N J Higgins presentation at HR Directors Summit 2011 on People Management

1. People Management: Why organisations
(and HR) keep making the same mistakes and
how to put them right… [Expanded edition for distribution]
People Science®
24th January 2011
Nicholas J Higgins
CEO, VaLUENTiS & Dean, Int’l School of Human Capital Management
DrHCMI MSc Fin (LBS) MBA (OBS) MCMI
HR Directors Summit 2011
ICC Birmingham

2. People S i
P l Science®
®
Analyse, Advise, Implement, Educate
www.valuentis.com
Professional Services
‘Winners of World Finance100 award’
(www.WorldFinance100.com )
www.ISHCM.com
ADDED INSERT

3. Smart. Smarter. Smartest...
Professional Services
www.valuentis.com
www valuentis com
‘The leading human
capital management
specialists’
‘PEOPLE SCIENCE®’
Organisation Intelligence
to
improve organisation performance
• Human Capital Management Evaluation
• Employee Engagement
• Talent Management
• Workforce Productivity & Performance
• Predictive Analytics
• HC Forensics & Risk
• HR Function ROI Analysis
• Organisation Measurement
• Management Education
• Organisation Strategy
SOLUTIONS
ADDED INSERT

4. ‘ISHCM’
Eight faculties:
Enterprise Governance and Leadership
Evidence‐based Management (EbM)
g ( )
Human Capital Management
Human Capital Measurement
Employee Engagement
HR Leadership
HR L d hi
HR Operational Excellence
Employment law...
...1 Masters HCMI practitioner qualification
p q
4 executive programmes
6 practitioner programmes
80 short course modules
Unlimited customised combinations...
Unlimited customised combinations
One outstanding value
proposition
ADDED INSERT

5. Fact 1
“Organisations don t exist without people.
Organisations don’t people.”

6. Fact 2
“Everything that happens within an
organisation is down to the people it
employs past, present and future.”

7. Fact 3
“People are simultaneously ASSETS and
“ l i l l d
RESOURCES from an organisational
g
performance perspective and potential
LIABILITIES from a risk perspective.”
perspective.
“This is t the heart of h
“Thi i at th h t f human capital
it l
management.”

8. Fact 4
“Organisations spend considerable sums
each year carrying out financial audits; but
y y g ;
spend very little in comparison on people
management effectiveness and/or HCM
audits/evaluations.”

9. Overall fact
Thus, the oft-misguided question of
‘How valuable are our people to the
p p
organisation?’ is the wrong question.
The question should be ‘How valuable
are our people management practices?’
and ‘How do we know?’
How know?

10. About today
today…
“So today I’m going to talk about some
common people management problems
l t bl
encountered over the years and what to do
about them”
[Note that this is a very short shortlist for the workshop]
ADDED INSERT

11. What organisations (HR) keep getting
wrong (this is a short ‘shortlist’)…
1. Employee engagement: its concept and application
p y g g p pp
2. The use of employee surveys
3.
3 Evaluation/measurement of people management
4. Performance management
5. The ‘people competency’ of line management
5 Th ‘ l t ’ f li t
6. The role of HR (‘customer-agency dissonance’)

12. What organisations (HR) keep getting
wrong (shortlist)…
1. Employee engagement: its concept and application
p y g g p pp
2. The use of employee surveys
3.
3 Evaluation/measurement of people management
4. Performance management
5. The ‘people competency’ of line management
5 Th ‘ l t ’ f li t
6. The role of HR (‘customer-agency dissonance’)

13. 1. Employee engagement: its
concept and application
...common problems ... do differently
ff
• Lack of working definition
g • Select or build
• Inadequate definition • Understand the concept
• Not measured adequately • Adopt design or construct
• Management lack • Requires Communication,
understanding of concept Education and
or its impact Reinforcement (CER)
• Little use of models to • Map operational ‘outcome
support application systems’ (mensuration)
• N t embedded as core
Not b dd d • C
Can only exist if other
l i t th
management practice problems overcome

14. EMPLOYEE ENGAGEMENT:
“Employee engagement is an ‘outcome-based’ concept. It is
the term used to describe the degree to which employees
can be ascribed as ‘aligned’ and ‘committed’ to an
organisation such that they are at their most productive.”
VaLUENTiS International School of HCM

