Tag Archives: employee engagement

Measuring the organisational fear factor

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If you want to read a detailed case study on how not to run a company, especially a very large bank, I can firmly recommend a 450-page report entitled “The failure of the Royal Bank of Scotland” by the UK’s FSA (Financial Services Authority).  No one comes out of this story with any credit – literally – hahaha.

RBS has already had several mentions on this site because it was once held up as a great example of HR by many less-discerning HR publications.  Its HR team still persists with failed HR practices today, despite one revealing statistic from the FSA report which showed that in 2007, the year before RBS collapsed -

“66% of employees were recorded as agreeing with the statement – the ‘Group Executive Management Committee (GEMC) provides good leadership’”

This neatly disproves the latest theory in leadership development that says great leaders are defined by their followers.  What really comes across in the report though, loudly and clearly, is the opposite of employee engagement.  There was an insidious, underlying fear culture that completely contradicted RBS’s ‘Lemming Survey’ produced by its HR team.  The report is particularly damning of CEO Fred Goodwin’s management style and devoted a whole section to something HR strategists should know all about -

“The importance of management, governance and culture”

remarking that

“During 2003 and 2004, …. the FSA had identified a risk created by the perceived dominance of RBS’s CEO. While it was recognised that the CEOs of large firms tended to be assertive, robust individuals, the FSA’s view was that, in the case of RBS, the ‘challenging management culture led by the CEO raised particular risks that had to be addressed. ….‘Most of the members of GEMC we met with criticised the way the Committee operates. …. GEMC members also described dysfunctional working in relation to:

  • GEMC are not operating as a team.
  • Conversations are typically bilateral.
  • Performance targets consume too much of the agenda.
  • Discussions often seem bullying in nature.
  • The atmosphere is often negative and is at a low point currently.”

Fred Goodwin has undoubted talents but his management style is not one of them and it was the culture he created, above everything else, that ultimately condemned RBS to its inevitable fate.  This is the best possible argument for having an independent and effective HR director (rather than the one they had) reporting directly to the Board, with a specific remit to develop the right organisational culture whilst balancing the drive of “assertive, robust” executives with the need to maintain continuity and consistency; especially when your average FTSE 100 and Fortune 500 CEO lasts less than 5 years.

Another practical suggestion I would like to offer in response to the FSA report is to counterbalance the Q12 nonsense, that has prevailed in HR circles for far too long, with a Fear Factor Quotient (pat. pending).  I’m thinking along the lines of a questionnaire where the highest Fear Factor (i.e. the worst case) would be linked to statements such as: -

‘I am a complete nervous wreck, having lived in fear of my life every waking second that I am at work’

using the usual Likert-type response options ranging from ‘strongly disagree’ to ‘strongly agree’ with an additional box for those on medication to provide details.

At the other (best) end of the scale a typical statement might be –

‘I am encouraged to say exactly what I think to who the hell I like. I could walk into the CEO’s office tomorrow, call him a complete tosser, not bother to dress it up as constructive criticism and he would thank me for it. Hey, I would even be offered a coffee!’

I was thinking we could also invent a new unit of measurement – the ‘Goodwin’ – although you could adapt this to your own organization by just inserting the name of your most feared executive.  The ‘Goodwin Scale’, as with the logarithmic Richter Scale, would range from 1 to 10 with the difference between say a 5 Goodwin and a 6 Goodwin being the equivalent, in order of business disaster magnitude, of an increase from say $10 million to $300 million.

Alongside this I think we would also need to design in a specific ‘Whistleblower Propensity Rating’ where all employees were asked to state what would have to happen for them to blow the whistle.  These could be on a separate, sensitivity scale ranging from “I would blow the whistle on my own mother if she so much as borrowed my company pen”  to “I would have to witness my boss murdering someone with their bare hands, in front of my very own eyes, before I would feel inclined to blow the whistle on them.” (we might also have to insert a witness protection scheme clause in there somewhere).

