Zapaterismo

Sameness is boringness

I've been extremely quiet lately, a trend that you've likely observed from me over the last 3-6 months.  I'm still around and still very much involved in the world of talent management technology.  But I'm finding the latest and greatest in the HCM to be a bit of a yawn (particularly, perhaps, when compared with two very worthwhile distractions- the U.S. presidential election and the financial/economic crisis).

Specifically, here's my grief.

Vendors:  Much like other bloggers in this space (here, here, and here) , I'm disappointed to see the amount of "me-too" going on out there.  Sameness in functionality might be helpful from the standpoint of standards development, but it can certainly leave people feeling underwhelmed when they think about the future of talent management.  I don't believe the economic outlook is going to help this situation.

Users: Again, like other bloggers, I'm saddened by the amount of automation-only thinking. Slowly we're seeing more and more HR users "realize" (or maybe internalize) that automation doesn't equal strategic. But that leaves HR people in the same place they found themselves half a decade ago, before HCM technology really took off... wondering, "How do I, as an HR practitioner, enable the business?" This is a hump we don't seem to have gotten over as a profession.  

But somebody please prove me wrong!!  What are you seeing out there in the world of HR that inspires you and gives you hope in the future.  What companies are really setting the standard?

PLEASE!  HELP!

Accounting for Human Capital

I've been reading a great deal about financial accounting and reporting recently, in no small part because of a class that I've been taking on the subject.

Those who have read the book Beyond HR know that Boudreau and Ramstad compare accounting to human resources by emphasising accounting's transition from a profession oriented toward processing transactions, to a decision science called finance.  They suggest that HR is bound to face a similar transition.  Thus, a comparison between the accounting and HR shouldn't seem at all original.

However, I'm coming to believe that Beyond HR misses some of the most critical and telling points of comparison between the disciplines. Not only that, but the book encourages readers to pursue strategic HCM and analytics before our organizations are really ready.

First of all, professional accounting and financial reporting practices are universally organized around a number of principles (think GAAP and FASB). One in particular states that, to be useful, all financial information should share the following qualitative characteristics:

• Relevant - useful in making decisions
  • Predictive value  
  • Feedback value   
  • Timely 
• Reliable
  • Verifiable - can be verified independently  
  • Representative of reality
  • Neutral (unbiased) 
• Comparable (across companies)  
• Consistent (over time)  

(See here and here for more)  

It strikes me that the accounting profession has traditionally and continues to place such great emphasis on the quality of information as a prerequisite to reporting, while HR appears over-eager to jump headlong into analytics without the data they rely on meeting any of the above criteria.

Certainly, we have a long way to go before we can actually account for human capital in a way that allows us to add such assets to a balance sheet in a manner that lends itself to comparability and consistency.  

However, and this is a huge HOWEVER, HR needs to start looking more carefully at the relevancy and reliability of its talent data now.  Very few companies implement talent management technologies and programs with this in mind - a fatal flaw in my humble opinion.

Along those lines, another accounting principle addressing "cost benefit" holds that the benefits to users of financial information should outweigh the costs of providing it.

If the business, and not HR, are considered primary users of human capital information (they should be), then I'd say this is one more area where HR has yet to match the practices of its nerdy cousin profession.  And if getting HR right must precede an HR decision science, then I'd say we've got a long way to go.

CEO Comp and Corporate Governance

I came across an interesting blog post the other day citing a study of CEO compensation practices in the UK post-2002.  Go here - Truth on the Market Blog 

Importantly, the study notes that levels of executive comp and growth rates in executive comp have not significantly changed since 2002, despite new legislation submitting executive comp to (non-binding) shareholder approval.

HOWEVER, the study did find that executive comp had become more sensitive to whether or a not a company posted a negative operating performance.

Rulers, Randomness, and Talent management

Over the last month or so I have spent a substantial amount of time putting together a thought leadership presentation and writing a white paper dealing with talent management analytics. 

The presentation, which outlines a crawl, walk, run approach to getting to "strategic" talent management analytics, was delivered a couple of weeks ago to a highly engaged and interested crowd of functional HR and HRIS professionals.

To my surprise and amusement, one of the points that really resonated with people was the idea of validity and reliability in measuring talent (and how boss-only ratings using a Likert scale consistently do not yield reliable data).

