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Sep 23 2011
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Business, Human Resources, Leadership, Management

Transformative HR: Book Review

As many of you know, I love to read! While I have an appetite for all kinds of books, news & blogs, I just love great content on HR. And often, that’s the hardest to come by. One of my favourite authors on HR is John Boudreau. I became an instant fan when I read and reviewed his book Retooling HR. I felt that the frameworks, approaches and tools he talked about can not only help HR professionals to up their game, but can also help in talking coherently, logically and meaningfully with the business. The application of usual business analysis tools such as portfolio management, segmentation, conjoint analysis etc. to HR issues was extremely appealing.

So, when I got a copy of the book Transformative HR, I was thrilled. Transformative HR has been written by John Boudreau and Ravin Jesuthasan. Ravin is a senior colleague of mine and is the Global Practice Leader for Talent Management at Towers Watson. I hungrily read the book and I think it is one of the best I have read so far. The key takeaway is that HR professionals and leaders need to make informed human capital decisions to keep their organisations competitive. ‘Informed’ is a key word here and the book outlines an evidence-based approach to human capital decisions. They outline 5 basic principles of evidence-based change:

1) Logic-driven Analytics: How often do we HR professionals have an overload of information and metrics? Do we just have numbers or can we tell a powerful story? In a transformative HR future state, the authors share how we can use frameworks & mental models to go behind the metrics, understand the real picture and produce insights which are in high demand by other organisational stakeholders. After all, getting the numbers right is just the beginning. The real value-add comes from using a multi-dimensional approach by synthesizing business strategies, business metrics and talent metrics to produce real insights that help in achieving those business objectives.

2) Segmentation: Conceptually, most of us agree that one size doesn’t fit all and we need to segment our workforce. But, how? John and Ravin propose 3 fundamental questions:

  • What are our vital talent segments?
  • Which employment elements induce the desired responses at optimum cost (supply-side talent segmentation)?
  • What do we need employees to do (demand-side talent segmentation)?

I think this is a powerful way to think through key talent investment decisions, as it helps to understand how to customize the employment deal to create the highest payoff in terms of business outcomes, at the optimum costs.

3) Risk Leverage: I feel that Human Capital Risks are often under-reported and worst, not well-understood. Now, all organisations face HR-related risks, but instead of just mitigating risks, the focus should be on optimizing risks. The book presents a number of systematic approaches to optimize risks and develop sustainable advantages. Again, the approaches are rooted in management tools that business leaders are used to – tolerance analysis, portfolio theory, stochastic simulations, probability matrices etc. In two words: cutting-edge and powerful!

4) Integration & Synergy: Often, HR processes operate in silos which prevents us from getting the “1+1=3″ effect. This principle talks about how to integrate various HR sub-functions as well as integrating HR with other organisational units. The live example about the Talent Management Game at Shanda (one of China’s largest online gaming company) is just fascinating!

5) Optimization: The principle of optimization follows from segmentation. It is all about identifying where & how the payoff of certain HR investments will lead to exponential returns. It is all about identifying the mix of investments that will have the most desired business outcomes. So, instead of spreading HR investments across the board equally, the focus should be on understanding & positioning ‘fairness’ to mean strategically differentiated treatment.

The book is full of great examples and brilliant case-studies from leading global organisations such as IBM, Coca-Cola, Royal Bank of Scotland, Deutsche Telekom, Ameriprise, Royal Bank of Canada, Khazanah Nasional Berhad etc. Overall, it’s a compelling read. It is for anyone who wants to bring rigorous thinking, informed decision-making and sustainable impactful change in their organisation. Did I say that you just can’t miss this book!

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Aug 24 2011
3 Comments
Business, Employee Engagement, Human Resources, Leadership, Management

How Can HR Use Engagement Surveys to Drive Business Performance?

