Hr Optimization

HR Optimization From Personnel Administration to Human and Organizational Capital Development

Rick Bellingham, Ed.D. with

Russell J. Campanello, Contributing Editor HRD Press, Inc. Amherst, Massachusetts

Copyright © 2004, HRD Press All rights reserved. It is a violation of the law to reproduce, store in a retrieval system or transmit, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, any part of this publication without the prior written permission of HRD Press, Inc.

Published by HRD Press, Inc. 22 Amherst Road Amherst, Massachusetts 01002 1-800-822-2801 (U.S. and Canada) 1-413-253-3488 1-413-253-3490 (fax) http://www.hrdpress.com ISBN 0-87425-762-X

Typeset by Pracharak Technologies (P) Ltd, Madras, India Cover design by Eileen Klockars Editorial services by Suzanne Bay

Other books by Rick Bellingham: Ethical Leadership, Second Edition The Manager’s Pocket Guide to Spiritual Leadership The Manager’s Pocket Guide to Corporate Culture Change The Manager’s Pocket Guide to Virtual Teams The Complete Guide to Wellness

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Contents

Dedication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .vii Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .ix Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .xi Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .xiii Section I Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section II Core Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 1. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 2. Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 3. Human Capital Management System (HCMS) . . . . . . . . . . . . . . 29 4. Learning and Development. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 5. Staffing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 6. Leadership Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 7. Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 8. Process Excellence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

HR OPTIMIZATION Section III Account Management . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 9. Business Consulting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 10. Employee Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 11. Change Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 12. Performance Management . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 13. Diversity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 14. Measuring Human and Organizational Capital . . . . . . . . . . . 139 Appendices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147 Appendix A: Customer Satisfaction Survey . . . . . . . . . . . . . . . 149 Appendix B: Critical Consulting Skills (Positioning, Contracting, Productive Dialogue) . . . . . . . . . . . . . . . . . . . . . 157 About the Author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187

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Dedication

We would like to dedicate this book to our children, Emily, Nina, and Rebecca. It is for them that we have the passion to create healthy, innovative, and productive work environments.

Acknowledgments

First and foremost, we want to acknowledge Robert Carkhuff, Ph.D., whose perspectives, constructs, and technologies made this book possible. Dr. Carkhuff is the originator of the terms Human and Organizational Capital Development, which he service marked in the 1980s. We would also like to acknowledge people who contributed significantly to the content in this book: April Hendrick, Bill O’Brien, Doug Nufer, Ed Raine, Evelyn Flaherty, Greg Friedman, James Fuller, Jen Kahler, JoAnn Nikka, Laura Moorehead, Lisa Wales, Maria Van Parys, Maritzie Rudden, Matt Cohen, Michael Serino, Michele Giametti, Neal Bruce, Nicol Pitchon, Theresa Daniels. We could not have written this book without their input and feedback. Finally, we want to express our gratitude to our clients who have helped shape our ideas. We have worked with over 200 companies over the past 25 years, and it is our learning in those organizations that provided the material for this book.

Foreword

This book represents a blueprint for human resource transformation. It not only contains action steps and tasks, but also provides the vision for the future of human resources. It is obvious in this book that Bellingham and Campanello have not only lived in the organizational trenches for many years, but also have done their research. It is scholarly, pragmatic, and easily accessible. Bellingham and Campanello possess an incredible track record for innovation and results. Implementing the recommendations in this book should result in a great company in which great people have great jobs. It explains how to align the business and people strategies to achieve profitable growth. It successfully outlines the levels that exist between a company’s present state and the end game. Thus, one is never too far away from an orientation point. The beauty of this book is that it stimulates thought and provides a process for discussion. Each chapter is written to engage readers in a thought process that can be applied to their unique situation. The book encourages readers to assess their current situation, think about organizational readiness for change, and then develop action strategies to elevate the function. This book succinctly outlines critical success factors and invites readers to add their own success factors and their reasons to change. Some of the most compelling ideas of each chapter are contained in the Lessons Learned section. The authors derive these lessons from over 40 years of work with more than 200 companies. As such, they constitute a rich source of guidelines for successful transformation. Perhaps the most unique contribution this book makes is to organize all 14 human resource functions into their respective components, functions, processes, conditions, and standards. Based on the work of Dr. Robert Carkhuff, no other book has taken such a systematic and deductive approach to

HR OPTIMIZATION HR optimization. Again, the experience of the authors comes through in the conclusions of each chapter. Their multidimensional thinking provides frameworks and models that are invaluable for guiding transformation efforts. As a business leader, I am continually implored to take into account the human and organizational factors that account for sustainable growth. This book shows how to do just that. Barry Cohen, Ph.D. Executive Vice President PTC

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Preface

We believe that many contemporary HR organizations have unique and substantive capabilities—it is our responsibility as an HR community to share our thinking and our models with the wider HR community in the hopes that more companies will invest significant resources in people and culture. This book is not meant to be a cure-all for all HR departments within all companies. Each company and each HR department has unique needs that require thoughtful tailoring. We hope that this book will be a stimulus to help you think through your particular challenges and distinguish yourself as an HR professional independent of organizational support for HR. As such, this book is incomplete; it will be completed by your participation. In each chapter there will be opportunities for you to assess the current level of functioning of your organization, to identify reasons for you to change, to reflect upon the critical success factors in your organization, and to summarize the lessons you have learned in your efforts to implement initiatives in each function. Your organization may only want or demand personnel administration from HR. This book provides guidelines and strategies for optimizing that role. On the other hand, many organizations are demanding more from HR. In a service economy, compliance and reporting are necessary but insufficient requirements for HR. Many businesses are asking HR to add value, to act as strategic partners, and to develop individual and organizational capabilities. Whatever your organizational reality is, this book will help you and your colleagues grow as HR professionals. We would like you to see this book as an invitation to change because it represents the tone with which we would like to see the book received. It imposes neither participation nor use. We see the writing of this book as a dynamic process that will encourage you to journal your experience in transformation. We

HR OPTIMIZATION believe that every one of you will have a different perspective on and experience with the changes you are making. The book is divided into three sections: Introduction, Core Solutions, and Account Management. The Introduction describes the purpose of transformation: for organizations to evolve from good companies (or bad companies, if that is the case) to great companies; and for people to be able to describe their jobs as a great experience. Sections II and III discuss how HR can contribute to the creation of great jobs in great companies. The 14 chapters in this book each discuss one HR function—each chapter has seven parts:

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1. 2. 3. 4. 5. 6. 7.

Introduction Scale Why Change Critical Success Factors Reality Lessons Learned Conclusions

The Introduction describes the function and discusses why the function is an essential element in a great job. The Scale enables us to assess where we are and where we want to be in the function. Why Change addresses the reasons we need to look at things differently and to elevate our thinking. It should be noted that examples in this section represent a composite of over 200 companies. Critical Success Factors summarizes our strategy for change and incorporates theoretical constructs that support the change. The Reality is a place for all of us to describe our journey along the way—it’s a place for sharing the human-interest stories that will bring this book alive and make it real for the reader. It’s also the place to describe the organizational realities and context in which the implementation will take place. Lessons Learned encourages us to identify potential pitfalls and to capture and share our insights about transformation and the evolution of people and functions. Conclusions organizes the key points from the chapter into components, functions, processes, conditions, and standards. We used this organizing construct so that by the end of the book you will not only have a path for transforming your function, but also a framework for ongoing analysis and development. As you will see, everyone has an opportunity to contribute to this book. You may have a strong feeling about why change is required. Write it down. You may have an interesting story to tell that helps the reader understand the barriers and

PREFACE obstacles to change. Share it. Your experience may have led to a real epiphany for the Lessons Learned section. Pass it along. In fact, we encourage you to write your own story. This book simply provides examples and perspectives we have acquired along our own journey. To make this book really work for you, you’ll need to personalize each section to your own situation. You may have different reasons for change than we describe here. Your critical success factors may be different from what we have found to be successful. This book is a road map, not a recipe. Create your own stew.

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Section I Introduction

Introduction

How would you rate your job? Great? Good? OK? Bad? Depressing? What measures did you use to arrive at your rating? In the United States, a common measure of a great job is one that pays a lot of money. This book asks, “At what price?” Clearly, there are quantitative measures of success that need to be taken into account, but what about the qualitative side? One of our clients was a man who had just sold his company for $30 million. As it turns out, we had helped him structure the company in a way that made the sale possible. The terms of the sale included a clause for him to continue as CEO of this company for two years. After the deal closed, we asked him what success looked like for him at the end of those two years. When he started spouting quantitative measures, we interrupted him and said, “You’ve already won that game beyond your wildest dreams, what about the personal measures of success, like being able to spend more time with your grandchildren?” He was visibly startled, but to his credit, responded, “You’re right. I do need to change my measures of success.” Unfortunately, few of us are able to achieve the quantitative level of success this client attained. This book suggests a re-framing of our measures of success and encourages both individuals and organizations to take more responsibility for the qualitative side of the equation. Most people spend a large portion of their lives working. It is not uncommon for a person to work 50 hours per week for 40 years or more. This equates to 100,000 hours of work in a typical lifetime. This book explores the impact of that huge investment of time on the quality of our lives. Sadly, in many cases, the most significant investment of our time has a negative return. In our work as HR professionals, it is important for us to remember that we can have a significant impact on the quality of life for our colleagues in our

HR OPTIMIZATION respective organizational communities. As Dave Ulrich, a leading HR strategist, would say, our work is more than becoming administrative experts, we need to be employee champions, change agents, and strategic partners. In doing so, however, we need to keep in mind the desired outcomes of all our efforts: to improve the quality of life of our colleagues and to add measures of success that give people real meaning. As Jim Collins, a noted author and consultant, would say, our organizational goal is to transform our organizations from Good to Great. Our goal at the human level is to enable all employees in our company to respond to the question “How would you rate your job?” with a resounding “Great!” It may be helpful to start this journey with an assessment of how you would rate your job. Simply complete the following survey to determine if your work experience is for better or for worse.

Job Satisfaction Survey

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1. I look forward to going to work on Monday morning. 2. I feel positive and up most of the time I am working. 3. I have energy at the end of each work day to attend to the people I care about. 4. I have energy at the end of each work day to engage in personal interests. 5. I have the time and energy in my life to read books that interest me. 6. Most interactions at work are positive. 7. I have good friends at work. 8. I feel valued and affirmed at work. 9. I feel recognized and appreciated at work. 10. Work is a real plus in my life. 11. I’m engaged in meaningful work. 12. I feel free to be who I am at work. 13. I feel free to do things the way I like at work. 14. My values fit with the organizational values. 15. I am aligned with the organizational mission. 16. I trust our leadership team. 17. I respect the work of my peers. 18. I have opportunities to learn what I want to learn.

INTRODUCTION 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30.

I feel involved in decisions that affect our organizational community. Creativity and innovation are supported. I feel informed about what’s going on. I know what is expected of me at work. I have the materials and equipment that I need in order to do my work right. I have the opportunity to do what I do best every day at work. My manager cares about me as a person. I know someone at work who encourages my development. My opinions count. My co-workers are committed to doing quality work. My manager reviews my progress. I am fairly compensated.

Give yourself 2 points for each statement you answered positively. Use the following scale to evaluate your job: 50–60 40–49 30–39 20–29 0–19

points: points: points: points: points:

Great Job Good Job OK Job Bad Job Depressing Job

Now that you have an assessment of where you are on this scale, we can begin our discussion of how to create the conditions and standards that will enable you to answer more of the questions positively. Before we begin the process of assessing where you are on all of the HR functions, it is critical to get a sense of the context in which we are trying to make changes as individuals and as organizations. This introduction will help you evaluate not only how you are feeling about your current job, but also how you view your organizational culture. As we mentioned earlier, our organizational goal is to transform our organizations from good to great. Jim Collins conducted extensive research on this subject and wrote a book about the findings, Good to Great. What follows is an adaptation of the timeless characteristics that Collins discovered in his research: 1. Undaunted curiosity 2. Rigorous not ruthless

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HR OPTIMIZATION

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3. Culture of discipline:  Disciplined people  Disciplined thought  Disciplined action 4. Leadership humility 5. Professional determination 6. Right people in the right jobs 7. Unwavering faith 8. Honesty about the brutal facts of the current reality 9. Carefully selected technology accelerators 10. Core values 11. Understanding of differentiating competencies (what we are best at in the world) 12. Piercing insight into economic drivers 13. Focused passion 14. Goals based on understanding vs. bravado 15. Executive decisions based on  Dialogue and debate  Autopsies and analysis You may want to ask yourself how many of those characteristics would describe the organizational culture in which you work. Which of the 15 characteristics would you consider to be strengths in your organizational culture; and which would be weaknesses? The results give you an indicator of context and organizational readiness. One of the central challenges of HR professionals is to continually calibrate the work with organizational reality. This book contains ideas for transformation in 14 critical Human Resource areas that will result in employees pronouncing that they have a great job in a great company. Focus on all of the following 14 areas will result in significant contributions to human and organizational capital: 1. 2. 3. 4.

Compensation Benefits Human Capital Management System (HCMS) Learning and Development

INTRODUCTION 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.

Staffing Leadership Development Communications Process Excellence Business Consulting Employee Relations Change Management Performance Management Diversity Measuring Human and Organizational Capital Development

Each chapter contains principles for improving the delivery of services. As you read each chapter, remember the goal: to elevate the human and organizational capabilities of the company from good to great. At the beginning of any intervention or transformation effort, the first question that needs to be addressed is “What are the desired outcomes of this investment?” For an HR Optimization project, we answer that question as follows:  The compensation system rewards desired behaviors and core values.  The benefits package promotes and encourages wellness and wise medical consumerism.  The HR information system is user-friendly and serves as the foundation for capturing, maintaining, and reporting on all employee data worldwide.  Learning and development programs have real business and personal impact.  Staffing processes result in attracting, hiring, and retaining the right talent in a short amount of time at low cost per hire.  HR business partners add value to all discussions related to strategy, structure, and business issues.  Great talent stays with the company and employee satisfaction ratings are high.  HR leads change management initiatives and helps to define desired end states.  Leaders are promoted from within and are extremely successful in achieving business results.  All employees have contribution and capability plans written and reviewed.

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HR OPTIMIZATION  Employees are inspired by the company vision and direction; everyone is certified to tell the story.  HR is easy to do business with; processes are smooth and efficient.  The company acts as one team and leverages its collaborative processing capabilities.  There is significant diversity of talent in all organizations at all levels.

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At the beginning of each chapter, there is a scale that outlines the range of possible outcomes for each of the items listed above. For example, while the ideal outcome of changing the compensation system is to reward desired behaviors and values fairly and appropriately, there is no guarantee that the ideal will be achieved. There may be too much resistance to change or too much attachment to old ways of rewarding performance. Some people will prefer reward systems that are based solely on revenue production and that compensate them for achieving the ends independent of the means. Rewarding people based on a balanced scorecard and company performance may represent a dramatic shift in philosophy and threaten people. Therefore, it is critical to construct a range of possible outcomes, assess the gap between the current reality and the future possibility, and determine the amount of resources required to achieve the goal given the level of resistance. Each of the scales presented was built on a generic construct that can be represented as follows: 5: 4: 3: 2: 1:

Ideal End State. Very Positive, but Less Than Optimal End State. Acceptable End State. Less Than Acceptable End State. Totally Unacceptable End State.

