Table of Contents
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Charting The Course
The business of performance management is heavily on the minds of the HR community. Led by SuccessFactor’s impressive growth track record, the conversation in and about HR is changing. In this era of heightened accountability and cost management, the usual rules no longer apply.
When focused on the performance of the business, HR can become a competitive weapon. When focused on the efficiency of internal process, HR is a boat anchor. It really, really doesn’t matter how fast or slow your overall HR processes are, how much they cost per employee or who is to blame for process inefficiencies. What matters is having the right people in the right place at the right time with the right skills and the right objectives.
The actual deployment of people to work on the business problem is the only thing that matters.The rest is the land of pretend that HR is famous for occupying. In today’s organization, you are either part of the momentum or you are a drag on progress.
One or the other.
It’s HR religion to say that one should never be held accountable for things beyond one’s control. In HR led performance management processes, the guidance is almost always to assign goals that are a stretch but within the realm of possible achievement. The notion that people should be held accountable for things beyond their control is an anathema to conventional HR wisdom.
Business leaders are always responsible for things beyond their control. It’s the essence of leadership. The difference between HR that matters and HR that ought to be outsourced is as simple as whether or not the organization will take on impossible goals.
Let’s look at an example.
Imagine two HR leaders. One is given performance bonuses for reaching an organizational goal like “revenue per employee”. The other is given the more standard set of goals involving ‘keeping the trains running on time’. The former works toward a single overarching target to which she can only make a contribution and can never control the outcome. Her view is on the top line. The latter manages an HR organization with an eye on cost containment and process efficiency. Her goal involves the bottom line.
The differences in the way the function is managed are completely different. The first leader has a framework for prioritizing decision making based on organizational objectives. Faced with a choice between alternatives, the executive will choose the path that is most likely to impact ‘revenue per employee’.
The second leader will be motivated to choose alternatives that make running the railroad more efficient even if that reduces the likelihood of achieving goals like ‘revenue per employee’.
Imagine that the two are faced with the following choice.
Two senior managers arrive at he HR leaders office. Mr. A wants serious help filling two very difficult slots in a high margin, fast growth business. The search will distract the recruiting department. Mr. B is trying to hire 25 people for the Tucson call center. They are easy to hire and the work can be done quickly. Mr. A’s project increases the likelihood that the company will meet its ‘revenue per employee’ target. Mr. B’s requirement will help the HR department meet it goal to reduce average hiring cycle time.
The leader with harder to meet goals will focus on the business while the leader focused on measures of efficiency will choose the project that meets those goals. Which do you want, a business outcome focus or an HR process focus?
The HR leader who takes on goals that she can only influence is a team player whose work moves the organization towards its goals. The HR leader who is rewarded for making HR ‘better at what it does’ is doomed to irrelevance and outsourcing.
In The Know v1.33 Performance Management
The very best thing you can say about Performance Management tools and systems is that they make a serious effort to have organizational progress come from the top. The focus is on organizational alignment rather than the perpetuation of internally focused initiatives. It is a solid step in the direction of building an HR function that is the heart of organizational alignment.
The typical concern expressed about performance management is that it seems extraordinarily difficult and often unreliable to measure phenomena as complex as performance. People point out that today’s organizations are rapidly changing, thus results and measures quickly become obsolete. They add that translating human desires and interactions to measurements is impersonal and even heavy handed.
An additional concern is that the process of breaking organizational goals down into sub components can become an exercise in self-flagellation.
The alternative view is that any function that can not be directly tied to the organization’s performance objectives is a function that should be jettisoned. Every person, supervisor and department head should be able to quickly and clearly describe the contribution her function makes to the end game.
- John Lennons and the Future of Talent
Jeff Hunter remains one of the brightest minds in the space even though actually working in HR has slowed his output. In this piece, he bemoans the tendency to bypass people who are great at one or two things for those who are mediocre at many things.
You can imagine, from this piece, that he might be concerned that a relentless focus on alignment with a few objectives will make the organization impotent in the face of real environmental friction.
- Wikipedia on Performance Management
Bare bones definition is a good place to start. Performance management is the alignment of goals behind the CEO’s objectives.
