In particular:

“The ultimate fulfilment of the Peter Principle is that the higher you climb in executive management, the further removed you are from what an average customer really wants. This makes dictating the kinds of innovation necessary very difficult and results in vague requests for innovation.”

This is one of the complaints that Mintzberg has been particularly vocal about in recent months. So where does this place the role of senior management in innovation? Again, we keep coming back to ideas of managers being facilitators rather than directors:

“They can impact the culture through rewards and recognition. They can understand their value in creating clear strategic goals and communicating those effectively. They can introduce tools, techniques and methodologies to help the innovators accomplish their goals. They can introduce a common language and approach for innovation as tools for innovators to use. They can encourage networking and interaction with other firms which will spawn many more new ideas. They can introduce new tools to gain customer insight. They can create new funding mechanisms beyond an annual plan. In essence, they can become the cheerleaders, funders and toolbringers, which is really all they can do effectively.”

Quite a thought! The lack of understanding about innovation is also the subject of a Business Week article. In this article, Stefan Lindegaard reaches many of the same conclusions as Phillips.

“The problem is that top executives reward middle managers for getting stuff done and executing flawlessly. This can be counter-intuitive to innovating. But top executives are often too far away from the action to understand how this compensation structure makes it harder for innovation leaders to succeed.”

Clearly too much emphasis is currently placed on senior executives coming up with the killer ideas, as Robin Hanson states:

“Knowledge isn’t generated by lone geniuses who magically produce brilliant new ideas in their gigantic brains.”

This is expanded on in a HBR piece, the authors advocate moving away from a traditional Knowledge Management model that focuses on the management of existing knowledge:

“We know we’re better off engaging in the interactions and collaborations that create new knowledge about how to get things done. What we need are new approaches to creating knowledge, ones that take advantage of the new digital infrastructure’s ability to lower the interaction costs among us all – ones that mobilize big, diverse groups of participants to innovate and create new value.”

Clearly technology has an important role to play here in terms of facilitating the generation of new knowledge and innovation. However, managers still have a key role to play in encouraging or identifying areas of potential collaboration.

In addition to failing to cultivate effective innovation, senior executives come under additional criticism for being in a state of denial. In a new book, Richard S. Tedlow documents the blinkered approach to pressing organisational issues that spiraled into massive corporate failure:

“Denial is falling into a cognitive Bermuda Triangle. Everything is clear, yet you lose your bearings.”

In a familiar refrain, Tedlow goes on to say:

“It is often middle managers who are best acquainted with new realities….. Unfortunately, when middle managers actually raise these problems – especially those that contradict the firm’s prevailing assumptions and conventional wisdom – they are often ignored, or worse.”

Managing Tacit Knowledge

This quarter I’ll try to keep the HR focus down a little, not least because there is a paucity of new or interesting articles on the subject. There have been a couple of notable exceptions. First up is this provocative blog post, Joshua Letourneau advocates a fundamental refocusing of the HR function. Here he quotes a surprising anecdotal figure:

“Less than 1.5% of all Social Network Analysis (SNA) projects I’m aware of have been HR-purchased or HR-centric. This greatly surprises me because I believe SNA, or the ability to map the invisible networks that exist parallel to the formal hierarchy (i.e. the way work ‘really’ gets done), should empower HR more than any other business unit.”

In an echo of articles already cited above:

“As the shift from transactions to tacit knowledge transfer has happened, HR has not updated its focus and structure. Since we’re now aware that Human-Networks innovate, create value, etc., as opposed to purely individuals (i.e. “resources”), has the time come for HR to be now known as HN (“Human Networks”)?”

I think that this is key to the future of HR, however there are few signs that people are acknowledging the reality facing them. As Letourneau states:

“Networks drive performance, not individuals.”

Another blog post questioning long-held assumptions was written by Steve Hearsum. In this blog post he questions the efficacy of 360 degree performance appraisals:

“As humans, we are constantly assessing how social encounters either enhance or diminish our status… performance reviews often provoke a threat response; people being reviewed feel that the exercise itself encroaches on their status. This makes 360-degree reviews, unless extremely participative and well-designed, ineffective at generating positive behavioural change.”

I think this critique is valid for many aspects of performance appraisal.

Given that an organisation is fundamentally a relational system, it is only by looking at things such as motivation that we can get to grips with what is actually happening.

Interestingly, the subject of motivation and how traditional performance appraisals can foster negativity also came in for criticism from Dan Pink at the end of last year.

That’s about it for this quarter. As always any comments and feedback are appreciated and if you are interested in discussing any of these topics in more detail, please get in touch.

• 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.

• 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.

Tag Cloud

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.

Summary for Q2 2009

Reading through this quarter’s articles, there were plenty of pieces rehashing practical tips on how to deal with the recession. However, there are a number of interesting ideas and themes lurking beneath the surface.

• Intangibles such as engagement, networking and collaboration are hot topics but managing these issues is easier said than done
• New technologies have the potential to revolutionise the way we understand organisational behaviour, although the appetite for this information is as yet unclear
• Line managers can play a pivotal role in developing engaged employees and this has implications for how organisations approach talent management
• Firms are waking up to the importance of engagement, in these recessionary times, once costs have been stripped out, the need to do more with less is paramount
• Knowledge is key to value creation but how we educate and train for working with this often intangible and unpredictable environment is unknown

Comments and feedback are of course welcome.

Tag Cloud

Engagement in the Spotlight

Following from Richard Beatty’s withering comments on the lack of quantitative evidence to support investment in engagement back in January, engagement remains one of the hot topics for discussion amongst HR and OD professionals. Interestingly, articles and blog posts are increasingly blurring the lines between specific discussions on engagement and how this impacts the wider issue of talent management. The one thing that is clear however is that, despite Beatty’s comments, an acknowledgement that these issues are of paramount importance in the current economic climate remains. Yet, given their intangible nature, control and mastery of these areas remains elusive.