The key to all change is seeing possibilities against the backdrop of reality. It is just as important to envision the possibility as it is to assess the reality. Having a broad range of outcome measures with specific indices for measuring success guides the transformation efforts and enables change leaders to determine dynamically what additional resources or shocks will be required to achieve the desired end-state—the scales simply facilitate that process. In reading the scales, it is important to understand that the scales are cumulative from level 3 up to level 5, i.e., a level 5 outcome incorporates the positive aspects of level 3 and level 4 outcomes. Each chapter in this book is designed to help HR departments achieve success in each of the 14 solutions addressed herein. If you are using this book to engage your team in the work of transforming HR, we suggest you welcome contribu-

INTRODUCTION tions from any source. When people contribute ideas for transforming your HR organization, acknowledge their input. With your team, you can establish a model for your own HR transformation. When you complete the journey, your whole team will own it. If you are able to “move up the scale” in the 14 functional HR areas, you will be contributing to human and organizational capital development. The last chapter of this book, “Measuring Human and Organizational Capital Development,” explores ways to measure the business impact of your progress—a new way for assessing the strength of your strategy and for measuring human and organizational capital.

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Section II Core Solutions

Chapter

1 Compensation

Introduction How people are compensated for their work in regard to base salary, bonuses, and stock grants has a large bearing on how they feel about their job and their company. People need to feel they are being compensated fairly and competitively. Most importantly, people need to believe that their compensation is directly linked to their personal performance, as well as corporate performance, and is in line with their contribution. Fairness is the operative word. Compensation strategy needs to be linked to corporate strategy. Decisions on the richness and mix of compensation depend on “who” the company is and what it is trying to achieve. For example, a company that positions itself as a dependable, steady organization may not want or need a compensation strategy with a high variable component. It is a mistake for companies to promote something that is not real. HR professionals need to make sure that the compensation strategy is consistent with the organizational reality. While we all aspire to doing great things (at least that is our assumption about the reader of this book), “great” needs to be defined relative to the organizational context in which you are working.

Scale There is a range of possible outcomes in any effort to change the compensation system. Here is a scale to envision possibilities and assess current realities:

HR OPTIMIZATION 5: 4: 3: 2: 1:

Reward systems tied to desired behaviors and core values. Reward systems tied to company performance. Rewards tied to individual performance. Rewards in line with market/no internal equity issues. Rewards not tied to performance or to market. System lacks integrity and is not perceived as equitable.

Where are you on the scale now? Where do you want to be on this scale in one year?

______ ______

Why Change

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Company A grew very rapidly as a result of superior engineering technology. As a high-flying, high-tech company, Company A was able to attract and retain great talent with relatively low cash compensation and rich option packages. As competition became more intense and the economic climate deteriorated (i.e., devaluation of high-tech stocks), stock options became a less important component of the compensation package. Whereas in the past, Company A could easily attract and retain people by offering base pay and total cash compensation at the 50th percentile with a great deal of upside potential on stock options, conditions have changed. The company now needs to take a hard look at each component of the mix. Company A needs to move toward the 75th percentile on total cash compensation and reduce its reliance on and use of stock options. In order to attract and retain key talent, it needs to design a compensation system that drives a high-performance culture and that is intimately linked to the performance management system. In short, Company A’s reasons to change are the need for greater flexibility, fairness, and attractiveness as an employer.

Your Reasons for Change

Critical Success Factors The two essential ingredients in transforming a corporate culture are leadership role modeling behaviors and the reward system. People take their cues

COMPENSATION from their leaders. Thus, leadership behaviors must be consistent with the values and philosophy of the compensation system. If behaviors that support the desired and required norms and values of the new culture are rewarded, then people will get the message that compensation is tied to cultural leadership. If the compensation system continues to reward old ways of doing business, then cultural proclamations and business imperatives will ring empty and employees will become increasingly cynical. In order to create an environment in which people feel great about their jobs, the compensation system must be aligned with stated values and operating principles. Leaders must be clear about performance expectations and how associates will be rewarded. At the foundation level, rewards need to be in line with the market and support the business strategy. Organizations need to make a policy decision to pay at the 50th percentile, the 75th percentile, or whatever is appropriate. If a company pays less than the 50th percentile, there will need to be multiple factors in the culture to “compensate” for a lack of compensation or it will be impossible to attract great talent or star performers. On the other hand, the strategy may not be to hire stars. The compensation strategy may be to attract solid performers by paying fair wages in exchange for security and growth opportunities. In essence, the compensation strategy should reflect the needs of the business strategy in attracting the most appropriate talent. Once a company decides the strategy and the corresponding pay percentile, benchmarking analyses are required to determine the comparability of each job in relation to market rates. In order to execute business strategy, it is usually necessary to compete for appropriate talent. Business strategy drives decisions related to compensation because it specifies requirements for critical talent that can only be acquired and retained through competitive compensation programs. The corporate culture also influences compensation decisions because it either consists of a number of compelling reasons for joining or staying with a company (for example, a winning company, great branding, quality of life, career development, or any of the Great Job/Great Company indicators listed in the Introduction) . . . or it doesn’t. If there are few compelling reasons for joining or staying with a company other than compensation, then the compensation package will need to be very rich. A good compensation system does not keep people focused on their compensation, it keeps them focused on other compelling aspects of the organization because pay is not a distraction. Again, the operative word is fairness. Employees will always ask, “Am I being paid fairly and rewarded appropriately for my contributions to what the company says is important?”

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HR OPTIMIZATION Decisions surrounding compensation present a terrific opportunity for HR business partners to take a leadership role with their clients. Since compensation usually tops the list of what’s most important to corporate clients, business partners can add real value to their clients through their consultation on compensation issues. In any company, the way compensation issues are handled is critical to the perceived effectiveness of HR. It is also important to minimize inequities within departments. Over a period of time, because market rates vary according to supply and demand curves, there may be several people in a department doing very similar jobs but who are paid at significantly different rates. For example, one person may have been hired as a computer programmer in 1997 when the market value for such jobs was $50,000. Another programmer could have been hired in 2000 when the market rate for the same job was $75,000. Thus, while appropriate market measures were used to determine salary, the changing rates create inequity issues within the department. These issues are compounded when gender and race come into play. Salary offers, merit increases, and other compensation decisions must take into account both comparability and equity considerations. These issues typically consume a large share of compensation specialists’ time.

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While it seems to be common sense to tie rewards to individual performance, this practice is far too uncommon. We have worked in multiple corporations in which the compensation team and performance management team did not talk to each other. Unfortunately, very few organizations are satisfied with their performance management system and even fewer believe that performance is linked fairly and accurately to compensation. In too many cases, employees perceive that rewards are tied more to who you know than to what you deliver. This perception violates one of the primary characteristics of a “great job”: I am fairly compensated. While performance management will be discussed in more detail in Chapter 12, it is important to make the connection here. The other common factor that causes employees to rate a job as “depressing” is to have an opinionated boss who uses only one source of input to make compensation decisions— his or her own perception. Not only are managers often not in the best position to evaluate performance, they may also suffer from biases that could taint their evaluations. In the worst of cases, the manager may be a golfing buddy of an employee who is of the same age, race, sex, background, and sexual orientation. This employee may benefit from a “halo effect,” while another employee from a different set of circumstances may be unjustly compensated. These situations feed the negative perception among employees that compensation decisions are based more on “how you dance vs. what you do.” In single-rater situations, quiet contributors are also often ignored unless the manager is finely attuned to each employee’s various levels of contribution. When compensation is linked

COMPENSATION closely to performance and employees feel that evaluation decisions are done fairly and accurately, employees are much more likely to proclaim, “I’ve got a great job!” Assuming that a company has addressed internal equity and market comparability issues and that compensation is linked intimately to performance, the next level of achievement is to tie compensation to organizational performance. This linkage is typically accomplished through incentive programs. When bonuses are given every year independent of the financial performance of the firm, then employees begin to see this form of compensation as an entitlement. If bonuses are tied to company performance, employees are more likely to think interdependently and the company has a greater chance of survival in tough economic times. If employees know that they will be compensated based on how well the company achieves its revenue and profitability goals, then everyone will actively seek ways to help each other succeed. A one-team mentality starts to take form in which all members of the community work collaboratively for the greater good. This phenomenon is what makes people experience their everyday work experience as a great job. Feeling part of a community in which all members are focused on common goals leads to greater satisfaction than simply working independently to collect a pay check each week. It is important to point out, however, that variable compensation can only be leveraged so far. Base salary needs to be fair enough for employees to “hang in” during tough times. The perception of fairness is based on both structural fairness and reward fairness. Structural fairness relates to how the job fits into the career path framework; reward fairness relates to the amount and timing of incremental increases. At level 5 on our compensation scale, reward systems are tied to desired behaviors and values. Stock option grants are the most common way of making a statement that particular behaviors are valued and that the organization wants the person to remain in the community. When stock option grants are awarded to people who achieve financial goals at the expense of all other stated values in the culture, employees rightly conclude that they are simply a member of a mercenary community with one value—money—not a growth community in which several values are rewarded and recognized. Linking rewards to desired behaviors and values requires three key elements: (1) a clear articulation of what the desired behaviors and values are; (2) a commitment to tie compensation to those behaviors; and (3) a reward system that takes into account the contribution that individuals make to the desired culture. Articulating the desired values is not an event that the executive committee performs; it is a process in which employees at all levels of the organization participate. If employees are involved in the process of stating desired behaviors and values, they will be much more likely to own them. When values are clear, they can become a vital part of the

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HR OPTIMIZATION performance management system, so employees get regular feedback on how well they are contributing to the values or detracting from them. That feedback should influence compensation adjustments.

Your Critical Success Factors

The Reality

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While the theoretical constructs of compensation appear logical, the reality often presents many challenges. Here are some examples from our experience. Tenured vs. new employees. With changing economic conditions, it is not unusual for people to be recruited into the organization in boom times with inflated salaries. When this happens, loyal employees who have served many years may find themselves with far smaller salaries than new employees with less experience. These situations, which are difficult to avoid, are even more difficult to resolve when the economy slows and profit margins come under pressure. Do you always pay market value for new jobs? Do you always limit pay raises for existing employees to a certain amount? What happens when you refuse to pay inflated market values or if you start making exceptions for certain employees? If rigid adherence to a philosophy of limiting pay raises to a certain percentage results in a situation in which employees have to quit and return to get significant bumps in compensation, how do you deal with those employees and the ones who stayed with you and came up short? Legacy products vs. new technologies. Supply and demand curves sometimes create bidding wars for people who have skills in hot products. For example, when SAP first emerged, consulting companies were paying “hot skills” bonuses to attract people who had SAP implementation skills. The problem occurs when the supply and demand curve shifts and the hot skills cool off. What happens if the bonuses for these skills are baked into base salary? Do you take away the bonus? Should you use variable compensation to deal with “hot skill” pressures on compensation? Transfers between organizations. In many organizations, some departments follow the compensation rules, while other departments don’t. When an individual transfers from a department that doesn’t follow the rules into a department that does, what do you do if the person’s compensation is far above his or her

COMPENSATION colleagues in the new organization because he or she benefited from exceptions? For example, a Web designer in marketing with essentially the same job as a Web designer in IT makes much more money because the marketing department tended to pay higher wages and regularly made exceptions to the rules. In addition, the person in marketing has an incentive plan and the person in IT does not. What do you do when the marketing person gets transferred to IT? What do you do when exceptions become the rule?

Your Reality

Top Ten Lessons Learned 1. It is important to start with a guiding philosophy and stick to it. 2. HR business partners can have a tremendous impact on the business by optimizing the compensation value proposition. 3. Effective compensation policy requires a balanced approach with thoughtful consideration for how compensation is configured among base, variable, and stock incentives. 4. As the business climate changes and business strategy changes, compensation must adjust policies to be aligned with the changes. 5. The leadership team must own and believe in the compensation strategy. 6. It is critical to be able to accommodate exemplars and star performers without destroying internal equity. 7. Compensation is as much art as science. 8. Compensation decisions need to take into account performance, equity, and market conditions. 9. Structured flexibility is the best policy. There is always a need for discretion. 10. Compensation must be interdependent with other initiatives such as performance management, career development, etc.

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HR OPTIMIZATION Conclusions The components that need to be taken into account in any comprehensive compensation program are base salary, bonuses, incentives, and stock grants. The right levels and mix of these components should result in improved performance and motivation. The three critical processes of compensation are benchmarking, performance management, and continuous calibration. Clearly, economic conditions play a major role in compensation decisions, but the standard of fairness should remain constant.

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Chapter

2 Benefits

Introduction The benefits package is an essential part of the employment agreement. Employees need to feel that they are financially protected from catastrophic loss or disabling disease. In the United States, this level of coverage is necessary to meet the social service threshold—the level at which basic health care needs are met. Many benefits address fundamental needs for safety and security (which according to Maslow’s hierarchy must be met first). Other benefits, such as tuition reimbursement, address higher-order needs. If people do not feel safe and secure, they cannot move up the transformational ladder to feel belongingness, esteem, and self-actualization (a great job provides all of these). A comprehensive benefits package should address the full range of needs of a diverse workforce: financial, social, emotional, physical, and intellectual.

Scale There is a range of possible outcomes in any effort to change a benefits package. The following scale helps to envision possibilities and assess current realities: 5: 4:

Benefits package attracts the right talent and promotes and supports total employee well-being for a diverse population. Benefits package promotes wise consumerism and employee well-being and engages people as healthy partners.

HR OPTIMIZATION 3: 2: 1:

Benefits package is competitive with market in comprehensiveness and is cost-effective. Benefits package is competitive with market in comprehensiveness, but more costly than most. Benefits package is not competitive with market and promotes unwise consumerism; policies promote sickness behaviors.

Where are you now on this scale? Where do you want to be on this scale in one year?

_____ _____

Why Change

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Historically, Company B offered one of the richest benefits packages of any high-tech company. Company B was one of a few companies that provided 100 percent medical coverage. When health care costs were rising at 5 to 7 percent per year and profit margins were robust, Company B was able to afford a comparatively rich benefits package. Now health care costs are rising at 15 to 20 percent per year and company profit margins are declining. It is prohibitively expensive to continue to offer the same benefits package. In 2002, Company B paid approximately $17 million in U.S. health care costs. With no changes in the benefits package or economic conditions, those costs would exceed $50 million in 2008. In addition, the benefits package was designed to address the needs of a male, family-oriented employee base. As the workforce becomes more diverse, benefits packages need to change to take into account different demographics and life style orientations. There is also a growing body of research that supports the idea that partnering with employees on health care management and focusing on prevention can lead to significant cost savings and to healthier employees. By targeting high-risk employees, promoting positive health practice, and educating employees on wise medical consumerism, health risks and their associated costs can be reduced. In short, the reasons to change are lower costs, more flexibility, and better health care.

