Tag Archives: systems

EBM – Doing it for real – Lesson 10 – Design Human Systems

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In our continued exploration of organisational anatomy and the strategic management framework you should have noticed by now a distinct emphasis here on the human aspects. In reality the human dimension is rarely, if ever, fully taken into account; especially where the name of the game is speculation or early exits by private equity partners.  Nevertheless, every CEO should know they have to install effective systems of control if the word ‘management’ is to mean anything.  Wherever systems are absent or ineffective disaster awaits.

The IAEA (International Atomic Energy Agency) yesterday released its ‘Preliminary Assessment’ of the Fukushima nuclear disaster, following the Japanese tsunami in March 2011, and obviously wants to reassure the rest of the world that the situation is under control, acknowledging that “Nuclear regulatory systems should address extreme events adequately”.  However other reports suggest there was already plenty of evidence that no effective systems were in place.  So we need to look at what constitutes an effective management system and, again, particularly highlight how making systems human, in every sense of the word, is an absolute imperative.

Lesson 10

Design all systems to be human.

Practical application

The picture above is from a client’s brand new, state-of-the-art, premises that includes security doors that only allow pass holders to enter.  Unfortunately the door shown was on the way to the coffee/breakout area and it became a real pain having to get our passes out every time, so someone just took the law into their own hands and decided to subvert the whole ‘system’ by jamming a chair in the way (which was marginally less hassle to negotiate).  The reason I put system in quotes is obviously because it did not qualify as a system and that is the first part of this lesson – be absolutely clear in your own mind what a system is.

The definition of system that I use is –

A system is a means by which you ensure that what you want to happen actually happens.

A computer operating system operates the computer; a road sign system shows you how to get from A to B; an invoice system makes sure you get paid.  Unfortunately the sea wall ‘system’ constructed in Japan, which was designed to ensure a tsunami did not reach the reactor, failed to prevent a tsunami reaching the reactor and a chair jammed in a doorway failed to stop non-pass holders entering.

Of course systems designers will always excuse themselves, before they even start, by saying no system is perfect, which is true, but that does not mean they should not keep perfection as their goal and remove as many of the imperfections as possible. They should also realise that most imperfections emanate from that intrinsically, imperfect resource – human beings – that is why human resource management systems are so crucial in all organisations.  So who is going to design them?

HR people are very poor systems designers.  They talk about performance management systems that don’t produce performance, reward systems that don’t match rewards to results and learning and development refer to ‘learning management systems’ that don’t gauge learning, application or impact. So what are the rules of great, human, systems design?

  1. Don’t ever refer to a system being in place unless you can confidently state – “What we want to happen is ……… and this system will ensure that happens.”
  2. Fill the blank in 1. above with a crystal clear purpose and that purpose should always be an output or outcome (e.g. traffic lights have 2 purposes – safety and traffic flow; banking regulation systems guarantee that banks have enough money to pay creditors – hahaha)
  3. Make it idiot proof – even the most mechanical systems will have a human element that can undermine the whole system (e.g. the lights might be on red but one person fails to stop, stupid bankers buy derivatives they don’t understand)
  4. Only allow people to make decisions or take actions within their capabilities, which have to be checked (i.e. regulators take certificates away from transgressors)
  5. If anyone tries to bypass the system have a back up system in place to alert you (e.g. the open door sets off an alarm after a certain time, mortgage applications are checked to make sure they are kosher)
  6. Think of the most unlikely disaster that could happen (e.g. tsunamis higher than the walls you are designing, a run on a bank) and then design your system accordingly, making sure the people running the system have the balls to enforce it.

We will never achieve perfect systems but just imagine how much better the world would be if we at least produced evidence that we had done everything possible to make them human-proof?

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

Postscript.

Once you start spotting human system failures you see them everywhere – here’s one sent to me by a former student from my MBA (HR Strategy) class.

 

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HR garbage in, HR garbage out

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As someone who regularly gets involved in HR data management I have inevitably come across the work of the two biggest players in the field of data production, SAP and Oracle.  SAP (see slide 5) even misinterpreted my own HR Maturity Scale to help sell their products (which they used without my permission or guidance, I hasten to add).

Yet all HRIS (HR Information Systems) providers fail to follow their own golden rule of IT – ‘garbage in, garbage out’ – which has always been a founding principle since the birth of the computer age.

The whole point of any management information system, HR or otherwise, is to add value in some way – management that does not add value is redundant.  So the data used has to provide information that reveals something about the output, cost, revenue or quality of the organisation. If it does not serve this purpose it is only fit for the garbage bin. So what information comes out of a typical HRIS? Basic record keeping including -

  • How many people are employed (although even this is amazingly difficult to pin down in a dynamic environment)
  • Whether they are absent or not (assuming they are accurately and honestly registered as such)
  • How much they cost in salary and benefits (but nothing about what value they add) and
  • Whether they completed their last appraisal (which may or may not have been a pointless exercise).

This type of data has to be regarded as garbage though until some sense can be made of it in value terms.  Interestingly, Oracle’s own VP of HR, Vance Kearney, once happily declared (at a conference on HR Strategy) that he had nothing to do with strategy and so his own department was merely an ‘admin’ function (as was Neil Roden’s HR function at RBS apparently).  This admission places Oracle itself at Stage 1, the lowest value Stage for HR on the Maturity Scale, so don’t raise your expectations too high of Oracle ever teaching you how HR can add value.

Of course to turn HR data into useful, evidence-based, management information requires –

  • A systematic way of deciding how many people you should be employing at any particular point in time
  • An effective performance management system that tells you whether those at work are performing well (and whether you can afford to do without the ones that are absent)
  • A meaningful review process, rather than the sort of anodyne performance reviews and personal development planning processes often used as a substitute, that will provide a clear view of what value is achieved by each employee – and this could be a negative value (it’s a pity none of the banks had such a system in place)

All of these, by their very nature, are difficult to design and implement effectively; but then that is precisely why they offer such a huge, competitive advantage.  It is the ability to rise to this challenge,  using garbage-free, evidence-based, value-driven information systems that will mark out the best organisations from those who employ expensive HR bureaucrats.

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