Would the real Nigel Paine please stand up?

Posted on May 23, 2012 by Paul Kearns

If anyone is thinking of attending this year’s “Learning Live” conference I wonder if you would be so kind as to do me and the rest of the learning profession a favour, would you? According to the programme they have a Nigel Paine speaking (see blurb below) and I would like to know if that is the same Nigel Paine who I met at the BBC back in 2003? It can’t be can it? The one I met showed no signs of “understanding and talking the language of business” and his leadership programme cannot possibly have won any awards because both I and another independent evaluator’s report declared it to have absolutely no connection to the BBC’s business whatsoever (“no specific and measurable business objectives were subsequently required to be met” according to the report).

Also, while you are there, be a love and ask the chairman of The Learning and Performance Institute, Donald H. Taylor, on what principles and criteria his ‘Institute’ is based, what evidence they use for ‘accreditation’ and ‘certification’ and whether he bothers to check his speakers’ credentials?

Thank you so much.

The Alternative Theory Theory

Posted on May 9, 2012 by Paul Kearns

How many of the things you plan to do today are based on sound theory? If you work in HR you might be running an assessment centre, organising an employee survey or developing a competence policy. Each one of these is working to an implicit theory – the theory of employee assessment says you will make better selections; satisfied employees perform better; competence development means effectiveness. You might have assumed that someone, somewhere must have tested these theories out at some time, and that the practices you are following are already validated by evidence. You could pause to check whether these theories exist and what evidence they are based on. Alternatively, you could come up with a different theory yourself. I call this the Alternative Theory Theory. It states that for every theory that tries to explain human behaviour there is an equally plausible alternative that adopts exactly the opposite perspective. Let’s try it out.

The most obvious contender is the employee-customer-profit chain theory. It predicts that if you have engaged and satisfied employees they will look after the customer better and you will make more profit. This theory, based on false correlations between employee engagement and company performance, led to the exponential growth in employee surveys over the last 20 years. The obvious alternative theory is that good companies with good business models, providing customers with what they want at the right price, will be nicer places to work and employees will be more satisfied working there. This theory predicts that unless and until you get your business model right you might be wasting time and effort on trying to engage your workforce in a poorly managed business.

How about the theory of management education?* The theory goes something like this, I think – management education has to be taught by management academics and the best management academics are those who do lots of research and write lots of papers, peer reviewed by other academics, none of whom has actually proven themselves to be great managers with clear evidence. Actually, that does not sound like much of a theory at all does it? OK here’s an alternative theory. If you are a very ambitious manager you need the best CV to further your career. The best CV’s have the best business schools on them and I know they are the best because ..…. hmmm, no I don’t like where this theory is heading either.

Let’s have another go at explaining why managers go to business schools. Here’s a better alternative theory. It does not matter what you learn, if anything, from your business school as long as everyone else regards it as one of the best business schools. That means image is more important than substance so business schools play whatever games they have to in order to come top of the league tables of business schools. So the league tables are based on measures such as “faculty with doctorates”, presumably because there is a theory somewhere that having a doctorate not only makes you a better teacher but also, presumably, that you teach managers how to perform better? I would be very interested to see the evidence that backs up that theory. Or you can see “salary increase” or “career progression” as indicators of how good the business school is. Hmmm, this is already starting to sound like another one of my favourite Alternative Theories, the Circular Argument Theory.

The problem with circular arguments is that eventually you disappear up your own orifice. In fact Harvard’s traditional ‘case method’ of teaching was such a glaring example of the Circular Argument Theory that they have abandoned it. Funnily enough though, they are still No.1 in the latest 2013 US News ‘Best Business School Rankings’ where no mention is made of Harvard’s break with its past and, as yet, unproven future. Harvard itself makes no mention of whether Evidence-Based Management is on its new curriculum either.