- Performance Management – Basic Concepts
“Performance management reminds us that being busy is not the same as producing results. It reminds us that training, strong commitment and lots of hard work alone are not results. The major contribution of performance management is its focus on achieving results — useful products and services for customers inside and outside the organization. Performance management redirects our efforts away from busyness toward effectiveness.” – On Performance in Organizations
- Performance Measurement Documents
The Department of Energy has an amazingly detailed approach to designing internal performance management systems. If you want a model of the hyper-analytical approach, review these documents. Great engineering organizations will emulate this approach. It might not work as well in other environments.
- Innovation in Human Capital Management
The other great mind in HR is Wes Wu. Here, he begins to wrestle with the fact that Talent Management only addresses a small part of the people needs of the organization. In particular, Benchmarks in Performance Measurement is worth a gander.
Goal Setting II
In legal circles, the assignment of responsibility is an integral part of strategy. When lawyers look at behavior, they have a deep desire to isolate responsibility to ‘single belly buttons’. Legal strategy often involves creating plausible deniability. A great lawyer tells you how to keep your own personal behind covered. In other words, supreme clarity about responsibility is exactly how you avoid it.
This is the problem with most performance management approaches. When objectives flow down from the top, they are usually divided and subdivided. Each individual in the chain ends up with what is deemed an appropriate share of the overall objectives. The idea is to simultaneously clarify individual jobs while maintaining the ability to zero in on the person or persons responsible for failure.
In other words, performance management is an analytical process that dissects an organizations goals and aligns individual responsibilities to them in measurable ways.
Like the law, most performance management implementations are really about the assignment of blame. The CEO can trace, down to the lowest level of the organization, just exactly who is responsible for the fact that he didn’t make his bonus. The same thing is true for each descending level of the organization. It almost always feels like that. The navagation of goals is a game of blame dodgeball.
Performance management, in this form, is usually accompanied by a large binder of company policies. With narrow and precise job descriptions, some companies thrive or narrow the restraint of individual actors. Badly executed, and most are, performance management systems create silos where there were none. They do this by erring on the side of specificity.
In general, the problem with policy oriented approaches is that they tie the hands of the employee. When faced with a choice between what’s best for the business and meeting one’s performance goals, which do you suppose is the winner? Overly regimented notions of jobs and job descriptions hobble the organization when a rapid environmental shift requires agility.
Unfortunately, you can not quantify good judgment. Performance management systems make the exercise of good judgment even harder.
So, what’s the alternative?
Rather than the clear allocation of responsibility for measurement purposes, the real organizational need is for alignment of the team. We want the organization (and each individual actor) to be rewarded for choosing its welfare over the limits of the plan. We want to be sure that the plan does not prevent us from building the best possible future. That means that for some big picture ideas, everyone has to be responsible.
Aspirational goals are best served whole. Slicing and dicing eventually means that you can’t tell that the meat comes from the cow. The precision measurement of organizational behavior is means to an end. It is terrible easy to confuse the two (means and ends).
Performance management systems must be understood as a way to create a robust conversation about the organization, its goals and the individual contributor’s role. To the extent that they are an exercise in filling out forms for reporting purposes, they are of no use to the employee. Rather than avoiding them, a great performance management system incorporates goals for which individual performance is hard to quantify. That’s what forces the conversation to happen.
Jay Cross is a champion of informal learning, web 2.0, and systems thinking. He has challenged conventional wisdom about how adults learn since designing the first business degree program offered by the University of Phoenix. Full Bio
THE METRICS CYCLE
There’s no cookie-cutter formula for applying metrics, but there is an underlying process.
Generally, you’ll follow these five steps to identify, agree upon, assess, and use metrics. This is not rocket science. It’s the same process you already use to accomplish a lot of things in life. Let’s briefly consider each step.
1. State Desired Outcome. Results do not exist inside the training department. In fact, results do not exist within the business. Results corne from outside the business. Imagine a no-nonsense businessperson, say, GE’s former boss, Jack Welch. If you can explain yourself to Jack, you’ve mastered this step.
2. Agree How To Measure. The only valid metrics for corporate learning are business metrics. Examples are increased sales, shorter time to market, fewer rejects, and lower costs. How do you decide what measures to apply? You don’t: that’s the responsibility of your business sponsor, the person who signs the checks. Together you agree on what’s to be done and how you’ll measure success or failure. Once you’ve settled on the project and its metrics, get it in writing.
3. Execute Project(s). The projects could be training and/or an incentive bonus plan and/or more advertising. Training programs are often part of a larger scheme, and it’s fruitless to try to isolate them. In fact, savvy training directors look for major corporate initiatives they can hitch a ride on.
