Tuesday, March 30, 2010

HR 2.0: What's Next?

Over the last few weeks, I have had many conversations about the Human Resource Profession. I was honored to be included in a strategic planning event where we discussed the profession and where we thought HR is heading. I had a great discussion yesterday with Sharlyn Lauby over at the HR Bartender, regarding trends in HR. I am also preparing for several keynotes on the subject, so it has been very top of mind for me over the last few months.

Here is what I know:

1) HR transactional work such as payroll and benefits will continue to be outsourced in companies where it makes sense and there is scale. Other companies will continue to deliver these services internally, but fewer jobs will exist in this area.

2) Healthcare is changing. Have no idea what this means yet.

3) Companies are and should be focused on performance. The recession has forced us with doing more with less and compensation dollars are tight.

4) In the next 10 years, there will be another talent shortage. Michael Haberman over at HR Observations reports data that estimates a 5 million person shortage by 2018.

5) C-Suite executives are more demanding of HR in terms of data, analysis and business acumen.

6) The way we approach work is changing. Many companies are taking a just-in-time talent approach hiring flexible workers to fill temporary needs and project work. (The permanent temporary workforce, BusinessWeek, January 18, 2010)

And I am sure there are many more observations I have failed to list. Please feel free to comment on those. I would love to hear your perspectives.

The next question becomes what does HR 2.0 of the future look like given the above observations? There are so many opinions on this subject. Here are some ideas I have heard:

1) HR will split into a strategic arm and a transactional arm much like Accounting and Finance and Marketing and Sales had to do, due to conflicting expectations when those departments were one.

2) HR is uniquely positioned to step up and guide organizations and take accountability and responsibility for Human Capital after all in some companies Human Capital and related expenses represents 60-85% of the budget.

3) HR will become expert workforce planners navigating the changing workforce and planning for trends in shortages and surpluses of labor.

4) HR will execute on its promise to be a true business partner.

5) HR is going away.

6) A combo of above

7) None of the above

You know my belief, I believe it is time for us to shine and we will be rockstars! HR professionals just need to do a few things differently. What are those? Let's keep the conversation going!

Monday, March 22, 2010

How Good is Your Performance Data?

During a presentation last week on "HR Metrics that Matter," I was discussing the importance of using performance data when analyzing turnover and employee engagement. The premise is that we want to make sure we find out why our top performers leave and we also want to know why our top performers are engaged. (or not)

A very smart young lady asked me, "Well what if all your performance data is skewed and managers give everyone a 3 out 5?" (This issue is known as a central tendency error in which managers tend to rate everyone in the middle). The short answer is don't use that data....yet!

Wow, what a good question and thanks to my colleagues over at Phil Blount and Associates, I happened to know the answer to that question as we are working on competency based performance management systems for some clients. As part of the new performance management system, we have designed training for the Managers and Supervisors (raters).

It is a fact that you can have the best aligned performance appraisal but if your raters do not understand what separates great performance from good performance then there is an issue of reliability. Here is what we recommend to make a subjective rating process more objective:

1) Inter-rater reliability calibration sessions-These session are designed to uncover the behaviors that separate each point on your performance rating scale. So, in this session you would determine which behaviors constitute a rating of 5 out of a 5 point scale, and which ones warrant a rating of 4, 3, 2, and 1. This process make sit easier for managers to delineate between the points of the scale when they have behaviors that are associated with each point.

2) Forced distribution-Publish a guide to managers giving them ranges for each point on the scale for approximately what % of employees should be rated at each level. So for example, on a 5 point scale, where 5 is high, approximately 15% should be a 5 and perhaps only 5% should be rated a 1. (depending on your performance philosophy)

3) Senior Rater-Some companies like to add a senior rater to review all scores to make sure they are supported and distributed correctly. This is just one more check in order to make sure ratings are fair and consistent.

4) Train managers on errors and biases and job documentation so they have the appropriate data to make rating decisions and leave biases checked at the door.

When you have a performance management system that is tightly aligned to organizational goals and objectives AND managers understand HOW to use it and rate employees, then you can do amazing things with the performance data.

How have you made your performance management process more objective? How have you trained your managers on rating your employees?

Sunday, March 14, 2010

Making Your HR Metrics Matter?

As I prepare for a presentation to Dulles SHRM this Wednesday on "Making HR Metrics Matter, " I am reminded of a question that usually comes up during the presentation. Why should HR be concerned about metrics? At the HR Florida conference last year, that very same question was raised, click on the video below to hear the responses from that audience.

The next question I get is usually around "which metrics should I be using?" I respond to this question the same way every time. Although there are common HR metrics that most companies use like turnover or cost per hire, YOUR metrics are very dependent on YOUR company's strategy. So, in order to develop HR Metrics that Matter to your company you must start with strategy and make sure HR is aligned with the organizational strategy.