Last but not least, what about the theory of why CEOs employ HR people? The obvious theory is simply that they need HR but that does not explain why they need HR. There are at least two alternatives. One is that it makes the CEO look like he or she gives a damn about their people. Another is that they employ HR departments purely to keep them out of court. A third, which gets a bit closer to the truth, is that managing people well takes a lot of thought and consideration and is damned hard work, so they would rather get someone else to do it for them. My personal choice of Alternative Theory is the simplest of all and is the one that explains absolutely everything – CEOs simply don’t have a clue why they employ HR. That is because the business school they attended never presented any evidence as to HR’s real value. Oh dear, we’re back to the Circular Argument Theory. So who is going to help us all break out of this pernicious cycle with some evidence? Hmmm.

*PS. If anyone knows of an evidence-based theory of management education could they please let me know where I can find it?

What is the opposite of Advanced?

Posted on April 26, 2012 by Paul Kearns

The reason I ask is because I have just come across an “AIM Practice” document entitled “HRM and Innovation Assessment.” which claims it can help “assess the extent to which HRM in your organization is oriented towards innovation.” If you have never heard of AIM Practice it is the sister organisation of AIM – the Advanced Institute of Management (Research) – and if you have never heard of AIM it might be worth asking yourself what makes these academics think they are so advanced? Sometimes advanced is not good news – as when cancer reaches an advanced stage.

The Deputy Director of AIM is Professor Andy Neely and I first came across Andy in 1998 when I was invited to speak (about Organisational HR Maturity) at the ‘First International Conference on Performance Measurement’ at Cambridge University’s Judge Institute of Management Studies. One of the papers presented at that conference (by Andy himself and Mike Bourne) was entitled “Why do performance measurement initiatives succeed and fail” and I have been trying to convince Andy ever since that one of the main deciding factors will be whether or not performance management is an integral part of a well-conceived, complete HR strategy. I failed to get him or his academic colleagues interested. In fact HR strategy has never really featured much in AIM’s research; so whatever they think they mean by ‘Advanced’ it certainly has nothing to do with advanced HR thinking.

Evidence-based HR does not loom large at AIM either. Yet the very reason this blog/book exists at all is because the main area of management that still lacks evidence is, funnily enough, not operational management but human resource management. This is because producing performance data on the way organisations manage their human capital is so problematic. If anything, AIM should be concentrating on EB-HR more than any other aspect of management research. Instead it is just dumping more and more HR products into a market already awash with non-evidence-based gimmicks.

So how good are these products being peddled by AIM Practice? How about their “Hot Spots toolkit – Taken from Professor Lynda Gratton’s book ‘Hot Spots: Why Some Companies Buzz with Energy and Innovation – and Others Don’t”. Odd choice when one considers the hot spot that Gratton’s exemplar organisation, BP, managed to get itself into.

If losing $$$billions in the Gulf of Mexico is advanced management what should we expect from the ‘HRM Innovation Assessment’ toolkit? Apparently it only “takes up to 15 minutes to complete.” and “When all of your nominated participants have completed the questionnaire you will be notified, and your personalised report will be available online within 24 hours.” There is no evidence offered as to what impact this ‘report’ might have so any thinking manager is bound to ask which elements of these off-the-shelf products qualify as ‘advanced’? How arrogant are these academics and how advanced is their management ‘practice’ if they think they can produce a report about innovation without even bothering to come down from their ivory tower to visit the company concerned? They would do well to heed Toyota’s very old principle of genchi genbutsu – ‘go and see’ for yourself.

AIM is the very opposite of advanced and there are plenty of antonyms of what that means – going back, receding, regressive, unsophisticated, even uncivilised and any organisation that does not take its human capital into account is certainly that.

Organisation Development – OD’s time will come when it has better definition and evidence

Posted on April 17, 2012 by Paul Kearns

Back in 2003 I was invited, by an alumni group from Roffey Park’s Masters in Organisation Development, to run a session on organisation design. I was told at the time that the Roffey programme specifically excluded organisation design. Roffey was always at the feely end of touchy (or should that be the touchy end of feely?) and took the view that the two are completely separate subjects. That might explain why there is still something missing in their current mission statement “We develop people who develop organisations” – develop for what?