4. Assess Results. You must evaluate the impact of your efforts with the measures you set up back in step 2. In other words, you are not allowed to mimic Charlie Brown, who would shoot an arrow and then paint the target around it. Why stick with the measures you came up with before? Because that’s how to maintain credibility with your sponsor. You can bring up unforeseen outcomes or anecdotal evidence, so long as you follow up on those original methods first.
5. Begin anew. The only thing worse than learning from experience is not learning from experience. Your post-mortem on the completed project should include a section titled “What to do better next time.” This is where you start the cycle anew.
In an article in T +D Magazine titled ‘A Seat at the Table’, Kevin Oakes, then president of SumTotal Systems, masterfully described how speaking the language of business is one of the biggest skill gaps in the learning profession. Kevin quotes two respected industry figures, John Cone, the former CLO of Dell Computers, and Pat Crull, CLO of ToysRUs, that hammer home the point. Here are their original words.
“Learning professionals who have the ear of senior management come to the table to talk about business results, not learning pedagogy. They understand the drivers of the business, how the executives think, and the metrics that mean the most to them.
They talk about business outcomes, not learning enablers. And they talk about their business using real business language and real data. They talk about revenue, expense, productivity, customer satisfaction, and other quantifiable stuff that business people care about. They’ve learned that every conversation had better include information about money or time saved, revenue or new business generated, or customer problems solved.” John Cone
“During my presentation (at an industry conference), I stated that as a CLO, I see myself as an officer of the corporation. I worry about improving shareowner value. If it doesn’t make a difference to the bottom line, then my work has little of no value. At that point. a woman in the audience got up from her seat and left the room.”
“Later, during the Q&A section of our presentation, someone who was sitting next to the woman who had left, stood up and said, “Do you know what she said right before she exited? That she didn’t get into the training and development field to worry about the bottom line.” I was stunned. To me, that summed up the biggest problem in our profession today.” Pat Crull
In summary, to ‘earn a seat at the table’ where the business managers sit, you must:
- Speak the language of business
- Behave like an officer of the corporation
- Think like a businessperson
- Act like a businessperson.
- Be a businessperson.
‘Tis the gift to be simple, ’tis the gift to be free,
‘Tis the gift to come down where we ought to be,
And when we find ourselves in the place just right,
‘Twill be in the valley of love and delight.
- Simple Gifts (old Shaker Hymn) (listen here, here or here)
Yesterday, we looked at the remarkable focus and effectiveness achieved in the StrictlyTalent application. Resisting the temptation to be all things to all people, the service does one thing and does it very, very well. No bells, no whistles. Focus and effectiveness.
They are not alone. Next week we’ll review a couple more hyper-effective, elegant point solutions. They each behave more like an iPhone app than an enterprise platform. They represent the future of the HRTech industry.
At least for a while.
A funny thing happened on the way to the economic uptick. As HR Tech vendors faced the downturn, they made decisions that fit conventional wisdom. Knowing that revenue was contracting, they quickly closed down marketing, sales and some of customer support. The logic is simple. No sales means you don’t need sales people. No market means you don’t need marketing.
They almost uniformly moved to protect the technical heart of the business. The conventional wisdom was that the essence of a technical company is its technology. So, when things get tough, you shield the core of the business.
The net result is a bunch of companies who have been developing new features and functions in their offerings. When you have development on payroll, guess what they do? They develop stuff.
Meanwhile, you can’t tell the difference between a lot of the offerings. Software development without marketing leaves one deeply hungry for a story. These days, what passes for a corporate narrative is a recitation of product functionality.
Right now, the HRTech market is flooded with look alike sound alike offerings that all claim to do more or less the same things. At the same time, buyers are only really buying things that cut costs and save money. The ‘unified suite’ has little value in the cost conscious purchasing plan.
More than ever before, customers have gotten really smart about implementation costs. The total cost of ownership of a piece of software is driven by a combination of functionality, customer maturity, provider maturity and process sophistication. Customers are extremely wary of deals where the cost isn’t precisely controllable. So are sophisticated providers.
That’s why there’s a burgeoning market for simple, single function tools. These products can be easily integrated into existing workflows without complex implementation processes. If they are simple enough, the can be installed without modifications to configuration or customization.
It looks like the growth will be in these small solutions. Think of it as the HRTech version of iPhone apps.