Tag Archives: SHRM

American ‘HR metric mania’ is a concrete lifejacket

Posted on by
Share

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

Share

A different brand of HR and L&D – actual results

Posted on by
Share

In the last post we looked at the empty rhetoric of ‘talent management’ but we could equally have asked to see the substance behind ‘employer branding’, ‘employer of choice’, ‘employee engagement’, ‘competence’, ‘HR business partners’, ‘e-learning’, ‘social media’ – the list goes on and on and it is almost as if we are moving further and further away from actually making a concrete connection between people management and business performance.

This is what ‘Team HR’ has become, a mere logo, a low value brand that is obsessed with appearance and style rather than substance.  ‘Team L&D’ hail from the same stable and struggle with the concept, never mind the practice, of putting a $ sign on their impact, preferring instead to concentrate on the ‘process’ and activity rather than business outcome.

If you want a perfect, bang-up-to-date example of what I mean you only have to read the cover story on this month’s HR Magazine from the American Society for HRM (SHRM) Vol. 56 No. 8 entitled “The Care and Feeding of High-Potential Employees” by Robert J. Grossman suggesting that “Up to one-quarter of your top talent might be fed up and thinking of leaving your organization.”

No doubt many SHRM readers will be fascinated by this apparent insight but my reaction is – are you sure you have identified the right problem?  It is not at all clear what this article is about.  It seems to be about hanging onto ‘talent’ but offers the reader no evidence that these “high potentials” are actually great performers. It also assumes that Eric G., as a “freshly minted Stanford MBA”,  must have been a real catch (does having an MBA guarantee that?) but only reveals that he relocated 5 times in 3 years.  One could reasonably deduce from this that he could not possibly have performed effectively in any of those roles. Have a read for yourself and see what you think.

This blog/book is a determined attempt to change the emphasis of HR, L&D and articles like this from process to evidence.  It is building a new brand of HR and L&D that is not concerned with vacuous logos such as ‘talent management’, ‘human capital’ or ‘analytics’ but a fundamentally different brand of management with clearly distinguishing features.  Right at the top of the list is probably the most obvious and simple point of all – measurable business needs have to drive HR and L&D – not the other way around.

The evidence to date is very clear – every survey of HR and L&D from around the globe will reveal remarkable consistency in approach, process and activity – not differentiation.  How can that be when there are literally thousands of different organisations, in different markets and at different stages in their life cycle?  All of them have their own unique problems and issues but what they get from HR and L&D are standardised answers.  Whereas the evidence-based manager asks what does the business really need?  What business need led to the hiring of people like Eric G, who seem to be difficult to satisfy?  How might the business suffer if a ‘lesser mortal’ were to be employed instead (and may already have been passed over)?  On the scant information offered by this article it appears many American corporations are still much more preoccupied with and obsessed by CV’s than they are with results and tangible value.

Share

EB-HR, Human Capital Reporting and International HR Standards are all closely connected

Posted on by
Share

There are three, seminal, management ideas that have been moving inexorably towards each other over the last 50 years and they are finally beginning to meet up at the same junction: -

  • Evidence-based management is emerging as a superior approach to management
  • Employees are increasingly being viewed as another form of very valuable capital that has to be expertly managed to achieve differentiation and greater returns
  • Tougher standards have to be imposed if HR and L&D are to achieve the same level of credibility and gravitas as other professions

The first of these, the concept of being evidence-based, is extremely simple – only do those things where you have evidence that they work.  Human beings are already hard-wired to do exactly this – we made fire because the evidence was obvious that it would keep us warm and feed us.  Intelligent managers, with common sense, will already be basing most, if not all, of their decisions on the obvious evidence of costs, output and quality figures.