In November 2009, at a Leadership Foundation in Higher Education Conference (LFHE), while one keynote speaker was asking the question “What makes an effective Organisational Development Practitioner?” I was trying to answer it with my keynote on “Evidence-Based Learning & Development – The Real Purpose of Evaluation and ROI”. I asked one of the academics hosting the event whether she took the view that ODevt and ODesign were different subjects? My enquiry apparently did not warrant a serious answer – maybe it’s because I am not an academic?

Of all the disciplines that I have had to master to become an HR Professional the one that stands out for its lack of definition, purpose and workable methodology is ODevt. There are plenty of definitions available but here is one from the OD Network that I actually like -

“Organization Development is a body of knowledge and practice that enhances organizational performance and individual development, viewing the organization as a complex system of systems that exist within a larger system, each of which has its own attributes and degrees of alignment. OD interventions in these systems are inclusive methodologies and approaches to strategic planning, organization design, leadership development, change management, performance management, coaching, diversity, and work/life balance.” Matt Minahan, MM & Associates, Silver Spring, Maryland

Matt has restored my faith in ODevt because he relates it to performance and incorporates organization design; as it always should have been. Now all we have to do is produce some evidence that ODevt actually makes a difference. In that respect OD is no different from any other management discipline and the guiding principle, as always with evidence-based management, is to agree the evidence at the beginning. In practice this means that OD specialists need to demonstrate, up front, how their “interventions” are going to add some value: otherwise OD is just more vapourware.

One sector that is seriously in need of OD is the higher education sector. Universities and business schools are becoming more and more market-driven and this is already starting to put pressure on the quality of research and teaching. Some of the immediate OD challenges in academic institutions are to find Deans (or equivalent) who can show true leadership in maintaining standards, at a time of significant transition, in the face of fierce competition. They need to re-design their institutions with a whole new generation of academics who live in the real world and are evidence-based themselves; that means being prepared to have their performance managed. The real art in the design and development will come from doing all of this without losing any of the strengths of academia (its previous rigour?) whilst maintaining a collegiate culture: that’s quite a task for OD but it is long overdue. Most of all though, before any OD effort starts, someone needs to agree what type of evidence will demonstrate that these ‘developments’ have been a success and higher education has changed for the better.

American ‘HR metric mania’ is a concrete lifejacket

Posted on March 20, 2012 by Paul Kearns

Quality standards often get a deservedly bad press. Tom Peters ridiculed ISO9000 by suggesting that a lifejacket made of concrete would satisfy the standard. He was perfectly correct of course because the standard is more concerned with process than outcome or the functionality of the end product. It is a pity no one on SHRM’s Taskforce for HR Standards had learned this lesson before it submitted its first attempt, Cost Per Hire (CPH), to the American National Standards Institute (ANSI).

We do not have to look very far for evidence of setting concrete. Page 3 of this standard – the Executive Summary – tells us that:

“The CPH metric has been in use for decades, providing HR professionals and
managers with information to assist them in establishing budgets and also serving as a benchmark for recruiting effectiveness and the efficiency of staffing processes.”

CPH was just one of many ‘HR metrics’ promoted by the work of SHRM’s favourite, number-crunching, benchmarker Jac Fitz-Enz but neither he nor SHRM ever showed any understanding of the crucial distinctions that must be made between efficiency, effectiveness and value (that’s $’s to you and me).

Cost-per-hire is just the average cost of recruiting someone. It does not tell you whether that person is of sufficient quality to do their job effectively. Nor does it tell you anything about their subsequent performance. So to claim that it can serve “as a benchmark for recruiting effectiveness” is actually a lie and to suggest it gauges “efficiency” is also nonsense until the outcome, the performance of the new hires, is established. You could be hiring idiots at a very low cost and it would still satisfy this standard (sic). In short, this is not a standard at all.