I believe there is already a ‘Group Executive Management Committee Members’ Courage’ seismometer gathering dust somewhere in the bowels of RBS but it was never used because the bank was already registering an 8 on the Goodwin Scale and this meant there was nothing in the boardroom to be measured on it .

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So how would EB-HR apply to …. ?

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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

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Humanity finally arrives in the workplace – A book review of ‘Beyond the Corporation’ by David Erdal

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Anyone who has ever read my work over the years will testify to the fact that I happily slaughter sacred management cows, on a regular basis, and enthusiastically devour sloppy-thinking HR directors for breakfast.  Indeed, the basic premise of this series is that non-evidence-based management practices, particularly prevalent in senior HR ranks, are risible and rightly deserve every bit of criticism coming their way.

Being this critical has meant that I have only ever reviewed a couple of management books in my life. Gushing is not my thing and I firmly believe there is nothing new under the sun, so there is a 99.9% probability that I will be underwhelmed by what I am asked to read. So you might be pleasantly surprised to hear a very different ‘me’ for a change, one that is extremely positive (don’t sound so surprised).  In fact, I could not put down this particular ‘management’ book after I bought it and had no hesitation in making it my very first book review here.

‘Beyond the corporation – Humanity Working’ (Bodley Head 2011) by David Erdal is written so lucidly and with such passionate argument that it left me in a state of euphoria (stop me if I start gushing).  Mainlining a large injection of humanity into your system, in one sitting, can have a rather disorientating effect. This is no short-lived, feelgood-factor ‘high’ though; the sort of natural, human sensation so cynically abused by so-called, inspirational, conference speakers.  This is a deep-rooted yet heightened sense of awareness and it does not wear off.

I only saw David Erdal in the flesh last Monday (21st March 2011) when he came to Bristol to talk on ‘Employee Owned Organisations’ and he comes across as a very quietly spoken presenter of ideas of great and universal import.  He appears humble and unassuming but underneath you sense a magma chamber of indignation that occasionally erupts in the book.  Everything he says is well-conceived and pre-tested for any potential flaws, theoretical and practical, all of which adds gravitas and power to his argument.  He is the sort of man you would trust with your life and I bet many of his previous employees would as well.  He is the perfect counterpoint to ‘greedy bankers’ and ‘fat cat’ CEO’s.  He is the epitome of that very rare and elusive beast – authentic leadership.

This could all be an illusion but it is unlikely because Erdal provides a superb exposition of the real power of evidence-based thinking.  So much so that I immediately urge you to get your order in now before the first print run is sold out.  Believe me, it is in your own interests, because if you thought you knew how to get the best out of your people you are going to have to think again. Compared to the case studies covered in Erdal’s book you have not even begun to scratch the surface of what it means to unleash the full force of human potential.

Erdal’s basic thesis is extremely simple and passes the first, common sense test with ease – employee owned organisations will perform better than equivalent companies driven purely by shareholder and senior executives’ interests.  Erdal does not leave it at that though, unlike the vast majority of books on ‘people management’ he supports every step of his well-argued case with very convincing evidence.  Along the way he dismantles much of conventional economic theory and management practice, especially managers whose practice fails to find the best in people.  At the same time he manages to cover every page with a warm layer of humanity – a very rare skill indeed. So this book will worry many vested interests – private equity asset strippers; investment bankers; anyone who makes large fees from M&A; CEO’s who pay lip service to the notion of managing human capital effectively and their HR directors who think their current practices get anywhere near to getting the best out of people.

But there is much more to David Erdal.  He has actually done it himself as Chairman of his previous, family-owned, business Tullis Russell, which he ‘handed over’ to his employees.  He has actually experienced what it feels like to transform the way people think about their work and how to build trust in the most trying of circumstances, whilst never shying away from the really tough business decisions. If I were you I would clear the shelves of any books you might have on change management – this knocks them into a cocked hat and does not hide the harsh realities that are an inevitable part of the journey towards significant and long-lasting change.

