Tag Archives: metrics

Is there any ROI in ‘learning’ technology?

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How times have changed – or maybe not? Having just spoken at the CIPD’s ‘HRD 2011’ on the topic of ‘How accurate and necessary is ROI for L&D?’ (based on my CIPD book) I was trying to compare it to my last big CIPD conference session (Scottish 2006), entitled “The ROI from Human Capital”, when I suddenly realised I had been typecast.

So what has changed?  Well obviously not the subject matter – no I was thinking more along the lines of the application of technology to individual and organisational learning.  For a start, this was the first conference I have ever spoken at where apparently my every utterance was being tweeted, every couple of minutes, such as -

“The purpose of evaluation is to establish evidence that your organisation is creating value by learning.” (11.41 precisely)

- and I ask myself, is this where the technology was meant to take us?  Is this what the great technological revolution was all about?  All the organisations I know, who have been relentlessly moving towards something they call ‘e-learning’, is this what they had in mind – twittering?  Is the great white hope of social media the answer to anything?

If you do follow tweeters what were you supposed to make of these disconnected, 140-character snippets?  If you look at Lesson 7 I will at least provide one practical lesson that you can take away and use.  Then when you get stuck – comment here, drop me a line, call, or email and I will offer a possible answer to your question.  Now, out of all of that activity, which bit did the technology help with?  It can certainly disseminate data faster to more people.  What it doesn’t seem able to do is offer an answer to the most difficult problems in individual and organisational learning – how we discriminate between what is worth knowing, and what isn’t, and then how we manage to apply what we have learned in a human organisation that doesn’t necessarily want to learn.

Of the 140+ people, who crammed themselves into the seminar room on Wednesday, I wonder what they learned from my session? More importantly, if they learned anything at all, how have they applied it?  What I hope they took away was this (my first slide – tweeted at 11.25 precisely) -

“ROI doesn’t have to be accurate and isn’t always necessary”

This was not only a straight answer to a straight question but one I could only offer, with absolute confidence and 20 years experience, because I know ROI isn’t the main issue here.  The main issue in learning is human relationships.  There are huge barriers to learning in the human condition, especially humans drawn together, willingly or otherwise, in organisations.

The IT industry have always told us that ‘information is power’ but they are wrong.  Partly because they usually provide data, not information (the data has to be processed by a human brain for it to be called information) but even if they do manage to get that far they should have realised that it is not information that is powerful but knowledge and wisdom.  Moreover, it is a reluctance to share knowledge, because it is so powerful, that stops organisations learning what they need to know: those with power are usually reluctant to let it go.  People play politics in preference to playing the learning game and trying to get someone to admit their ignorance, the first step towards enlightenment, usually means they fear losing face.  So you had better have superb skills in helping people to feel good about themselves while they are learning.

So where does ROI fit in with all of this – well you should have come to hear me speak instead of reading tweets or, failing that, you might learn something from reading Lesson 7, or even my book, but none of this beats developing a proper, warm blooded relationship where we can continuously learn from each other in a safe, constructive and mutually supportive environment – and if you already reside in such a place then you are truly blessed.

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

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The un-balanced scorecard needs that human touch

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Anyone who entered the world of management within the last 20 years will have come across something called the ‘balanced scorecard’ and might even have felt its cold, damp hand on their shoulder.  Those of us who have been in management for more than 20 years saw how cruelly exposed traditional approaches to financial management, auditing and performance management were when faced with the pressures of rapid globalisation.  So we knew the foundations of management had to fundamentally change.  The main problem with change being forced though is that you tend to fall back on what you know best rather than think differently, outside of the box.  Business had become addicted to measurement and decided that the only way forward was even more measurement and this time around the balanced scorecard appeared to offer more intelligent measurement.

The history of scorecards actually goes back much further than you might realise (at least to the 1950’s) and early attempts included the notion of a ‘dashboard’ of measures; just as a pilot needs a whole array of instruments to fly a plane. The eventual popularisers of this new game were of course Kaplan and Norton (‘Putting the balanced scorecard to work’ Harvard Business Review, Sept-Oct 1993) but eventually even they realised that more measurement wasn’t the answer.  Instead of re-thinking the design of their measurement machine though they compounded their crime by bolting on an ugly, ridiculously complex and totally unnecessary gadget called the “strategy alignment map” (the one thing you could not fault Kaplan and Norton for was their alchemic ability at turning goose eggs into gold).