In fairness, the standard acknowledges some of the “Known Limitations” of CPH (6.4) but then blithely carries on without resolving any of the complex issues inherent in the pursuit of value through strategic HR management. This simplistic approach also ignores, or is unaware of, the paradigm shift required to move HR onto an evidence-based management footing.

As a lifelong campaigner for improving HR professionalism I should be welcoming the introduction of standards. I was even a volunteer on SHRM’s Taskforce for six months before I realised that no one was listening to common sense or learning from their own mistakes. History tells us that the use of such HR metrics never improved HR’s credibility or reputation in the US (or anywhere else for that matter).

What worries me more is that SHRM now wants to use its ANSI standards (there are more in the pipeline) as the basis for globally recognised, ISO standards in HR. If it manages to do so there will be many HR departments, not just in America, who will be drowning under the immense weight of this misguided bureaucracy (all 50 pages of it). As an adviser to the British Standards Institute (BSI) on the same ISO-HR standards effort I will certainly be doing my best to ensure that the UK does not get dragged down with them.

Update – 9th June 2012 – the Americans have now submitted the ANSI CPH standard to ISO for approval as an international standard. It will be put to the vote in September 2012. See also HR Standards

NHS – A terminal case of management cancer – Part 3

Posted on March 1, 2012 by Paul Kearns

Click here for Part 1 and Part 2

Andrew Lansley was interviewed by the BBC’s Nick Robinson just 2 days ago about changing the NHS. Lansley says that introducing competition into the state-run, taxpayer-funded NHS is about “competition for quality not competition for price”. What Lansley should be saying is competition for value, which is an indivisible combination of price and quality. If anything, the NHS should determine quality standards and allow competition on price. This would be entirely consistent and coherent with what they already do with drugs companies and any other organisation wanting to supply health services; who cannot compromise on quality and so have to compete on price,

Lansley further declares that the NHS is “driven by evidence” and that it “establishes an NHS price”. Economists, competitive capitalists and even the ordinary ‘man’ in the street know that when price is determined by a politicised bureaucracy, rather than a free market, poor societal value is likely to be the outcome.

There is still, of course, a serious question here about the most appropriate economic philosophy, organisational entity and HR strategy for running the NHS but Lansley has obviously not come up with the answer yet. So, rather than resuscitating the NHS, when a Health Secretary utters such nonsense we are more likely witnessing its final death throes.

So how would EB-HR apply to …. ?

Posted on February 22, 2012 by Paul Kearns

If you somehow stumbled across this blog-book because you heard some oblique reference somewhere to the words ‘evidence’ and ‘HR’ being used in the same sentence by someone whose name you cannot quite remember saying something that you may or may not have mis-heard then you have come to the right place to clear the matter up once and for all.

The something you need to know about, if you are a manager, is evidence-based management (EBM) and the HR bit is the application of EBM to managing people. So far so simple. Unfortunately, what you think you heard and where you heard it could make all the difference to whether you understand it or not and, depending on who you ask, you could get some very different answers. So if you are a conventional HR person doing conventional HR-type things (see the list below) and are asking yourself what all this hoo-ha is about and how it might upset your cosy little world then please read on.

Leaving aside those in the HR and learning field who don’t know what EB-HR is, don’t want to know and have as much interest in evidence as they do in English translations of the national anthem of Nepal you could possibly chance your arm with the academic community first? They may well tell you that EBM is all about getting the best research studies before you try to manage anything. Well the academics would say that wouldn’t they – that’s why they became academics – if they wanted to actually do management they would have become managers themselves.

The trouble with academia is they talk about evidence-based management but what they mean is conventional management research. They will only be able to give you the research findings from evidence-based management when they have already studied some evidence-based managers but until ordinary managers are taught how to become evidence-based that is unlikely to happen. So you will be forgiven if you decide not to take part in this game called chasing your tail. OK? Shall we move on then?