Several companies invest thousands of dollars in running Employee Engagement surveys. Typically, they use the survey results to benchmark workplace experiences with other organizations,  determine enterprise-level priorities, drive key HR programs, set engagement-related KPIs, involve managers in the action planning process etc. But one of the key elements missing is how do we use these insights from the survey, fortify them and use them to really drive business performance. I often find that we miss connecting those critical dots. If HR has to ‘get a seat at the table’, then all it’s initiatives should link back to business performance, including employee engagement.

I could think of one potential approach, and it may be suitable to larger size organizations with a decent number of “units of analysis” i.e. bank branches, retail stores, production sites etc. If we have sufficient number of units to study, the first step would be to start linking the employee engagement survey data to business metrics. Think sales, profitability, productivity, employee attrition, customer survey scores, safety incidents, customer waiting time etc. Then you would need some analytical wizardry to examine how these metrics link to employee survey data. Do highly engaged bank branches have higher loan growth and higher net interest margin? Or do low engagement manufacturing plants showlow productivity as well? Or worse, the linkage is not meaningful or not strong enough (in which case you really need to go back to the drawing board to design a good survey). Such linkages help to establish the validity of your employee research frameworks and help create buy-in among the senior leadership team.

The next step is really to take it a notch further up. Based on the above linkage analysis, you would have identified your high / average / low performing units. Now, the way HR can really add value and improve business performance is by replicating the high performing units. How do you do that? Well, you try to examine what differentiates these high performing units from others. You could look at a range of variables for employees in these groups – age, tenure, experience, competencies, managerial practices – anything that can hypothetically differentiate performance. And yes, you could also connect it all back to the employee survey and see what issues are these “high engagement – high performance” units particularly satisfied on as compared to other units. Again, we are just looking for factors which can differentiate or even predict engagement and performance

Only when you have insights of this depth, then you could work out a plan for replicating such high-performance. Such insights can provide inputs into recruitment plans, talent management, rewards, training & development, career progression etc.  And all this will potentially have much more credibility since you have validated these against business outcomes.

What do you think? How are you using employee survey data to improve business performance? Drop in a line if you would like to discuss this in details.

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Aug 13 2011
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Business, Employee Engagement, Enterprise 2.0, Human Resources, Management, Social Media, Technology

Gamification of the Enterprise

One of the blogs I love reading is The Future Of Work blog by Socialcast. It has great content about things I am passionate about – social media, organization development, employee engagement, collaboration tools etc. They also put up great infographics every now and then. I just couldn’t resist posting their infographic titled “Adding Play Into the Enterprise”. It does a crisp summary of employee engagement trends, the explosion of gaming and how they can be married together. My favorite bit is when they compare the ‘Gaming World’ with the ‘Job World’. So, your job title is the “level”, salary is “score”, promotions are “level up” and performance reviews are the “stat summary”. That’s a cool way to think about it!

Enjoy the infographic! And do share your best ideas on gamification.

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Jul 06 2011
8 Comments
Blogging, Business, Employee Engagement, Human Resources, Leadership, Management

Carnival of HR – The Talent Race

Alright people! I bring to you the latest Carnival of HR. Themed as “The Talent Race”, this edition contains interesting posts about how could organizations effectively Attract, Engage and Retain their employees and what are the latest practices in Talent Management. Additionally, I wanted to have some Asian flavours by getting posts by people writing about the Asian context. Unfortunately, I didn’t get many posts about talent management practices from Asia. And that means that one, we need more professionals in Asia to blog on the subject and two, I need to expand my Asian network even more!