Your Reasons to Change

Critical Success Factors Benefits can be a compelling part of the great job equation. Some of the fundamental benefits employees expect in their benefits package are health, dental,

BENEFITS and life insurance. In today’s environment, an enhanced level of benefits usually includes an employee stock purchase plan (ESPP), a 401(K) plan, dental care, Employee Assistance Programs (EAPs), and vision care in addition to the standards mentioned above. Many progressive companies offer elder care, child care, paternity and maternity leaves, as well as provide comprehensive wellness programs, encourage work-life balance, and take seriously the idea of creating a healthy work environment. Transforming benefits requires an elevated perspective of health. Benefits should address the physical, emotional, intellectual, and financial issues that are important to employees. For example, particularly in this economic climate, the 401(K) plan is a very important component of the benefits package. Employees want to have flexibility in how they access their retirement accounts. With medical care costs rising at 15 to 20 percent per year, it is cost prohibitive for companies to pay 100 percent of all health-related claims. Companies need to form healthy partnerships with employees in which both parties actively seek ways to keep the other healthy and whole. Since benefits make up a significant portion of the overall rewards program, employees need to be educated about the economic value and true cost of health care. Most employees do not appreciate the real value of the benefits provided because there has been little or no communication to the employees about the benefits and there are typically few educational programs to increase awareness and to promote behavioral change. Providing employees with total compensation statements that detail both pay and benefits helps educate employees about the economic value of their benefits package. Ongoing communications about benefits programs reinforce the mutual nature of the healthy partnership and keep employees informed of changes and options. Essentially, benefits programs need to be dynamic and sustainable for the long term. HR professionals need to engage employees in productive dialogue about the economics of benefits and their role in the dual goals of increasing health and decreasing costs. This dialogue also makes it possible to design benefits that fit the needs of employees so that they realize the value of what is provided. The overall theme of benefits programs should be to promote the wellness of employees and their families. Employees are more apt to embrace change if they understand the context, reasons, and benefits of the change. When a company makes the decision to redesign benefits programs to reduce costs, it must also find creative ways to offer more choice and greater flexibility so that selected programs can be enhanced to balance those programs that are being reduced. Changing behavior takes time and requires a great deal of communication and education in order to be successful. Communication campaigns should incorporate both Web-based and print media. The benefits program needs to be branded in order to promote recognition and

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HR OPTIMIZATION

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consistency. Ongoing communications are needed to announce open enrollment choices and to educate employees about their options. One extremely useful communication tool is to send annual benefits statements to employees that explain the financial value of benefits provided in the total compensation package. Medical premium plans may be converted to self-insured plans in order to reduce fixed administrative costs, eliminate state premium taxes, and allow for a uniform plan design. In self-insured plans, the company pays for all covered health care costs (e.g., dental, vision, medical, etc.), but carries insurance to cover catastrophic events. Self-insured plans allow for more flexibility, better financial management, and gain sharing. Full flexibility programs can then be explored to increase employee choice. Full flexibility programs mean that benefits are assigned price tags and employees are given credits to purchase benefits to meet their individual needs. It should be noted, however, that the transition to self-insurance and to self-service requires robust systems and consistent communications. All of these elements—self-service, communications, systems, and education—are intimately connected and interdependent and constitute an integrated health management system. Shifting to self-insured, full flex programs requires benefits professionals to keep a constant watch on cost drivers to insure that spikes in certain areas don’t undermine the economic viability of the programs. These cost drivers may come from mandated legislative changes, new coverage and procedure requirements, medical price inflation, or changes in utilization of services, e.g., increases in the frequency of claims driven by improved diagnostic procedures, an aging workforce, and so forth. Advancements in technology can also drive costs because they result in new medical equipment, procedures, and medications that impact the intensity of care. Also, the trend toward reduction in Medicare reimbursement generally results in cost shifts to the private sector. One critical advantage of self-insured plans is that they enable gain sharing with employees. Gain sharing means giving back a percentage of cost reductions achieved through healthy lifestyles and wise medical consumerism to the employees who practice positive health practices and use health care resources wisely. Additional cost savings, not distributed to employees, can be used to fund wellness activities and programs. It is a win-win solution. In addition to all the fundamental components of a comprehensive benefits program, there are additional perks to consider such as fitness centers, free breakfasts and drinks, cafeteria subsidies, and concierge services. The challenge is to figure out not only what benefits to offer to employees but also how to make them connected and integrated with the organization.

BENEFITS Whether one views health care from a national perspective or an organizational perspective, the same six factors need to be taken into account:      

Quality Cost Access Choice Simplicity Responsibility

The reason the health care problem is so difficult to solve is because any solution requires a trade-off among those six values. It is impossible to provide universal access and freedom of choice to the highest quality care in a simple way at low cost. The only way to achieve a win-win solution is for all parties to take responsibility for wise medical provision and consumerism and for healthy choices. Forming healthy partnerships appears to be the most promising avenue for change, but it will take a great deal of work to create an interdependent attitude in which both employer and employee look for ways to help each other grow.

25 Your Critical Success Factors

The Reality While the theoretical constructs underlying benefits packages appear logical, reality often presents many challenges. Here are some examples from our experience. Entitlement vs. empowerment. Theoretically, one would think that communicating to employees about the economic value of their benefits package and educating them about the options and choices they have would lead to a sense of empowerment. Unfortunately, in many cases, employees view benefits as something HR does to them and they take the benefits for granted. It’s hard to educate employees about economic value and the marriage of compensation and benefits. Particularly in paternalistic cultures, employees don’t understand that benefits need to change in response to changing economic and competitive

HR OPTIMIZATION conditions. Therefore, any changes in benefits packages need to take into consideration the sense of entitlement employees have and how strongly paternalistic the culture is. Competitive differentiator vs. cost drain. A competitive benefits package not only has value to the employee but also to the company. Excellent benefits are a critical component of a compelling employment offer. Smart candidates compare the benefits packages of competing offers as well as the salary component. In many cases, a benefits package that meets the particular needs of a candidate can offset a lower salary offer. Benefits can be a powerful differentiator, particularly when an individual puts a heavy weight on vacation, wellness, or even coverage for fertility treatments. In times when competition for talent is severe, having flexibility in the benefits package can make a difference. Flexible cafeteria plans, however, require more work to implement. Emotional vs. intellectual factors. While some changes in benefit plans make good sense from an intellectual point of view, they can meet with strong emotional resistance. People don’t like to change benefits, particularly on coverage that is personal. A change in plans may mean a change in relationship with a health provider with whom an employee has close ties. Therefore, any changes in plans need to consider emotional as well as economic factors.

26 Your Reality

Top Ten Lessons Learned 1. It’s important to ensure that management understands how benefits are tied to organizational strategy. 2. Employees deal better with open, honest, direct communications than with surprises. 3. Before making any changes, ask for input and feedback from multiple groups. 4. It’s important to stay close to and manage health care providers. 5. Education of employees is crucial, particularly as it relates to the economic value of benefits. 6. Employees need accurate decision support information to help them choose among their options.

BENEFITS 7. Wise medical consumerism can result in significant cost savings. 8. Organizational culture is a major factor in the success or failure of any program—we must understand what people value. 9. Timing is everything—changes must be introduced at a time when there are few competing announcements. 10. A dynamic and sustainable benefits plan requires a dynamic and sustainable relationship with employees.

Conclusions Level 5 benefits programs promote wellness, encourage partnerships, and enable wise medical consumerism. A comprehensive benefits program should take into account the physical, emotional, and intellectual dimensions of a person’s life through all life stages. Physical factors might encompass medical coverage and health insurance. Emotional factors might include an EAP program. Intellectual factors might involve financial planning or legal assistance. The functions of a benefits program are to reduce costs, increase flexibility, and improve care. These functions are discharged by facilitating enrollment, partnering for health, and communicating effectively. Clearly, the age and diversity of the workforce may affect the range of benefits programs offered, but the standards of protection and support should remain constant.

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Chapter

3

Human Capital Management System (HCMS)

Introduction Having access to the information you need to do your work is a fundamental requirement for a great job. Effective information systems and infrastructure make it easier for people to acquire meaningful decision support information. Clearly, that decision support information needs to be accurate so that business leaders can make intelligent and informed business decisions about investments in human capital—the combination of commitment and capability that generates new sources of gain. Without sufficient information, decision making and individual/organizational development are made more difficult, if not impossible. Systems need to support our ability to develop individual and organizational capabilities. As such, HCMS is different from HRIS (Human Resource Information System) to the extent that it provides knowledge vs. data. Data are simply discreet facts. Knowledge is processed information which means it requires human analysis. Therefore, an HCMS is the output of information technology and human processing. The information technology component may include learning management systems (for example, THINQ and SABA), staffing systems (for example, WebHire and Brass Ring), and human resource systems (for example, PeopleSoft, Oracle, and Lawson). An efficient HCMS fully integrates all component systems, reduces the hassle factor in a job, and provides the knowledge platform on which a great company can be built. Above all, it ensures data accuracy and protects employee

HR OPTIMIZATION confidentiality. Employees need to know that their personal data are strictly confidential. Managers need to know that the information they are being provided is trustworthy. And organizations need to know that confidentiality safeguards are government mandated. HR earns the right to engage in higher level work only when it is able to ensure employee confidentiality and data integrity. It should be noted, however, that management and employees own responsibility for accurate data.

Scale There is a range of possible outcomes in any effort to change the systems related to managing human capital. The following scale helps to envision possibilities and assess current realities for HCMS in your organization: 5:

4:

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3: 2: 1:

One global, efficient, best-of-breed, user-friendly, seamless system that is the foundation for capturing, maintaining, and reporting on all employee knowledge worldwide. Global, efficient, and integrated enterprise solution for capturing, maintaining, and reporting employee information and competencies worldwide. Adequate and efficient means of centrally capturing and maintaining all employee information and skills worldwide. Adequate but inefficient means of capturing and maintaining employee information worldwide. Inefficient, inadequate, individual systems for capturing and maintaining employee data worldwide.

Where are you now on this scale? Where do you want to be on this scale in one year?

_____ _____

Why Change Company C’s current system doesn’t have data integrity, and it is passing inaccurate information to numerous downstream systems. In order to be credible, it needs to be able to provide reports that are reliable and repeatable. Currently, the lack of reliability and repeatability is damaging credibility. In order to be cost-effective, Company C needs to reduce redundancies. Currently, many of the systems and processes are redundant. These redundancies result in unnecessary costs. In short, Company C does not have the basics in place.

HUMAN CAPITAL MANAGEMENT SYSTEM (HCMS) Company C needs to capture worldwide employee data with high integrity. Business leaders need accurate and timely decision support information to be effective. Company C has an incompatible and inadequate set of systems and technology that makes it difficult and time consuming to ensure information integrity. The current HRIS does not have global capabilities and does not enable the company to feed related systems in an efficient way. As a result, different countries use different spreadsheets to account for information that could all be processed with better contextual knowledge with a more robust system. Essentially, Company C is currently at level 1 on the scale and it needs to be at least at level 3 to be able to respond reliably to business requests. Finally, new requirements are imposing new demands on HR systems. With the advent of the Internet, business leaders expect to have access to information they need to make informed decisions. Timely, accurate, and meaningful information is required for intelligent strategic positioning. When HR fails to meet management requirements and expectations for accessible and accurate information, or if these requirements and expectations are ill-defined, HR’s perceived effectiveness is damaged. In short, Company C’s reasons for change are the need for integrity, accuracy, timeliness, and efficiency.

Your Reasons for Change

Critical Success Factors HR typically has an abundance of data. Unfortunately, the data does not usually translate into accurate, timely, and usable information that can facilitate effective decision making. In addition, the information usually resides in multiple locations and there is no easy way to access the information from a single view. This fragmented amalgamation of data results in redundancies, uninformed decisions, and an enormous waste of time. Ideally, an information management system should make it easy for decision makers and employees to get the information they need quickly and easily and in a form that facilitates good decision making. Simply stated, an effective HCMS increases efficiencies and leverages information. At the foundation level, an HCMS needs to reduce the time it takes employees to do certain activities, thereby reducing labor costs. Reducing time and costs associated with routine HR activities can be achieved by enabling

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managers and employees to access a portal or a self-service application instead of requiring human intervention. These activities can include enrolling in or changing benefits, registering for training, changing home and mailing address information, applying for a job, making a salary change, checking pay stubs, accessing organizational charts, getting approval for a promotion, or creating a job requisition. All of these activities normally require a great deal of labor costs and time. An HCMS system can reduce these costs significantly. It should be noted, however, that transitioning to self-service requires a transformation in culture. Moving to self-service means that employees need to own the data and take more initiative in getting the information they need. In addition, openness has risks and rewards. The risk is that giving people access to information that can be interpreted in multiple ways could generate more questions and create unfounded angst. The rewards are that employees feel more empowered and self-sufficient and can find information they need to support personal and professional decisions. Having acknowledged the cultural requirements and confidentiality risks, the use of self-service applications can reduce many of the costs associated with printing, publishing, and binding manuals as well as distributing forms, letters, reports, statements, etc. An effective HCMS can make it much easier to do business with HR. Self-service applications can make administrative tasks much simpler and more accessible. This goal requires that processes are well defined and simplified and people are trained in how to use the system. By giving employees direct access to services, HR is relieved of administrative tasks and is freed up to work on higher level issues and change initiatives. Having one portal for all HR-related information makes it possible to present pertinent information to all employees on a consistent basis. A self-service application not only enables employees to view their paid time-off balance, benefits elections, or paycheck data, it also serves as an excellent vehicle for communicating company information. At level 1 on the scale, critical information can get buried in an e-mail file or somehow get lost in a “wall of noise” that arises from multiple communication channels bombarding employees from every direction. As a result, there is no way to capture, maintain, and use employee information worldwide. Since so many employees work remotely and function as virtual teams, an effective self-service application should be accessible through a browser. Making the portal accessible through the Internet allows employees to be connected to critical information wherever they go. Employees should be able to use any Web browser to take advantage of a server doing all the processing. Self-service functionality enables employees to be empowered and more productive. Building an effective HCMS starts with defining the requirements for success. The next step is to ensure that there are processes in place to achieve those

HUMAN CAPITAL MANAGEMENT SYSTEM (HCMS) requirements. Then, decisions can be made about how to capture, organize, distribute, and use the information contained within the system. Capturing knowledge means collecting implicit and explicit information from new and existing sources. Organizing knowledge means categorizing information to facilitate its use and value. Distributing information means making decisions and accessibility rules to ensure that information gets to the right people at the right time in the right format. Using knowledge means leveraging information both internally and externally to continually achieve better results. An effective HCMS drives knowledge to people who can use it. Thus, in essence, an HCMS is a transactional-based knowledge management system. Knowledge management is the process of getting the right information from the right source to the right person using the right vehicle at the right time in the right format so that people can make the best decision or take the wisest course of action. The decision or action may require different levels of knowledge. Data consist of basic facts. Information is contextualized data or concepts and ideas made up of related facts. Knowledge is processed information or causal relationships between interrelated elements of information. Wisdom is applied and tested knowledge. It results in the ability to forecast and control situational outcomes within a particular domain. An effective HCMS needs to provide accurate information capital and manage our human capital accurately throughout the employee life cycle. A global system is required to support worldwide initiatives and processes. In addition, success requires leadership and cultural support. It is a mistake to assume that all leaders want information that an HCMS can provide and that the culture is one that values openness, responsibility, initiative, and ownership. It is also a mistake to underestimate the amount of planning, process development, and IT support required to implement any new system. Successful implementation of an HCMS involves a thoughtful consideration of leadership needs, cultural resistance, IT requirements, and data ownership.

Your Critical Success Factors

The Reality While HCMS theory appears logical, reality often presents many challenges. Here are some examples from our experience.

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Manual vs. electronic. While there is clearly a rapid evolution to electronic processing, there is still a lot of paperwork to be completed manually. HR is frequently asked to fill out employee change forms and performance management documents. And no matter how sophisticated the system, there are always requests for information that require manual effort. For example, headcount reporting may take into account temps, contractors, or part-time employees. Without a full understanding of FTEs (full-time equivalents) in the organization, it is difficult to manage expenses and achieve profitability goals. HR vs. management responsibility. Even though there is a clear trend for employees to own responsibility for data input and processing, accountability for data integrity is typically assigned to HR. When management gets inaccurate data, HR gets blamed. In many cases, management will often talk about the need for adequate infrastructure and information systems, but investments do not always match the rhetoric. It is always a challenge to put responsibility for data audits, common review, or performance management in the hands of management. Independent systems vs. integrated systems. In global companies, it is fairly typical for each company or geographic region to use home-grown spreadsheets to handle reporting and compensation responsibilities. When it becomes necessary to roll up data into company statistics, it becomes a nightmare to piece together all the disparate data and processes. A variety of independent systems causes a great deal of frustration not only for corporate leaders but also for new employees who might be accustomed to more integrated, enterprise solutions.