Another alternative would be to call any of the growing band of ‘HR analytics’ ‘experts’ who will try to convince you that EB-HR is really all about data gathering and detailed analysis using very complicated algorithms and other obscure techniques favoured by the actuarial industry. You know what they say about actuaries don’t you – they make accountants look interesting. They will not define what analytics are or what they reveal about value but they will keep you busy. If you do pay them a visit I strongly recommend you have your early exit strategy worked out first.

EB-HR is much simpler and easier to demonstrate than either of these ‘schools of thought’ would have you believe but it does require going back to first principles. Let’s try it out. Have you recently found yourself asking a question that goes something like this – “So how would I apply this EB-HR stuff to our ….”

360 feedback efforts?
Leadership development programmes?
Talent development?
Diversity policy?
Employer branding initiative?
Employee engagement survey?

If you have then you have got completely the wrong end of the stick. EB-HR always, always, always (is that enough emphasis) starts from a business need, not from an existing HR process. As an illustration let us take a look at a current article on engagement at Tesco in today’s Personnel Today* from their international HR director, Judith Nelson, and compare how they are doing with how they might have done if they had understood the simple principles of EB-HR?

How could Tesco gain from EB-HR?

Quoting directly from the article -

“Employee engagement is a key tool for employers that want to attract and retain staff”

Is it? Where is the evidence to back that assertion up and even if another company has managed to do so is Tesco sure it could do the same in its own context?

“Judith Nelson, Tesco’s international HR director, reveals the steps the company has taken to boost its employee engagement”

The article does not show that it has boosted employee engagement. Even if it did – so what – is employee engagement an end in itself? Where is Tesco’s own baseline data (a core concept in EB-HR) on attraction and retention? More importantly – shouldn’t the focus in some way be connected to Tesco’s recently subdued sales?

“Listen and Fix is the biggest listening exercise Tesco has ever undertaken.”

Really? If only “7% of staff – more than 40,000” have been listened to through Listen & Fix what about the other 255,000 (sorry to be picky Judith but your analytics don’t seem to add up – 40k ÷ 255k is not 7%?). Why aren’t Tesco’s managers listening to all of their staff every day? Are they so busy and disinterested that they would rather get an outside body to listen for them? Which engagement hypothesis are you working to here Judith? Is this evidence of successful engagement or the very opposite, an admission of failure to communicate with employees on a grand scale?

“Our objectives in undertaking it were to make Tesco a better place to shop and work via a more engaged workforce, and to gain a deeper understanding of what really mattered in all areas of the business: in our stores and distribution; at Tesco.com and Tesco Bank; and at our head office.”

OK so you asked the question “What gets in the way of you doing a great job for our customers?” – that at least sounds like a simple hypothesis that is focused on the customer but you end up by identifying -

“… a need for new checkout headsets; now we can be sure all checkout staff are properly equipped in this area. We also ordered 250 coffee machines and 42 dishwashers for staff areas in the stores that needed them most.”

Ah, I see, new coffee machines and staff dishwashers will make Tesco a “better place to shop” …. how exactly?

So, there you have it. EB-HR just asks the very simple questions that HR doesn’t but should.

*Personnel Today picks up the story

Kill the ‘Leadership Team’!

Posted on February 9, 2012 by Paul Kearns

No, of course I am not inciting anyone to literally go out and kill their ‘leadership team’ – I mean let’s kill off the notion that any group of executives or managers should ever be allowed to call themselves the Leadership Team. What arrogance! What brass neck!* The sheer, barefaced cheek of it! There is so much wrong with this ridiculous title it is difficult to know where to start? Perhaps a bit of humility would not go amiss?

After the hubris before the crash of 2008, and the body of evidence exposing the mismatch between executive reward and performance, surely we need to herald in an era of leadership humility. ‘Leadership team’ should be legally banned; just as one might ban CEO’s ever referring to themselves as king, emperor or tsar. Oh no, I’ve said it now, and probably made it worse by giving the madder ones an idea.

Look guys (and gals) – get this into your heads once and for all (they are certainly big enough) -

Great leaders don’t need to call themselves leaders.