So where does this leave HR? Many commentators are signalling the recession as a great opportunity for HR to make its mark on the business and there is no denying that the current state of flux points to opportunities for the brave. On the other hand, there is considerable evidence for poor morale and low levels of engagement in HR departments.

Better Understanding of Organisational Behaviour

In previous editions of this update I have noted an increasing trend in the number of people focusing on the role technology is having on our understanding of the complexities and subtleties or organisational behaviour. This piece by Marina Gorbis succinctly summarises the direction which our understanding of organisational dynamics is evolving and the possible changes that it will bring. In it, she discusses a forthcoming book by Douglas Rushkoff.

Gorbis states that in viewing organisations as complex ecosystems, we can start to understand the influence of groups on individual behaviour. This may lead to a more relevant and holistic understanding of the way organisations function and perform. As Gorbis states,

“In fact, we are making the invisible visible through use of data.”

The practical implications being that this understanding enables organisations to be better informed, able to achieve strategic goals and able to align their people to long-term objectives or outcomes. Of course, this also implies that businesses and HR departments in particular are going to have to acquire new skills and understanding into organisational behaviour. As Gorbis states, organisations are going to be recruiting not just from business schools but from university departments such as anthropology, ecology or zoology.

Gorbis also notes the growing importance of “amplified individuals” a concept discussed in previous updates. These are key people who are in a position to influence and shape the behaviour of others and who derive their power not from their position in the organisational hierarchy but from their connections and informal networks, often bypassing traditional organisational structures.

Increasingly, new tools are being brought to market that facilitate the identification of these individuals and provides organisations information on not only the brightest and most able but also on the more intangible aspects of organisational behaviour.

Clearly this has implications for how organisations go about their talent management processes. More on  this later. Perhaps the most interesting aspect of this article, to me at least, is the discussion on engagement and how an appreciation of what engages on a neurological basis is slowly being revealed.

“So much of our organizational practices and processes, however, have been based on simplistic carrot-and-stick approaches. In the next decade, much greater understanding of the human brain and principles of engagement will make us rewrite many of our management books and manuals. Do not be surprised to find many more neuroscientists and game designers among the human resource professionals.”

On a similar theme, the changing nature of the organisation and the skills required to thrive is discussed in a talk by Daniel Pink. In particular, the role of change and how we as individuals are trained to deal with this raises some interesting new challenges.

Pink argues that the organisation of the future, in the developed world at least, will require employees capable of extended right-brain thinking. This requires “Artistry, empathy, inventiveness, big-picture thinking” rather than left-brain skills such as logical and analytical processes. The big question Pink raises is how to train or develop these skills through the education system and into the workplace? In Pink’s vision of the future, the routine and mundane will be outsourced and only things that can’t be automated will remain in developed economies.

Defining Engagement

Moving back to engagement, despite Professor Beatty’s comments in January, there is considerable consensus on role of engagement as key to organisational performance, however, the difficulty of clarifying what engagement actually is and how it is measured is an ongoing cause of debate. In a solid round-up of the engagement field here, the IES HR Network, describe engagement in the following terms;

“Engagement is consistently shown as something given by the employee which can benefit the organisation through commitment and dedication, advocacy, discretionary effort, using talents to the fullest and being supportive of the organisation’s goals and values. Engaged employees feel a sense of attachment towards their organisation, investing themselves not only in their role, but in the organisation as a whole.”

Perhaps the reason why engagement is such a hot topic right now relates to the underlying economy and how it is likely to affect morale and performance. Companies are struggling to cut costs and in many cases this necessitates having to do more with less. Clearly once all excess costs have been stripped out, doing more with less requires an engaged and committed workforce willing to go the extra mile. Generating this in a climate of job losses and economic uncertainty only makes engagement more elusive. Furthermore, in order to capitalise on any economic recovery when it comes, organisations will need to have an engaged and motivated workforce to make the most of improving conditions.

While there is consensus on the importance of engagement, how to measure it is another challenge entirely.  Employee engagement surveys are one area that has fallen under the spotlight recently, the IES HR report goes on to say;

“There are a variety of measures of engagement available. However, the lack of a clear definition of employee engagement and the differing requirements of each organisation means there is likely to be considerable variation in what is measured in these surveys.”

The IES report also raises another interesting topic, namely the role of personality in engagement, stating that extroverts are more likely to be engaged than introverts. On the face of it, I think that this is an over-simplification, however there may well be some correlation between positive attitudes to work and personality type.

Human Resources magazine debates, the value and the way engagement surveys are structured, with researcher Peter Hutton claiming that two of the most popular surveys in the UK, the Gallup Q12 and Best Companies lack statistical integrity. The search for an accurate way to measure engagement is likely to continue.

Line Managers in Engagement

A Towers Perrin survey points to the role of line managers in the engagement equation. Given the emphasis on organisational-wide initiatives and taking a big-picture view of engagement, this is a topic that has not had sufficient emphasis and accounts for the wide levels of variability in engagement throughout the organisation. The article argues that the key levers of engagement lie in the team or at the micro level. By being sincere and developing an environment of trust, managers are able to encourage increasingly engaged employees. In particular, the article states that recognising and praising in a sincere and informal manner can accelerate productivity and performance.

An article by Julie Gebauer of  Towers Perrin focuses on another requirement for engagement, namely the wholehearted support of senior leadership.  In the article she emphasises the need for selling the business case for investing in engagement, rather than “something ‘nice to do’ that only HR is championing.” Again, the problem here is that this is easier said than done. However, by focusing on business outcomes and how engagement can help align the organisational strategy, a compelling case can at least be made.