  • Jon Ingham is one of my favourite bloggers. He feels that there is a need for a differentiated unique proposition for people management. Sticking to the theme of “talent race”, he shares how Haier (a consumer electronics MNC that started off in China) established race tracks for a unique way of managing their talent base.
  • Laura Schroeder wonders where has all the talent gone. She analyzes reports from the Economist Intelligence Unit and Bersin & Associates to come up with strategies to bridge the talent gap.
  • Tanmay Vora writes at the QAspire blog and shares with us some Core Lessons in Leading & Managing People. He says that “working with people, guiding a team and helping them in their quest for peak potential is one of the noblest things we can do as leaders. It is an opportunity and an obligation as well.
  • As HR professionals, we are often heard advising employees to “take charge of your own development”. But do most employees really know how to do this? In this post, Dan McCarthy, from Great Leadership, offers a free step-by-step self-study guide to developing leadership skills. Best of all, it’s free to use and/or share, as a way to engage and retain valuable employees who are willing to learn on their own but need a little structure”.
  • Heard about the “HR Hairball”? Find out in this excellent post by Mark Stelzner.
  • It might be important to hire employees for their skills, but hiring for culture-fit is really important as well. Wally Bock shares his views on Hiring Well. One of my favourite lines from the blog post – “Performance and growth are often situational”.
  • Amy Wilson writes about transforming existing performance models into one that is more work-centric and embedded in the natural flow of business to get the best work done.
  • A strong learning & development platform is critical for organization looking at managing their talent base effectively and driving sustained business performance. Linda Fisher Thornton from Leading in Context shares 11 Learning & Development Reports. Informative!
  • Anita Lettink feels that “best practices” may not always work for you because you have your own unique context. Instead, she shares some guidelines for winning the Talent Race.
I would like to thank all the contributors for sharing their ideas. Also, thanks to Shauna Moerke for the giving me the opportunity to host the Carnival of HR.
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Jun 09 2011
5 Comments
Employee Engagement, Human Resources, Management

Designing an Effective Recognition Program (Interview)

A lot of employee research highlights the importance of “recognition” in enhancing employee engagement and reinforcing the right behaviours that benefit the company as well as the employees. Often, I find companies taking a slightly ad-hoc approach to recognition and often such programs end up not being targeted, frequent and in the true sense, rewarding.

To better understand what makes for a robust recognition program, I did a short interview with Derek Irvine of Globoforce. Derek is Globoforce’s Vice President for Client Strategy & Consulting and is one of the leading voices on employee engagement, strategic recognition, talent management and business performance.

Q. There is something you call “Strategic Recognition”. Could you share with me what Strategic Recognition is all about and how it benefits organisations?

Derek: Strategic recognition means integrating employee recognition with a company’s core values and strategic goals. This helps employees understand the behavioural norms you have identified as necessary for achieving the desired business outcome—and strategic recognition does this for every employee in your company, regardless of where they live and work. The benefits of strategic recognition can be categorised in three ways:

1) Increased alignment with the company values and strategic objectives to ensure employees are recognised and rewarded only when they achieve desired targets by behaving in ways the company has deemed appropriate to success.

2) Increased employee engagement because employees intimately understand how their daily efforts contribute to achieving the bigger picture, resulting in increased productivity and performance. Our clients regularly realise double-digit increases in employee engagement in less than a year.

3) Increased retention of employees by ensuring employees know their value to the organisation and also building stronger bonds between employees, colleagues and managers.

Q. Human Resources professionals often draw out recognition programs for their organisations. What are some of the missing ingredients in such programs based on your experiences? What are the key elements to consider while designing such programs?

Derek: In some organisations, the first hurdle to clear is helping those responsible for designing their organisation’s recognition program to understand that recognition is not a Years of Service or Long Service award program. At least, employee recognition is not just Years of Service. In the same vein, employee recognition is not just sales or customer service incentive initiatives.

The first step is therefore broadening the understanding of employee recognition to anything and everything you as an organisation, manager or even peer do to acknowledge, praise and appreciate the hard work, success and achievements of colleagues. Once that understanding is in place, we can move into the key elements to consider when designing a truly strategic recognition program. We call these key elements the Five Tenets of Strategic Recognition:

1. A Clear Global Strategy for a consolidated recognition program flexible enough to allow for peer recognition, spot recognition, milestone anniversary recognition, etc., while creating visibility and auditability into the recognition budget spend across the globe for improved governance.

