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?

1 comment:

Michael D. Haberman, SPHR said...

Superb piece. Very thought provoking. I look forward to talking to you about this.