Erdal does have several bêtes noires and chief amongst these is the theory, ideology and doctrine of ‘capital market discipline’ which can rightly be blamed for much of the financial collapse of 2008. Only then does his ire slip into the occasional, fully understandable, but still relatively gentle rant.  In Chapter 8 he analyses the causes of obscene and unjustifiable CEO salary rises over the last decade and sees much of capitalism’s present malaise rooted in that classic management debate – power – where it resides, its uses and abuses.  This is at the heart of the thesis – power should reside with the collective, employee ownership of the enterprise with ‘ownership’ the core concept – more powerful than its close relative, cooperativism.

“..if employees are not owners – not even indirectly through trusts – then you cannot achieve the ownership effect by tricking them into feeling as if they are.  There is good evidence that ownership itself is a vital part of the equation – ownership may be indirect, but it must be real.” (p.207)

Apart from the self-evident veracity of what Erdal has to say ‘Beyond the Corporation’ is also just a damned good read (and in pure readability terms his book ‘Local Heroes’ is even better).  If you still feel compelled to skim, despite this advice, you might choose to skip the heart-rending anecdotes in Chapter 7 because even I felt a lump in my throat.  In the hands of a lesser writer these would seem slightly tacky or mawkish but here Erdal knows just how to tap into the power of their understated intensity without over-doing it.

Alternatively, Chapter 9 on the employment contract does cover ground already well known by students of labour history and employment rights, but then this is just a precursor to the ground-breaking theory in Chapter 10 – ‘Thinking it through’.  This is another very thoughtful piece of writing but the only occasion when I felt that the argument was less convincing when set against the context of the world we currently inhabit.  However, as Erdal takes a very long-term, visionary view of what is possible it is entirely in-keeping and coherent with his philosophy.

Other than that you skip sections at your peril, and to your great loss, because in essence this is a book about leadership, decision making and participation.  It presents a very sophisticated paradigm for the most mature form of organisational management.  Employee owned organisations already exist in significant numbers and Erdal’s book will help to push the world further in this direction but, at the end of the day, you either ‘get it’ or you don’t.  If you get it you will never see the world in the same way again, especially if you have any concern for humanity and want to bring that concern to bear in your evidence-based, people management practice.

‘Beyond the corporation’ will not have the CEO’s of very large, global organisations quaking in their boots, just yet, and moving to employee ownership is not an easy ride when re-education is needed to make old, hardened attitudes soften and change.  Any CEO or HR director should be struck though by one very disconcerting revelation  – there is conclusive evidence here that employee commitment and productivity, in employee owned organisations, are bound to exceed any attempt at employee engagement and talent management that ‘progressive’ HR management fads, fashions and fixations might hope to achieve in more conventionally owned and managed enterprises. In fact, all HR Directors that have enrobed themselves in these gimmicks are suddenly going to find that their nakedness is now in full view – employee ownership and participation has offered an entirely new benchmark.  David Erdal describes this movement as a ‘quiet revolution’ – it might be quiet but it’s definitely a revolution.

For personal development linked to this topic visit the Consummate Professional Series

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EBM – Doing it for real – Lesson 5 – Finding the root causes of ‘people’ problems

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Don’t worry, this Lesson is not about old-fashioned fishbone diagrams but we do need to cover the basic groundwork first.  Any manager who wants to regard themselves as professional will have been trained in the discipline of problem solving, which can be summarised in 5 discrete steps:

  1. Identify the problem (e.g. customer complaints)
  2. Measure the problem (how many?)
  3. Find the cause of the problem (e.g. defective product)
  4. Provide a solution to remove the causes (improve design and quality assurance)
  5. Check that the solution worked (re-measure 2.)

