Archive for February, 2009
Researcher of the Decade – Dr. Laurie Bassi
Posted by: grandma in Employee Development, ROI in Human Capital, Talent Management on February 27th, 2009
Of all the Talent Management gurus that give us advice, tell us how we’ll be better if we just did this, Dr. Laurie Bassi is the one I admire most. A couple of things about her: She owns her own talent strategy firm called McBassi and Company (maybe she liked McDonalds growing up) She is one of Success Factors’ valuable research resources. I think she best connects the dots between the value of people and company performance. One of the main things HR struggles with is how to sell people related projects to the executive team.
Dr. Bassi authored one of the most unique white papers on ROI for Human Capital Management. In one of her cases she looks at a South Carolina school district that had plenty of funding but poor test results. Those schools that had better Human Capital practices always scored better. Why is this study more relevant to performance than in the business world? You simply have to develop a student. You can’t hire them. You can’t fire them. And you can’t pay them. I haven’t seen another study come close to this. This truly proves the value of development.
The most telling sign that Dr. Bassi’s research is spot on? She created a Human Capital Stock Index for companies that exhibit best practices in Talent Management. And guess what? Those companies had better returns for their shareholders. If you look at a company and what it is worth, the value of intangible assets dominate that balance sheet. What do you think a firm like Deloitte Consulting is worth? They truly represent Human Capital Value Add. How much value does a consultant with a weekly billable goal add to its organization?
Succession Planning First Step – Identify your Talent Pool
Posted by: grandma in Employee Development, Leadership, Recruiting, Succession Planning, Talent Management, Workforce Planning on February 23rd, 2009
I had a recent visit to a client that said they had over 500,000 resumes on file for this 28,000 person organization. This was pretty impressive since their policy was to hold resumes for only 1-year. They had over 100 recruiters and a well-oiled process for brining new talent on-board. Their time to hire was 28 days – which by my count has to be in the top 10% of all companies. After hearing them discuss their best practices in recruiting, I asked, “How many internal resumes do you have for the 28,000 employees? A look of consternation came back to me – the answer was none. They even posted for 5 business days internally before bringing the requisition out to the public. (5 days was included in the 28 which makes that number even more impressive) How does a company like that spend its resources on people that don’t even work at the company? This is not a unique case. Amazingly enough, I would say that most companies don’t capture employee data. Resume data for an internal employee (aka “Talent Profile”) is outdated on day 1 of the job.
Building out your Talent Pool accomplishes these two things:
1) It classifies and inventories your Human Assets. Everything else is accounted for – why not account for your people?
2) It allows you to create the foundation for your Succession Planning process.
There are multiple Talent/Core vendors that have Talent Profile functionality. Be sure to take advantage of this. If you are launching a talent initiative, make the Talent Profile step 1 before anything else. Why? It is the easiest win. Here are some tips:
1) Employees won’t update this on their own so definitely send out a task to complete this.
2) The Talent Profile should be updated every 6 months otherwise the information won’t be accurate.
3) The KISS principle applies – half the point of launching this first is to introduce your employees to the system. Don’t overburden them with a long form.
Do these things and you will be well on your way to managing talent.
Two Unique Measurements of Potential for Succession Planning – Part 2 – Self-Efficacy
Posted by: grandma in Employee Development, Leadership, Succession Planning on February 20th, 2009
Let’s start with a definition of self-efficacy. It is a belief that one has the capabilities to execute the courses of actions required to manage prospective situations. Unlike efficacy, which is the power to produce an effect (in essence, competence), self-efficacy is the belief that one has the power to produce that effect.
Self-Efficacy is the single most important determinant of success at anything. Yes – I will say it again: Self-Efficacy is the single most important determinant of success at anything.
So, on that premise, don’t you think you should measure someone’s self-efficacy to determine their potential? How will you know if they can succeed at the next level?
If one of your employees has a high degree of self-efficacy, then they have the following:
1) An appetite to continuously learn – the best leaders are those that never stop learning. Often, managers stop learning after they think they have mastered management. The best leaders never let their willingness to learn expire.
2) More likely to model their behavior after someone or allow someone to model them – mentoring is a very effective for employee engagement both for the mentor and mentee.
3) Attribute of a hard-worker – being smart is nothing without hard work. Those with Self-Efficacy know that anything worthwhile isn’t easy to do.
4) Perseverance when a set back arises – these leaders don’t blame others for failures and take ownership to correct their mistakes.
Self-Efficacy is basically a competency with the above associated behaviors. Make sure you include it as one of your leadership competencies and measure it as a predictor of potential.
This is a great paper on the subject by Peter Heslin and Ute-Christine Klehe. Self-Efficacy
Two Unique Measurements of Potential for Succession Planning – Part 1 – Managerial Mindset
Posted by: grandma in Employee Development, Leadership, Succession Planning on February 17th, 2009
One of the big issues I’ve seen with a company’s succession planning process is how to measure potential. Potential makes up the x-axis of the 9-box (or whatever flavor) versus performance on the y-axis. So how can this be determined?