Your Reality

Top Ten Lessons Learned 1. Providing integrated sources of information elevates the role of HR. 2. Distribute and use knowledge instead of burying management with data. 3. Don’t build in silos (for example: learning management, staffing, HRIS, performance management) without an integration plan. 4. Leverage small improvements—demonstrate that systems work. Million dollar investments are not always required to improve the way work gets done. 5. Engineer processes before buying systems, but recognize the fact that sometimes new systems provide a catalyst for developing new processes.

HUMAN CAPITAL MANAGEMENT SYSTEM (HCMS) 6. 7. 8. 9.

Educate management on the value of effective HCMS. Use process improvement to change the culture. Invest in training people in the tools—it must be a process, not an event. Conduct training in new technology for all HR staff—it’s the foundation of HR. 10. Ensure that the HR system is integral to and connected with other systems.

Conclusions An effective HCMS takes into account the business needs for data, information, and knowledge. Data needs might relate to headcount or demographic numbers. Information might address trends in each organization and geography over time. Knowledge might include an expert resource network and/or skills bank that enables employees to leverage the experience of subject matter experts to gain competitive advantage. The functions of an HCMS are to develop information capital, human capital, and organizational capital. The processes required to optimize capital development are defining requirements, capturing relevant tacit and explicit information, organizing the information into meaningful categories, distributing the information to the right people in the right way, and leveraging knowledge to achieve results. Clearly, cultural conditions such as openness and risk taking influence the effectiveness of an HCMS, but the standard of trustworthiness remains constant.

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Chapter

4 Learning and Development

Introduction One of the defining characteristics of a great job is the opportunity for growth. In many ways, the purpose of life is to grow. Learning and development provide multidimensional opportunities for growth at work. If individuals are learning and growing, the company has a much greater chance to grow also. Without individual growth, there is rarely organizational growth. Given the dynamic nature of today’s marketplace, there is no chance for sustained company growth unless individuals are learning and growing. In order for individuals to sustain growth, the organizational culture must support growth and recognize progress on learning and development goals. In order for organizations to sustain growth, learning activities must be aligned to performance improvement and business results. In a great company, learning and development support both individual (personal and professional) and organizational growth.

Scale There is a range of possible outcomes in any effort to change learning and development programs. Here is a scale to envision possibilities and assess current realities regarding learning and development: 5: Employees average 10 days per year of business impact development; multiple learning options are leveraged and zero latency exists.

HR OPTIMIZATION 4: Employees average 7 days per year of business-related development; multiple learning options exist, and there are minimal time lags between skill requirements and skill availability. 3: Employees average 5 days per year of excellent development; several learning options exist, and time lags between skill requirements and skill availability do not disrupt performance. 2: Employees average 3 days per year of random development; a few learning options exist, and time lags between skill requirements and skill availability cause performance problems. 1: Employees average less than 3 days per year of out-dated development; very few learning options exist, and skill availability never meets skill requirements. Where are you now on this scale? Where do you want to be on this scale in one year?

_____ _____

Why Change

38

Building relationships has not been as important to Company D as generating revenue. Company D now realizes that growing revenues is dependent on improving relationships internally and externally. While Company D ranks highest among its customers on the most comprehensive solution in its market space, it ranks lowest among its competitors on customer satisfaction. The biggest reason for the low customer satisfaction rating is the fact that customers don’t trust Company D. Since organizational growth is dependent on people, Company D needs to teach people how to become trusted advisors with customers and with employees. Unfortunately, many managers not only discourage development as trusted advisors, they enable and permit destructive behaviors. In addition, Company D has been an “on your own” culture. Employees learned what they needed to know through their own initiative, peer networks, and Internet searches—there was no development culture at Company D. In order to realize its mission, Company D needs to provide employees at all levels with the knowledge, skills, and experience to be helpful to customers. It also needs to be seen as the first choice for helping employees win in their careers. In short, Company D needs to make relationships as important as revenue. Company D offers a variety of disparate programs, but they are all random and inductive. Even though the programs are well designed, they do not relate to corporate objectives. There is no consistent process to register employees in classes, track progress, or estimate a return on investment. The company culture does not support learning and development—it is viewed more as a cost than an investment.

LEARNING AND DEVELOPMENT Your Reasons to Change

Critical Success Factors The functional test of learning and development is whether or not the programs and activities make any impact on the business. Having said that, it is important to set an organizational standard for development in order to send the message that employee learning and growth are important. The scale in this chapter is defined in both quantitative and qualitative terms so that both impact and expectations are taken into account. The best way to ensure that learning and development will have a business impact is to design all interventions around the competencies required for success in particular jobs. Involving client groups (e.g., Sales, Services, Marketing, R&D) in the development of job models and related competencies is critical for accuracy and success. The organization is responsible for defining competencies required for maximum business impact in each job, and the individual is responsible for assessing himself or herself on those competencies and then acquiring the skills related to those competencies. Again, this type of disciplined process requires cultural support in order to sustain the system. The key is to create simple, empowering, thinking tools that enable managers to improve business processes. One critical success factor is a clear learning strategy. A learning strategy is designed to address all of the learning demands created by the business strategy, organizational needs, and cultural requirements. A learning strategy is an implementation road map for the competency, skill, and knowledge requirements and takes into account system needs and cultural support. Developing and implementing a learning strategy is critical to the business because it ensures that individual and organizational capabilities are aligned behind its marketplace positioning and organizational needs. A learning strategy is designed to achieve four major goals: 1. To enable colleagues to acquire the skills and knowledge they need to perform optimally on their jobs and to fulfill their personal development goals by providing easy access to the right content delivered in the right way at the right time. 2. To develop and/or acquire programs, processes, systems, and technologies that support the business strategy, the cultural requirements, and the competency model and that meet organizational needs for learning and development.

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HR OPTIMIZATION 3. To create an environment that supports innovative thinking, organizational learning, personal development, and high performance. Learning needs to be a part of the greater organizational change management plan. 4. To link knowledge management and people development strategies to financial success, i.e., to demonstrate positive return on investment. Finally, with the strategic context and competency requirements in mind, the learning strategy must take into account three critical learning processes that will enable the improvement of individual and organizational performance: 1. How to improve access to learning. 2. How to develop and deliver learning opportunities. 3. How to manage learning and realize value. Another critical success factor is the belief employees have in the culture. People need to believe that corporate-sponsored learning will be useful to them and that their efforts will be rewarded. In addition, learning and development cannot be delivered in isolation from other organizational initiatives. Success depends not only on an integrated approach, but also on other systems, processes, guidelines, and procedures.

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On an individual level, there are two primary reasons to grow: to improve performance on current job realities and to improve positioning for future job possibilities. It is important for individuals to understand both the economic and personal value of development. On an economic level, competency-based incentive plans reward individuals for acquiring and applying certain skills. On a personal level, the acquisition of new skills usually translates into heightened confidence and a sense of empowerment. On the organizational level, there are multiple objectives for a long-term learning strategy: 1. 2. 3. 4. 5. 6.

Align learning investments to performance needs and business requirements. Ensure fair access to learning. Develop the right learning options and opportunities. Deliver learning in the right way at the right time to the right people. Create an environment that supports learning and development. Install the right systems to manage the learning process most costeffectively. 7. Maximize return on investment. 8. Achieve zero latency (ensure that people get the skills and knowledge they need to meet project deliverables just in time).

LEARNING AND DEVELOPMENT 9. Reduce turnover. 10. Improve performance. 11. Improve the attractiveness of the organization. 12. Leverage opportunities for collaboration. These objectives can be summarized by level in the organization and by process, impact, and outcome variables.

Process

Impact

Outcome

Executive

Cultural Management

Organizational Development

Reduced turnover Achievement of business goals

Manager

Performance Management

Human Development

Zero latency Improved performance

Learning Management

Competency Development

Improved costeffectiveness Improved quality

HR

One of the biggest challenges in HR is to sell the value proposition of programs it offers. The chart above is a helpful tool for thinking about what the value proposition is for clients at different levels in the organization. A project manager simply wants to ensure that he or she has the right skills available at the right time to do the job so that performance can be improved. The value proposition for executives focuses on capital development: organizational capital, customer capital, cultural capital, and financial capital. This chart helps the HR professional personalize the value proposition to the audience, i.e., become more thoughtful about what value is responsive to whom. In the five-point scale described in the second section of this chapter, there is mention of how many learning options are being offered and how well they are being leveraged. The list on the following page provides a stimulus for thinking about the various learning options that might be considered in a comprehensive learning and development strategy.

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HR OPTIMIZATION Learning Options

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1. Classroom learning  Internal courses  External courses  Technical training 2. Interactions  Peers  Customers 3. Benchmarking 4. Cross-functional teams 5. Mentor 6. Self-Study 7. Online learning/Web-based training 8. Knowledge sharing  Central repository  Expert resource network  Networking  Communities of practice  Professional associations 9. OJT (on-the-job training) 10. New hire training 11. Corporate University 12. Web site surfing 13. Modeling 14. Coaching 15. Road shows 16. Reading 17. Laboratory 18. Lunch and learn 19. Application success sharing 20. After action reviews 21. Product demos by experts 22. Webinars

LEARNING AND DEVELOPMENT 23. Seminars 24. Workshops 25. Webcasts 26. Conferences 27. Conference calls 28. Intranet connector 29. Town meetings 30. VP forums 31. Action learning interventions 32. Virtual teaming 33. Multiple rater assessments 34. Customer satisfaction surveys Access to most of this learning is a function of cultural support for thinking and learning. Leaders are the primary gateway to learning access, i.e., if leaders support and encourage participation in many of the activities listed above, colleagues will have continuous access to learning. Beyond cultural and leadership support, however, access involves connecting learners to learning options outside day-to-day activities at the workplace. Access to classroom training, online courses, educational materials, expert and knowledge resources—both internally and externally—requires assistance beyond what can be expected from leaders. The chart below is a thinking tool for helping you consider a variety of ways to improve cultural and leadership support for learning:

Before

During

After

Learning Provider Participant Sponsor Manager Leader This chart will help you think through what needs to happen before, during, and after any learning opportunity in order to maximize its impact.

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HR OPTIMIZATION There are several critical decisions that need to be made concerning access to learning opportunities. Here are a few of the key questions that need to be answered: 1. What is the right blend of learning options, i.e., what percentage of learning should be done online, what percentage should be in the classroom, etc.? 2. How much freedom do you give your employees to select learning options? What is the spending authority of each employee? 3. What level of support will be required to institutionalize continuous learning? For example, what policies need to be created to support learning and development?

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Question #1: What is the right blend of learning options, i.e., what percentage of learning should be done online, what percentage should be in the classroom, etc.? We recommend converting as much compliance-level training as possible to e-learning delivery and developing the technological capacity to make it easy for employees to access Web-based training at home and at work. We also strongly recommend that selected training, such as leadership development and team development, be done in a classroom setting. Most important, however, is to ensure that all employees have access to a multitude of the informal learning opportunities listed earlier. The reason for providing multiple learning options is that learning delivery needs to match the learning style of the participant. And it is critical to apply adult learning principles to guide decisions regarding learning options. Question #2: How much freedom do you give your employees to select learning options? What is the spending authority of each employee? We recommend giving colleagues freedom in pursuing learning objectives. Respect and trust are key values in a learning culture. The decision on this issue will send a loud message about how we walk that talk. In addition, we believe that personal development of any type has transfer power to the business. As people grow, the business benefits from their increased insight, creativity, and wisdom. In order for this policy to work, however, employees need to know how their jobs fit into the big picture, what competencies are required for their jobs, and how any learning is aligned with business objectives. Question #3: What level of support will be required to institutionalize continuous learning? For example, what policies need to be created to support learning and development? While we don’t recommend creating a raft of policies that would dizzy even the most bureaucratic of organizations, we do recommend developing policies related to:

LEARNING AND DEVELOPMENT    

Tuition reimbursement Dollar limits for classroom and online learning Approval process Line item allocations and charge backs

A critical success factor is to list all the questions that will need to be addressed in order for learning and development to realize its potential. The three questions discussed above may trigger additional questions for you. The most important outcome of answering these questions is to institutionalize learning in the culture. This will not happen with a random, event-based approach to learning.

Your Critical Success Factors

The Reality Implementing a learning strategy requires several critical decisions concerning the development and delivery of learning opportunities. Here are a few of the key questions that need to be answered. 1. What programs best support your performance needs, competency requirements, culture, and business strategy? 2. Should you develop your own programs or buy programs that are already developed? 3. Should you build an internal staff for learning and development or outsource most of the programs? 4. How should you deliver your learning opportunities: online, self-paced, or in a classroom? 5. How can you customize all learning opportunities so that they reflect your way? Question #1: What programs best support your performance needs, competency requirements, culture and business strategy? All skills need to be mapped against the business strategy, the cultural requirements, and competency model to ensure that you are linking all of your course offerings to business needs. You also need to link the learning options to the competency requirements. Development and delivery must take into account not

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HR OPTIMIZATION

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only what courses should be offered, but also who teaches them and how they are best delivered. Start by identifying the company’s business goals. Next, align performance requirements to those business goals. If there is a gap, investigate. The gap may exist because of non-skill and knowledge issues (i.e., a process needs to be modified). On the flip side, you may find that the gap exists because the majority of the performers do not have the right skills and knowledge. At this point, seek out the highest performers. Interview these performers (internal or external) and use their help to identify the skills and knowledge used to perform the process. Next, determine if the majority of performers truly do not possess the required skills and knowledge (you may do this via surveys, observations, assessment reviews, leadership insight, etc.). If they do not, you will be much more inclined to buy or create the learning program. Question #2: Should you develop your own programs or buy programs that are already developed? We recommend that, whenever possible, you should buy programs that are already developed. There are a multitude of courses available to teach most required skills and it is very expensive and time intensive to develop courses from scratch. However, there may be certain courses that can only be developed internally because of the uniqueness of your culture, products, methodologies, and leadership style. Another dimension of this question is whether to provide programs electronically or in live classrooms. The answer to this question must take into account costs and learning styles, but one factor is to ask how results will be measured. A simple rule of thumb is if it can be tested on the Web, it can be delivered on the Web. For example, teaching swimming might be hard to measure on the Web, but spreadsheet mastery could be tested on the Web. Question #3: Should you build an internal staff for learning and development or outsource most of the programs? We recommend an outsourced model. Hiring internal staff is not only expensive, it tends to be ineffective over time because skill requirements are constantly changing. However, most companies need a driver and sponsor of learning as well as a core infrastructure to coordinate the customization of all content by subject matter experts and to develop and oversee all internally developed programs listed in the development recommendations. The roles of the internal learning and development organizations need to be clearly defined and collaborative opportunities agreed upon. We suggest that the learning and development organizations (Learning Council) should have the following roles:  Develop and implement the learning strategy.  Select and administer the appropriate systems and technologies for implementing the strategy.

LEARNING AND DEVELOPMENT  Help develop cultural support for thinking and learning.  Orchestrate and manage the delivery of internal and external courses. Question #4: How should you deliver your learning opportunities: online, selfpaced, or in a classroom? Overall, it usually makes sense to deliver most of the technical courses online, whereas the leadership, marketing, sales, and professional development courses are better taught in a classroom situation. You will need to continually evaluate the blend of high-tech and high-touch delivery. You should also continue to look at how you can convert some of the course content you now deliver in classrooms into online versions, particularly as you grow globally. Question #5: How can you customize all learning opportunities so that they reflect your way? Your company surely has some “secret sauce” it doesn’t want to share with the outside world. You need to ensure that your sauce gets mixed into the learning recipe without compromising its integrity. We recommend forming a close relationship with an outside training provider with whom there is a high degree of trust and who can help to customize some of the courses. We also recommend that associates participate in the development and delivery of courses where it makes sense. Some courses, particularly in leadership development and operations, should be home grown so that you can continue to differentiate your company in the marketplace by your leadership style, corporate culture, and intellectual capital. Most important, all learning opportunities need to be built around the core competencies. The underlying dynamic in most of these questions is whether programs are being offered to justify HR existence and survival or are being offered to enable business growth. To the extent that HR gets caught up in its own survival needs, it will continue to miss opportunities to partner effectively with its business clients.