Evidence for increasing focus on the importance of engagement is growing, indeed in the UK, July will see the publication of a government review on the subject undertaken by David McLeod. In this People Management article, practitioners are calling for some practical advice and actions into improving engagement, whilst acknowledging that it is not what it could be at the moment. Given the intangible and unique nature of engagement in every organisation, it will be interesting to see how much influence government can have on this area.

The Ongoing Talent Management Debate

It’s impossible to view engagement in isolation without discussing the wider talent management perspective. Again, as with engagement, a standard definition is elusive, however the ASTD (American Society for Training & Development) came up with a catchy epithet.

“Talent management is a holistic approach to optimizing human capital, which enables an organization to drive short and long term results by building culture, engagement, capability, and capacity through integrated talent acquisition, development and deployment processes that are aligned to business goals.”

This article also raises one of the key contradictions or inconsistencies in traditional talent management practice, namely by focusing on key high potential employees or senior managers, talent management becomes a self-fulfilling prophecy that also runs the risk of being perceived as elitist. By focusing investment on the gifted few, their success and advancement through the organisation is all but guaranteed. There is also the danger that these “stars” will be enticed away to other organisations and the investment in their development is only ever partially realised.

One organisation appearing to have some success with a broader approach to talent management is financial services company Aviva. In a short piece, by taking an approach that benefits everyone “has so far led to 45 per cent of employees that had previously been identified as “languishing” moving into new roles and “thriving”.

Taking a broader approach and focusing on the many may make more sense in terms of networks, collaboration, productivity and succession. Whether there is any appetite for this inevitably more expensive approach is questionable.

Talent Management in the Current Climate

An interesting series of three articles (first one here) from Deloitte seek to examine the evolving attitude to talent management in the current climate. In particular, the diverging pressure to cut costs whilst continuing to invest in people.  This is a timely series of reports and throws into sharp relief the tricky if not impossible balancing act of minimising costs in the short-term and effective workforce planning. Without a systematic means of quantifying the benefits of a strong commitment to talent management, it is always likely to fall down the agenda.

This is evidenced in the second Deloitte report that also highlights the decision of many organisations to focus their talent management efforts on the few.  The figures quoted show that 37% of those polled expect to increase focus on high potential employees. While increased investment in this area is to be welcomed, this information plus the assertion that despite the increased availability of advance analytical tools, organisations are not making use of these services leads to the view that companies, at least at the moment, are not becoming more sophisticated in their identification and development of talent.

The second Deloitte report also highlights dwindling morale in many organisations over the first few months of this year, again a sign that employees are becoming less engaged at the exact time that organisations need them to increase their levels of engagement.

Interestingly, these issues are at odds with Deloitte’s own research last year under the catchy title The Chemistry of Talent. The report focused on the need for companies to develop their own bespoke talent management solutions and in particular use technology to develop more flexible and sophisticated career planning techniques. One year on, there seems to be little evidence of this investment from Deloitte’s own research having an impact and given the worsening economic conditions, this situation is unlikely to change.

Leadership

Moving on to leadership, there have been a couple of interesting articles that have brought together some of underlying themes above and how they are likely to impact the top of the organisation. A slideshow from Mary Adams at Intellectual Capital Advisors echoes many of the same concerns in the Pink article above. Principally, that intellectual capital or knowledge is the foundation of the organisation and should be the focus of value creation. The challenge facing leaders as she puts it is;

“…most managers don’t have explicit models for the role of knowledge in their business. They know it’s there. They know what to do with it. But they are dealing with it all on a gut level. But you don’t want to rely exclusively on your gut to manage your business.”

A further article focusing on leadership also draws parallels with the Pink article. On the Leadership Now blog, Michael McKinney revisits the age old distinction between leadership and management. In this piece, he brings back the distinctions between the two areas by referencing Bennis’ 12 distinguishing points in his 1989 book On Becoming a Leader.

The behaviours that Pink describes as right brained thinking are quite clearly analogous to what Bennis describes as typical management skills. Whereas Pink’s reference to left brain thinking are much more closely aligned to Bennis’ description of leadership. McKinney further echoes Pink by emphasising how the current educational system is geared towards management rather than leadership.

In his piece, McKinney argues that in order to be successful, both disciplines are necessary within the organisation but points out that most businesses are currently geared towards excessive emphasis on management rather than leadership.

“Management is based on the response to the questions we had yesterday. Today, some of those responses are still valid, many are not. Leadership is needed to address the questions of today and bring us to a different place. This is especially true in times of great change.”

As we have already seen, real engagement takes place at the level of small teams. By displaying typical management behaviour, it can be argued that line managers are simply going through the motions and neglecting significant opportunities to challenge not only themselves but also their people. The question that arises is how can organisations better equip line managers to develop these behaviours? And will this go some way to improving engagement?

The HR Conundrum

Where does the HR profession stand in all of this? Quite clearly, it should be front and centre. All these issues, whether dressed up as engagement, talent management or leadership all call for bold and imaginative HR-centric solutions. As if to emphasise this, support from an unlikely source comes from Benjamin Zander, conductor of the Boston Philharmonic Orchestra. Harking back to engagement, Zander claims that HR is responsible for the “spirit” of the organisation but that it is occasionally “downtrodden”.

I think Zander hits the nail on the head with one of the key issues facing HR at the moment. Namely that HR is in theory well positioned to have a significant impact on nailing down these crucial yet intangible problems. However, the big question is whether there is enough confidence, credibility, vision and technology to pull this off. On the face of things, morale in HR departments is not good. In this HR Magazine article, the results of a Baddenoch & Clark survey claims that only 57% of HR employees feel valued. Without reading too much into these results, the obvious question is how is HR going to engage the rest of the organisation when feeling demotivated or not valued?

To further emphasise the perceptions that need to be overcome, a HR Magazine article, cites a survey by Endaba, which claims more than a quarter of employees do not trust the HR department.

