Evaluating People Management andthe Value Based HR Function People Science® 19th January 2010Nicholas J HigginsCEO, VaLUENTiS & Dean, Int’l School of Human Capital ManagementDrHCMI MSc Fin (LBS) MBA (OBS) MCMIHR Directors Summit 2010 General distribution versionICC Birmingham
All models, frameworks and related information contained in this presentation are the sole copyright of VaLUENTiS and the International School of Human Capital Management 2002-2010 2002-2010.
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Content for today1. Human Capital Management2.2 Employee Engagement3. The Value-based HR Function part I4.4 The Value-based HR Function part II Th V l b d F ti t5. Summary (including ‘The Repositioning of HR’)
One for the road.....“If you cannot measure it, you cannotimprove it.”Original source attributed to Lord Kelvin 1824-1907, pioneerof physics and thermodynamics, first UK scientist appointedto the House of Lords
In modern management parlance.....“What gets measured gets managed.”
In our HR social science world.....Evaluation is a more appropriate wordfor measurement.
So consider..... HUMAN CAPITAL MANAGEMENT: “Human capital management is the term which is used to describe an organisation’s multi-disciplined and integrated approach t i t t d h to optimising the capabilities and performance of its management and employees.” VaLUENTiS International School of HCM 2006
Human capital management as a ‘collective’ collective Diversity Di it Employee centricity Employer brand p y Leadership Organisation climate Organisation communication HR FUNCTIONHuman capital INFLUENCEmanagement Organisation designeffectiveness Performance orientation Resourcing Reward & recognition Talent management Training & Development HR governance HR FUNCTION HR operational excellence CONTROL
A conundrum to consider?“People, as we know, for manyorganisations are a prime operatingcost/investment and thus contributionto organisation performance.Organisations spend considerablesums each year carrying out financialaudits; but spend very very little on very,people management effectivenessHC/HCM audits/evaluations audits/evaluations........Why? Why? ”
Evaluating People management in yourorganisation: The Organisation Engagement g g g g‘radar/clock’ TRAINING & DIVERSITY DEVELOPMENT TALENT EMPLOYEE MANAGEMENT 813 CENTRICITY EMPLOYER REWARD BRAND 674 599 416 657 615 HR RETENTION GOVERNANCE 742 431 684 487 HR RESOURCING 642 OPERATIONAL 603 594 EXCELLENCE 628 ‘Out-performing’ (world class) ‘Out-performing’ PERFORMANCE LEADERSHIP (peer) ORIENTATION ‘Comparable’ 796 (peer) ORGANISATION ORGANISATION ‘Under-performing’ DESIGN CLIMATE (peer) ORGANISATION COMMUNICATIONS
Applications to date...• HR strategy• Employee engagement• Organisation D O i i Development l• Cultural assessment• Pre-merger Pre merger integration planning/Change management• Workforce planning• Leadership development evaluation• Executive development• Individual assessment of each ‘HCM slice’ and appropriate HCM slice intervention with more detailed analysis• Human Capital Reporting• IiP accreditation/Foundation Trust status• HR functional contribution
Case studies (well vignettes!)Private • Media•Auto • Oil & Gas•Biotechnology Biotechnology • Pharmaceutical•Business services • Professional service•Chemicals firms•Construction • Retail•Distribution • Telecommunications•Food Production • Transport p•Financial services • Utilities – Insurance – Investment banking Public P bli – Retail banking • Local Government•FMCG FMCG • NHS•Leisure • Higher Education•Manufacturing/Mining • Police
Delegate takeaway actions....HCM1. What evaluation has my organisation done in the HCM ‘slices’? (if not g to 3.) ( go )2. What has been the driver in each instance?3. Why does my organisation not see evaluation e al ation of people management as important?4. How do we know if any current or past y p people interventions have made a difference in our organisation?5.5 Is our HR (HCM) strategy hampered by not having sufficient knowledge?6. As a function how much of an influence are we really h ll having in improving or maintaining current HCM performance?
Employee engagement.....“To understand and use the concept ofemployee engagement, one requires l ithree things: 1. A working definition 2. A model of components based on reality 3. A means of measuring and evaluating Importance should also be given to its organisational context.” context.