Much like a focal performance review, you should also conduct a potential review. So what does determine the potential of someone? To most, it is an inate judgement call. Here are two unique measurements that you should obtain with this survey. The first is essential to the measurement because it is a gateway to potential.
1) Managerial Mindset (Growth or Fixed)
2) Level of Self-Efficacy
Today, we will look at the first measurement – Managerial Mindset. I think this is a huge determinant of potential – especially if the position they are coming into is a leadership one. Dr. Carol Dweck (Mindset-The New Psychology of Success) has done decades of research on this subject. A growth mindset is basically someone who thinks anything can be learned by anyone. A fixed mindset is someone who thinks intelligence is capped or that they can’t grow anymore. In other words, someone who adamantly believes in the Peter Principle has a fixed mindset. It is someone who would say “Leaders are born, not made.” In an interview with HR.com, Dr. Laurie Bassi (who by the way has some of the best learning research ever presented) said one of the biggest reasons training isn’t successful is because managers are not really supportive of the training. So on that premise, shouldn’t you measure someone on whether they are supportive? If you have managers that deny training to their employees or don’t encourage it, then they likely they have a fixed mindset. Fixed Mindset managers don’t provide good feedback, feel threatened by their employees growth and have an “elitist” us vs. them attitude.
The most important job at any company is the 1st level manager. They have the most influence on the individual contributor.
What is the cumulative effect of having 1,000 managers with a growth mindset? This would have a staggering effect on your organization. Make sure your measure Mindset in your Succession Reviews.
Update: This is a great article citing Scott Forstall having a Growth Mindset – he managed the team that developd the iPhone.
Transactional Performance is True Performance
Posted by: grandma in Compensation, Incentive Compensation, Performance Management on February 14th, 2009
If your retail manager put $500 on the table and told you it was yours if you picked up his dry-cleaning, you would probably sprint to your car. Pure-play talent management vendors like Success Factors, Authoria, and Halogen sell performance management software that manages an employee’s focal or anniversary review. There are a lot of advantages to this, but I don’t think these types of reviews truly improve performance like a transactional system would.
Why? Call it PIC.
Aubrey Daniels has done some great research on motivation and consequences in his book, Bringing out the Best in People. Daniels uses the above abbreviation – Positive, Immediate, and Certain – in the context of a positively motivated consequence. Conversely, he argues that the same behavior can result when a negative motivator, NIC, is applied. “I will fire you if you don’t get my dry-cleaning in the next 10 minutes.” Daniel’s research shows that NIC will work to get results, but only in the short-term. You’ll get pretty tired of your boss if he continually brow beats you to death.
There are several companies that sell transactionally based performance management systems, but they do not classify them as such. Callidus, Xactly, Synygy, and Oracle all sell systems coined Sales Incentive Management (SIM). Oracle at one time called it Enterprise Incentive Management (EIM), but these niche vendors and Gartner defined the market differently so SIM stuck. I bet it will go back to EIM in the near future. These incentive systems apply to many workgroups beyond just sales. The biggest difference between a reward and a reinforcer of behavior is the immediacy of the consequence. To me, these vendors have products that enable “Pay-for-Performance” because they do it transactionally.
Why?
1) Subjectivity is left out – how many credit card applications did you sell today?
2) Ratings of employees are not inflated – “meets standards” doesn’t have a negative connotation when what you produce really matters.
3) The frequency of the behavior is measured more often. Focal reviews tend to measure no more frequently than quarterly or yearly in most cases.
Let’s look at “I”
“I” is for immediate. The $500 would be paid on the spot after the employee returned the boss’ dry-cleaning. He could have been fired as well if he didn’t get it (NIC). The converse of this is “Future”. Much like focal performance reviews, a raise in 12 months doesn’t exactly motivate someone to do something in the present. Ask your commissions only sales force if the want to be paid immediately and I doubt any of them would say no. MaryKay is a great example because they pay their independent consultants when the transaction is conducted.
Let’s look at “C”
“C” is for certain. The employee knew he was going to get the money because it was laid out in front of him. The converse to this is obviously uncertain. Most companies give an average annual raise of 2.8%. No one is going to bust their butt for a nominal raise like that. Additionally, companies don’t exactly cascade merit increases down to the individual. Most do it by group, equally, so the pot of money is only so big for high performers.
Where does this leave pure-play Talent Vendors? They still measure competencies better than everyone else, and the EIM vendors can’t touch them on this functionality. A bank teller won’t have any transactional goals, so how can they improve the teller’s performance? Measure him or her on competencies instead. Who wants a teller that gives you your money fast but is a curmudgeon in the process?