15. Or another way to look at it
it…
Fully
congruent Knows what to
do/achieve but Fully
Could do more
unlikely to productive
achieve it
More likely to Less than
Individual s
Individual’s have optimally
degree of performance/ Job gets done productive -
capability Could do more
Alignment issues ‘well’
Likely to have
More likely to
performance, High
have objective
attitudinal probability of
and/or
and/or wasted effort/
‘potential’
behavioural frustration
Incongruent issues
issues
Continuance Degree of Affective
Commitment © VaLUENTiS Ltd 2002-11

16. Staff engagement:
The challenge for organisations
Fully
congruent Knows what to
do/achieve Could do Fully
but unlikely to more productive
achieve it “Only one box in
nine reflects the
constant ‘high
More likely to Less than bar’ challenge for
Individual’s have
Job gets optimally
p y
performance/ productive - organisations in
i ti i
degree of done
capability Could do more optimising
Alignment issues ‘well’ engagement
across the
Likely to have
performance, More likely to High probability workforce on a
attitudinal have objective of wasted daily basis”
y
and/or and/or ‘potential’ effort/
behavioural issues frustration
Incongruent issues
Continuance Degree of Affective
Commitment © VaLUENTiS Ltd 2002-11

17. When I talk about models and frameworks -
here’s one as an example
here s example…
VaLUENTiS 5D Employee Engagement Framework
Line-of-Sight Work Environment
Organisation
operating
ti
culture
Reward (equity)
( q y) Development
p
© VaLUENTiS Ltd 2002-11

18. Engagement is and always has been a
MULTI DIMENSIONAL construct
MULTI-DIMENSIONAL construct….
VaLUENTiS 5D Employee Engagement Framework [ p
[expanded]
]
Line-of-Sight Work Environment
Objectives awareness Cultural elements
Behaviour alignment Team dynamics
Role ‘fit’ Organisation Communication
Performance management Resources
Feedback
operating culture Local management
Organisation design
Capability Physical environment
Performance/talent
management
‘Corporate’ Leadership
Remuneration equity Communication Career progression
Bonus/incentives Decision rights
g p
Competencies
Benefits
Work values Succession planning
Trust
Role equity Job/ Role architecture
Recognition Training/ Learning
Promotional aspects Coaching/ Mentoring
Reward (equity) Development
© VaLUENTiS Ltd 2002-11

19. A look back at The original Sears
g
model…
“Arguably the simple model that set the engagement movement alight. Its now
Arguably
nearly 20 years old.
Also note the (now) flawed use of employee satisfaction ”
( ) p y
Employee Revenue
Retention Growth
Internal Employee External Customer Customer
service Satisfaction Service Satisfaction Loyalty
quality Value
Employee Profitability
Productivity
Putting the Service-Profit chain to work
Heskett, Jones, Loveman, Sasser Jr & Schlesinger
, , , g
Harvard Business Review Mar-Apr 1994

20. Employee engagement and
Organisation Performance today:
We ve
We’ve now moved on from the Sears model…
model
Example ‘Macro’ model NHS version 1.11
Leadership
Leadership Trust
Shareholder
Employer
Employer
&& performance
value
brand
brand
g
governance
governance
Human
Human Work values Safety
Work values Portfolio mix
Capital
Capital External Patient
Line-of-sight Clinical External Customer Quality of
Revenue
Practices
Practices Line-of-sight X-selling
Satisfaction
treatment
t eat e t Satisfaction services
Growth
Development Staff
St ff
Employee Individual/ Patient focus
Development Individual/ Service Value
Engagement
Engagement team Value
Reward
Reward team Prompt service
Portfolio mix
Productivity
Productivity Proposition Patient
Work environment
Work environment Environment Proposition Customer UseProfitability
of Resources
X-selling experience
Loyalty
Community
Service
Staff
Employee
Retention
Retention
Compliance
Compliance
‘Local’
‘Local’
Managementt
Management
M Cost control
Cost control
© VaLUENTiS VBM Analytics methodology 2008-11

21. What organisations (HR) keep getting
wrong (shortlist)…
1. Employee engagement: its concept and application
p y g g p pp
2. The use of employee surveys
3.
3 Evaluation/measurement of people management
4. Performance management
5. The ‘people competency’ of line management
5 Th ‘ l t ’ f li t
6. The role of HR (‘customer-agency dissonance’)

