Tag Archives: talent management

Talent stats – A book review of ‘Moneyball’ by Michael Lewis

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It probably tells me something about the state of the talent management ‘profession’ when a book on baseball proves to be the best source I could find on how to use statistical evidence to identify and deploy talent.  Let me stress immediately that this is no slight on the game of baseball nor its loyal fans. Far from it. As a Brit who only ever played baseball on very rare occasions at school (but who far preferred it to that other inscrutable, arcane game of cricket) I did not realise just how much analysis could go into what appeared, on the field, to be a very simple game: a bit like management really.  That is why you need to read on regardless of whether you like baseball or books on sport.

What Michael Lewis has done is truly remarkable.  Not only can he write in wonderfully lyrical prose, about a topic that could be as dull as ditch water, he has done the world of human resource management a great service by producing one of the most illuminating management books of all time.  It should certainly be a set text on the desk of anyone currently pretending that they know anything about talent management.  This is evidence-based talent management, it has already been around since the mid-90’s and it is time you were practising it.

The book is based on a well-researched, true story that has already been turned into a film starring Brad Pitt.  Pitt plays the lead role of Billy Beane, the legendary general manager of the Oakland A’s baseball team who used statistical principles to recruit talented baseball players that conventional wisdom, experienced scouts and competing teams had all failed to spot.  The real coup though was that Oakland could not afford the most expensive players and, as un-spotted talent is cheaper talent, Billy Beane was able to compete successfully with the teams that had the deepest pockets (any premiership football managers reading please take note).  The film, wisely in my view, spends less time on the statistics and more on the fascinating, human frailty story of Billy Beane’s own life: a guy who apparently possessed every talent required, to be one of the greatest baseball players ever known, but who never achieved the potential he held out as a youngster.  As an avid film-goer I enjoyed the film, as an avid evidence-based HR fan I really enjoyed the management expertise in the book: my copy has numerous, neon, post-its inserted on the many pages that contain useful management lessons.

The aspect of the book that is most relevant here is the battle between conventional baseball management and the application of new thinking; specifically sabermetrics. Conventional scouting in baseball looked for 5 specific talents, more colloquially referred to as ‘tools’ comprised of “the abilities to run, throw, field, hit and hit with power”.  When it came to selecting players for the season the scouts would sit around a table and discuss the merits of their favoured players.  In essence, the book shows how conventional management is blinded by impressions of talent rather than any rigorous, evidence-based method of selection.  It also explores the battles that Billy Beane and his colleagues had in turning around the conventional wisdom that was born out of the many years of experience of hard-bitten scouts, coaches and managers.  This is precisely the challenge facing the evidence-based manager today – replacing intuition and non-evidence-based methods with intelligent management.

This short review cannot do justice to Michael Lewis’s achievement in drawing out many life lessons with a masterful blend of cold statistics and human endeavour.  There are certainly passages in the book that might only interest the über-geeks of baseball statistics and other sports-stats nerds, but the reader wanting to learn about sophisticated, human capital management will easily find plenty of other episodes here where you can smell the sweat and almost bite off a wad of the bitter-tasting, chewing tobacco ever-present in this ultra-macho world. There is also plenty of entertaining viewing to be had from the film, which contains enough pathos to satisfy anyone who has ever known what it feels like to have personal ambition and talent cruelly thwarted.

Billy Beane in 2006

 

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Just run that HR hypothesis by me one more time would you?

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When HR tries to measure itself it always ends in tears and not just the ones running down the cheeks of the HR department: every executive who has had to endure yet another HR presentation, supposedly demonstrating its incredible value proposition, will know only too well what it feels like.  It would not be so bad if HR had learned from its previous mistakes.  Measurement is a golden rule for any organisation but the measures must be meaningful to the business and they have to follow the #1 Golden Rule, often ignored by HR departments, of sticking to a well-conceived hypothesis.