Furthermore, a Taleo report, cites a McKinsey survey which asked both HR and line managers “”Does HR lack the capabilities to develop talent strategies aligned with business objectives?” Only one-quarter of the HR participants agreed with this statement, while the majority (58%) of line managers agreed.”

Clearly, these attitudes do not exist in every organisation but where they do, they will not change overnight. However, if HR can gain confidence and trust, there is an opportunity to drive a new agenda. This is the argument made by Duncan Brown at the Institute of Employment Studies. In this wide-ranging piece, he puts forward the argument that recent events are leading to an underlying shift in the way in which rewards are distributed. Focusing on fairness and the perception of fairness as a way of improving organisational performance, Brown also weighs into the engagement debate.

“Professor David Guest’s research shows that perceived fairness and reciprocity, alongside of trust, are at the core of a positive, engaging and high performance generating psychological contract in the workplace.”

HR needs to be in a position to deliver the strategy but also ensure that conditions are conducive to line managers generating enthusiasm or engagement. HR’s responsibility is to track and measure strategy but most importantly, ensure that managers have the capabilities to execute the strategy and engage others, ensuring that people are actively working towards team and organisational goals.

The Last Word

A quick word on M&A, in particular the announcement of the merger as equals of Towers Perrin and Watson Wyatt. Two of the largest consulting firms in the HR sphere. Given the circumstances underpinning the merger, namely challenging market conditions, it will be very interesting to see how these two masters of integration manage the process!

Welcome to the second quarterly roundup of the latest thinking and developments around leadership, HR, innovation, talent management and organisational development. I have tried to pick out the most interesting or thought provoking of the high volume of articles, surveys, blogs and webcasts. In this issue, articles and examples have been included from the likes of Capital One, CFO.com, Cisco, McKinsey, Microsoft, Harvard Business School and Towers Perrin.

Summary for Q1 2009

Unsurprisingly, the financial crisis is still uppermost in people’s minds and new ideas and insights are slowly emerging, interestingly not always from organisations which one would term the “HR establishment”. Over and above this, other themes for this quarter include;

• Leadership development is going nowhere fast
• HR’s relevance to an organisation’s success
• HR acting more like a teenager, or not
• Command and control, enterprise 2.0 and amplified workers
• Successful recruitment via a self directing process
• A lack of creativity and death by data
• The big picture HR role
• Innovation, change and new ideas

As always any comments and feedback are welcome!

Tag Cloud

Leadership development is going nowhere fast

It has not been hard over the past few weeks to pick out the negative or critical of the HR function, especially when it comes to leadership development. The 2008/9 DDI Global Leadership Forecast (pdf), which surveyed over 13,000 HR professionals and business leaders throughout the world, found that “leadership development is going nowhere fast.” This is compounded by further observations that include decreasing confidence in senior leaders who lack basic skills. The survey also finds that organisations are poor at leadership selection, have ineffective talent identification programmes and poor succession planning.

A further alarming tendency highlighted in this survey is that HR and managers are locked in a spiralling circle of blame as each blame the other for failures in leadership development. Where development programmes do exist there is a lack of effective measurement of their impact.

This focus on quantifying the HR impact is a common theme these days, however the difficulty in linking or measuring the impact of strategy on performance is highlighted by Kim Warren, who hits the nail on the head by stating that this will not be possible until the influence of intangibles on performance is fully understood.

HR’s relevance to an organisation’s success

Things don’t get a whole lot better for HR practitioners in an article on cfo.com. In a talk given to a conference of financial executives by Professor Richard Beatty of Rutgers University, he lambasts the HR profession for failing to prove the value of employee engagement and also accuses it of not being able to systematically recruit and retain top performers.

“…he (Beatty) claimed that typical human resources activities have no relevance to an organization’s success. “HR people try to perpetuate the idea that job satisfaction is critical,” Beatty said. “But there is no evidence that engaging employees impacts financial returns.”

In summary, Beatty argues that HR’s focus on employee engagement is misplaced and instead of seeking to engage the workforce, more time should be spent on activities which show a tangible and measurable return on investment. In this instance, Beatty urges HR to focus on cultivating and retaining top performers through more effective selection.

Given his audience, Beatty’s talk is likely magnify the schism between HR and management in many organisations and the comment “the language of organizations is numbers, HR isn’t very good at data analytics” is likely to resonate and frustrate in equal measure. In many ways, Beatty echoes Keith Hammond’s controversial 2007 piece, which undermines the notion of “strategic HR” and the impact of the traditional HR function;

“HR is the corporate function with the greatest potential – the key driver, in theory, of business performance – and also the one that most consistently underdelivers.”

Unsurprisingly, these comments have not gone down well in the HR community. Notable respondents include Dennis Howlett and Kris Dunn who have both made considered responses to Prof. Beatty’s comments. Both state that although not agreeing with many of Beatty’s arguments, he does make a compelling case for a change in the focus or the way HR communicates with the business. Engagement is a much discussed topic and in the current climate is something many HR professionals are looking to prioritise. A recent survey by TalentDrain provides some evidence for the shifting priorities of HR departments. It is hard to argue that enthusiastic and committed employees are any less productive than the idle or disengaged, the key however is to be able to quantify this effect.

The practical difficulties of identifying future leaders is discussed in an interesting piece from James Heskett who casts doubt on the possibility of systematically selecting future leaders. In the article, he quotes Capital One’s CEO, Richard Fairbank, who said several years ago, “At most companies, people spend 2 percent of their time recruiting and 75 percent managing their recruiting mistakes.” At the end of the article, he leaves us with the following questions;

• “Are there leadership jobs in business for which it is simply impossible to select people with any degree of confidence?
• Do behaviors change when one is anointed with the power of a leadership position?
• Are we condemned to an on-the-job training approach, with the attendant obligation to correct mistakes quickly (which boards understandably are reluctant to do)?
• Or are there more affordable approaches to the problem?”