Cause and effect charts are a well-known, widely-used and essentially common sense technique.  For example, if you have water coming through your ceiling (effect) you naturally look for the source of the leak (cause).  The first thing you must write on the chart is the ‘effect’ or fish’s ‘head’ (dripping water).  Then all the ‘bones’ are added, representing the contributory causes (e.g. a hole in the pipe, the stopcock is still open, poor insulation etc.).  Trying to solve problems any other way would be totally illogical.

Yet when it comes to human capital management this simple logic often flies straight out of the window.  So a clear-headed adherence to the stipulations of cause/effect analysis will distinguish the evidence-based HR manager from their distant cousins, twice removed, non-evidence-based HR departments.

Lesson 5

EB-HR Managers always use cause and effect analysis, especially for the most complex, strategic, human capital issues.

Practical application

Many HR people break this sacrosanct cause/effect rule on a regular basis; often with the complicity of, or even under duress from, senior line managers.  The most obvious examples usually emanate, ironically, from the learning and development department. They produce an annual menu of pre-determined training courses (management development, leadership, customer service) without any specific problem identification, definition, measurement or causal analysis.

When senior managers cannot be bothered to work out complex organisational issues they seek instant, quick-fix solutions and this is where the most serious breaches of the cause/effect rule tend to occur.  This is exactly why the need for EB-HR arose in the first place – to fill the void between operational management limitations and effective, strategic execution. This is the space that the critical, evidence-based, human capital manager needs to inhabit.

Let us consider issues as nebulous and indistinct as ‘inter-departmental collaboration’ or ‘functional cooperation’.  These may feel like palpable and significant problems but they are, at best, expressions only of symptoms, not effects.  Poor cooperation might result in longer, product development times but the only effects we are interested in are those that have hard cost and revenue implications.  Rushing off and dealing with symptoms, without a logical cause/effect analysis, is doomed to fail.  So to minimise this tendency among their management colleagues the EB manager will just confidently apply their trusted discipline of cause/effect analysis by: -

  1. Immediately recognising that the topic of discussion has yet to be properly defined in OCRQ value terms and
  2. Taking out a pen and paper and asking the meeting to approach the issue using a fishbone diagram

There will be some resistance to this idea because it is likely to lay the responsibility for solving the problems at the very doors of those causing them (which is precisely what it is designed to do).  Nevertheless, the EB Manager should stick to their guns by asking any objectors to offer an alternative if they have one (knowing that there isn’t one).  From here on the rest is relatively straightforward.

  1. State that the effect has to be the first thing written on the paper (there can be no argument with that).
  2. When someone says ‘poor cooperation’ you ask them to spell out what that might mean to the business, hypothetically, in terms of OCRQ
  3. When they try to put ‘C’ and ‘R’ as a joint effect remind them that a fishbone diagram can only deal with one effect at a time – so which is it?
  4. When they eventually agree to insert the word ‘cost’ you ask them for an actual number (always) – is it $100 or $1,000,000?
  5. Then you want an estimate of how long it will take to have the desired effect.
  6. Only now can you frame the question correctly by asking “what is causing our costs of product development to be $1,000,000 higher than we need them to be?”
  7. You can now draw some large fish bones with the generic headings – structure, system, process, culture, business plan and roles and you will find most causes fall under one or more of these.  So, for example, if someone says ‘bad design’ that would go under ‘the design process’ or ‘design system’ causal heading.
  8. The EB-HR Manager now interjects that all causes can be linked back to people causes eventually (e.g. bad designers, badly recruited designers, insufficient training, poor process designer, poor system designer, paying peanuts for designers)
  9. Now the conversation gets really interesting because it starts to highlight all of the underlying, organisational weaknesses and funnily enough they are all human causes.

The guiding principle here is simple – there is a solution for every organisational problem and you need to find the best solution as quickly as possible.  The best way, in fact the only way, is the intelligent application of cause and effect analysis to ascertain who is at the root of the problem.

For personal development linked to this topic visit the Consummate Professional Series

 

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