Is HR theory and practice founded on sound hypotheses?  The list of activities regarded as the unquestionable and indispensable orthodoxy of HR, the ‘givens’, includes -

  • Competence frameworks
  • 360° feedback (but including 180°, 540° and 473.5°) – OK, that last one was a joke
  • Leadership development
  • Engagement
  • Talent management
  • Diversity

All of these have been around for a while now so maybe it is about time someone checked out whether they are under-pinned by any sound hypothesis.  Let us take a fresh look, using the logic of EB-HR, to see if any of them really hold water?

The Competence Hypothesis

Every EB-HR hypothesis has to start with an intelligent question about an identified problem: this is called root cause, or cause and effect, analysis.  Presumably those who install competence frameworks believe they have a problem with the effects of management incompetence?  Yet cause and effect analysis demands that the ‘effect’ be measured, so they can only say they have a problem with incompetence if they have already measured it.  That conclusion, in turn, requires them to produce a very specific definition of competence and logically leads into that dreadful labyrinth comprised of the myriad of competencies supposedly exhibited by a multitude of managers in an infinite array of combinations or clusters. Now, even if they were able to unravel this Gordion knot of their own making, there is the equally important question of whether there is any close causal connection between these competencies and performance?  This will require an analysis of the competencies of high performing managers, showing how being competent in certain areas (e.g. negotiation, organisation, delegation etc.) causes their performance to reach a level superior to their competence-challenged colleagues.  Of course, to do this they would need a definition of performance based on a balanced set of performance indicators that could be compared between two distinct groups of managers over time (performing and non-performing) and we all know how problematic performance measurement is don’t we?  This is because performance itself is subject to the vagaries of organisational planning and market dynamics, which never stay constant long enough for meaningful comparisons to be made. These environmental complications then ultimately defeat any attempt to run a controlled experiment where answers to the original questions can be found.  Nevertheless, if the HR team soldiers on and somehow identifies a group that need some competence improvement they then incur the next practical problem of how to design individual, competence development programmes.  Plus, they would simultaneously have to run a control group of managers, who would be left to their own devices, while the target groups (incompetent and competent) were monitored. Phew!!

If this hypothesis strikes you as simple, and easy to explain to any serving manager, then good luck with your competence framework.  But remember – if your competitors are doing exactly the same then neither of you gain a competitive advantage after all this effort.

A simpler hypothesis, that addresses all of the complexities more directly and efficiently, is to regard each manager as a unique individual with their own unique combination of abilities and talents that you will never have the time or energy to fully fathom, explicate, delineate or codify.  So instead, why not just ensure each manager is regularly asking themselves a set of simple evidence-based questions:

  1. ‘What evidence do I have of our performance level today?’
  2. ‘What measure would I choose to indicate an improvement?’
  3. ‘What do I require to help us achieve that improvement?’

Please note – if the answer to question 3. is something as broad as – ‘restructure the whole department’, ‘re-design the system‘, ‘re-think the process‘ or ‘change our marketing strategy’ – then this suggestion needs to be treated with respect, systematically analysed for validity and resolved.

This hypothesis is based on 3 assumptions -

  1. We are always willing and able to improve.
  2. Everyone is allowed to voice their conclusions from asking these questions, without fear, through a systematic process for organisational problem resolution
  3. If we keep improving we will read that as evidence that we are becoming more competent.

This evidence-based hypothesis leads me to recommend that you consider ditching your existing competence framework.  Would anybody like to submit a better hypothesis for competence or any of the other ‘givens’ on the HR list?

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We can measure what we call ‘talent’ even if we can’t define it

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This is part one of a 2-part post.

One of the earliest pieces in this series looked at a truism in human performance – any population will form a normal distribution – the bell curve – the highest and lowest performers will be minorities and the bulk of people will be somewhere in between.  As a truism it gives EB-HR managers great confidence when they use it to analyse organisational strengths and weaknesses.