So why is the balanced scorecard concept still so popular today?  Obviously some of  those who use it say it works – without realising that they are not actually using a balanced scorecard (* see below).  My guess is that it allows managers to look intelligent while behaving simplistically; that’s a very clever trick to pull off.  They keep believing that as long as they follow their own set of ‘balanced’ measures they must be doing something right.  This is exactly the opposite of what it was designed for – to get managers to use their brains and think things through more holistically rather than mechanistically – to create long term value rather than short term profit and long term value requires a long term HR strategy; and appropriate measures to match.

We hear the phrase ‘human capital’ used very glibly these days (except in this series of course) as though we are all mature managers now and understand how to get the best out of this most problematic resource.  Kaplan and Norton’s nod to the problem of people management revealed itself in their ‘innovation and growth’ box of measures. Yet Norton himself confessed, in a foreword to ‘The HR Scorecard’ (another Harvard ‘golden egg’ by Huselid, Becker and Ulrich, 2001) that it is always this ‘people measures’ box that companies find the most difficult -

“ … the worst grades are reserved for their understanding of strategies for developing human capital.  There is little consensus, little creativity, and no real framework for thinking about the subject.  Worse yet, we have seen little improvement in this over the past eight years.”

Of course he didn’t offer any solution during those 8 years to the very problem that he and Kaplan had set for their clients.  If he took another look today he would find the situation has not improved and his endorsement of the ‘HR Scorecard’ proved to be yet another empty promise.  So the performance management ‘experts’ (sic), who still promote the balanced scorecard, dashboards and prisms have yet to provide the right ticks in their own boxes. *This means that after nearly twenty years there has never actually been a balanced scorecard – only a three-quarters, unbalanced version.

The real irony here is that the ‘people box’ has to be the most important ingredient in all performance measurement and management systems, so human capital measurement and reporting is the only genuine innovation to have arrived on the scene in the last 50 years.  But because HCM is about human beings, who don’t always want to be measured or made accountable, and would rather play the system than make it work – it will never succumb to a simplistic, tick box mentality.

So, in summary, the balanced scorecard -

  • Doesn’t balance – and doesn’t acknowledge that value management comes from the whole system working well, not just its component parts
  • Emphasises the need for innovation and growth (and therefore organisational learning) but doesn’t offer any way of capitalising on the latent, creative and innovative behaviour of human capital and
  • Tries to deconstruct what creates value but, in doing so, often destroys it (you try putting deconstructed mayonnaise on your burger and see how you like it)

But apart from that it’s a really great idea.

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

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The HR ‘Wheel’ of questionable value

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An odd title, you might think, for someone who has been espousing the cause of competitive advantage through strategic, evidence-based HR for well over 20 years?

Not really.  This series is promoting VALUE, not HR.  Conventional HR (i.e. non-evidence-based) is, at best, a means to an end and at worst a drain on resources. This fact of life is one that the vast majority of HR people either do not understand or choose to studiously ignore: a great deal of their work adds little value and some of it actually reduces value (maybe that’s 2 facts of life but it is essentially the same point).  Let us first deal with the issue of conventional HR work adding little, if any, value.

Ask yourself what is the value of a laptop to an individual or an organisation but, before you reach for your calculator to work out productivity rates (with and without laptops), stop for a second and consider whether you would bother doing the same calculation for the use of the wheel?  No doubt the invention of the wheel gave the Mesopotamians a competitive advantage in heavy-rock logistics 3500 years ago but I don’t hear anyone singing the praises of the wheel these days, do you?  Similarly we all take laptops for granted because they do not cost much these days.

A more nuanced point is that whatever advantage was gained from buying laptops in the past, in terms of efficiency, is now enjoyed by all of your competitors and they have all translated those efficiency savings into lower costs and more competitive pricing.  Ergo, no one can achieve any more value from laptops.

Of course, the dedicated EB-HR manager in me says – yes, but what about the way people use their laptops?  The doctor who can make a quicker diagnosis, the graphic designer who is better trained to use its full potential?  Surely that brings a competitive edge and more value?  That might be true, again for a short time, but if all doctors and graphic designers are equally well-trained (yes, I accept that is a huge ‘if’) then the advantage eventually disappears.

So why do HR and ‘learning’ people get so excited about their employee engagement scores or their ‘e-learning solutions’?  They are kidding themselves that these, in some way, are bringing them advantages – but they are not.  What might bring them some advantage though is how they use these tools strategically – first mover societies that seize upon and exploit the strategic or military advantage of the next ‘wheel’ will dominate the world.