Further evidence of this “crisis of leadership” is in a blog post by Steven Smith who quotes a Rutgers and University of Connecticut poll, which found “58% of workers believe most top executives put their own self-interest ahead of the company’s, while 67% don’t believe their bosses have the team’s best interests at heart.” If your employees believe that you are acting in self-interest, it is hardly likely that they will put the organisation’s interests above their own.

HR acting more like a teenager, or not

The apparent failure of many in HR to fully appreciate the opportunity to rethink the HR role in light of the current crisis is illustrated by recent comments from Jackie Orme, CEO of the CIPD in the UK, where she states that “the profession is still in its teenage years and has some way to go.” In my view this exactly sums up the problems facing HR, if only HR acted more and not less like a teenager, then maybe they would have greater influence or impact on organisational development and strategy? For example if HR was more disruptive, idealistic, technology-focused, pushy and wilful then maybe things would be different.

So if the framework for the HR response to recent events is not coming from the establishment, where are the new ideas coming from? Unsurprisingly, these key issues are being addressed by the wider community. This quarter there have been some articles which focus on HR relevant areas such as recruitment, change, retention, innovation and talent management as a way to redefine the way organisations function.

Command and control, enterprise 2.0 and amplified workers

There seems to be a growing consensus that executives need to get used to less control and adjust their outlook accordingly. In a blog post Jon Husband writes about a talk given by Cisco CEO John Chambers who stresses how organisations are increasingly being built on virtual terms, technology means that collaboration is likely to increase while day to day contact decreases. In a further discussion around the role of Enterprise 2.0, these sentiments are also echoed by Léo Apotheker, co-CEO and a member of the Executive Board of SAP and Andrew Mcafee of the Technology and Operations Management Unit at Harvard Business School.

The growing importance of social networking is well documented, however this article at Deloitte raises some interesting questions on how this may impact on future leadership selection. In the article, the authors focus on the need for organisations to embrace new social media technologies and communication methods. Of particular note is the assertion that networks are being formed without the knowledge of management. In a section headed, the rise of the workplace “superheroes”. The article quotes research from The Institute of the Future in Palo Alto which forecasts that successful organizations will turn to “amplified workers” who are able to harness the latest technology and combine it with an ability to communicate and collaborate across a wide variety of platforms.

This raises a number of direct challenges to HR, firstly the requirement to fully embrace new technology and in particular social media and all the control issues that go with it and secondly to come up with ways to identify and engage with these “amplified workers”. In order to gain the maximum benefit from these workers, it is possible that organisations will have to remove layers of bureaucracy or bypass systems which have been used to maintain structure and control.

Similar sentiments are echoed by Keith Harrison-Broninski who in talking about Human Interaction Management (HIM) encourages every level of management to focus on and do what it does best. To enable this however is going to necessitate less top down control and a relinquishing of certain aspects of oversight by senior management. This is also something that encouraging the increased use of social media will also require as it will be impossible for managers to control or even be aware of the growing number of social networks and interaction. Coming back to the teenager analogy, the failure of HR to embrace new technology or Web 2.0 is also acknowledged in a report by the CIPD.

Successful recruitment via a self directing process

This moves things on nicely to recruitment, another bugbear for Beatty. I recently watched a talk given by Ricardo Semler of Semco at MIT Sloan, who has successfully implemented a number of interesting initiatives which have marked his organisation out as a beacon of innovation and forward-thinking. This is an inspiring talk and although it took place last year, I didn’t pick up on it until January and felt compelled to include it in this quarter’s material. In fact Semler goes as far as anyone has yet to articulate a new way of running organisations and I suggest anyone with 30 minutes to spend has a watch. One of the ideas which particularly struck a chord, particularly in light of Beatty’s comments above is Semco’s approach to recruitment;

“The [typical] process of recruitment and selection in a company is basically an internet dating process. You say your company is Brad Pitt and she says she’s Angelina Jolie and you go and meet at a bar…You get together for two quick meetings and then you decide to get married and hope it works…

[Instead of that,] we take qualified candidates, the ten that fit the bill, and ask them to come in together. Then we have whoever wants to be involved interview these people. This will go for hours. Then [the interviewers] write down the two people who they want to keep. The two who score highest come back and spend the whole day here and talk to anyone they want…The result is less than 2% year turnover.”

This figure I’m sure would make Prof. Beatty’s blood boil but from where I am sitting it looks pretty impressive.

Having looked at Ricardo Semler’s entry on Wikipedia, his story is quite remarkable, becoming CEO of Semco at 21 following arguments with his father and threats to quit the company over its future direction. He embarked on a radical diversification programme which included firing 60% of the senior managers on his first day in charge. Clearly a man unafraid to challenge conventional wisdom and willing to accept the failure of some ideas, turnover has grown from $4 million to $212 million in 2003. One question that pops into my mind is, would Semler have been as successful or even have been identified as a potential leader if he had a more conventional business background? Or would his ideas and radical views have been squeezed out of him by a combination of office politics, poor talent management and a lack of leadership development? How many Ricardo Semlers are there out there who never get the opportunity to put their ideas into practice?

One of the reasons that I believe this process has worked for Semco is that because the company has such a clearly defined culture and set of values, this recruitment by committee essentially acts as a filter which ensures that only the candidates likely to fit in or align with the companies values get recruited. Understanding the skills and experience of each candidate is something HR has got down pretty well. The next stage is to understand the intangible impact of each hiring decision, issues such as relationships, culture and values are key issues but are often overlooked or pegged as ‘gut-feel’ when decisions are made. The Semco model goes a long way to overcome this. Also worth noting is the seemingly minimal impact of the HR function on this process.