2. Executive Sponsorship with Defined Goals to signal senior management support and establish a management methodology including clear targets for success and meaningful measurement and reporting functionality linked with company strategic objectives.

3. Aligned with Company Values to ensure all recognised activities are associated with a company value, helping employees understand how their direct actions and behaviours impact achievement of company goals and giving managers dashboard insight into the traction of each company value by employee, region, division or department.

4. Opportunity for All to Participate to empower and unite the entire workforce, not just the top performers, behind the company’s strategic objectives and values. Top performing companies ensure 80% of the global workforce will be touched by the recognition program each year, largely through peer-to-peer recognition.

5. Offer the Reward of Choice to reinforce the recognition recipient’s positive association with the company through personally memorable, culturally relevant, locally based rewards.

Q. Is there a measurable ROI on strategic recognition programs?

Derek: Yes. Strategic recognition is proven to increase employee engagement by double digits, improve employee performance and reduce employee turnover. Gallup found in research last fall that employees do not become engaged just because they work for a financially successful organisation. Rather, employees who are engaged drive financial results. And those results are significant. In their 2007-2008 Global Workforce Study, Towers Watson found that companies with high employee engagement vastly outperform low-employee engagement firms in terms of operating income, income growth rate, and earnings per share. In an earlier study, Towers Watson calculated that a 15% improvement in levels of employee engagement correlates with a 2% improvement in operating margin.

In terms of retention, Gallup found organisations with high employee engagement had 37% less employee turnover. Considering the cost of replacing just one employee is 75-150% of that person’s salary, increasing retention alone can have a significant impact on the bottom line.

Aside from the benefits of increasing employee engagement with strategic recognition, the ROI benefits of strategic recognition directly on employee performance and productivity are profound. Especially in today’s world of rapid change, the ability to communicate to employees changing priorities and company strategies in a way that makes sense to employees in their daily work is itself a primary benefit. Quickly re-focussing employees precisely on most critical tasks in a positive way ensures employees remain at their most productive.

Q. In your opinion, are non-monetary forms of rewards & recognition as effective as monetary forms?

Derek: Non-monetary rewards are far more effective than monetary ones. Much research supports the fallacy of “give them more money” as a reward strategy. The most obvious example is the bonus culture that led to egregious behaviours in the financial world and, in many ways, the Great Recession. I argue base compensation in these firms should be much higher, with regular, frequent recognition of achievements and no ridiculously high year-end cash bonus.

Cash is an inappropriate reward mechanism because cash is the currency of compensation – of base pay. To be differentiated in a recipient’s mind, rewards must have a different currency.

These non-monetary rewards can still have economic value to the recipient and do have their place in a strategic program. Non-cash rewards in the form of gift cards to local high-value, lifestyle venues around the world take rewards beyond compensation to trophy award status. Recipients can choose rewards in their local neighborhoods, supporting their local economies and vendors they trust, or they can choose to enjoy rewards anywhere in the world. Options are limitless – shopping, dining, travel, adventures, sporting events, concerts, shows, even charities around the world. Employees who are deserving of recognition are also deserving of memorable rewards with unrestricted choice.

Q. Finally, what are 3 recent books that you enjoyed reading?

Derek: 

1. Delivering Happiness. The Zappos story is great in terms of follow your passion, and have the courage to build the right culture.

2. The Thank You Economy. What he describes as a mega trend for brands and the impact of all things social is going to be enormous for company cultures, and how to actively manage your culture – something I’m passionate about too.

3. Good Boss, Bad Boss. Contemporary management practices are shifting fast, the bad bosses had better catch up quick, or they’ll fall off the cliff before they even notice!

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That’s it for now folks! I thank Derek for making time for this and you could also follow Derek’s blog “Recognize This!”.

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