The Work Contract Has Changed. Did We Tell Anyone? The work contract used to be: Loyalty for Security. Now it is Commitment for Development in a safe and secure environment. For most of the 20th century, workers felt that as long as they remained loyal to the company, they could expect job security and health coverage. Even though there were always issues about pay inequity, market comparability, benefits design, and work environment, workers did not typically feel anxious about losing their jobs through restructuring, downsizing, or re-layering. While there have always been fairness issues, lack of security was not a predominant concern. As a result of that psychological contract, many workers never worried

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HR OPTIMIZATION about their market value, i.e., what their current skills were worth in the marketplace. In essence, these workers engaged in planned obsolescence. When layoffs became more common toward the end of the century, these workers found themselves scrambling for jobs at significantly reduced wages. The old contract is dead. Very few companies are now willing to guarantee job security for any length of time, so it is a bit unrealistic to think that employees should be totally loyal. On the other hand, most companies provide developmental opportunities for employees that make it easier for employees to find new jobs if economic conditions require significant cost and headcount reductions. In exchange for the ability to learn new skills, it is reasonable for organizations to expect that employees demonstrate high commitment while they are employed. The new contract can be graphically depicted by the following grid:

Responsibility

Expectation

Organization

Provide developmental opportunities

High commitment while employed

Individual

Learn the skills required to increase market value

Respect, fairness, and integrity during time of employment

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Expecting high commitment in Europe and Asia, however, can be problematic. The reaction is, “How do you know what my commitment is?” More acceptable language in Europe and Asia is “personal accountability and support.” Development has to include consideration for expatriate assignments as well. In a global economy, one of the most critical skill-sets a person can learn is how to conduct business in multiple cultures.

Your Reality

Top Ten Lessons Learned 1. Educate people about possibilities for growth. 2. Demonstrate the impact of programs through ROI analysis.

LEARNING AND DEVELOPMENT 3. 4. 5. 6. 7. 8. 9. 10.

Be more concerned with quality than quantity. Understand what it will take to be successful in the organizational culture. Map learning to performance needs and business results. Create a value proposition and reasons to change. Don’t forget the basics: Skills + Support = Success. Leverage the power of sponsorship. Involve stakeholders. Solve business problems through networking, relationship building, and collaboration.

Conclusions A comprehensive learning and development program encompasses the components of professional development, sales development, technical training, and product training. The functions of learning and development are individual growth, organizational growth, and company growth. Multiple processes are employed to discharge these functions: self-paced learning, e-learning, and instructor-led training. Clearly, the extent to which the company embraces the notion of organizational learning impacts the effectiveness of learning and development initiatives, but the standard of positive and sustainable performance remains constant.

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Chapter

5 Staffing

Introduction A great company is built by great people. The search for world-class talent is an ongoing priority for a great company. One critical requirement for a great job is to be able to work with great people. Exceptional talent attracts exceptional talent. All of these principles underscore the importance of staffing.

Scale There is a range of possible outcomes in any effort to change the staffing process. The following scale helps envision possibilities and assess current realities: 5: World-class talent attracted, hired, retained, and aligned behind corporate objectives. Staffing is measured on the performance of people hired. 4: Great talent attracted, hired, and retained. Staffing is measured on retention of mission critical/highly capable talent. 3: Adequate talent attracted, hired, and retained. Staffing is measured on cost per hire, time of open requisitions. 2: Fair talent attracted and hired. Staffing is measured on number of positions filled. 1: Poor talent attracted and hired. Staffing effectiveness and efficiency are not measured.

HR OPTIMIZATION Where are you now on this scale? Where do you want to be on this scale in one year?

_____ _____

Why Change

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Historically, Company E relied heavily on outside agencies to conduct a high percentage of searches. While the agencies were able to source excellent candidates, the costs were very high. In fact, average cost per hire in some departments exceeded $15,000. While a reasonable standard for agency usage is around 10 percent of hires, several groups had agency usage in the 35 to 40 percent range. In addition, Company E sourced a large number of employees from personal contacts. While employee referrals can be a rich source of candidates for a company, it can also lead to an extremely homogeneous workforce. For Company E, the sourcing pool consisted predominantly of white, male, military athletes. This DNA (organizational gene pool) served Company E well when the sales strategy was to be the most aggressive player in the market and when the primary clients were white male engineers. But in the new competitive, relationship-oriented marketplace, this strategy no longer makes sense. Company E needs to attract a diverse workforce through a more cost-effective mix of sourcing strategies. It needs to not only recruit a more heterogeneous workforce, but also to encourage its diverse workforce to recruit from diverse talent pools. To compound the problem, managers within the company perceive HR as résumé finders instead of staffing consultants who could add value to the entire staffing process. In short, Company E needs staffing to attract and retain the right talent.

Your Reasons to Change

Critical Success Factors One of the most critical factors of a great job is working with great people. Waging the war for talent requires real commitment from senior leadership and processes that result in excellent choices. There are five phases within a Staffing Methodology or Process: Planning, Sourcing, Assessing, Closing, and Engaging. People, culture, and technology support and enable these five phases. The people enabler includes interviewers, managers, business partners, etc. The

STAFFING cultural enabler refers to the norms and values in the organization that either enhance or impede a systematic process. The technology enabler makes it possible to conduct the staffing process more efficiently and effectively.

Planning

Sourcing Assessing

Closing

Engaging

People, Culture, and Technology 1. Planning Phase The planning process begins with the creation of a workforce plan and ends with a clearly defined approach to filling jobs. This plan includes the roles that each person will play within the staffing process. Workforce planning brings together business executives, finance leaders, HR leaders, and hiring managers for the purpose of creating a top-down and bottom-up view of the human capital requirements to achieve business objectives. Hiring managers identify ideal start dates and the staffing organization rolls up all the requirements (competencies, experience, knowledge, skills, and attitudes) and start dates into a comprehensive plan. The workforce plan is used to create a hiring plan. This plan takes into account turnover and internal transfer expectations. With the workforce plan and hiring plan in place, staffing consultants facilitate a conversation with business executives and finance leaders that results in a staffing budget. Based on the budget, staffing leaders define and implement a collateral strategy to attract talent. Also after budget approval, hiring managers create job requisitions and secure approval. Staffing consultants verify that the job requisition content is accurate and complete. Once the requisition is approved, the manager and staffing consultant meet to commit to a staffing strategy that is documented in a service-level agreement. In this document, the staffing consultant and hiring manager create a staffing strategy for each of the remaining steps of the methodology and reach agreement on start dates, assessment procedures, interview teams, and the communication strategy. After role expectations are defined, the staffing consultant moves the approved requisition to open status in the staffing system. Entering the requisition into the system enables the staffing organization to track the time and costs associated with each position.

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HR OPTIMIZATION 2. Sourcing Phase The goal of the sourcing phase is to attract talented individuals for opportunities on a global basis. During this phase, candidates become aware of and excited about career opportunities. During the planning phase, the staffing consultant and hiring manager defined a sourcing strategy. Now the strategy will be verified and updated to reflect any changes. The staffing consultant verifies the job description, prioritizes job requirements, ensures that the approved recruiting budget is appropriate for the job, uses internal and external resources available to source the best candidates, and updates the service-level agreement as necessary. The hiring manager identifies target companies or candidates for the job, gains approval for additional sourcing costs as necessary, participates in sourcing efforts, and solicits candidate referrals from colleagues.

3. Assessing Phase

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The assessment phase is designed to measure the fit between the candidate and the job. The assessment includes measuring a candidate’s capabilities, motivations, and cultural fit with the organization. The goal is to find candidates who fit well with the corporate culture and who demonstrate how their skills and values are aligned with business needs. In this phase, candidates also assess the organization and decide if the company meets their expectations for a rewarding career opportunity. During this phase, the staffing consultant meets with the other members of the qualifying team to review and update the staffing strategy, determines if the candidate meets the minimum requirements as defined by the hiring manager, conducts the initial candidate interview, provides an introduction to the company, and facilitates a structured feedback discussion with members of the qualifying interviewing team.

4. Closing Phase The goals of the closing phase are to acquire candidates who are the best fit for the jobs available, to notify candidates who were not selected, and to have candidates who, regardless of the outcome, feel better about the company after participating in the staffing process. During this phase, the staffing consultant verifies the candidate’s current compensation and expectations, identifies outstanding issues, and defines the compensation package within the compensation range. Then the staffing consultant and hiring manager work together to create a compelling offer, including salary, bonus, stock, relocation (if necessary) benefits, and development/career opportunities. The hiring manager gains

STAFFING additional offer/contract approval if the final compensation package is outside the range approved in the requisition. After all these details are covered, the appropriate leader communicates the verbal offer to the selected candidate and communicates his or her decision to other members of the hiring team. As a person transitions from “candidate” to “new hire,” it’s the responsibility of staffing to complete the appropriate paperwork.

5. Engaging Phase The goals of the engaging phase are to help orient new colleagues to their new company and fully assimilate into the culture, to ensure that they have the tools and relationships necessary to start their new jobs, and to facilitate a rapid learning curve. During this phase, the staffing consultant and hiring manager work together to ensure that new hires have office space with computer equipment, are set up in payroll, and have signed up for benefits. The hiring manager should also introduce the new hires to other colleagues inside the group and create a support network outside the group, possibly including mentors. As a result of the engagement phase, new colleagues not only understand job expectations and how their jobs relate to the overall business strategy, but also feel connected to their teams.

Your Critical Success Factors

The Reality While staffing theory appears logical, reality often presents many challenges. Here are some examples from our experience. Good times vs. bad times. Staffing issues change dramatically in different economic conditions. During good times, getting the right people presents a major challenge. The emphasis is on creating the most compelling offer in order to compete with multiple offers the candidate brings to the table. Sourcing good candidates is a continuous challenge because the demand for talent far exceeds supply. During bad times, getting a requisition approved presents the major

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HR OPTIMIZATION

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challenge. The supply and demand curve shifts, so the supply of candidates far exceeds demand and the caseload and the nature of work in staffing changes. It’s difficult to maintain excitement and motivation in the staffing organization during tough times because there are always stops and starts, and the interviewing process is typically drawn out. In short, sourcing presents the biggest challenge during good times, and selection (assessing and closing) presents the biggest challenge during bad times. Quality vs. quantity. Staffing is typically assessed on the number of jobs it is managing, the number of candidates that are presented, the number of people hired, and the cost per hire. Unfortunately, these quantitative measures do not reflect the quality of the hire. The most important measure of staffing is retention and performance, i.e., does the person stay and does he or she demonstrate the level of contribution and commitment expected. While cost is fairly easy to compute, the effectiveness part of the equation is usually ignored. Effectiveness can be measured by the time it takes the person to reach peak performance on the job, how long the person stays with the company, and whether or not the person is promoted or advances in the organization. These measures are more qualitative and take more time to track. The real issue is whether or not staffing is able to get the right person in the right job at the right time. These are all qualitative measures that rarely get the attention they deserve. Recruiters vs. consultants. Changing the way people think about staffing is an ongoing challenge. Most business leaders have an image of people in staffing as recruiters—people who source candidates and get them hired. The staffing consultant is a person who adds value to each phase of the staffing process: planning, sourcing, assessing, closing, and engaging. An effective staffing consultant is much more than a recruiter. A staffing consultant is engaged in workforce planning, performance assessments, and ongoing dialogue with clients about getting the right resources working on the most important tasks. Changing the image of staffing with clients and positioning staffing appropriately in the organization as a value-added service is a reality that staffing consultants confront on a daily basis. The people in the role of recruiting talent into the organization are perceived by candidates as the “face” of the company; the representatives who embody the culture and character of the company. In many cases, this face is the only contact a candidate has with the company. The impression the staffing consultant leaves with a candidate has significant impact on the company’s brand image in the marketplace. The impact the staffing function has on the perception of the marketplace should not be underestimated. A number of factors make up this impact: the quality of the staffing consultants’ work, their personal character, their broad

STAFFING and in-depth knowledge of the company they represent, and their personal commitment to the company and its mission. The reality is that this value is rarely recognized or appreciated. Manual vs. electronic. Managing changes in realistic time frames is difficult with manual procedures. There are client demands for weekly reports as well as daily requests. Trying to respond to all the requests for information and for people is practically impossible without an electronic system. Staffing systems, e.g., Brass Ring or WebHire, enable the staffing process and make it more efficient and effective. Spreadsheet accuracy is critical for managers to control their expenses and make informed decisions. Providing that accuracy and ensuring data integrity is much easier with electronic tools and systems.

Your Reality

57 Top Ten Lessons Learned 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

You can’t fix what you don’t measure. The recruiting system is a critical enabler. Choosing the most important metrics is critical. It takes years to establish/inculcate great processes. Leadership changes dramatically affect the ability to move from one level to another. You must align staffing strategy with competencies required for today and tomorrow. The requisition process is necessary to focus on what matters, e.g., competencies, cultural fit, level of commitment. Focus on hiring the “right” people vs. world-class talent. Every company says it wants to hire top talent—very few want to invest the time, money, and resources to do it. Employer of choice may be the wrong strategy; you want the right people in the right jobs.

HR OPTIMIZATION Conclusions The components of a comprehensive staffing program are planning, sourcing, assessing, closing, and engaging. The functions of staffing are to recruit a diverse and talented workforce that meets business needs and to retain the most critical and capable people. Several processes are used to discharge these functions: direct hiring, Internet recruiting, employee referrals, agency assignment, and assimilation. Clearly, the abundance or scarcity of talent in the labor market affects staffing programs, but the standard of getting the right person in the right job at the right time remains constant.

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Chapter

6 Leadership Development

Introduction There is no possibility of creating great jobs in a great company without effective leadership. A person’s relationship with her or his boss is a major factor in how the person views the job. A positive and productive relationship is essential. But many managers are promoted to leadership positions without having the skills to build relationships and mobilize commitment to the organizational goals and objectives. Leaders need to be continually assessed for performance and potential: performance is a combination of the contribution the leader makes as well as the leadership role he or she plays; potential is a combination of capability and commitment. An effective leader contributes to the company’s strategic direction, to the bottom line, and to the organizational culture. In this chapter, we will discuss the competencies required for great leadership as well as the process used to optimize talent.

Scale There is a range of possible outcomes in any effort to improve leadership development. Here is a scale to help envision possibilities and assess current realities: 5: Most promotions from within are extremely successful. 4: Most promotions from within are very successful. 3: Many promotions from within are successful.