EMPLOYEE ENGAGEMENTEmployee engagement is an‘outcome based’ concept It outcome-based concept.is the term used to describethe degree to whichemployees can b ascribed l be ib das ‘aligned’ and ‘committed’to an organisation such thatthey are at their mostproductive. VaLUENTiS International School of HCM
Alignment/Commitment matrix (quick guide) ‘Doing the right things the rightway for the right reason’ Individual’s degree of Alignment‘Doing the wrong things/ wrong ‘Feeling ‘Having to ‘Wanting to way/ wrong they ought stay’ stay’ reasons’ to stay’ Degree of Commitment
Or another simpler way toremember...(!)remember (!) Fully congruent Knows what to do/achieve but Fully Could do more unlikely to productive achieve it More likely to likel Less thanIndividual’s have optimally degree of performance/ Job gets done productive - capability Could do more Alignment g issues ‘well’ Likely to have More likely to performance, High have objective attitudinal i di l probability of b bili f and/or and/or wasted effort/ ‘potential’ behavioural frustration Incongruent issues issues Continuance Degree of Affective Commitment
The challenge for the organisation (and HR): Fully congruent Knows what to do/achieve Could do Fully but unlikely to more productive achieve it More likely to Less than Individual s Individual’s have Job gets optimally degree of performance/ productive - capability done Could do more Alignment issues ‘well’ Likely to have performance, More likely to High probability attitudinal have objective of wasted and/or d/ and/or ‘potential’ d/ ‘ t ti l’ effort/ ff t/ behavioural issues frustration Incongruent issues Continuance C ti Degree of Affective Aff ti Commitment
Alignment/Commitment matrix:Typical indicative map of reality in organisations Fully congruent Knows what to do/achieve but Fully 4% unlikely to 8% Could d C ld do more 21% productive achieve it Less than Individual’s More likely to optimally have degree of 11% performance/ 10% Job gets done 13% productive - Could do more Alignment Ali t capability issues bilit i ‘well’ More likely to Likely to have have objective High performance, and/or probability of 16% attitudinal and/or 12% 5% behavioural ‘potential’ wasted effort/ issues issues frustration Incongruent Continuance Degree of Affective Commitment
The traditional view of employee engagementcontributing to improved organisationalperformance... Higher Higher Higher employee organisation productivity engagement performance
The emerging view of human capital managementpractice and employee engagement contributing toimproved organisational performance (as a system) More effective human capital management Higher Higher organisation i ti productivity performance Higher employee engagement
However,However remember the converse converse..... More ineffective human capital management Lower Lower organisation i ti productivity performance Lower employee engagement
The importance of employee surveys“One of the most common ways of ymeasuring employee engagement isthrough the use of employee surveys.” g p y y
Employee survey expertise model HIGH nagement MYOPIC 20/20 foresight pital man xpertise ex e man cap BLIND UNFOCUSEDHum LOW HIGH Survey design & measurement expertise
HIGH 20/20 MYOPIC foresight ertise Result: ent expe organisation has Result: sufficient in- misleading or depth, robust erroneous knowledge to act nageme interpretation upon pital man BLIND UNFOCUSED Limited i i ht Li it d insight man cap Result: end up due to with ‘garbage limitations of in garbage out in-garbage out’ HCMHum syndrome knowledge LOW HIGH Survey design & measurement expertise
HIGH MYOPIC 20/20 foresight ertise ent expe 16% 8% nageme pital man 51% 25% man cap Hum BLIND UNFOCUSED LOW Survey design & measurement expertise HIGHSample: 147 employee surveys. All organisations with over 750 employees. ISHCM research team. Study carried out 2006-7
Employee surveys and engagement: Ten B t T Best practices from the field...(I) ti f th fi ld (I)View or apply employee surveys:1. As part of a wider enterprise driven focus on people management2. With the appropriate importance ( pp p p (not as a tick-box exercise) )3. As organisational feedback/diagnostics as opposed to just garnering opinion, using a robust engagement framework in the process4.4 As an embedded annual/quarterly process not as one-off interventions one off5. With the importance of science in understanding the data and the various systemic relationships that provide greater understanding and drive more sustainable interventions Source: Employee Engagement: Factors of Successful Implementation Journal Of Applied Human Capital Management, Volume 2 Number 1 2008
Employee surveys and engagement: Ten B t T Best practices from the field...(II) ti f th fi ld (II)View or apply the employee survey process:6. As a ‘means to an end’ and not the other way around7. With emphasis on post-survey practice/intervention8. NOT as a means of just benchmarking externally (but they see the advantages of benchmarking internally)9. In NOT over-focusing on the response ratio recognising that it’s j g p g g just one element10.As mandatory, i.e. don’t postpone the process just because something negative may have recently happened, i.e. it’s not about internal or g y y pp , external PR Source: Employee Engagement: Factors of Successful Implementation Journal Of Applied Human Capital Management, Volume 2 Number 1 2008
A quote from Albert himself...“Everything should be made as simpleas possible, b t no simpler.” ibl but i l ”This hasThi h great resonance with the practice t ith th tiof effective people management andengagement. t
The original Sears model Employee Revenue Retention GrowthInternal Employee External Customer Customerservice Satisfaction Service Satisfaction Loyalty quality Value Employee Profitability Productivity Putting the Service-Profit chain to work Heskett, Jones Loveman, Heskett Jones, Loveman Sasser Jr & Schlesinger Harvard Business Review Mar-Apr 1994
Delegate takeaway actions....EE1. Who is responsible for the project management of employee surveying in your organisation?2. What definition of employee engagement do we use in our organisation?3. What ‘Engagement’ model underpins this? g g p4. Are we aware of how effective our survey is as an instrument in light of the survey expertise model ac oss ode across: i. Question-Statement design? ii. Breadth and focus of questions? iii. Balance of QS question bank?5. What do answers to the questions posed in the ‘best ten practices’ tell us?6.6 In light of my/our answers, should we be answers reviewing our organisational approach?
