• 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.

Every business gets the HR it deserves

This strikes me as both shirking responsibility for people management on the one hand and on the other, a tacit acknowledgement that HR lacks anything like a consensus around its raison d’etre. Perhaps the idea that 20 – 40% of performance is determined by the quality of people’s relationships might be a start?

As for the ‘insight driven’ approach, haven’t we been here already?

My thinking is as follows;

• E2 can be framed both as a technology and as a cultural shift
• Its takeup is clearly very different from hard technologies e.g. email, personal computers, blackberries, databases etc.
• Adoption is also very different from technological/methodological hybrids e.g. CRM, BRP(?), ERP and JIT amongst others
• Likewise, the debate about top down and bottom up drivers of adoption is new(ish)
• E2 seeks a different culture from command and control in which to thrive

Thus;

• Given the potentially disruptive nature of E2
• Its perceived low cost of technology
• The apparent need to be integrated into processes (see Howlett for example!)
• Its material ‘distributed’ impact on culture and values (what can’t be E2′ed?)

It will either;

Take hold on a case by case basis, varying from organisation to organisation and function to function, eventually fulfilling its potential and bringing about a subtle change in culture, the credit for which will vary dramatically and some will claim it was their idea from day!

or

Fail to take hold as the organisation seeks to control and police (in the nicest possible way of course!) the various elements of E2

Therefore;

• E2 is a bit of a slippery eel, who knows where it will go next
• E2 doesn’t lend itself to linear outcomes and cost/benefit analysis (hard but not impossible!)
• Claiming credit and gaining influence for E2 is anyone’s guess

As Jon writes himself;

I am not aware of significant work in the general area of changes to mainstream HR practices as a result of embarking on the path towards Enterprise 2.0.  I will be delighted to learn from any of you of examples and / or issues I may have missed or glossed over.

My guess is that we’ll be waiting quite a while…

Rather than bandwagoning around E2, I think that setting out to claim a element of an organisation that can be improved and has thus far been overlooked will reap richer rewards.

Many thanks to Anne Marie for the brainstorm

• 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”

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

‘Unstructured, Intangible and Typically Unmeasured’

Gartner and others have suggested that

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

In a similar vein, John Hagel of Deloitte writes that

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

The CIPD then offers us the following

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

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

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

New Technologies, Processes and Practices

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

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

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

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

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

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

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

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

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

Footnote

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

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

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

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

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

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

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

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

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

What History Teaches Us

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

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

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

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

Creating a Context

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

Researching the HR Profession of the Future

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

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

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

HR and Technology

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

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

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

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

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

Now that’s more like it…

Happy New Year!

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

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

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

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

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

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

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

From John’s blog;

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

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

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

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