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)