22. 2.
2 The use of employee surveys
...common problems ... do differently
• Viewed as a reactive • Adopt more pro-active,
single event integrated application
• Response rate over-focus • Focus on ‘end’ perspective
• Inadequate and/or • Understand your HCM
unbalanced questioning ‘model’ and ‘QS’ design
• Overly PR based • It’s about your staff
It s
• Management • Too many B-players
complacency requiring ‘baseball bat’(!)
baseball bat (!)
• Failure in follow-up • Adopt clear inclusive
actioning/comms process through ‘line’
[Added note: QS = Question-statement – technical term for questionnaire
response item]

23. Remember (?) The Employee survey
expertise model
HIGH
uman capital management
MYOPIC 20/20
foresight
tise
m
expert
c
BLIND UNFOCUSED
Hu
LOW HIGH
Survey design & measurement
expertise © ISHCM 2006

24. HIGH
20/20
MYOPIC
foresight
tise
uman capital management expert Result:
organisation has
Result: sufficient in-
misleading oor depth, robust
erroneous knowledge to act
interpretation upon
p
BLIND UNFOCUSED
Limited insight
Result: end up due to
c
with ‘garbage limitations of
in-garbage out’ HCM
syndrome knowledge
Hu
LOW HIGH
Survey design & measurement expertise © ISHCM 2006

25. HIGH
MYOPIC 20/20
foresight
tise
uman capital management expert
16% 8%
51% 25%
Hu c
BLIND UNFOCUSED
LOW
Survey design & measurement expertise HIGH
Sample: 147 employee surveys. All organisations with over 750 employees. ISHCM research team. Study carried out 2006-7

26. Employee surveys and engagement:
Ten Best practices from the field...(I)
View or apply employee surveys:
1. As part of a wider enterprise driven focus on people management
2. With the appropriate importance (not as a tick-box exercise)
3. As organisational feedback/diagnostics as opposed to just garnering
opinion, using a robust engagement framework in the process
4. As an embedded annual/quarterly process not as one-off interventions
5.
5 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

27. Employee surveys and engagement:
Ten Best practices from the field...(II)
View or apply the employee survey process:
6. As a ‘means to an end’ and not the other way around
7. With emphasis on post-survey practice/intervention
8. 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 just one
element
10.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
external PR
Source: Employee Engagement: Factors of Successful Implementation
Journal Of Applied Human Capital Management, Volume 2 Number 1 2008

28. What organisations (HR) keep getting
wrong (shortlist)…
1. Employee engagement: its concept and application
p y g g p pp
2. The use of employee surveys
3.
3 Evaluation/measurement of people management
4. Performance management
5. The ‘people competency’ of line management
5 Th ‘ l t ’ f li t
6. The role of HR (‘customer-agency dissonance’)

29. One for the road.....
road
“If you cannot measure it, you cannot
improve it.”
Original source attributed to Lord Kelvin 1824-1907, pioneer
g p
of physics and thermodynamics, first UK scientist appointed
to the House of Lords.
Since used by many to illustrate the same point in different
ways, i.e. substitute ‘improve’ with ‘manage’.

30. 3. Evaluation/measurement of people
management
...common problems ... do differently
• Managers have patchy • Introduce DCLR
understanding of HCM
g programme
g
• Lack of in-situ design • Apply HCM elements to
operational models
p operational situations
p
• Default to single • Need to use blended
dimension benchmarking QUAL QUANT
QUAL-QUANT framework
• Over-focus on data • Measurement must be
collation rather than its outcome focused rather
use than input focused
• Lack of internal expertise • Get ‘external’ help
external
[Added note: DCLR = shorthand for Design, Communicate, Learn,
Reinforce]

31. 3. Evaluation/measurement of people
management
“But h t d
“B t what do we mean when we talk of
h t lk f
‘people management’?”
[whilst acknowledging the employee engagement elements shown earlier]
ADDED INSERT

33. HUMAN CAPITAL MANAGEMENT:
“Human capital management is the term which is used to
describe an organisation’s multi-disciplined and integrated
approach to optimising the capabilities and performance of
its management and employees.”
VaLUENTiS International School of HCM