For example, if your company has a strategy to be innovative and develop new products, you would need metrics that measure how well you are doing against that strategy. So perhaps HR should make sure that ideas, suggestions, and successful product launches are rewarded and recognized appropriately in the performance management system and compensation philosophy. HR could then determine which metrics are appropriately linked to their people strategy. In this environment maybe metrics like # of new ideas per quarter, % of new ideas that are implemented, and satisfaction rating with new products.

Contrast the innovative environment just discussed with an organization that has a growth strategy. As you can imagine the metrics should be VERY different. In a growth oriented business metrics like revenue per employee, profit per employee, % of salespeople exceeding quota and market penetration measures would be important.

So, start with strategy to get to your Metrics that Matter...

What are you measuring in HR today? How do you know if your metrics matter?

Monday, March 8, 2010

Start from Results and Work Backwards

What contributes to your profits? Looks like a simple question, but get your management team in a room and see how they answer the question. I read a great article this morning on this topic. The authors Bassi and McMurrer discuss the importance of understanding what drives your business results and designing a human capital strategy around those answers. The authors debunk popular employee engagement myths:

1) The drivers of employee engagement are the same everywhere-I have always had a problem with the one size fits all approach to engagement. It's not about 12 questions, it is much broader than that.

2) The drivers of employee engagement are NOT the same as the drivers of business results. The top drivers of engagement have little or no overlap with the top drivers off business results. The authors use the example of sales. What drives engagement is not the same as what drives sales. For example, engagement can be driven by having clear expectations, room for development, and tools and equipment to do a good job. Sales can be driven by branding, marketing efforts, salesman skill, etc. So, if a company is focusing on engagement solely to increase sales they will miss the mark.

3) Employee engagement should be maximized. This may or may not be true depending on the linkage analysis. The key is context and linkage. You have to measure engagement in terms of business results to see where the focus and resources should be spent.

I am a big fan of measuring employee engagement but I like to do so as part of a bigger data gathering exercise. I think you should measure customer data in conjunction with employee data to understand behaviors that maximize the customer experience. I think HR professionals need to look at engagement with performance and turnover data. What if you uncover that you have turnover trending up and engagement trending down for your highest performing customer account managers. You need to take action on that quickly to uncover root causes of the turnover. This is the kind of data that is important to our C-Suites.

I believe HR can collaborate with other departments to determine and analyze linkage when it comes to human capital and business results. I believe that this analysis will be critical as companies are so focused on cost, performance and effectiveness post recession. It's about telling a complete data story and making sure cause and effect is really understood. This type of thinking allows for better decisions and better resource allocation.

How does your company measure engagement and what other metrics to you use to get the complete story?

Monday, March 1, 2010

How Culture Leads to Profits

Over the last month or so, I have had a very interesting B2B buying experience. Our company decided to upgrade our laptops in January. As a relatively happy Dell customer we decided to order 2 new Dells. (or let me just say try to order). Here is a brief overview of my experience:

1) Called Dell direct after I configured our systems online including colors from their widely advertised color options.
2) After we finished the configuration I was told I would have to speak to someone in the home division instead of business because I had chose a color that wasn't offered in his business unit. I would have to start the process from start.
3) I said that I wasn't willing to do that, and he needed to figure that out internally.
4) Finally after 2 days, my order has been placed and we will have our laptops mid-February.
5) Due to several delays, the order being placed inaccurately, the unavailability of the processor, etc. they said it would be March 15th before our order would ship.
6) I cancelled the order. (after speaking with the salesperson, he felt his hands were tied in the process and believe me, I felt his hands were tied as the customer).

Here is a brief overview of my Apple experience:
1) Called Apple to discuss transferring to a PC and integrating our smart phones. They said it would be no problem.
2) Went to the Apple store spoke with the Geniuses, (and they are), ordered the laptops, picked them up the next day.
3) Logged in a call to Apple online support with a question regarding my email and they said someone would be calling me in a minute, it took 10 seconds.
4) I am using my Apple Macbook right now and proud to have paid double for the level of service I received.
5) Had a slight issue with my email after pick up, BJ a very cool Apple Genius stayed on the phone with me after hours for an hour trying to diagnose.

So, how does Apple do it? They have 10% market share today, but I feel that is growing. They make it EASY for a person to buy their products via a very smart, highly trained, highly committed workforce. Their culture supports their strategy and in my opinion it is created in a deliberate manner. The customer is at the center of everything they do. My question is how do they sustain that culture of high touch customer service?

I have some thoughts on the subject, but what is your experience? How do companies like Nordstrom's, Apple, Zappo's, Chick-Fil-A and others make their culture where you can almost see it because you certainly do feel it? How is the culture SUSTAINED over time?