HR OPTIMIZATION 2: Some promotions from within have limited success. 1: Almost no promotions from within; rare success.* *It should be noted that many companies promote from within, but those promotions turn out to be unsuccessful because the promotions are based on inappropriate criteria and/or nothing is done to help the person acquire the competencies required for success in the new position. This scale does not reflect that option, but if that is the case for your company, you should assign yourself a level 1 rating. Where are you now on this scale? _____ Where do you want to be on this scale in one year? _____

Why Change

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Leadership development needs to change because marketplace and organizational requirements have changed. In the past, Company F needed its managers to drive for results, control costs, and monitor work. In response to that need, HR provided a series of supervisory and management-level courses that taught managers the fundamentals of supervision. These courses focused on tactical considerations and helped managers comply with internal policies and external laws. They were designed to enable managers to do their jobs and relate to people in reasonable ways. In the marketplace today, there is a need for continuous generation of new ideas to help customers win with superior products, services, solutions, and partnerships. In the organization today, there is a need for leaders to inspire people to think creatively about new ways of working, to motivate people to perform at their highest levels, and to align all work behind corporate goals and priorities. Whereas in the past most decisions were made by a small group of executives, there is now an attempt to push decision making lower in the organization and to hold managers accountable for the results to which they commit. These new requirements mean that leaders have to think strategically and relate collaboratively in order to be successful. It is no longer sufficient to perform well as a supervisor or manager by monitoring tasks and controlling costs. In today’s world, every employee needs to think and act as a leader by identifying priorities, building programs and teams, and driving results. If we are going to provide opportunities for people to grow, we need to provide them with the skills and support they need to be successful. Company F needed to change because the predominant leadership style was resulting in poor morale and turnover of key talent. In order to improve morale, productivity, and profitability, Company F now requires leaders who are competent, empowered, and collaborative.

LEADERSHIP DEVELOPMENT Your Reasons to Change

Critical Success Factors The functional tests of leadership development involve asking the following questions: 1. Are we promoting from within? 2. Are our leaders successful in their jobs? If our leadership development efforts are effective, then we should be growing sufficient talent internally to fill new leadership roles as they open up. It is not sufficient, however, to provide leadership opportunities to internal candidates. The people who are promoted must succeed in their new jobs. The challenge is to determine what makes a good leader in different cultural contexts. A leader could be extremely effective in North America and fail miserably in Japan. Similarly, a leader could perform well in marketing and not do well in engineering. There are certain truths about leaders, however, that hold constant in any context: integrity, the ability to identify strategic opportunities, the ability to build teams, and the persistence to drive results. One important factor in the success of any leader is to be clear about the measures of success at the beginning of the job. In order to be effective, leaders need to be able to know and grow:    

Their own commitment and capabilities Others’ commitment and capabilities Their organization’s capabilities Their customers’ capabilities and satisfaction

These are the four components of leadership. Leaders need to focus on knowledge and growth for themselves, others, their organizations, and their customers. There are well-defined meta competencies that enable leaders to discharge their responsibilities in all four components of leadership:  Envision possibilities.  Assess realities.  Think creatively and analytically.

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HR OPTIMIZATION    

Relate inclusively and interdependently. Plan dynamically. Act rigorously and relentlessly. Learn continually.

The grid on the next page provides examples of competencies that are directly related to success in each cell. Thus, if the primary component of a leader’s job is to know and grow the customer, and the primary functions are to think creatively and relate interdependently, then the competency in that cell will indicate what the leader needs to know in order to be successful. The assignment of competencies to each cell is not meant to be exclusive. For example, the competency of motivating others could be critical in multiple cells. Since this book is an invitation to transformation, the cell assignments should be seen as stimuli for you to think through what competencies are required in your organization. As mentioned earlier, the challenge was to identify required competencies for a leader whose primary job responsibility was to know and grow customers and whose primary functions were to think creatively and think interdependently.

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Thus, in this example, the competencies required for success for this leader would be: Business acumen, Intellectual horsepower, Problem solving, Customer focus, Integrity and trust, Presentation skills, Written communications Essentially, good leaders need to be able to envision, assess, think, relate, plan, act, and learn. These are the metacompetencies of leadership. Leaders need to be able to size up people and situations, analyze organizational dynamics, and diagnose accurately what it takes to motivate people. They need to generate new responses to changing conditions and apply innovation to customers’ needs. They need to be able to engage people in meaningful dialogue and create an environment of trust. They need to be able to plan, organize, manage, and measure work in efficient and effective ways. And finally, they need to be able to hire the right people, get work done, and drive for results. All of these competencies can be summarized by Identify, Build, and Drive. The effective leader identifies strengths, weaknesses, opportunities, and threats; builds individual and organizational capabilities; and drives for results.

Self-knowledge, Career ambition

Work/Life balance

Timely decision making

Personal disclosure, Ethics and values, Composure

Planning, Priority setting

Perseverance, Standing alone, Action oriented

Personal learning, Self-development

Envision Possibilities

Assess Realities

Think Creatively and Analytically

Relate Inclusively and Interdependently

Plan Dynamically

Act Rigorously and Relentlessly

Learn Continually

Know and Grow Your Own Capabilities and Commitment Strategic agility Innovation management, Customer listening Business acumen, Intellectual horsepower Problem solving

Process management Re-engineering, Action orientation, Functional and technical skills Dealing with paradox, Technical learning

Organizational agility, Perspective, Managing vision Time management Dealing with ambiguity, Creativity, Decision quality Boss relationships, Comfort around higher management, Managing diversity, Political savvy Organizing Command skills, Managerial courage, Drive for results Learning on the fly

Conflict management, Negotiating Fairness, Caring, Compassion, Patience, Humor, Interpersonal savvy, Listening, Informing Managing and measuring work

Managing diversity

Delegating, Developing, Confronting, Directing, Building teams

Sizing up people, Understanding others

Hiring and staffing, Motivating others

Customer focus, Integrity and trust, Presentation skills, Written communications

Know and Grow Customer Capabilities and Satisfaction

Know and Grow Others’ Capabilities and Commitment

Know and Grow Organizational Capabilities

Leadership Competencies

LEADERSHIP DEVELOPMENT

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HR OPTIMIZATION Your Critical Success Factors

The Reality While leadership theory appears logical, the reality usually presents many challenges. Here are some examples from our experience. Company F’s CEO issued a challenge to his management team: “We need to optimize our resources throughout the organization. That means we need to ensure that  We have our best people in our most important jobs.  We have development plans for our high performance/high potential people.  We no longer accept or ignore poor performance.” His bold and demanding challenge raised several questions:

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1. How do we evaluate objectively what our most important jobs are? 2. How do we evaluate objectively who our highest performing/high potential people are? 3. How do we ensure that we are providing the right developmental opportunities to the right people? 4. How do we deal fairly with poor performers? HR took on the task of providing substantive responses to all these questions. Question 1: How do we evaluate objectively what our most important jobs are? In order to answer this question, we needed to develop criteria for evaluating each vice president (VP) job. These criteria were designed to evaluate if the job really merited a VP or senior vice president (SVP) title. Company F had 186 VPs for an employee population of 4,200, which meant that about 4.4 percent of its employees had a VP title. A benchmarking study indicated that in comparable high-tech companies, about 3 percent of all employees were VPs. That meant that Company F had about 60 more VPs than what one might find in a benchmark company. That statistic posed a problem because the intent of this process was not to demote 60 VPs, but to ensure that the highest performing people were in the most important jobs. Thus, one of the first challenges of this process was to keep the discussion laser focused on optimization vs. demotion.

LEADERSHIP DEVELOPMENT We established a set of criteria to facilitate the analysis and dialogue. Here are the criteria we used to evaluate the jobs and the people.

Senior Management Job Rating Scales Instructions: Refer to the standard criteria below to evaluate each VP titled position in your organization. Do not evaluate the person in the role today—this is a job evaluation only. Total the points associated with each job you evaluate. Job Title: __________________________________ Name of Person Currently in Job __________________________________ Strategic Nature of Job/Liability Potential _______ 5: 4: 3: 2: 1:

Extremely Strategic and/or great liability potential in the case of inaccuracy Very Strategic or high liability potential in the case of inaccuracy Strategic or liability potential in the case of inaccuracy Somewhat Strategic or liability potential in the case of inaccuracy Tactical or no real liability potential in the case of inaccuracy

Size and Scope of Job

_______

5: >100 employees 4: 51–100 employees 3: 25–50 employees 2: 15–24 employees 1: <15 employees Revenue/Cost Responsibility 5: 4: 3: 2: 1:

Responsible Responsible Responsible Responsible Responsible

for for for for for

_______

> $50 million in sales or >$18 million in costs $30–50 million in sales or $12–18 million in costs $20–29 million in sales or $6–12 million in costs $10–19 million in sales or $1–6 million in costs < $10 million in sales, <$1 million in costs

Relationship Responsibility (internal and external) 5: 4: 3: 2: 1:

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_______

World-wide responsibility for 2 or more functions, reports to executive VP World-wide responsibility for entire function International responsibility for entire function Responsibility for function within United States, Europe, or Asia Responsibility for a function within a particular country or geography

HR OPTIMIZATION Technical/Professional Requirements 5: 4: 3: 2: 1:

________

Very High technical/professional requirements, broad company knowledge High technical/professional requirements Technical/professional requirements Some technical/professional requirements Very few technical/professional requirements TOTAL:

_______SVP = >20; VP = 15–20

Senior Management Personal Ratings Instructions: Refer to the standard criteria below to assess each of your senior managers (VPs and above). Total the points associated with each person you assess. Name: _____________________________________________ Performance: (How is this person doing on current job?) Contribution: _______

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5: 4: 3: 2: 1:

Far exceeding expectations on current job Exceeding expectations on current job Meeting expectations on current job Falling short of expectations on current job Falling far short of expectations on current job

Leadership: 5: 4: 3: 2: 1:

Inspires others in people development and core values Promotes people development and impacts core values Actively develops people and supports core values Sometimes engages in people development and supports the values Doesn’t engage in people development and/or distracts from the core values

Potential (Can this person do more?) Capability: 5: 4: 3: 2: 1:

_______

_______

Has the knowledge, skills, and experience to do much more Has the knowledge, skills, and experience to do more Has the knowledge, skills, and experience to do more with development Lacks the knowledge, skills, or experience to do more Does not have the knowledge, skills, and experience to do more

LEADERSHIP DEVELOPMENT Commitment:

_______

5: Extremely committed to the company, personally accountable for company growth 4: Very committed to the company, personally accountable for organizational growth 3: Committed to the company, personally accountable for departmental growth 2: Lacks commitment to the company, accountable for personal growth 1: Not at all committed to the company, not accountable Question 2: How do we evaluate objectively who our highest performing/high potential people are? The senior management teams of each organization reviewed each job on the Job Rating Scales and each VP on the Person Rating Scales. If a VP job fell below a total of 15 points on the five scales, that job was tagged in case the person in the job were to leave for any reason. The person was not demoted, but the job was designated as one that would not be replaced as a VP. In a separate exercise, each VP was rated on the Person Rating Scales. Since there were two scales for Performance and two scales for Potential, it was possible to map the totals into an optimization model (see page 68) using the following guidelines:

Performance: High: Exceeds expectations/Inspirational leader (8–10) Med: Meets expectations/Impact player (5–7) Low: Falls short of expectations/Detracts from core values (<5)

Potential: High: Has capability and commitment to do more (8–10) Med: Has capability and commitment to do more with development (5–7) Low: Lacks capability and commitment to do more (<5)

Readiness: Green: Yellow: Red:

Ready now Ready within 1 year with development Ready within 2 years with development

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HR OPTIMIZATION Criticality of Job: 3: Mission Critical 2: Very Important 1: Important

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P e r f o r m a n c e

Potential High • Map In People • Assess Readiness • Assess Job-Person Gaps

Med

Low Low

Medium

High

Leadership Competencies In addition to mapping all VPs into the optimization model and indicating the criticality of the current job and the readiness of the person to move, the executive staff also agreed on organizational principles to ensure that the process reinforced core values in the culture.

Organizational Principles Evaluation: All VP jobs will be evaluated whenever there is significant organizational change or every 2 years. All VPs should be evaluated on an annual basis. VP jobs are reviewed independent of the person.

LEADERSHIP DEVELOPMENT Authority to hire: Proposed VP jobs need to be approved by the executive committee and the decision must be unanimous. SVPs have authority to hire who they want as long as the position has been approved as a VP job.

Guidelines for hiring, promoting, and rating: Whenever VP jobs open up, we should make every effort to fill them with diverse cultural backgrounds. When senior management positions open up, we will use our designated talent pool as a viable source for candidates. SVPs can assign designations independent of the numerical ratings, e.g., the “person” ratings should only be seen as decision support information. If a person reports to an SVP, it does not necessarily follow that she/he should have a VP title. Question #3: How do we ensure that we are providing the right developmental opportunities to the right people? In many organizations, “one off” decisions are made on who gets to go to development programs whether they be executive MBA programs or two-week intensive programs. Even more common are organizations that provide random, inductive leadership training. This means that the training is not tied to the competencies required for success in the current job or future job. The outline below illustrates how one company leveraged its optimization process to ensure that the company provided the right developmental opportunities to the right people.

Optimization Process Phase I: VP Job Evaluation 1. Meet with the executive team to review the criteria and the process. 2. Once we agree on criteria, we will make no promotions to SVP or VP without going through the criteria in the executive committee. 3. Reach agreement on how to integrate with Performance Management. 4. Build evaluation tools and support documents. 5. Evaluate all VP jobs on the criteria.

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HR OPTIMIZATION 6. Based on the data, each executive VP in collaboration with the HR Business Partners will identify key positions within their respective organization. 7. Executive committee will review all positions and identify the most important positions.

Phase II: Succession Planning and Performance Management 1. Executive VPs will assess all VPs in their respective organizations using the “person” criteria (performance and potential) and assign a red, yellow, or green readiness rating to each VP. 2. Executive VPs will identify top talent in their organization and development plans for each. 3. CEO will present results of analysis and the optimization plan to board of directors.

Phase III: Optimization

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1. Each executive VP will meet with CEO and SVP of HR to  Review organizational structure.  Review current list of key positions in order of priority and criticality to the business.  Present “talent pool” of high-potential, high-performing leaders within the organization who are ready to move into high-impact jobs.  Present a succession plan based on key positions and leaders with potential and readiness for immediate and future growth.  Discuss development plan for those included in succession plan with emphasis on assignment management.  Identify minorities, women, and employees with unique/critical skill sets.  Invite high-performing, high-potential leaders to apply for educational grants to continue their development on the competencies required for success in their next job.  Review steps to operationalize the optimization plan. 2. Each executive VP will implement optimization plan. Question 4: How do we deal fairly with poor performers? It is just as important to deal fairly and effectively with people in the lower left quadrants of the optimization grid as it is to provide developmental opportunities for people in the upper right quadrant of the grid. The optimiza-

LEADERSHIP DEVELOPMENT tion process not only uses specific criteria on which all managers are evaluated, it also incorporates multiple-rater assessment as a critical part of the process. Poor performers must be dealt with directly, fairly, and quickly. Too often, poor performers are permitted to hide in the organization and continue to collect their pay checks with no accountability. The key ingredients of fair dealing are to evaluate everyone on the same criteria, to enlist multiple sources of input on potential and performance, to provide constructive feedback, and to give a person a reasonable amount of time to improve. If performance on specific objectives does not improve in a reasonable amount of time, then action needs to be taken. While some executives believe that the lower 10 percent needs to be eliminated each year, we do not subscribe to that notion. Cutting by percentages is a losing strategy. The more effective strategy is to hold everyone accountable to performance goals and to deal honestly and directly with those who fall short of meeting expectations.

Your Reality

71 Top Ten Lessons Learned 1. Development needs to be based in the reality of the leader’s job and organizational culture. 2. Senior leadership role modeling and support are critical. 3. Raising awareness of the need for development is half the battle. 4. Flexibility and a variety of development options are important. 5. Rewarding for development sends a clear message that personal learning and growth is valued in the culture. 6. Development needs to be built into every activity—point out development opportunities. 7. Debriefing doesn’t mean assigning blame—it means learning. 8. Provide thinking tools and methodologies: Identify-Build-Drive; AnalysisDialogue-Discipline. 9. Create environments in which people can learn. 10. Leadership is not a program—it is a commitment, a process, and a belief.