With that inspirational thought now uppermost in your mind I am sorry to have to bring you back down to the fact that HR methods can actually reduce value when not deployed correctly.  Take the issue of performance management using forced ranking; a method that was once flavour-of-the-month.  Here is a quote from an article about the VP-HR of Ford Europe’s experience under the heading – “Ford rethinks cull of its lowest performers”

“Boy did it get a bad reaction. It turned a lot of staff against the company just by the manner in which it was done. We’ve moved away from that now. If you put in a performance management approach, make sure it fits the company culture.”

Paradoxically, while HR is pretending to play a strategic game there is plenty of evidence that it is actually wasting huge amounts of value every day just doing the reactive, transactional work that is the comfort blanket of the majority of HR practitioners.  The disciplinary, grievance, legal and contractual work they pretend to dislike is actually the only job they know.  Worse still, they have a perverse incentive to ensure they have as many problems to deal with as possible, which has the dual appeal of not only keeping them in employment (for now) but also, simultaneously, making them ‘too busy’ to do the really difficult, but high value, strategic work.

All this nonsense about HR outsourcing or moving to a shared service centre, so that HR can become more ‘strategic’ ( a line Dave Ulrich has been simplistically trotting out far past its sell-by date) was always a con. Outsourcing HR transactions is never going to add value if the value of those transactions is nil or their frequency is not significantly curtailed by adopting a well-conceived and implemented strategic approach (like dealing with strategic employee relations issues and recalcitrant union representatives). Ford were not ready for forced ranking; it was the wrong solution for a poorly diagnosed problem.  It was never going to work because Ford shied away from taking the difficult, long-term, strategic HR decisions – and still does so today.

So where does that leave the potential for HR and learning to add value? Could the technological ‘wheel’ of the internet provide greater opportunities?  Not if we accept Michael Dell’s earlier prediction that the internet would be so ubiquitous and low cost that it would be just like everyone having access to the same electric light switch.  So whenever we hear of the supposed ‘advantages’ of e-HR and e-learning solutions* being trumpeted we are really just witnessing HR and learning departments where the cold light of truth has yet to dawn.  They need to get themselves ready for the day when the CFO, who has been trying to get rid of their costs for so long, finally wakes up.  Without evidence of value that day cannot be too far away.

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HR is NOT a support function

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After hearing Neil Roden’s very late admission that the function he headed up at RBS (Royal Bank of Scotland) was merely a support function it is time to finally put a few hoary old misconceptions about HR to rest.

First on that list is the simple fact that when we all talk about ‘HR’ most people forget that this is short for human resource management – HR is a management function. Second, managing an organisation’s human resources (or human capital if you prefer) is inherently and necessarily a strategic role. The reason RBS went bust was because a sizeable chunk of their bankers were not managed well enough to stop them creating huge bad debts.  RBS’s strategic ambition to become the ‘most admired bank’ was not matched by an ability to get the best value from its human capital. If that isn’t the job of an HR director then I don’t know what is.  For Roden, as with the HR directors of all the other banks that failed, if they somehow think this is not their job then they need to make room for those who do.  Otherwise they are turning the clock back to the bad old days of the lowly, unprofessional personnel manager – often appointed because no other department would have them.

A support function like Roden’s involves recruitment, advising on contractual pay and conditions, dealing with the usual grievance and disciplinary issues and reacting to any changes happening in the business such as relocations, revised terms and conditions and the like.  This is what passes for HR in the vast majority of organisations today but is just old-fashioned personnel administration by any other name, with all the severe limitations that entails.  The world might have changed in many ways and the job titles too (e.g. talent manager) but a support function runs training courses – it doesn’t get the best value out of its talent.

Day-to-day maintenance and reacting to operational demands, such as filling vacancies and running courses (even in expensive, purpose-built business schools or corporate universities) is intrinsically low value work because it is so easy to replicate; as evidenced by the low salaries of personnel and training officers relative to other professions.  Nevertheless, even basic tasks need to be managed well and constantly monitored for how efficiently and effectively they are carried out.  This leads personnel administration teams to resort to the sort of number crunching promoted by PwC/Saratoga to show how quick or cheap their recruitment process is.

The key distinction between personnel admin and real HR is that real HR people know that their main priorities are getting the right people and ensuring they are performing to their full potential, adding as much value as possible.  They know this presents them with a much more problematic set of issues but they are not stupid enough to be taken in by the sort of simplistic and misleading data used in PwC/Saratoga-type metrics.