A lack of creativity and death by data

In contrast, a recent profile of Google’s vice president of search products and user experience, Marissa Mayer in the New York Times recounts the following anecdote; “At a recent personnel meeting, she homes in on grade-point averages and SAT scores to narrow a list of candidates, many having graduated from Ivy League schools, whom she wanted to meet as part of a program to foster in-house talent. In essence, math is used to solve a human problem: How do you predict whether an employee has the potential for success?”

“A scrum of executives sit around a table, laptops in front of them, as they sort through résumés, college transcripts and quarterly reviews. The conversation is unemotional, at times a little brutal.”

“One candidate got a C in macroeconomics. “That’s troubling to me,” Ms. Mayer says. “Good students are good at all things.”

I was a little taken aback by this comment, perhaps naively it is something I would expect at a Wall Street investment bank (pre crash obviously) and not Google, with its reputation for creativity, innovation and developer of unconventional and leftfield ideas. I must admit that I had put this article to the back of my mind. That was until I saw this blog post from Google’s now ex-head of design Douglas Bowman.

“When a company is filled with engineers, it turns to engineering to solve problems. Reduce each decision to a simple logic problem. Remove all subjectivity and just look at the data. Data in your favor? Ok, launch it. Data shows negative effects? Back to the drawing board. And that data eventually becomes a crutch for every decision, paralyzing the company and preventing it from making any daring design decisions.”

“Yes, it’s true that a team at Google couldn’t decide between two blues, so they’re testing 41 shades between each blue to see which one performs better. I had a recent debate over whether a border should be 3, 4 or 5 pixels wide, and was asked to prove my case. I can’t operate in an environment like that. I’ve grown tired of debating such minuscule design decisions. There are more exciting design problems in this world to tackle.”

This is very interesting and something at odds with the carefully cultivated public image of Google which suggests a far more intuitive and creative approach to new product development and design.

This begs the question, how does Google or any other organisation cultivate the creative or leftfield individuals who thrive in conditions of change or uncertainty such as we are experiencing at the moment? In other organisations the research suggests that large companies struggle to accommodate or reward these people. In a Strategy + Business article, the authors suggest that successful change agents are often ignored or fail to gain the recognition their efforts deserve. “Although 85 percent of the major change initiatives we studied met or exceeded the performance goals set for them at the start, fewer than 30 percent of the initiatives’ full-time leaders were promoted – and the same percentage were terminated or left their companies voluntarily at the conclusion of the change effort. The remaining 40 percent either remained in their positions or moved laterally in their organizations.”

A similar issue is raised by George Ambler in his blog, in this case he refers to the “mavericks” in every organisation who often find themselves marginalised, he quotes Hans Hans Finzel, in The Top Ten Mistakes Leaders Make; “‘Have we made it impossible for bright rising stars and maverick go-getters to live within our organisation?’ When we become too preoccupied with policy, procedure, and the fine-tuning of conformity to organizational standards, in effect, we have squeezed out some of our most gifted people.” Ambler goes on to conclude that;

“Mavericks are essential in every organisation. Giving them the encouragement and space to contribute makes all the difference. Mavericks matter… because they bring us the future.”

Given the current economic conditions this is a pressing issue which organisations, even ones such as the mighty Google may need to address.

Arguably, these are the people who will help prepare organisations for “The New Normal” which is tentatively explored in a McKinsey essay by Ian Davis. He claims that;

“For talented contrarians and technologists, the next few years may prove especially fruitful as investors looking for high-risk, high-reward opportunities shift their attention from financial engineering to genetic engineering, software, and clean energy.”

The big picture HR role

No doubt the current economic crisis places a number of organisational issues central to HR at the heart of the debate. In short, given their view of the organisation, HR practitioners are in theory well placed to help navigate a way out of the current mess. However, the question of whether existing HR executives are equipped or able to lead this discussion is one which has been posed by Donna Bear and also in a podcast. She points to examples of high profile companies, in this case Microsoft and LinkedIn who have both appointed HR executives with zero HR experience. The leadership vs technical skills debate is not a new one, however in this instance I think that it heralds a further dislocation between the HR process and systems role and what one could call the “big-picture” HR role. Bear quotes LinkedIn CEO Dan Nye;

“…when it comes to people, I always put a premium on people who are incredibly bright, who demonstrate strong leadership skills, and where they have strong critical thinking skills and really strong communication skills. I will always put a premium on that over functional experience.”

In order to step up, HR executives may have to put aside their previous procedural experience and demonstrate an ability to communicate and connect with their audience on a level that goes beyond the standard HR systems and processes. A grasp of organisational values and understanding of the role of culture and collaboration will mark out those with the ability to set the people agenda.

Perhaps because both companies recognise the pivotal role that HR is going to play in the future, they have hired these people who they believe are going to raise the profile and influence of the function. Not damning of HR in itself but recognition of the strategic importance of the role.

Innovation, change and new ideas

There has been a lot written about innovation and the role that it could probably play, as we have already seen many, particularly large organisations struggle to identify and accommodate those most likely to instigate change and new ideas. Given that this is often a barrier to innovation, a recent McKinsey article Amar Bhidé takes a look at the role or value of innovation to organisations and the wider economy and gives it a good shake. In summary he claims that it is not important where or by whom innovation takes place but who commercialises it. The role of licensing has always played an important part in the development of new products, however, encouraging organisations to essentially outsource their innovation is something which opens up a number of possibilities.

Licensing new technology or ideas is something which could potentially be of considerable organisational and national benefit. Licensing a new technology could potentially save companies considerable time and money that would normally be spent in acquiring a competitor or innovative start-up. As we have seen already, large organisations often struggle to accommodate the innovative or disruptive and by keeping this relationship at arms length rather than trying to combine two very different cultures may be an idea worth exploring.