HR OPTIMIZATION Conclusions The components of a comprehensive leadership development program include opportunities for knowing and growing self, others, the organization, and customers. The functions of leadership development are to increase the ability of leaders to identify opportunities and threats, to build partnerships, and to drive accountability and results. Several processes can be employed to develop leaders: promotions into more challenging jobs, leadership training, and educational assistance. Clearly, the extent to which a company supports development and succession planning impacts the success of leadership development efforts, but the standard of continuous learning remains constant.

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Chapter

7 Communications

Introduction In the thousands of organizational studies conducted by consultants over the past several decades, one major theme appears constantly: the need to improve communication. It’s hard for anyone to feel as if they have a great job when they don’t feel informed of what’s happening in the organization nor involved in making decisions. Quite simply, people need to know what’s going on in their work environment to be successful. When people are uninformed, they feel out-of-sync. When they are not involved in decisions that affect them, they do not feel aligned with the organization’s strategic direction. In companies that communicate extraordinarily well, people are aligned with corporate and organizational goals and objectives. The test of communications is alignment.

Scale There is a range of possible outcomes in any effort to improve workplace communications. The following scale will help you envision possibilities and assess current realities in your organization: 5: Employees are inspired by the organization’s vision and direction; everyone feels like they are part of the action. People are aligned with the vision. 4: Employees feel incorporated in the business and are aligned with the mission.

HR OPTIMIZATION 3: Employees feel involved in organizational decisions and direction and are aligned with organizational goals. 2: Employees feel informed of organizational decisions and direction and are aligned with departmental objectives. 1: Employees feel ignored and are not aligned. Where are you on the scale now? Where do you want to be on this scale in one year?

_____ _____

Why Change

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Information has not flowed smoothly in Company G. Idiosyncratic decisions are made frequently that affect other people, but those decisions are communicated tersely, if at all, to those affected by the decision. Company G can be characterized as having a culture of negotiation. If someone doesn’t like a decision from one source, he or she simply goes to another source to negotiate a different deal. Even at the executive level, some decisions are made without informing or involving other senior executives. Company G does not have a vision statement and there is significant resistance to spending time developing a mission statement that reflects broad-based input. Historically, most decisions have been made by a small team of executives without involvement or dialogue with the rest of the senior management team. This command and control communication style has been changing, but one would not describe the Company G culture as empowering or engaging. In short, Company G needs to change in order to create an informed, involved, and inspired workforce.

Your Reasons for Change

Critical Success Factors At a minimum, people need to be informed of decisions that affect them and of the strategic direction of the organization. If there is a commitment to create a supportive community among colleagues and associates, then there needs to be evidence that the commitment translates into open communication. Town meetings are an effective way to communicate company news and changes and to

COMMUNICATIONS share openly the progress or lack of progress that is being made on corporate objectives. At an acceptable level of communication, employees feel involved in decisions and are clear about the strategic direction of the firm. This may require focus groups, breakfast meetings, practice communities, etc. While it is rare for an organizational community to feel that involvement efforts are adequate and real, it is still important to make genuine attempts to engage people in meaningful dialogue when appropriate and possible. At the highest levels of communications, employees feel inspired by the messages they are receiving. The vision statement should align with employees’ deeper aspirations and reflect a higher purpose. It should be phrased in such a way that employees would want to share it proudly with their most significant others. The statement should be one that employees identify with and can internalize. It should be a simple, powerful, and repeatable phrase that inspires employees to dedicate themselves to furthering the purpose of the organization. Communications cover a wide range of interactions: investor relations, employee newsletters, town meetings, employee suggestion systems, meetings, performance reviews, goal setting, ongoing feedback, coaching, memos, conference calls, Web-casts, etc. Given the abundance of communication channels, it’s surprising to hear the common complaint, “There are no communications around here.” Why is there such a disconnect between the amount of time managers invest in communications (either through meetings or memos) and the lack of clarity employees typically experience? The average manager spends a large portion of time in meetings. Some studies indicate that managers spend more than 50 percent of a typical day reading and writing. The average employee spends almost an hour producing each memo. The average document is reviewed four times before it reaches its intended audience. Given the proliferate amount of memos circulated in a given day, that’s an enormous investment in time and energy. Yet, according to a Louis Harris study, less than one-third of employees think that management provides clear goals and directions. Even though we know that open communication is one of the most important retention factors, it is difficult to satisfy employee expectations for information and involvement. One possible reason for the disconnect between the high investment in time and the low result in clarity is that senior managers rarely do a good job of cascading corporate goals throughout the organization. If goals at the top are not well articulated and communicated, it is unlikely that employees will feel like they know what’s going on and how they fit in.

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HR OPTIMIZATION There are three critical success factors for effective communication: (1) develop a communication strategy, (2) create a culture of trust, and (3) hold individual managers accountable for communicating with their employees. Individual managers need to be trained to deliver good news and bad news about performance, to provide ongoing coaching, and to present ideas cogently and effectively. Creating a culture of trust requires a long-term commitment to open, honest, and direct communications about successes and failures, financial results, and strategic changes. Multiple channels of communication, an ongoing commitment to tell the truth, and leadership authenticity are all essential elements in building trust. A communication strategy involves more than developing a technology infrastructure. An effective communication strategy addresses how an organization cascades its goals, clarifies expectations, manages change, distributes information, involves people in decisions, incorporates them in the business, and inspires them by the vision, mission, and strategy. The most important success factor is to make conscious decisions about what to communicate to whom and to be clear about the purpose of the communication. The table that follows is a helpful thinking tool for making conscious communication decisions:

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Employees

Customers

Communities

Board of Directors and Shareholders

Inspire Incorporate Involve Inform Ignore This tool can help you think through the level of communication required for your various constituencies. Are there situations in which you can ignore employees or the board of directors? When do customers need to be involved in decisions? How do you inspire employees with a particular message? This tool helps you raise questions that can lead to improving communications.

COMMUNICATIONS Your Critical Success Factors

The Reality While communication theory appears logical, the reality usually presents many challenges. Here are some examples from our experience: Consistent messages vs. a wall of noise. Some organizations go communications crazy. Each department has its own newsletter and disseminates pithy stories to the whole population. As a result, employees are choked with confusing and irrelevant information. At the other extreme, there is a communication void. Employees have no idea how well the company is progressing on its stated goals. To compound the confusion, messages often conflict with one another—there are a thousand specks of light instead of a spotlight on critical messages. Memos vs. meetings. What would happen to corporations if all memos and meetings were banned? Crafting memos and going to meetings constitute a major share of an employee’s day. What could be done to improve the quality of memos and meetings? Conscious decisions need to be made about the appropriate form of communication for a given issue. These issues are compounded when working in virtual teams. For more information on how to improve communications in virtual teams, refer to the book Virtual Teams (Bellingham, 2001).

Your Reality

Top Ten Lessons Learned 1. Use good e-mail protocols—not too long, not too often. 2. Use voice mail for a personal touch, but keep messages under 2 minutes. 3. Add face time and reduce travel costs through teleconferences.

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HR OPTIMIZATION 4. Promote interaction with Web-casts—don’t make them all “tell.” 5. Hold town meetings once per quarter to discuss progress against objectives. 6. Align all employees behind corporate and organizational goals by cascading them through the organization. Make sure that corporate goals are well articulated and communicated. 7. Encourage ongoing and constructive performance feedback. 8. Engage in productive dialogue and problem solving during face-to-face meetings. 9. Use memos to inform people of changes and decisions. 10. Leverage technologies for knowledge sharing and collaboration.

Conclusions

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The components of a comprehensive communication program are employee communications, customer communications, and shareholder/investor communications. The functions of communications are to inform, involve, incorporate, and inspire all stakeholders so that they are aligned with the strategic direction. Several processes can be used to discharge these functions: town meetings, e-mails, voice mails, newsletters, and Web-casts. Clearly, the extent to which senior management believes in openness affects communications, but the standard of honesty remains constant.

Chapter

8 Process Excellence

Introduction A fundamental requirement for human resource departments is to be easy to do business with and efficient with their processes. Managers and employees want to be able to request information and conduct transactions with an organization that reflects consistency and operational efficiency. Transactional processing needs to be simple and fast. In order to meet these employee expectations, each process needs to be designed to make interactions efficient and effective. Once existing processes are defined, then HR can look for ways to add reliability and efficiency. As an organization, it’s difficult to do great work if you are bogged down by inefficient processes.

Scale There is a range of possible outcomes in any effort to improve HR processes. Here is a scale to help you envision possibilities and assess current realities in your organization: 5: 4: 3:

Processes are dependable, repeatable, and efficient. Managers and employees don’t think about transactions after they are sent to HR. Processes are dependable and repeatable. HR is seen as easy to do business with. Employees can get answers to their questions in a timely fashion. Processes are dependable.

HR OPTIMIZATION 2: 1:

Information access and transaction reliability are dependent upon who in HR initiates them. Information and transactions are unreliable and inefficient.

Where are you on the scale now? Where do you want to be on this scale in one year?

_____ _____

Why Change

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In Company H, most HR processes were not documented and there was no way to understand what, or how, to improve. Many processes were redundant across various HR functional groups, and HR owned all aspects of the transactions, i.e., HR took responsibility for filling out forms and entering data. Process inconsistencies existed across all business units, resulting in gross process inefficiency. As a result, Company H wasted millions of dollars from incomplete and late transactions, unclear policies, auditing, tracking, and conflict resolution. Most processes involved manual, paper-intensive steps that often required rework. The inconsistencies, lack of clarity, and slowness caused communication breakdowns among managers, HR, compensation, and benefits. This process shabbiness created confusion and frustration among business clients and led to feelings of great dissatisfaction with HR. Company H wanted HR to develop quality-driven processes that would enable HR, managers, and employees to focus on adding value to the business. The long-term goal was to develop an organization that focused on continuous improvement and was flexible enough to adapt rapidly to changing business needs.

Your Reasons to Change

Critical Success Factors The key to process excellence is to identify all the critical processes that currently exist in HR and to understand their impact to manager or employee satisfaction with HR. To achieve this usually requires the creation of a process map that illustrates the interrelationship of all processes and how they flow. All

PROCESS EXCELLENCE processes should then be ranked in order of importance to the client, e.g., the organization, a manager, or an employee. Some of the key processes that clients value and that impact the perceived effectiveness of HR include the following:  New hire process  Employee change record process { Promotion, demotion, job title changes { Status changes { Incentive and commission changes { Transfers { Salary change  Termination process After the processes are prioritized, each process needs to be documented so that it can be used as an instruction set by those employees in the organization who use the process. Documentation should include recommendations for improvement, opportunities for automation, and metrics to measure success. Recommendations should address issues of standardization and localization. One approach to process improvement is to    

Identify, analyze, improve, and document current priority processes. Identify technology to streamline processes and reporting. Implement enabling technologies. Continuously improve processes to meet changing business needs.

This approach could take several months to several years to implement fully. Each process should have a flow chart. A termination process might look like this:

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HR OPTIMIZATION

Manager notifies HR of termination

HR meets with employee

Manager fills out requisition form for replacement

Connect to Staffing Process

HR Generalist coordinates action list

Cobra

Benefits

HR conducts exit interview

HRMS and payroll

Your Critical Success Factors

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Reality While process excellence theory appears logical, the reality usually presents many challenges. Here are some examples from our experience: Management ownership vs. HR ownership. In some companies, HR has the responsibility for social service activities such as event management, buying flowers for special events, distributing holiday gifts, etc. HR professionals often voice frustration and resentment about doing these services but do them anyway. Distributing ownership for people and organizational responsibilities is an ongoing reality in the life of HR professionals. Managers are always inclined to push paperwork and “people issues” to HR when they should be assuming responsibility themselves. A challenge for HR is to enable managers to fulfill their appropriate responsibilities in employee relations and process excellence. HR readiness vs. organizational readiness. It is often the case that HR has a critical need to improve processes, but the organization would prefer slow methodical change. Changing processes requires that people do things differently,

PROCESS EXCELLENCE but history has shown that people are attached to their habits. HR could create an air-tight business case for process improvement that clearly demonstrates gains in efficiency and effectiveness, but without a thoughtful, well-executed roll-out, the organization could simply say, “No thanks.” Continuous calibration is a mindset that needs to dominate HR’s approach to change. Dial tone vs. enhancement. Many organizations just want dial tone service from HR. If they pick up the phone, they want someone to answer. If they want a certain fact, they want to find it simply. If they want to hire a new person, they should be able to do so without a lot of bureaucracy. When HR wants to change or modify their processes in order to enhance their effectiveness, clients sometimes react negatively because they just want the basics. If the client wants basic compliance and HR delivers a different standard, client satisfaction may suffer. When HR tries to deliver what it thinks the client needs instead of providing what clients say they want, the end result is frustration for all parties. Policy vs. negotiation. In a culture that lacks standards, it is difficult to implement policies that require people to follow procedures. Many clients resist a disciplined approach to any process because they have been rewarded for not being disciplined. If going around the process or not using the process is rewarded, why would someone want to go through the effort of following guidelines?

Your Reality

Top Ten Lessons Learned 1. It’s hard to make change if it requires people to act differently. 2. Initial changes should focus on high-value customer-facing transactions. 3. Keep an open mind and explore processes even if you believe they are working well. 4. Remember the culture—if it’s fast paced and open, then make your changes quickly with lots of information. 5. Make managers owners of the information—provide them with regular reports to audit. 6. HR needs to be ready to deliver quality solutions when the organization is ready to receive them.

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HR OPTIMIZATION 7. HR needs to fill its own tool box—build its own capabilities. 8. HR needs to respond to client requests with value-added solutions. 9. HR needs to vary the timing of interventions per client group depending on readiness and capabilities. 10. HR needs to respect the capabilities of the entire HR department to absorb change and new material.

Conclusion The components of process improvement are instructions, data, forms, flow charts, and employee services. The functions of process improvement are to improve access, to reduce complexity, and to improve ease of use. Several processes enable HR to discharge these functions: call centers, drop-in centers, self-service, and change management. Clearly, the extent to which people embrace change impacts the potential effects of process improvement, but the standards of reliability and efficiency remain constant.

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Section III Account Management

Chapter

9 Business Consulting

Introduction Creating a great company requires effective business consulting on the part of HR in all customer-facing activities and account management. Jim Collins, an internationally known business consultant who wrote Built to Last and Good to Great, suggests that a primary role of a business consultant is to help a company instill some of the timeless characteristics mentioned in the introduction to this book (e.g., analysis, discipline, and dialogue—add value). If HR business partners are going to fulfill that role and add value to the organization, they will need to address the cultural norms that impact strategy, structure, staffing, systems, skills, and style. This chapter addresses the core requirements of business consulting. Since the degree of difficulty of business consulting exceeds the other areas and requires more elucidation, we have attached Appendix B as a primer for critical consulting skills.

Scale There is a range of possible outcomes in any effort to improve business. Here is a scale to help you envision possibilities and assess current realities in your organization: 5: 4:

HR adding value (e.g., identifying opportunities and threats) to all strategy, structure, and/or business issues. HR adding value to most strategy, structure, and/or business issues.

HR OPTIMIZATION 3: 2: 1:

HR adding value to some strategy, structure, and/or business issues. HR at the table for some strategy and structure issues. HR not at the table for strategy and structure issues.

Where are you on the scale now? Where do you want to be on this scale in one year?

_____ _____

Why Change

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Company I has not been tuned into the concept of business partnering with HR. Historically, Company I viewed HR as administrative experts and, to some degree, employee champions. The notion that HR could partner with the business to orchestrate change and to think strategically had not been accepted or supported. The shift to account management was an attempt to position HR not only as administrative experts and employee champions, but also as change agents and strategic partners. Company I has had a limited view of what HR can contribute to the business. The primary emphasis in Company I has been to generate financial capital. There has been little value placed on the importance of information capital, human capital, organizational capital, customer capital, or community capital. In order to make that transition, HR needed to be at the table and add value to business issues that relate to these new aspects of capital development. If HR focuses only on financial capital, it will always be seen as conserving costs at best and as adding overhead costs at worst.