However, the larger an organisation becomes the more its managers tend to lose sight of any direct connection between their decision-making and outcome.  Take pharmaceuticals, with a 12 year product development cycle, or the long-term planning of health services: here, simple common sense is just not up to the job anymore because the complexities and organisational dynamics involved require a higher, more sophisticated level of management capability.  We have already witnessed the evolution of concepts such as ‘total quality management’ and ‘balanced scorecards’ whose schemes try to ensure the whole organisation is working well as an organical.  This thinking exposed the weaknesses in old-fashioned managerialism and stretched it to breaking point; as evidenced by the on-going, sovereign debt crisis in Western economies that has yet to find a coherent or sustainable response.

Meanwhile, it has become widely accepted that the difference between the market and book values of large corporations is connected to how well they manage their human capital.  This has placed managing the expectations and performance of people firmly at centre stage.  Despite early resistance the term ‘human capital’ is beginning to stick because the players most interested in understanding these connections, the financial and investment analysts, are struggling to come up with explanations themselves so they are the ones putting pressure on organisations – and their HR ‘experts’ – to come up with answers.

All of these forces have put HR management in the spotlight and so far the HR profession’s response has been woeful.  Initially, in the early 1990’s, HR departments thought the answer was to measure themselves (e.g. Saratoga-type data of input and transactions) but it has become increasingly clear, especially in the wake of the financial crisis, that this does not offer the right evidence.  Consequently the whole concept of what it means to be an ‘HR professional’ is called into question because the traditional skill-set of the HR practitioner is being seen as inadequate; hence the drive to the business partner model.  The evidence is also clear that many companies have failed to perform, notably the banks, despite having adopted ‘progressive’ HR policies.

HR still has a lot of convincing to do and it has to start by ensuring its own professional standards are up to the job; hence SHRM’s current project on professional standards and metrics under the auspices of a Director of Standards and its efforts to move towards an ANSI (American) standard for HR that they hope will eventually become a globally-recognised (ISO) standard.

Behind all of this though lies the simplest tenet of all that underpins evidence-based management – the need for BASELINE EVIDENCE before you start trying to manage people more effectively.  The majority of conventional HR and learning methods are fixated with process, technique and ‘best practice’ rather than on any evidence of outcomes required in a particular context.

So HR Directors need to be acutely aware of what this potent mix of EB-HR, HC Reporting and International Professional Standards means for them.  Regardless of what credibility they might have earned in their careers to date, and irrespective of the ‘best practices’ they espouse, they will have some serious thinking and explaining to do when one of their international competitors manages to mix the perfect cocktail with these three, key ingredients.

Share

All you need to know about training evaluation in about 700 words

Posted on by
Share

When asked by the editor for a title for my CIPD book on evaluation I suggested – ‘The Last Word on Evaluation’ – not out of arrogance but because the mountain of literature and endless debate around the subject had never reached a conclusion.  Evaluation is essentially a simple subject made unnecessarily complicated by vested interests. Probably the biggest and most influential vested interest is the American Society for Training and Development (ASTD) who, whenever they tried to offer their members advice on this thorny subject, managed to get it so completely and so obviously wrong.

From the 1970’s the ASTD regarded Kirkpatrick’s 4-Levels as their standard:

  1. Reaction to training (happy or smile sheets)
  2. Testing learning
  3. Applying learning in the workplace
  4. Business impact

Let’s try this out by thinking of one salesperson going on a sales training course at a cost of $1000. When they return you take them through the 4 levels, starting with how they felt about the course…  – WRONG.  That way you end up at Level 4 with no way of assessing impact.

Let’s start again. Before you send them on the course you ask them how much they sell now ($1.2 million) and what the profit margin is (10%)?  Then afterwards, when you get to Level 4, you can ask again how much they are selling and you have a basis for gauging impact. The critical, pre-learning questions form the BASELINE and produce the simplest, most obvious and effective evaluation model with just 2 levels:

  1. Baseline evidence
  2. Business impact measured against the baseline data

- but you will quickly find in practice that this 1st, Baseline level will usually suffice because it is this one that adds all the value in what is now an enhanced, learning process. Individual learning starts when each individual knows their own Baseline.