The biggest problem of all though with an HR ‘director’ believing an organisation like RBS can operate in a global banking and finance system with only a personnel support function is the most obvious one – it failed miserably – because if you leave human capital management to personnel people, or even other senior, operational directors, it doesn’t happen. Fact.

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

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PwC – The March of the Clones

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Anyone who has ever seen the films Village of the Damned (based on the book The Midwich Cuckoos) or Stepford Wives, or any other work in the genre of people being turned into crazed automatons, and has also had the misfortune to work with PwC’s ‘HR consultants’, cannot fail to have noticed some very disturbing similarities.

This might leave me open to charges of libel if it were not for the fact that the person who pointed this out to me was one of PwC’s own staff development managers – puts a whole new spin on the word ‘development’ doesn’t it?  To protect this person’s identity, and to save them from the sort of gruesome fate that usually befalls anyone who tries to halt the march of the humanoids, I will refer to them as ‘A’.   ‘A’ said that PwC had a reputation for producing “clones” (A’s word not mine), and very arrogant ones at that: apparently some of the partners were increasingly concerned about it .  As A was telling me this in a very public gathering I suddenly felt an urge to look over my shoulder and clock everyone else in the room for any suspicious or menacing behaviour.

Unfortunately, in the time since A told me this PwC does not seem to have had any success in stemming its descent.  I stumbled across an interview yesterday, about the totally discredited ex-HR head of RBS (Royal Bank of Scotland) that only confirmed my worst fears.  I first met Neil Roden in 2001 and suffice it to say that his is a classic case of  over-promotion (in every sense) having become CEO Fred ‘The Shred’ Goodwin’s HR head while he was at Bank of Australia.  Roden, like many HR directors, was struggling to maintain some semblance of competence and composure in a job that was obviously too big and too strategic for him.

At the time he was boasting about reducing his ratio of HR people per 100 FTE’s since RBS acquired Natwest: an obsession with irrelevant minutiae fostered by Saratoga – a specious benchmarking regime now run by PwC and inflicted on many of their clients.  Also, as one of Fred Goodwin’s henchmen, he had to show his macho credentials by mimicking his master’s appetite for  slashing costs. What has never occurred to Roden, or PwC/Saratoga for that matter, is that really effective, evidence-based and value driven  HR people are not a cost but a sound investment.  What a difference a few good HR people, who understand the true value of human capital, might have made to this now state-owned bank.

Roden was never one to hide his ‘talents’ and ‘achievements’ as he won awards and was regularly chosen to top HR league tables.  I even had my own clients asking me what was so good about RBS?  I tried to put them straight and even challenged him head on but to no avail because one of the biggest myths in HR, that companies making lots of profits must be good at HR, is perpetuated by those very HR directors who work in profitable companies but have no evidence to demonstrate what their own contribution is.  The old saying ‘no one ever got fired for buying IBM’ has been replaced by ‘She must be good – she worked for Pepsico‘).  Only when it is too late is the reality revealed, when companies like RBS or Enron crash.

So what is Roden’s hindsight view now?

“There’s a debate here about what HR can reasonably be held accountable for. People think HR runs companies. I say, stop getting carried away; HR is a support function, no more or less important than sales or IT. HR critics are way ahead of themselves; they need to get back inside their box.”

Roden is of course referring to ‘critics’ like yours truly but what Neil always failed to realise was that any criticism was objective and evidence-based and we were never criticising HR, per se, only its worst exponents.  It would not be so bad if he actually stopped contradicting himself: compare this with an interview he gave to PwC’s newsletter ‘Hourglass’ in February 2008 (just before RBS collapsed) in which he was quoted as saying -

“I was personally involved in the group executive committee on whether or not we should proceed with ABN Amro.”

This contradiction and bare-faced hypocrisy actually makes Roden a perfect candidate to join PwC, having passed their integrity standards test with flying colours.  As Michael Rendell, head of HR services at PwC, commented on Roden’s appointment:

“In addition to a wide ranging role advising clients on all aspects of HR, Neil will be focusing on the role of the HR function, how to optimise its activity and the critical impact of people on business performance.”

Obviously Rendell and PwC don’t care what Roden did at RBS.  The fact that they are already contradicting each other will soon be resolved because PwC’s core competence in cloning will soon ensure their latest recruit is mouthing exactly what their clients want to hear.