It was actually a piece of the presentation that I had been reluctant to include, as my experience with HR professionals is that they often become overwhelmed by the topic of analytics - period - even without mention of all of the considerations that go into generating sound analytics.

Yet, analytics are meaningless without reliable data to back them up, and this was clearly not lost on the attendees.

Since the session, I have started reading Nassim Taleb's Fooled by Randomness. It's a fabulous book - one that will make you feel so foolish about your ignorance of probability that you will rethink all of your heretofore assumptions about life and decision-making.

Toward the end of the text, Taleb makes the same point that I proffer above, but much more eloquently than I ever could.  He says:

"Unless you have confidence in the ruler's reliability, if you use a ruler to measure a table you may also be using the table to measure the ruler. The less you trust the ruler's reliability (in probability called the prior), the more information you are getting about the ruler and the less about the table."

Making a market in talent

McKinsey Quarterly put out a great article about two years ago called "Making a Market in Talent."  Before the Oracles, SAPs, and Taleos of the world were heavily marketing the link between recruiting and succession, McKinsey was somewhat esoterically talking about the need to create internal talent markets to "pull" rather than "push" talent around the organization.

Reading Slywotzky's timeless book, Value Migration, I have been reminded of the McKinsey article. 

Slywotzky spends a chapter of the book talking about Merck in the 1980s and the way in which they focused development resources and accelerated time to market through internal competition. Increased government regulation was skyrocketing R&D costs while also shortening product lifecycles, and so Merck's abililty to be first to market with blockbuster drugs gave them a huge competitive advantage.

In Slywotzky's words...

"Vagelos created cross-functional teams around the most promising and important products... As an incentive, teams had to "compete" for resources (both people and dollars) throughout the organization, forcing project managers to "sell" and functional managers to "buy" into the hottest projects...

This free market allocated resources in a way that normal budgeting couldn't.  Focus was automatic.  People wanted to be part of a blockbuster team." (page 142)

So what if your organization broke down any and all barriers to internal movement and empowered employees and managers to seek each other out through well executed internal talent marketplaces?

What might happen to the hard-nosed, streamrolling manager who scoffs at employee development plans and consistently de-motivates his (or her) people? And if he is held accountable for performance, how might the talent drain from his department accelerate the process of ushering him out of the company?

And on the other end of the continuum, what might become of the entrepreneurial, inspiring, and people focused leader and her (or his) promising new start-up unit, once employees started to catch wind of the fact that she was looking for more talented people?

If people and talent are what drive our organizations and economies this day in age, I can't help but think that true internal talent markets would have a massive impact on performance, while also giving disillusioned and disengaged employees mobility options that don't involve leaving the organization.

Are you a stock or a bond?

I came across this interesting blog post from Jonathan Chevreau at the Financial Post.  Apparently it comes from a book by Dr. Moshe Milevsky, a finance professor at York University’s Schulich School of Business. Sounds like it would be worth a read.

Jonathan says -

For young people just starting out, their Human Capital is huge (think hockey star Sydney Crosby) and life is a matter of gradually converting that human capital into financial capital. In that respect, the ScotiaBank marketing theme "you're richer than you think" is actually quite accurate.

Older people have spent half a lifetime or more using up their human capital and (hopefully) converting it into a nest egg they can live on once they no longer are able to, or wish to, work.

While Jonathan talks about individuals being stocks or bonds and the implications for personal investing, I wonder if there aren't a few lessons here for organizations.

Does your organization know which individuals are stocks (high risk, high return) vs. bonds (low risk, lower return).  Do you manage these assets/types of financial capital differently?  What might your talent management program look like if you did?

Good reading

I have been having so much fun catching up on the news and other blogs (oh yeah, and whole lot of working...) that I haven't done much posting of my own lately.

In that vein, I wanted to extend a hat tip to systematicHR for a series of great posts recently.

HBR on SOA - Good commentary on the potential and limitations of SOA as a productivity driver
The Peter Principle and HR - Well versed thoughts on the Peter Principle.  And in my point of view, more justification for being clear about employee's potential, to maximize their contribution to the organization and avoid setting them up for failure.
What Integration Means - Some wonderful ideas here on types of integration (Data vs. Process vs. People) that fall right in line with some of my recent thoughts on process integration that I'll be posting soon.

SaaS, HR, and Loathing for IT

Susan Cramm, in a recent blog post, does a wonderful job of outlining the animosity toward IT departments that exists in so many other parts of our businesses. (The podcast is great, too - take a listen.)