Leadership is one of those words that can never be self-referential; like integrity, honesty, professional, trustworthy. It has to be earned; it can never be conferred. It is in the eye of the beholder – these things are for us to decide - we who have to suffer you. The trendy academics might like to refer to us as ‘followers’ – an awful term that suggests we are mindless – but we are not. In fact leaders with mindless followers is the last thing we want – you know what sort of behaviour that leads to, don’t you?

We will probably never reveal whether we are being led by you, or whether we trust you. In fact we may well change our minds on a daily basis: leadership and ‘followership’ are not constant. Even if we do your bidding it is just as likely to be an accurate indicator of how much we really fear you. You will probably only find out what we really think of you when you are dead – if you know what I mean. Oh no, I’ve done it again, I can just see the narcissistic, ultra-egotists employing their PR experts to plant false rumours of their demise to find out what the reaction might be. That way lies madness.

Great leaders just lead, by definition. Pretenders might have executive accountability (if we are lucky) or just management responsibilities but that does not automatically infer leadership. It is an imprecise and over-used term. If you mean ‘executive group’ or ‘senior team’ then fine, just say so. But ‘top team’ is not acceptable. Top of what? Top dog? Top in what sense? Oh yes, of course, top of the pyramid, like some ancient pharaoh. The bigger the pyramid the better the leader? Mine’s bigger than yours? The very antithesis of leadership – if you’re on the top then we must all be at the bottom – that’s just what we all want to hear and feel – very motivational, very inspiring.

Maybe top profits? Well if leadership = profit be careful whose company you keep and make sure you get your timing right. If the ‘top people’ are such great leaders why did only 16 out of the FTSE 100 CEOs survive the first decade of the 21^st Century? Hardly long enough to lay the first foundation stone is it? Of the ones that did survive there is at least one self-proclaimed micro-managing, detail obsessive, control freak among them. Take my word for it, hyper-management is not a pretty sight, nor is it leadership. Enough already – just kill the ‘leadership team’ bit.

If anyone would like to start a drive to remove ‘Leadership Team’ from their organisation charts here’s my blessing and a random sample to start. Please write to the chairs of these organisations either to express ridicule (the perfect antidote to false gods) or just pass on this suggestion.

*no sense of shame

Just run that HR hypothesis by me one more time would you?

Posted on February 6, 2012 by Paul Kearns

When HR tries to measure itself it always ends in tears and not just the ones running down the cheeks of the HR department: every executive who has had to endure yet another HR presentation, supposedly demonstrating its incredible value proposition, will know only too well what it feels like. It would not be so bad if HR had learned from its previous mistakes. Measurement is a golden rule for any organisation but the measures must be meaningful to the business and they have to follow the #1 Golden Rule, often ignored by HR departments, of sticking to a well-conceived hypothesis.

Is HR theory and practice founded on sound hypotheses? The list of activities regarded as the unquestionable and indispensable orthodoxy of HR, the ‘givens’, includes -

Competence frameworks
360° feedback (but including 180°, 540° and 473.5°) – OK, that last one was a joke
Leadership development
Engagement
Talent management
Diversity

All of these have been around for a while now so maybe it is about time someone checked out whether they are under-pinned by any sound hypothesis. Let us take a fresh look, using the logic of EB-HR, to see if any of them really hold water?