Note: An interesting observation Aubrey Daniels’ book and his other on Performance Management is that Human Resources is never mentioned. Performance Management should be owned by management and enabled by HR.
Don’t Ignore the Skill Worker
Posted by: grandma in Employee Development, Employee Engagement, Performance Management, Succession Planning, Talent Management on February 11th, 2009
I’ve consulted with 100’s of companies on their talent management system and the majority have one thing in common when it comes to the scope of their project: they ignore the skill worker. Typically the only workgroup in scope for the talent project are the salaried employees or corporate employees. Let’s remember one of the key reasons why we do a performance review: to improve the relationship between the manager and employee. Let’s take a retail company. Retail is very heavy on the skill or hourly worker. Most retail companies have turnover in excess of 50% annually. This is one of the reasons corporate ignores this group in the talent process. Why should we pay attention to them if they always leave? To me, this is a very poor excuse not to look at the root cause of problem. Everyone knows that turnover is a huge cost to an organization so shouldn’t you do the things necessary to reduce this?
• Why don’t you have these employees fill in their Talent Profile to see their skills beyond their hourly position?
• Why don’t you do employee development to improve engagement? At least you will convey to them that their development is important and that you care about their career path – at your company or elsewhere.
• Why don’t you rate them on the competencies required for the position? What affect does it have on the overall business if 50,000 retail employees moved from a meets to exceeds rating on “Interpersonal Versatility”?
Talk to your IT department on how to address the worker that doesn’t have access to the on-line Talent System. There are plenty of ways to get their information into the system – not the least of which is a document management system (to lift the ratings of competencies or to pull answers yes/no questions to career questions), outsourced data entry, or kiosks. Make sure your manager is involved face-to-face in the talent process.
10 Things Wrong with Focal/Anniversary Reviews – Part 2
Posted by: grandma in Performance Management on February 8th, 2009
6. Stack ranking and performance distribution – This is probably the worst feature of any performance management technology. Stack ranking employees will immediately send collaboration into a downward spiral. High-performance between two employees is not mutually exclusive. If you do stack rank, then do it at the director level or above (assume 1 manager manages 10 managers). Out of 1,000 people, you’re likely to have some dead wood in the talent pool.
7. To many steps in the workflow – Anything beyond 8 steps in a workflow will make the process too cumbersome. Workflow would be defined as anything that would change hands in a manual process. Make sure that most steps are between employee and manager.
8. Conducted on-line and not in person – In one of the companies I used to work for, they actually calculated ROI for an on-line performance management based on time reduction of this process (i.e. going from an hour to 15 minutes). This was their pitch to try and push this through internally. This is actually a ridiculous calculation because the most meaningful thing about a performance review is the manager/employee interaction. Will your CFO really buy off on this reduction in time? No way – this would be the ultimate soft ROI.
9. The “Recency” Affect of ratings – In my experience, most companies don’t set goals and don’t measure employees based on these. And if they do, they set and measure them at the end of the fiscal year. What good is that? This is performance management because HR says you have to do it. This is a Fundamental Attribution Error.
10. Any peer review that would affect an employees score – I think this is well understood by HR but not by the business. Peer reviews should only be done for development purposes. They should be done anonymously because the feedback will be honest if there is no retribution.
What is the ROI on your Admin? An HR Project is not always about Hard Dollars
Posted by: grandma in Recruiting, Talent Management on February 2nd, 2009
I was assisting a recent evaluation for an Oil and Gas company to move forward with an on-line recruiting solution. Part of the process to get this approved was to construct a business case to get the funds released. As in most companies, this request went to the CFO. She was the ultimate gatekeeper of money and wielded some serious power in this 25,000 employee company. If she didn’t approve the project, it was either tabled or rejected. Of all the metrics that optimize recruiting, we had to hang our hat on only these:
1) Reduce Agency Fees
2) Reduce Advertising Fees (reallocation at best)
3) Reduce Print, Copy and Mail fees
Note all of the metrics “reduce” spend versus “improve” a process. Important metrics like improve time to hire, improve the requisition process and improve resume processing were not considered. A CFO will poke holes in anything that will improve worker productivity. It is curious why she only considered the “checks going out” or people that would be fired as part of the process improvement. We had to dig into the general ledger for 3 weeks quantifying the spend on recruiter fees. Fortunately for us, these fees pushed 2.5 million annually. A company can save 40% or more on agency fees with an on-line solution (see this case study) . Most of these fees were coded differently so wasn’t any visibility into the aggregate amount.
Would she have budgeted 2.5 million annually on these fees?
So what is the Return on Investment on the following:
• A Network upgrade – couldn’t you just wait longer for that download?
• The CFO Administrative Assistant – can’t you do your own expenses?
• Southwest Airlines Partition Poles: can’t customers fight through the bottleneck when their number is called?
• Does that new Financial Management system make you a better company or improve a manual process?