Recent years have seen many organisations taking a more sophisticated approach to acquisitions, taking into account intangible issues such as culture in the integration process. However, given the recent financial crisis it seems as though these lessons are being forgotten. A Towers Perrin article, points to research which suggests that acquisitions are being increasingly rushed through. Clearly this is a case of short-term expediency taking precedent over long term considerations, with many of the issues likely to affect the success of the transaction glossed over.

Finally, I thought that I would highlight an interesting talk given by Umair Haque of Havas Media Lab. Here Haque talks about the need to reinvent capitalism, stating that competition is obsolete and that it fundamentally destroys value. He calls for a radical rethink in the values and motivation of organisations. Whilst I don’t necessarily agree with everything he has to say, people like Haque are likely to increasingly influence the focus of organisational development.

We discussed the idea that people-based issues can be managed in a systematic and structured manner, something that Bruce is firmly in support of. 4G represents a proprietary approach developed by his company to understand and predict intangible aspects of people’s personality, interaction and values. However, our conversation was not so much about 4G itself but about taking a holistic approach and the how’s and why’s of it.

The full piece can be found here and our thanks go out to Rowena Morais and Isabella Chan for bearing with us!

The introduction is below.

Is 2009 the year the HR function finally enters its ascendancy as organizations place greater emphasis on talent management and putting strategic HR activities at the heart of the business? Or is HR destined to remain a transaction-based cost center as leaders still struggle to rise to the challenge?

If you’d like to read the full version, it can be found here.

Welcome to the first issue of the Four Groups Leadership, Intangibles and Talent review. The purpose is to try to distil and comment on some of the more interesting and articles shaping the field. That said, the subject matter is not strictly defined but takes into account wider economic issues, particularly given the challenging climate. In this issue, articles have been included from the likes of Deloitte, IBM, McKinsey, The Hay Group and Towers Perrin.

There is no set criteria for inclusion, just that an article, survey or blog entry should be thought provoking, challenging or state more than the obvious. Comments and feedback are of course welcome

Summary – Q4 2008

Unsurprisingly, many articles are focusing on what it will take to emerge from the current downturn in a position of strength. As such the main themes focus on;

• Is creativity and intelligence being filtered out of the system?
• The need to let go of many of HR’s traditional functions
• The need for senior level sponsorship
• The psychological change agenda
• Managing talent
• Ethics and employee branding

There seems to be considerable agreement that the organisations likely to manage and emerge from the downturn in the strongest position are ones which are; flexible, promote clear and consistent communication, are innovative and exhibit consistency between their internal and external behaviour. The theme tying all these attributes together is developing the ability to manage the intangibles of organisational behaviour, such as; social networks, collaboration, innovation and change.

Tag Cloud

Is creativity and intelligence being filtered out of the system?

Obviously the economic downturn is the hot topic. However, the article which really caught the attention, on the face of it, has nothing to do with the current economic situation. Bruce Charlton blogs about a book he is currently writing. Focusing on structural deficiencies holding back the pace of scientific progress, Charlton argues that the way the scientific process is organised is best suited to ‘plodders’ rather than the ‘creative’ but sometimes ‘erratic’ thinkers who may be capable of genuinely revolutionary insight. Charlton points to the fact that success in modern science is often down to an ability to navigate the bureaucracy of academia as much as scientific ability and this has a serious impact on the pace and levels of innovation. Indeed, this leads Charlton to argue that creativity and intelligence are being filtered out of the system.

“We can only conclude that science is dull mainly because its requirements for long term plodding, perseverance and social inoffensiveness have the effect of ruthlessly weeding out too many smart and interesting people.” Charlton, Why are Scientists so Dull?

This is all good stuff and got me wondering whether a similar dynamic is impacting the ability of organisations outside of the scientific community to encourage innovation and manage change? In particular do large organisations actively promote people to senior positions who are likely to struggle with the twin challenges of innovation and radical change? As will be shown below, the consensus is that change is the new normal and companies are going to have to exhibit an agility and flexibility that has historically been difficult to implement. Maybe one of the reasons for this inability is the presence of senior managers who are fundamentally unsuited to work in this type of environment?

The need to let go of many of HR’s traditional functions

Elsewhere, a number of broad themes are emerging. Many articles have sought to put a positive spin on recent economic events and articulate a number of opportunities which could potentially reshape the role of the HR function. One of the most comprehensive surveys (opens as a pdf) this quarter is the Towers Perrin, People, Change and Performance: Emerging Issues in HR Service, Delivery and Technology. This survey covers a wide range of HR issues, one of which concerns how the HR function could develop over the medium term. The report draws attention to a number of evolutionary issues which may shed light on the perennial conundrum of how HR can play a more strategic role in the organisation. For instance, the report provides evidence that the focus on HR technology is moving away from the process or delivery side and is more focused on managing talent and performance through systems. In effect, HR practitioners are no longer slaves to automation and time saving technology, but are instead are placing more focus on the systems and technology which can deliver on a strategic level. This is welcome news and potentially marks a key transition in HR being able to develop a more sophisticated and valuable dialogue within the organisation.

Before this can happen however, the Towers Perrin report argues that HR practitioners will need to let go of many of the traditional HR functions;

“HR must relinquish some control over mundane administrative processes and grow comfortable with line managers and others playing a more active role in decision making. Second, HR must learn to do more with the technology that it already has — making it more effective and more integrated across disparate HR processes or technology platforms. Finally, success requires a well-planned and well executed change management process. Unless these three key areas are adequately addressed, HR will continue to struggle to find the time — and the invitation — to make a more strategic contribution.” Towers Perrin, People, Change and Performance: Emerging Issues in HR Service, Delivery and Technology

The need for senior level sponsorship

This perspective is reinforced by an interesting interview in the McKinsey Quarterly with Beth Axelrod, head of HR at Ebay. In this interview, Ms. Axelrod discusses the difficulties that companies have in hiring and retaining women, strategies she has seen succeed, and her view of how HR can become a strategic partner with businesses.