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

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EBM is not an academic exercise

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Whatever EBM is or isn’t, in the absence of any universally accepted definition, it is safe to say it should be about improving outcomes, results and value.  While none of those words are explicitly mentioned in the title of this new discipline we should assume that ‘evidence based’ means improved performance and ‘management’ is the means to this desirable end.  However, management practices have to be applied in the real world rather than academic theory.

Academic research and studies might have a very important part to play in EBM but the evidence-based manager will be acutely aware of the difference between evidence-based HR theory and evidence-based HR practice.  In order to highlight the difference let us look at one particular study sponsored by the Work Foundation – “People and the Bottom Line” (Report 448 – P Tamkin, M Cowling, W Hunt; Institute of Employment Studies, 2008).  This is a 222 page report which concludes (page xvi) that its findings: -

“demonstrate that organisations that adopt an integrated range of HR practices, captured by the 4A model*, are likely to perform better on key indicators like profit and sales growth”.

(* their own model)

So is this an example of EB-HR Practice, EB-HR Theory, both or neither?

The answer is very simple – causality is everything to the EB manager (they want to know what works) and this research fails this most basic of tests because it was based on a questionnaire after the ‘HR practices’ had already happened – it was an ex post survey.  Yet to be a true EB-HR study it would have had to be ex ante; that is, HR practices would have to have been specifically designed to have a direct, causal influence on existing Baseline measures of ‘key indicators like profit and sales growth’ before any questionnaires were sent out.  This most obvious, founding principle of EBM – gather your Baseline data first – seems to have completely eluded the writers of this report

Then there is the ancillary question of when, if ever, does a report like this actually change management practice? If an employer read this report, and decided that the ‘4A Model’ had something to offer, they might try to put the model into practice, for example, by looking at Table 1 on page xv – “The Key 12 Measures” where they would spot -

“Ability – 4. Proportion of workforce that have a current personal development plan”

- and probably then give every employee a personal development plan (assuming they knew what an effective PDP looked like and were skilled enough in producing one).

Or they could go to page xvi and look at “Table 2 – Key processes” showing -

“Ability 1. The organisation evaluates development in a systematic way”

- without any guidelines from the authors that ‘systematic evaluation’ has to start with a Baseline measure – thereby encouraging more management activity rather than evidence-based practice.

The paradigm for this sort of pseudo-science is riddled with flaws but the oddest feature of all is this – why would a company already using HR practices be willing to let a quasi-academic body tell them whether their practices are working or not?  Either management trusts its own practices (in which case they don’t need approval) or they don’t (so why are they doing them in the first place?)  The world of non-evidence-based-HR can seem quite bizarre at times but the reasons why such odd behaviour persists is quite plain when you look at the motives behind the protagonists.

Governments around the world still generally subscribe to the notion that all education and training is ‘good’. The key sponsors of this particular research include government departments responsible for business and enterprise (BERR), Innovation Universities and Skills (DIUS) the University for Industry (UfI) and Skills for Business as well as the UK-government funded Investors in People. Most of these owe their very existence to such simplistic concepts that equate ‘good’ people management with good performance. This explains the following admission in the report (p.5): -

“Inevitably there are compromises between what ideally we might wish to measure and what is possible. For example:

Qualifications are used as a proxy for skill, and a broad brush one at that. Not all investments in education are considered equal in the labour market e.g. arts degrees have much lower returns than science degrees.” **

- and explains why the report is obsessed with asking questions such as: -

“How many of your managers are educated to degree level?”

So if the report is not about EB practice can we at least assume that it is on firmer ground, theoretically at least, with its methodology for statistical analysis ? Apparently not – their conclusion on page xvi also states that: -

“Whilst this research was not intended to demonstrate causality, it has laid the ground for future work that could do so by providing a tested set of measures that were both acceptable to employers and shown to relate to performance.”

In essence, they infer that their statistical analyses point to a correlation between HR practices and performance. They then hold out the forlorn hope that enough correlations will eventually demonstrate causation. Well, there might just be a strong correlation between the number of academic studies purporting to show that HR practices affect performance and the number of HR practices in use.  However, a better explanation might simply be that this is just a circular argument – researchers choose companies that are performing and assume it must be something to do with HR practices, because if it isn’t then they are out of a job – otherwise known as you scratch my back and I will scratch yours.

So what did you expect from non-evidence-based academics, researchers and politicians – integrity?

** compare with ‘New Report Smashes Skills Gap Theory’

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