34. Evaluating People management in your
organisation: Our HCM ‘radar/clock’ (you’ve seen
radar/clock (you ve
this before, right?)
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’
‘O t f i ’
(world class)
‘Out-performing’ PERFORMANCE LEADERSHIP
(peer) ORIENTATION
Comparable
‘Comparable’
796
(peer)
ORGANISATION ORGANISATION
‘Under-performing’ DESIGN CLIMATE
(peer) ORGANISATION
COMMUNICATIONS

35. 3. Evaluation/measurement of people
management
“This ll t t d
“Thi all started way back with a challenge
b k ith h ll
set by one of our earliest clients – could we
report a people management (aka HCM)
construct on one page?”
p g
ADDED INSERT

36. And then we did things like The HCR
Standards (GHCRS2006)
HC Productivity Statement
CONTRACTED RESOURCE ye 31st Dec 2005 ye 31st Dec 2004
Total number of FTE days contracted in year 3,530,340 3,401,289
Total number of FTE vacation days taken in 336,987 333,144
year
TOTAL NUMBER OF CONTRACTED FTE 3,193,353 3,068,145
Human Capital Operating Statement
DAYS AVAILABLE
WORK RESOURCE ADJUSTMENT
FTE days gained through recorded overtime 61,932 65,371
work (+)
FTE days lost to illness (-) 18,431 19,016
FTE days lost to work-related illness/injury (-) 2,773 2,816
FTE days lost to industrial action (-) ye 31st Dec 249
2005 ye 31st 167 2004
Dec
OPERATING INCOME as lost under miscellaneous
FTE days recorded 763 % 1,075
(-)
Revenue (£000s) 1,057,016 1,015,020
ACTUAL NUMBER OF CONTRACTED FTE 3,233,069 3,110,442
FTEs DAYS WORKED 16,352 16,047
GH RS2 6
HCR 2006
PeopleFlow® Statement
p
Revenue per FTE 64,641 63,253
PRODUCTIVITY
OPERATING COSTS FTE day (optimal)
HCI*Revenue per £192.96 £185.42
Total operating costs (£000s) (actual)
HCI*Revenue per FTE day £190.59
904,371 £182.90
815,094
A Guide to the Human Capital People HCI*Revenue per FTE day differential
costs (£000s)
STAFFING
Human Capital Intensity (HCI)
EMPLOYER-EMPLOYEE RELATED INDICES
532,181£2.37
ye 31st Dec 2005
58.85
%
£2.52
464,317
ye 31st Dec 2004
56.96
Employee engagement index
No of full-time staff at start of year 69.2
14,011 68.5
13,865
Reporting Standards OPERATING INCOME ATTRIBUTABLE
Employer brand index
TO Number of part-time staff at start of year (FTE
HC (HCIR per FTE)
eqv)
38,041 1,932
71.3 36,029
71.0
1,491
Number of CAPITALtMANAGEMENT eqv)
N HUMANother at start of year (FTEINDEX
b f th t t f ) 104 175
(GHCRS2006) FullVB-HR Rating
time equivalents (FTEs) at start of
year Performance
HC
ANCILLARY PEOPLE COSTS (APC)
£
BB-BB-R
16,047
Sustaining +
% £
BB-B-R
15,531
Sustaining +
%
Training & Development costs (£000s)
STAFFING MOVEMENT 8,176 % 7,342 £ %
Recruitment costs (£000s) in period (+)
Number of FTEs recruited 2,314 1,427 2,954
1,874
Health & Safety costs (£000s) during period (+)
Number of acquisitioned FTEs 740 - 691 -
HR functional and related costs (£000s) 6,254 1,427 1,874
6,879
Outplacement voluntary leavers (FTE) in period (-)
Number of costs (£000s) 256 996 1,065
53
Number of FTEs made redundant or outplaced 35 217
in period (-)
Total 17,740 17,919
Number of FTE retirements in period (-) 91 76
1st Edition Number of FTEs outsourced in period (-)
HC LEVERAGE (HCIR/APC per FTE) 35.06
-
32.26
2006 Full time equivalents (FTEs) at end of year
STAFFING MISCELLANEOUS
16,352 16,047
Mean tenure (years) 5.2
52 5.3
53
Mean age of workforce 34 34
Retirement population 5,391 5,304