The Competence Hypothesis

Every EB-HR hypothesis has to start with an intelligent question about an identified problem: this is called root cause, or cause and effect, analysis. Presumably those who install competence frameworks believe they have a problem with the effects of management incompetence? Yet cause and effect analysis demands that the ‘effect’ be measured, so they can only say they have a problem with incompetence if they have already measured it. That conclusion, in turn, requires them to produce a very specific definition of competence and logically leads into that dreadful labyrinth comprised of the myriad of competencies supposedly exhibited by a multitude of managers in an infinite array of combinations or clusters. Now, even if they were able to unravel this Gordion knot of their own making, there is the equally important question of whether there is any close causal connection between these competencies and performance? This will require an analysis of the competencies of high performing managers, showing how being competent in certain areas (e.g. negotiation, organisation, delegation etc.) causes their performance to reach a level superior to their competence-challenged colleagues. Of course, to do this they would need a definition of performance based on a balanced set of performance indicators that could be compared between two distinct groups of managers over time (performing and non-performing) and we all know how problematic performance measurement is don’t we? This is because performance itself is subject to the vagaries of organisational planning and market dynamics, which never stay constant long enough for meaningful comparisons to be made. These environmental complications then ultimately defeat any attempt to run a controlled experiment where answers to the original questions can be found. Nevertheless, if the HR team soldiers on and somehow identifies a group that need some competence improvement they then incur the next practical problem of how to design individual, competence development programmes. Plus, they would simultaneously have to run a control group of managers, who would be left to their own devices, while the target groups (incompetent and competent) were monitored. Phew!!

If this hypothesis strikes you as simple, and easy to explain to any serving manager, then good luck with your competence framework. But remember – if your competitors are doing exactly the same then neither of you gain a competitive advantage after all this effort.

A simpler hypothesis, that addresses all of the complexities more directly and efficiently, is to regard each manager as a unique individual with their own unique combination of abilities and talents that you will never have the time or energy to fully fathom, explicate, delineate or codify. So instead, why not just ensure each manager is regularly asking themselves a set of simple evidence-based questions:

‘What evidence do I have of our performance level today?’
‘What measure would I choose to indicate an improvement?’
‘What do I require to help us achieve that improvement?’

Please note – if the answer to question 3. is something as broad as – ‘restructure the whole department’, ‘re-design the system‘, ‘re-think the process‘ or ‘change our marketing strategy’ – then this suggestion needs to be treated with respect, systematically analysed for validity and resolved.

This hypothesis is based on 3 assumptions -

We are always willing and able to improve.
Everyone is allowed to voice their conclusions from asking these questions, without fear, through a systematic process for organisational problem resolution
If we keep improving we will read that as evidence that we are becoming more competent.

This evidence-based hypothesis leads me to recommend that you consider ditching your existing competence framework. Would anybody like to submit a better hypothesis for competence or any of the other ‘givens’ on the HR list?

A travesty of EB-HR principles – A book review of Transformative HR* by John Boudreau and Ravin Jesuthasan

Posted on January 24, 2012 by Paul Kearns

Book titles can be very misleading and we are all used to reading management books that never come close to delivering on what they promise but I think this book deserves a special award for – ‘The Most Perverse use of Evidence’.

Its full title is “Transformative HR. How Great Companies Use Evidence-Based Change for Sustainable Advantage” and, by an amazing feat of inverse logic, offers the Royal Bank of Scotland as one of its ‘great companies’ – a too-big-to-fail bank that had to be sustained by UK taxpayers because it collapsed in 2008.

Such stark evidence of failure is just brushed aside by the two authors who are blinded by the need to get this sales brochure from Towers Watson out into the burgeoning market of evidence-based HR before it is too late. The critical reader will see that it shows serious deficiencies in the claims made by its protagonists – but then Towers Watson (or at least Watson Wyatt as was) and the University of Southern California both have previous form in this respect.

According to a 2001 Watson Wyatt survey of more than 400 US and Canada-based companies, in support of their earlier doomed product – the Human Capital Index -

“there was a clear relationship between the effectiveness of a company’s human capital and shareholder value creation. This relationship we found is so clear that a significant improvement in 30 key HR practices is associated with a 30% increase in market value.”

This is typical correlation-speak passed off as causation but actuaries like Watson know better so they had to admit, in a similar report they produced in Europe (“HCI – European Survey Report 2000”), that while their data in North America

“… demonstrates a very strong correlation between effective people practices and shareholder value, on its own it does not prove a causal link”.

So don’t be surprised if you get different answers from different people in the same firm. I guess they realised us Europeans were not so easily fooled and so had to come clean; all the while hoping their HR clients were either too disinterested or innumerate to notice their contradictions. If you visit Towers Watson’s site today you will be treated to similar double-speak in a video from Ravin Jesuthasan himself.