The 4-Levels never captured this so, just as corporations started asking what the financial return (ROI) was on their training investment, Kirkpatrick’s obsolescence was becoming apparent.  So the ASTD decided to back a different horse in the 1990’s, but could not admit Kirkpatrick* was wrong, so adopted Jack Phillips’ model which just added another level – level 5 for the ROI calculation – which also made it look like an innovation – WRONG again.

Let’s go back to the beginning. You ask the sales trainee the BASELINE questions. You do the training and then at Level 4 you get an answer as to how much sales have increased (1%) and you know the cost ($1000) so you can do the net ROI calculation immediately – it’s 20%. There is no need for any level 5 – it doesn’t add anything and anyone with a calculator can work it out.  Under Phillips though you have to spend even more time and money making the numbers up and converting to $ because he doesn’t establish the relevant $ sign at the beginning.  Level 5 was always a figment of the ASTD’s collective imagination and that’s why the figures Phillips produced never convinced anyone who had a business head on their shoulders.

So the ASTD decided it needed more credibility and drafted in a labour economist  – Laurie Bassi – in a vain attempt to garner a more academic and quasi-scientific level of respectability.  Laurie tried to show the business impact from the billions of $’s ASTD members were spending on training.  Laurie did not know any more about evaluation than her predecessors though and, as an academic, used the only analytical tools she had, regression analysis to produce correlations, using retrospective data.  I guess she also did not have the benefit of first-hand experience of what it feels like to work in a training department in a large corporation; where trainers are often under pressure from managers to produce all sorts of stupid, knee-jerk programmes to cover up their deficiencies in people management and development.  Laurie is now heading up efforts to establish international standards by the other large American professional body, SHRM ( the Society for HRM) and the ASTD still makes it mandatory for anyone wanting to be their ‘partner’ to attend a Jack Phillips training programme.

Forty years should have been long enough for the Americans to get it right but so far, despite being an SBO (statement of the bleeding obvious), no ‘expert’ in the US has ever fully understood or acknowledged the crucial importance of the BASELINE level in evaluation and learning; whether it be sales training, management development, leadership or OD.  Starting with a Baseline makes learning evidence-based, it is a perfect application of evidence-based management.  Now, if you are looking for an indication of which corporations waste the most money on ‘training’ just ask them which model they use and where they start from.

For personal development linked to this topic visit the Consummate Professional Series or attend a workshop.

* The Kirkpatricks still refer to their model as ‘the 4-levels’, although son Jim now tries to make up for the absence of ROI with something called ROE (return on expectations).  This is intended as a sort of ROI-lite, except ‘expectations’ are not necessarily couched in $ terms and no ‘return’ can actually be calculated because ROE is not a mathematical or financial formula.  In short, ROE can mean whatever you want it to mean.


Share

HR playing the Fool

Posted on by
Share

I was sorely tempted to write an April Fool’s piece today but instead I opted for a history lesson on ‘The HR Department’.  In case you were still wondering, this is not a site for HR people – or at least not the majority of those in conventional HR roles.  As far back as I can remember there were soothsayers predicting that HR was at a ‘crossroads’ and had to decide which path to take.  In 1991 I decided to take a very different path to the one that the other 99% of the ‘HR profession’ thought was a safer bet.  So let’s go back 20 years and remind ourselves what the current thinking was then.

1991

The precursor of the UK’s CIPD was the IPM (Institute of Personnel Management).  Its president was Barry Curnow who wrote a piece for Human Resources magazine (Summer issue) entitled -

“Measuring the intangible – performance criteria in jobs without a bottom line”.

Barry, obviously having a penchant for self-immolation, did not present the most positive face that one might expect from a professional body’s titular head.  But even in 1991 Barry was totally out of touch with the real world, which was increasingly demanding a ‘total quality’ approach to management that had to exclude all muda (a Japanese term used in the Toyota Production System for an activity that is wasteful, unproductive and adds no value) and personnel people were definitely starting to be seen, at best, as a necessary evil and, at worst, as the PC (political correctness) police.