It is also perfectly adaptable to any type of organisation. If we take Goldman Sachs as an example, we know they offer some of the highest rewards in banking, which might lead you to believe they only employ great performers (i.e. their performance curve is skewed to the right), but the performance curve is always relative, so even Goldman Sachs will always have some people who are deemed to be under-performers relative to what their best achieve.  It is also worth adding that their ‘worst’ might be much better than the ‘best’ their competitors have to offer.  In effect, other banks start from a lower base (as shown in the graphic).

Goldman Sachs performance curve is ahead of other banks

Let us apply this simple tool and insight to what has come to be called ‘talent management’.

It is a decade since ‘The war for talent’ was published by Harvard Business Press – regular readers of this blog book will know I hold HBP responsible for publishing some spectacularly vacuous management books – and history has proven the authors so wrong (McKinsey’s chose Enron as a paragon).  From the very beginning the more astute management critics could see there was no substance behind McKinsey’s hype and even Wikipedia points out that the authors failed to define ‘talent’.  Yet this has never deterred ‘talent managers’ from selling their non-evidence-based, indefinable wares with great enthusiasm.

In the age of evidence-based HR let us at least get back to some basics.  Whether you can define talent or not we all know it is rare – that’s why we give it a name – and we also know you can only manage what you measure, even though the non-evidence-based refute this*.  Ideally the measures will be objective (output, cost, revenue, quality) but a subjective measure is better than no measure at all.

One group we naturally associate with having innate talents are sportspeople; whether they be high jumpers, footballers or basketball stars.  Their performance is measured every time they compete (height, goals, baskets) and we tend to read across to say how talented they are (e.g. the top goal scorer in the league must be one of the most talented) knowing that the context, and their team-mates, have a significant part to play in their success.  We also recognise some people as being highly talented despite poor performance – they are ‘off form’.  So there is no automatic correlation between talent and performance; we just have to keep working at making the best of whatever talents we have at our disposal.

It is an HR dictum that you should ‘hire for talent and attitude’ because we cannot endow people with attributes they do not possess.  You cannot give someone a talent and trying to change a bad attitude is more trouble than it is worth but if we want to manage talent it is worth measuring it.  Try it now by focusing on one particular talent – say negotiating.  I picked this one because it encapsulates many of the common issues surrounding discussions about talent. You can teach negotiating skills (e.g. save your big guns for later, when you say ‘no’ mean no) and train in how to prepare for a negotiation (e.g. what information do you have about the other side, how high can you afford to go?) but we all know good negotiators who just have a passion for negotiating and a personality that enables them to get away with things that others cannot – they have a natural talent for it.

If you send managers on negotiation training it can become evidence-based (without perfect evidence) by giving each trainee a baseline score from 1 to 10 before they start (as explained here) but also consider a few people who are not automatically on the list – they might have a talent as yet untapped.  For anyone getting a 3 or less I would recommend saving time and money by taking them off the list.  Anyone between 4 and 7 will probably need some motivating to improve their negotiating ability (they don’t have a natural talent and/or it is something they do not welcome) and with the 8 and over’s it might be worth considering what successes they have actually had before sitting down with them to try and work out what makes them so good.  If you are clever enough you might even help to make some of it rub off on the others.

As with everything in HR though it is never entirely straightforward is it?  Talent is not a one-way street; it can bring with it all sorts of problems and unexpected consequences.  Recognising talent can create primadonnas, prompt them to demand too much, encourage them to move elsewhere or just disrupt the team.  Defining talent does not help much and calling it a ‘competence’ just confuses the issue.

The only thing that matters is that you at least have some measures that tell you two things – you believe you are getting better at ‘it’ and ‘it’ is improving your performance. Alternatively if you think talent cannot be measured, because it is  ‘intangible’, don’t be surprised if it never produces anything tangible.

*Those who say you cannot measure ‘intangibles’ like talent and leadership seem to have missed the obvious point that they have already attached some relative importance to it – a subjective measure that says it is more important than the other things they could be doing.

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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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