Meanwhile, over in Southern California John Boudreau, who proves that the title ‘professor’ brings with it no guarantees of academic rigour, should still know better than to say RBS clarified (p.208) -

“…the causal connections between people data and business data”

when the evidence he presents does no such thing; but then he comes from the same ‘misleading correlation’ school as Ed Lawler III who happily offers his endorsement that these are-

“two of the most respected thinkers in HR”

- without, of course, offering any evidence to back up such an assertion.

Presumably they are respected by the sort of people who provide the other testimonials for the dust jacket? People like Stephen Corrone of Sara Lee, Brian Schipper of Cisco, Lynn Tetrault of AstraZeneca (“chairperson of the board, HR people and strategy” no less), Elaine Arden of Royal Bank of Scotland (do I detect a note of bias here?) and David Farrant of Nomura; all of whom don’t seem to mind risking their careers by associating themselves, and their employers, with such obvious nonsense. Maybe they are just deluding themselves that this has something to do with evidence-based HR or possibly it is the sort of flannel that got them to where they are in the first place?

Perhaps it is just what their CEO’s want to hear: which is much more worrying. CEO’s of very large companies can be incredibly illogical and downright crass when it comes to strategic HR matters. Apparently the current CEO of RBS, Stephen Hester (weho is otherwise well respected), is getting in on the act of using the wrong evidence for the wrong purpose (p.210) –

“A good deal of the communication about results of employee listening (sic) comes directly from Hester, the CEO. That sends a message to staff that RBS takes the information gathered from employees seriously.”

Yes I think it does and it also tells them, and any investment analysts watching, that he has taken his eye off the ball of transforming the bank into one that can relieve UK taxpayers of their present burden (all £45 billion of it). Even the CEOs of successful companies can make themselves look particularly stupid when desperately trying to be politically correct, rather than evidence-based. Here is a quote from CEO of Coca Cola, Muhtar Kent (pp 138-139) –

“I looked at who was buying our products and found that 70 percent of our shoppers were women. Then I looked at our workforce …. and saw a huge mismatch”

- such imperfect logic and superficial analysis led Coca Cola to create

“several programs to attract, retain and develop women leaders including the Women’s Leadership Council”.

I am sure the women of Coca Cola are not at all patronised, and the men not insulted – at least those who were not removed to make way for the women, by such inane and misguided thinking about diversity. Presumably they also do not mind having to have their own council or being allowed to break through the glass ceiling by dint of the fact that ‘women buy Coke’, rather than through their own efforts or abilities. If this logic holds and women stop buying Coke does this mean the policy will go into reverse?

The architect of all HR data gathering at RBS is one Greg Aitken, who was amassing meaningless HR data at RBS as far back as 2001 – has no one told him the bank has since crashed – and did he have anything to do with it? His sort of data has as much to do with business strategy as train-spotting has to do with the punctuality of trains. This obsession with so-called ‘HR analytics’ completely misses the point of EB-HR and has spawned Mickey Mouse jobs for a new breed of HR-analytical nerd at respected companies like Walt Disney Studios (my apologies Disney for that awful pun but you wrote the job advertisement).

This book is a travesty – especially for those of us who want to raise standards of professionalism in HR by basing our decisions on evidence of value. For anyone who falls into that category I do have one recommendation for you – buy a copy of this book and send it straight to your competitors, if they are gullible enough it will transform them into misguided, data-chasing automatons while you steal a march on them by putting proper evidence to good use – value creation.

*“Transformative HR. How Great Companies Use Evidence-Based Change for Sustainable Advantage” John Boudreau (Professor of Management & Organization at the Marshall School, University of Southern California) and Ravin Jesuthasan (MD of Towers Watson’s Talent Management Practice)

Evidence-Based HR

The Best HR Professionals are Evidence-Based

Category Archives: EBHR Critiques