1993

Two years later I was asked to speak at the IPM’s annual conference on the radically new theme of ‘The added value of Personnel’ (HR was still not on the scene).  Someone had finally decided that the Personnel department should at least acknowledge it had a bottom line.  Although it had not yet registered with the 500+ members in the audience: the majority of whom had bemused looks on their faces, as though I were speaking a foreign language.

The keynote conference speaker that year was Dr. Richard Pascale (“The art of Japanese Management”)  who told his audience -

“In the US people in personnel take on a psychological contract to be a victim.” (reported in Personnel Today, 9 November 1993).

So the US experience was no different apparently.

1995

By 1995 the response from beleaguered personnel departments, to all of this damning criticism, was to re-invent themselves as ‘HR’ – because it sounded more like the sort of department that might actually have a ‘bottom line’.  Yet the guy who had taken over Barry Curnow’s role, the infamous Geoff Armstrong, was having none of it.  In a book review in Personnel Today (23 February 1995) he predicted –

“In my view, it is wrong to tie strategic people issues to the HRM bandwagon.  They were around before HRM was invented, and will still be around long after its faddish label has faded.”

Whilst over-staying his welcome at the CIPD, and building a sycophantic regime that even Colonel Gaddafi would envy, Armstrong arguably did more damage to the cause of business-focused HR professionalism than any other person.  Certainly it set back the CIPD’s development by at least 10 years, IMHO.

1996

Meanwhile observers such as Thomas Stewart in Fortune magazine (15 January 1996) had a simple solution to the HR department ‘problem’ -

“Why not blow the sucker up?”

and added -

“Human resources has come to the proverbial fork in the road.  One path leads to a highly automated employee services operation…. The other leads straight to the CEO’s office.”

What he didn’t cover in any detail was what the HR director would do once they got there (having never been a strategic HR director himself).  Stewart is now the MD and editor of Harvard Business Review (HBR), a journal that has also failed to come up with an answer to maximising HR’s impact on the bottom line, despite publishing many questionable ‘solutions’ in the meantime (Prahalad and Hamel’s ‘core competence’ theory being probably the worst culprit, IMHO, although W. Chan Kim and Renée Mauborgne’s piece on ‘Blue Ocean Strategy’ gets my personal award for the most crass HBR article of all time).  I think it’s high time he blew that sucker up as well.

1998

Then Dave Ulrich turned up on the scene with his own HBR article entitled “A new mandate for human resources” where he argued -

“In recent years, a number of people who study and write about business have been debating whether we should do away with HR. The debate arises out of serious and widespread doubts about HR’s contribution to organizational performance. And as much as I like HR people, I must agree that there is a good reason for HR’s beleaguered reputation. It is often ineffective, incompetent, and costly; in a phrase, it is value sapping. But the truth is that HR has never been more necessary.”

This was a very clever article.  Ulrich knew his audience.  At a single stroke he wrote off HR departments as ineffective but then held out the prospect of a promised land, for the very same people who were so obviously ineffective, with his magic wand that would transform them all into strategic, business partners. He also remembered that when ‘personnel’ people were struggling in 1991 they were happy enough to just change their name rather than their modus operandi.  So he offered them an opportunity to pull the same stunt again, with new titles, only to suggest a full decade later, in …

2008

… at a conference hosted by PwC, that HR had failed to make his model work, rather than admit he had produced a seriously flawed model (which remains fundamentally flawed despite his more recent amendments).

Which roughly brings us up to the present day.

2011

So what are the key items on the organisational, HR agenda now, when HR no longer pretends it does not have a bottom line?*

  • Human capital management and reporting
  • Evidence based (HR) management methods
  • Tougher professional standards for HR people (SHRM is currently working on this)
  • Demonstrating added value and ROI

So, after two decades, HR has arrived right back at the same historical junction.  Of course, some HR departments have already tried to get away with their re-naming stunt once more – this time calling themselves ‘Human Capital’. Others are stuck on a vicious, circular path that always leads back to the transactional ghetto still fooling themselves that efficient transactions have something to do with value – but they are no longer fooling anyone else.

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

*But see Ulrich’s 2003 book “Why the bottom line isn’t!”

Share