Part ThreeA ‘bit’ on the Value-based HR function
Organisations have a trade-off in termsof optimising performance againstinvestment in effective human capitalmanagement practice. More effective human capital management Higher Higher organisation productivity performance Higher employee engagement The Th HR function is f ti i at the heart of this trade-off.
Value Based HR: The HCM-Org System model Organisation HC Reporting Reporting Organisation HC(M) Measurement Measurement HR Fcn Priorities Enterprise p Human Capital Performance Organisation HC/HR Fcn HR Fcn HR Governance Strategy Activities Performance HC Management g Performance Governance HR Fcn Resourcing Organisation g HC/HRF Value Value Drivers Proposition(s) Organisation HR Function Business Model 43 Delivery Model
Value-based HR: HR as a portfolio of service & compliance activities High Simplified Corporate Governance Value Add Illustration Services Professional & Advisory Services Nature of Activity Employment Services Transaction ServicesMarginalValue Added Complexity of Interaction High Low
The HR Function’s value parameters: ( the (‘the magnificent seven ) seven’)From the organisation perspective...1. Improving individual and team performance2.2 Aiding or enhancing decision-making3. Minimising loss of productivity4.4 Ensuring efficient (HCM) process5. Fulfilling client-agent need6.6 Improving employee relations7. 2-way communications with Line management
Plus this... The Th real ‘HR V l C l Value Curve’ ’ Valuecontribution (per unit) HR ‘Activity’ (The ’93’ as defined by VB-HR™ Profiler)
HR and Line ‘value dissonance’ value dissonance Valuecontribution (per unit) ‘Value dissonance’ Means that HR can close the expectation gap... HR ‘Activity’ (The ’93’ as defined by VB-HR™ Profiler)
Hum man Capital Man nagem ment A Activit ty-Delivery map y p: t mple Live client exam pp p What happens to the HR spend?
Remember earlier the Human capital management as a ‘distilled collective’... distilled collective Diversity Di it Employee centricity Employer brand p y Leadership Organisation climate Organisation communication HR FUNCTIONHuman capital INFLUENCEmanagement Organisation designeffectiveness Performance orientation Resourcing Reward & recognition Talent management Training & Development HR governance HR FUNCTION HR operational excellence CONTROL
HR lexicon – new common terms Then d Th and now.........1999 ...2009• Employee champion • Employee engagement• HR shared services • Talent management• Competencies • Employer brand• Business partner • Human capital reporting• Benchmarking • Reward strategy• Knowledge management • HCM intelligence• Diversity • Human capital• HR scorecard management
HCM versus HRM (‘ten for starters’) Source: NJH bl (hcglobal.blogspot.com June 2008) S blogHR Function HCM FunctionToo often a major focus on delivery Sees delivery structure as ‘a means’ withstructure as an ‘end in itself’ end itself subordinated focusCost-efficiency focus Value contribution focusCommonly defaults to ‘process’ Defaults to ‘outcome(s)’ as mandateBenchmarks simple operational metrics in Comprehensive multi-faceted measurementthe main (evaluation) frameworkEspouses HRM integration Executes HCM integrationEvidence based management not practised Evidence based management as underlyingsystematically ethos and embedded practiceMainly compensates for poor line ‘Expert-monitor’ role to management,management t manager as agent tStill embodied with Industrial relations Operates with organisation performancelegacy perspectiveInterventions too often driven by cause Driven by business case supported withwithout evaluated business case cause where necessaryIn too many cases a rebadging of personnel Evolutionary phase from current confusion
With regard to people...Management is doingM ti d ithings right;Leadership is doing the p gright things. Peter F Drucker (November 19th 1909 - November 11th 2005)
And so with the HR Function...HR Management is doing M ti d ithings right;HR Leadership is doing the p gright things.
HR going forward (as HCM):• ‘Business’ mindset with evidence-based approach• Much stronger link between strategy, measurement g gy, and people management effectiveness• Far more sophistication and integration of IT enabled processes• More analytical and measurement reporting skills• Decreasing administrative focus (‘taken as a given’)• More innovation around HR functional delivery (for example the ‘product-service’ construct)• HR function working as a collective not ‘silo’ strands• HR people having T-based skills profile not generalist versus specialist
Ten common areasHCM function of HR7... improvement..... i t Personnel 20 2016 2016 2015 2015 2014 2014 2013 2013 2012 2012 2011 2011 2010 2010 The reality choice for HR functions
Delegate takeaway actions....VBHRF1. Which function are we HCM or HR? (tick 1 only for each parameter) 1. HR or HCM 2. HR or HCM 3. HR or HCM 4. HR or HCM 5. HR or HCM 6. HR or HCM 7. HR or HCM 8. HR or HCM 9. HR or HCM 10. HR or HCM HR OVERALL HCM