HR is no exception here, and the antagonism that can play out between HR and IT goes a long way toward describing why SaaS has fared so well in the talent management space.

Rather than going to CIOs for help, HR is reaching into its own pocket books to finance cheap pay-as-you-go SaaS solutions, provided vendors can also support quick and cheap implementation.

The great irony here is that the way HR is treated by IT relative to some other functional departments (i.e. as the forgotten step-child) might be explained by HR's traditional failure to demonstrate its own impact on the business.  See Keith Hammonds' brilliant - and eerily reminiscent - 2005 "Why We Hate HR" Fast Company article for more. 

Risk and uncertainty in HR

One of the great mythical beliefs held by most economists is that people make decisions based on objective criteria and reason (called rational choice or rational action theory).  Just about all traditional economic theory rests on this assumption, yet we know from experience in life in general and, in particular, life in modern organizations, that this is hardly the case. Life is just too complex to be so objective.

Douglass North, a Nobel Prize winning economist at Washington University whose work I've been reading lately, goes so far as to suggest that true objectivity in decision-making is impossible, since at any point in time we simply don't know what we don't know. Even yesterday's tried and true solutions are in no way guaranteed to solve tomorrow's problems, since the human environment we live in is constantly evolving.

This ubiquitous uncertainty, in his view, is what really drives human behavior.  We try to mitigate uncertainty by creating explanations and theories based on socialized beliefs, accumulated knowledge, and personal experience. The resultant web of "rational" myths, in turn, drive our decisions and dictate how we craft the "institutions" that impede or facilitate economic exchange and growth.

So, he says, much of the explanation for economic disparity between countries lies in the fact that some were simply lucky enough to get it "right" more often.

It's an interesting proposition.  And if you think about corporate strategy, it's starts to come to life a bit more.  Why would any rational CEO place the future of his/her company in the hands of a best guess around what will spell success (i.e. a "strategy")? 

The explanation lies in the fact that uncertainty can't be circumscribed. So we've created this concept of "strategy" to take over where certainty ends. (Another reason we shouldn't be surprised that financial performance has more to do with execution than strategy.)

If you believe any of this, you'll also note that it flies in the face of the idea of evidence-based decision making. If access to data and analytics can't guarantee you'll make the right decisions, then why go to all of the trouble?

Well, because while you may never be able to predict the future perfectly (e.g., will this person really make a good regional sales manager?), you do want to position yourself to get it right more often, and that's where data is so helpful.

There may be no set of organizational decisions that rely so heavily on rational myths as those that concern talent, and perhaps also no set of organizational decisions that so heavily lack access to reliable data. The relationship, I think, is no coincidence, and the impact can be seen in the fact that so many of us have somehow come to accept success rates of, say, 50% when hiring and promoting employees.

That sucks.

As Douglass North suggests, we'll never be able to get it right 100% of the time, because the world is just too complex, our world views are too full of bias, and we simply don't know what we don't know.  But that doesn't mean we should give up on trying to be more predictive, by doing things like:

1. Creating a ready supply of valid and current talent data within our companies

2. Empowering line managers to use talent data to make better decisions, through education and by delivering useful talent management analytics back to the business

It's a huge task, but take a leap of faith and start pushing to make your organization more data-centric in its decision-making.

The Future of Corporate Healthcare Benefits

I am anything but a comp and benefits guy, but I wanted to share this fabulous Fast Company article for those of you who might.

A teaser...

"Staggering off a plane in Bangkok after a full day in the air, Shelton was met at the gate by the hospital's welcoming committee. They took his bags, checked him in for surgery, and drove him to the Bumrungrad Suites. He met his doctor the next morning, a young Thai who spoke excellent English. The ratio of nurses to patients, he noticed, was almost 1:1. Before he left, he had warned me, "If I start to feel too weird about it, I'm free to go," but his colonoscopy started early and went smoothly; he checked out the same afternoon.

Sitting comfortably back in his office in Myrtle Beach, Shelton says he wouldn't hesitate to return. Even for a $60,000 surgery? Sure, he said. What's more, savings on this scale would keep these surgeries available to his neediest employees, those who might have gritted their teeth through the pain rather than pay to go under the knife. In short, he's giving Bumrungrad his stamp of approval. Barring any unforeseen fallout from the city council, Myrtle Beach employees will soon find themselves at the forefront of globalized medicine."