Ostensibly the interview focuses on the difficulties companies have in hiring and developing women in the workplace. As a McKinsey alumnus and co-author of “The War for Talent” Axelrod unsurprisingly takes an analytical and research-based approach to the problem and urges organisations to focus on getting the basics right before anything else.

However, the most salient points focus on Axelrod’s assertion of the need for senior level sponsorship and support for HR initiatives, a universal theme in whatever you are hoping to achieve. Without this key component, HR is not going to be able to leverage any of its specific knowledge, insight or view of the organisation. There is no doubt that the level of senior level sponsorship and communication determine the success of any corporate initiative, the challenge in these tough times is for HR practitioners to ensure that their colleagues prioritise these issues highly enough.

Relationships are paramount to creating a connection between people and the organisation and Axelrod notes the importance of informal networks within the organisation in encouraging the development and success of individuals. The development of social networking is another theme emerging from recent articles which is seen as a key tool for leveraging expertise and collaboration throughout the organisation.

Dovetailing nicely with this theme, over at Deloitte there is an interesting discussion about the relevance and commitment of executives to the “our people are our greatest asset” mantra. The discussion succinctly highlights the additional challenges to living up to this statement which current economic circumstances present.

The psychological change agenda

The speed with which the unravelling of the global economy has taken placed seems to have focused minds on what I would loosely refer to as the new change agenda. In the current climate, change is not something which can be thought of as taking place on a periodic basis. In the future and in order to maximise flexibility and innovation, change is something which will be a constant and to achieve this organisations will have to engineer a considerable shift in workforce attitudes and perceptions.

Across the board there is acknowledgement that managing change is as much a psychological challenge as it is a procedural or systemic one. Focusing on behaviours and reaction to change is a key issue. This is likely to become more important over time as market conditions require companies need to constantly evolve. This is echoed by a couple of reports from IBM. In the first, the executives surveyed said that in the future successful companies will be “hungry for change and disruptive by nature”. Once again, the need for innovation and enabling greater collaboration across the organisation is widely acknowledged as a key component in the ability of organisations to successfully deliver strategic goals.

The second IBM survey focuses on what they describe as “The Change Gap”. This is the discrepancy between the CEOs expecting substantial change, a number increasing dramatically and the apparent effectiveness or outcome of change programmes, a number staying roughly the same. The report also discusses the relatively low level of success in change projects;

“What accounts for these vastly different rates of project success? We found in our detailed analysis of study results that achieving project success does not hinge primarily on technology – instead, success depends largely on people…..

Change challenges: The soft stuff is hard

The main obstacles identified were:

Changing mindsets and attitudes (58 percent)
Corporate culture (49 percent)
Underestimating project complexity (35 percent).” IBM, Making Change Work

Furthermore, the report goes on to echo the view that “change is the new normal.” As part of this assertion, people are going to have to get used to less hierarchy, control and supervision. Dealing with this is going to present considerable challenges, particularly when it comes to communicating information across complex organisational structures and geographies.

Managing talent

Another key aspect of managing in the downturn is likely to be the approach taken to talent management. The Hay Group published an interesting take on this particular issue . Advocating an approach based on the US Mutual Fund industry, the report highlights the danger of placing all your eggs in one basket rather than a more balanced broader brush approach.

Meanwhile a Towers Perrin report (opens as a pdf) on managing in the downturn advocates a three-pronged approach to managing talent.

• Effective senior management
• Taking a targeted and consistent approach to dealing with cost and risk issues
• Keeping employees focused and engaged

The report argues that organisations should see the downturn as an opportunity to focus on their most profitable activities and develop a consistent internal and external culture. All good advice but considerably easier said than done.

On a wider level and slipping somewhat under the radar is the Government sponsored DIUS report into developing our brains from cradle to grave. A wide-ranging report, it focuses on three key areas; learning in the early years, wellbeing at work and an ageing population. Of particular interest in the wellbeing at work, the report identifies absenteeism and presenteeism as particularly pressing problems in the workplace.

Ethics and employee branding

Another area which can potentially help organisations manage the downturn is employer branding and organisational identity. The argument goes; the companies whose values are either inconsistent or lacking clarity are going to struggle to effectively manage, communicate and engage with their people. Particularly when one takes into account the earlier assertion that in the future there is going to be less hierarchy and direct supervision. The first step in ensuring that information is understood across the board is to ensure that everyone is clear and understands the organisation’s key values and direction.

A good example of how an employer brand is likely to develop is the future role of CSR, most commentators agree that this is something which is likely to gain in importance and it is down to organisations to show employees that their words are backed up by their deeds. The role of ethics within the organisation over the coming years is discussed in a Deloitte webcast (registration required) . There is the suggestion that this is another key lever in the search for employee and customer engagement. This is an interesting area and again a key intangible, how best to measure the ethical climate of an organisation? Something that is likely to require considerable senior level commitment. The discussion advocates that now is a good time to put this theory into practice. Naturally there is a questioning of whether managers have the desire to engage in this subject at the moment. There are also some good tips on how to overcome resistance and apathy.

Finally, how important is innovation going to be during the downturn? Innovation is another of those key intangibles which are naturally difficult to measure and quantify. A McKinsey report gives it a go. The headline figures suggest that organisations which take a balanced portfolio approach to innovation are more likely to achieve high performance. There is also correlation between the number of metrics used to measure innovation and successful outcomes. Will companies spend the time and effort to pursue this?

Conclusion

The clear message from these articles is that HR is potentially in a very strong position to play a key role in developing the way organisations operate and how they will emerge from current economic difficulties. A focus on the intangibles such as relationships, networks, culture and change is also likely key for long term success. The big caveat however is the level of sponsorship and support that is available from senior management. At times like this, it is easy to see how issues not specifically tied to the bottom line may well be given short shrift.