Your Reasons to Change

Critical Success Factors Any consulting intervention can be for better or for worse. A critical success factor in a consulting intervention is the skill level of the consultant engaged in the process. Eight critical consulting skills help HR increase its ability to make a positive business impact with their clients.

BUSINESS CONSULTING Core Skills:  Goal Setting (the ability to clarify direction and specify objectives)  Data gathering and analysis (the ability to collect relevant information and to process and present that information in meaningful ways)  Problem solving (the ability to frame problems, conduct root cause analyses, generate options, define criteria, and create action strategies)  Planning and project management (the ability to develop plans and monitor progress against objectives)  Delivery and measurement (the ability to facilitate deployment and to demonstrate value realized, e.g., return on investment)

Functional Skills:  Positioning (the ability to elevate your relationship with clients and demonstrate value)  Contracting (the ability to specify who does what by when and for how much)  Productive dialogue (the ability to engage in meaningful conversations)

Key Principles:  Authenticity  Learning orientation  Trusting yourself and your experience An in-depth discussion of the three functional skills is included in Appendix B.

Overview Consulting competency is defined as: Generating innovative ideas and applying consistent practices to ensure the impact of key initiatives and their cultural adaptation: providing productive advice for improving the performance of individuals, teams, and the whole organization. Desired behaviors are defined for various levels in the HR organization using this framework. The objective for the consulting skills intervention is to enable individual contributors, managers, and executives within HR to improve their ability to do the following:

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HR OPTIMIZATION HR Individual Contributor:  Gather appropriate information through skillful questioning and listening.  Mobilize resources and provide appropriate advice and expertise to meet customer needs.  Use an understanding of change processes to anticipate and plan for the effects of change initiatives.  Help customers identify the benefits and challenges related to change initiatives. HR Managers and Directors:  Demonstrate change leadership by partnering with the line to initiate and implement organization changes.  Evaluate change initiatives over time and develop strategies for renewing or deepening their impact. HR Executives:

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 Provide innovative advice to business leaders that lead to new and more productive initiatives for the organization.  Initiate major change initiatives required to address current and future business needs (push senior management to understand and address critical issues).  Build broad buy-in and support from key stakeholders for change initiatives across the whole organization. In Competence at Work: Models for Superior Performance, Lyle Spencer defines competency, skill, and behavior as follows: Competency:

A measurable pattern of skills, behaviors, knowledge, beliefs, values, traits, or motives which causes superior performance and results within a defined job context. Skill: A consistently demonstrated ability to perform certain physical or mental tasks or job responsibilities. Behavior: An observable sequence of physical actions, verbalizations, or nonverbal cues. Consulting is helping to conceptualize and achieve desired future states. It involves an interaction between a consultant and a client to design and implement a particular intervention. Three key words need to be defined here: Consultant:

A person in a position to have some influence over an individual, a group, or an organization, but who

BUSINESS CONSULTING

Client:

Intervention:

has no direct power to make changes or implement programs. A single individual, work group, department, or organization. The client is the person or persons whom the consultant wants to influence without exercising direct control. The goal or end product in any consulting activity—a planned action in response to an identified need.

Appendix B focuses on the consulting skills required for an effective intervention with a defined client. However, there are multiple types of skills required of consultants. The most common are as follows: Content Expertise: Interpersonal Skills:

Consulting Skills:

Specific skills in an area of expertise. The ability to put ideas into words, to listen, to give support, to disagree constructively, to influence, and to maintain a relationship. The ability to start up, execute, and finish the tasks underlying the consulting relationship.

A consultant can also be expected to play a number of roles in an intervention. Common roles a consultant plays include the following: Expert:

Pair of Hands:

Collaborative Partner:

As an expert, the consultant examines the situation, decides what needs to be done, and directs the intervention. The client plays an inactive role during the consulting process, judging and evaluating after the fact. As a pair of hands, the consultant plays a passive role during the process. The client knows what needs to be done, but does not have the time or resources to deal with the problem. The consultant simply carries out tasks assigned, i.e., serves as a pair of hands for the client. As a partner, the consultant enters the relationship with the client with the understanding that her or his specialized knowledge and skills as well as the client’s knowledge of the organization are both required to solve the problem. Problem solving thus becomes a joint undertaking. The client is actively involved throughout the consulting process.

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HR OPTIMIZATION Having clarified the key terms related to consulting, the types of skills that are employed in a consulting relationship, and the roles that are played in an intervention, it is important to keep in mind the key principles that should guide the consulting process.

Key Principles Authenticity Peter Block, the author of Flawless Consulting, defines authenticity as follows: Authentic behavior with a client means you put into words what you are experiencing with the client as you work. This is the most powerful thing you can do to have the leverage you are looking for and to build client commitment. There is a tendency for consultants to look for ways of being clever with a client. We agonize over ways of presenting our ideas—of phrasing the project so that it will get a great reaction. We sometimes get caught in the trap of straining to figure out what will convince the client that we are everything they are looking for.

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It is a mistake to assume that clients make decisions to begin projects and use consultants based on purely rational reasons. More often than not, the client’s primary question is: “Is this consultant someone I can trust?” Is this someone I can trust not to hurt me, not to con me; someone who can both help solve the organizational and technical problems I have, and, at the same time, be considerate of my position and person? When we operate in too clever or manipulative a way, or lay it on too thick, clients pick up on it, and trust begins to erode. Low trust leads to lower leverage and lower client commitment. Authentic behavior leads to higher trust, higher leverage, and higher client commitment. Being authentic literally means that the consultant is genuinely himself or herself. He or she does not present a façade. Authentic behavior also has the advantage of being incredibly simple. It is literally to put into words what you are experiencing. As Geoffrey Bellman, author of The Consultant Calling, states, “I must have the opportunity to be myself while I work. Work that continually requires me to hide who I am is too burdensome to pursue.” Gelinas-James, Inc., has a list of behaviors that describe what authenticity isn’t and capture the essence of this point. They say: You are not being authentic when:  You say only what you believe the client wants to hear.  You ignore the sticky issues.

BUSINESS CONSULTING  You do not pay attention to your own feelings.  You become too “technique-y” or hide behind jargon.  You call on higher authority instead of presenting desires and wants as your own (“I know your boss wants us to . . .”).  You let innuendoes, cynical remarks, or “red flags” pass by without acknowledging them.  You hide what is going on inside you. Steps for authenticity:  Acknowledge what the client says.  Comment on what you think/feel/see.  Speak for yourself; use the first person (“I believe that . . .” vs. “People often believe . . .”).  State the feelings you are having (“I’m confused over how this request fits into your overall business strategy”).  State what you are seeing and hearing without blame or judgment (“You’ve told me that there won’t be any resistance from your group on this project, but we talked to at least four people on your team who are causing problems. Can you help me reconcile this?”).  Be authentic, but don’t overwhelm your client with your openness.  Speak the unspoken (“Clearly, the retention issue is huge, and it doesn’t sound like either of us is confident of the root cause of the problem”). If you really want to form a collaborative partnership with your client and have satisfying consulting engagements, then authenticity is a critical success factor.

Learning Orientation Consultants who approach their work with a learning orientation maintain a constant focus and intention to learn from all stakeholders. Consultants with a learning orientation enter every project with an open mind; they do not assume that they already have the answer. In fact, they realize there may be they do not assume many solutions to the issues, and they invest heavily in asking questions to clarify their understanding of the presenting situation. They aren’t shy about asking questions that they need answered to better understand the situation, and they are willing to admit that they will need some time to think about possibilities. They are not inclined to impress the client with instant answers; rather, they take a more thoughtful approach. In doing so, they build client trust and commitment. After all, how does it make clients feel when the issue with which they

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HR OPTIMIZATION have been wrestling for a while can be “fixed” immediately by the wise consultant! Maintaining a focus on learning rather than “fixing problems” opens the door for more collaborative and effective solutions. Here are some helpful steps to remember:  Hold the intention to learn with the client.  Be careful that you don’t make promises in the moment without taking time to reflect.  Understand that consulting isn’t getting the right answer once; it is an iterative process to discover what works.

Trusting Yourself and Your Experience Reaching agreement on the contract confirms that the client believes that you have the needed expertise and skills to be a partner in solving the client’s problem. You have the technical, interpersonal, and consulting skills necessary to perform your role. Rely on those skills and your past experiences and trust your instincts to make the right decisions in difficult situations.

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Your Critical Success Factors

The Reality While the theoretical constructs underlying business consulting appear logical, reality usually presents many challenges. Here are some examples from our experience. Before vs. after. Functioning as a strategic partner and business consultant means being invited into conversations with partners before there is a problem. The reality is that most HR business partners are invited in when there is a problem of some kind after the strategy has been set. While the goal for business partners is to relate to clients as trusted advisors and thinking partners, the reality is that they are asked to do tasks after the fact instead of relating intimately and thinking creatively about business issues and possibilities in the early stages of germination. In short, business partners usually spend more time in fermentation than generation (fermentation is defined as the heat caused by organic change).

BUSINESS CONSULTING People and culture vs. customer and finance. The goal of a strategic partner is to engage clients in productive dialogue about competitive differentiation. These conversations often go beyond people and cultural issues typically reserved for HR professionals. The reality for most business partners, however, is to focus exclusively on the value-add that they can provide as it relates to people and organizational process interventions and solutions. It is unusual for HR business partners to be involved in conversations about a range of capital development issues that could lead to business growth. Partners vs. pairs of hands. A true strategic partnership is recognized by the fact that the client is as anxious to engage the business partner as vice versa. The client and the HR professional are partners in the true sense of the word. The key to becoming a partner is to have intimate knowledge of the company strategy and to be able to provide a valuable perspective to the client. The difference between a “pair of hands” and a partner is the quality of perspective. Clients are always eager to hear a fresh perspective that could represent a significant source of gain. They are almost always not interested in hearing a worn-out perspective that simply results in more work and no gain.

Your Reality

Top Ten Lessons Learned 1. If you are able to understand the limits currently placed on you by a client’s perception of you, then you are better able to break free from that perception. 2. If you learn as much as possible about the business challenges of your client, then you will be able to engage more effectively in active inquiry, proactive advocacy, and collaborative processing. 3. If you are able to describe specifically the range of desired outcomes that will most likely occur based on a given intervention, then you will be positioned to assess the current gaps between current state and future state and to estimate the resources required to close the gap. 4. If you are clear about what you are bringing to the table as a consultant, then you will be able to make better choices about what you offer

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5.

6.

7.

8.

9.

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the client in terms of products, services, solutions, partnerships, and possibilities. If you clarify who the client is and what exactly they hope to achieve as a result of the proposed intervention, then you will avoid wasted energy and dissatisfaction and increase your chances for high commitment and ultimate success. If you are thorough in your assessment of the situation, then you will be able to do a much better job of defining resources, roles, and responsibilities. If you give your client alternative ways for achieving desired outcomes, then the client will be more engaged in the process and assume more ownership for the outcome. If you actively inquire about the clients’ frame of reference, you will get a much clearer understanding of the problem and the gaps between your image and the client’s image. If you proactively advocate for your point of view relative to the situation, cause, and direction, you will be able to influence your client to think differently about problems and possibilities. If you merge images with your client about problem, cause, and direction, you will increase ownership for the solution and ensure that the intervention is aligned with business requirements.

Conclusions The components of change within the purview of a strategic business partner include shared values, strategy, structure, staff, systems, skills, and style. The functions of consulting in all seven areas are to improve performance and to serve as the catalysts of capital development. The core processes for discharging those functions include positioning, contracting, and productive dialogue. Clearly, the competence of the business partner and the perception of value from the client affect the outcome of the intervention, but the standard of added value remains constant.

BUSINESS CONSULTING Project Initiation Form Purpose:

To clarify requests and desired outcomes. General Project Information

Project Name: Project Sponsor: Project Leader: Business Organization: Point of Contact: Expected Start and End Dates:

97 Date Requested: Business Request: Define the business problem or opportunity to be addressed by the project. Objectives and expectations need to be clearly defined. Brief Description: What is the project? What are the major components? What is it going to accomplish? What is excluded from the scope? Major Deliverables and Outcomes: Strategic Fit: Does this project meet the market and/or Company L business strategy? What is the potential business impact? Why should we do this project? Why should we do it now? How will success be measured? Resource Requirements: What skills are required? How many people? How much time?

Chapter

10 Employee Relations

Introduction Positive relationships with colleagues, managers, and direct reports are an essential element of a great job. When interpersonal relationships are going poorly on a job, nothing will counterbalance the negative effects from interpersonal tension and stress. Employee relations is a traditional but valuable role of HR account managers. Dealing with conflict, difficult employees, negotiated settlements, and simple disagreements are basic skills required of any account manager. In addition, the account manager needs to fulfill the role of employee champion for members of the organizational community. Dealing effectively with administrative details and acting as employee champions are prerequisites for performing as a strategic business partner and change agent.

Scale There is a range of possible outcomes in any effort to improve employee relations. Here is a scale to envision possibilities and assess current realities: 5: 4: 3: 2: 1:

Retention Retention Retention Retention Retention

of of of of of

right right right right right

talent >95%* talent 90–95% talent 85–90% talent 80–85% talent <80%

*Right talent means that you have adequate capabilities in the most critical jobs.

HR OPTIMIZATION

Wrong Capabilities Mission Critical Role

Right Capabilities Retention of right talent is critical in this box.

Marginal Role Turnover data is only meaningful if it is clear who is leaving the organization. In the grid above, it is most important to retain talent in the upper right quadrant: Where are you on the scale now? _____ Where do you want to be on this scale in one year? _____

Why Change

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Company J had a corrupt culture. People were promoted based more on who they knew than how they performed. Nepotism was rampant and favors were distributed inappropriately. The culture valued relationships over performance. Many managers were arrogant and had huge ego needs. Interactions with employees tended to be patronizing and condescending. Several senior executives were having affairs with people within the company. As a result of these attitudes and behaviors, there was an underlying malaise in which employee complaints bubbled up. Company J not only had to address the symptoms that were manifested, but it also had to take a hard look at the causes.

Your Reasons to Change

Critical Success Factors Employee relations focuses on the importance of understanding and merging corporate, management, and employee needs to increase efficiency, productivity, and profitability. Employee relations examines the implication of changes taking place in the economy and the workplace and how they affect the management and motivation of people.

EMPLOYEE RELATIONS HR professionals act as liaisons through which the organization communicates policies and employees voice concerns. In this role, HR professionals are often faced with difficult and sensitive situations. Employee relations encompasses a broad range of issues including:          

Corporate culture Health and safety Performance evaluation Sexual harassment Diversity Communications Conflict resolution Office policy Coaching and counseling Progressive discipline

This chapter will not attempt to address all the issues related to employee relations. We will deal briefly, however, with the three main problems associated with poor employee relations and the three primary sources of gain related to positive employee relations. The topics are the same for both: corporate culture, performance management, and management behavior. 1. Corporate culture can either enhance employee relations or destroy them. On the negative side, the norms and values of an organizational culture can be the most debilitating factor in a person’s life. When the organizational norms reinforce rigidity, insensitivity, secrecy, favoritism, and exclusivity, employee relations will be reactionary and primarily focused on negative issues. On the other hand, when organizational norms reinforce responsiveness, clarity, support, analysis, dialogue, discipline, openness, fairness, growth, and flexibility, employee relations can be more proactive. In a positive culture, the emphasis on employee relations is on building motivation and commitment vs. defusing crises. For a more complete review of corporate culture, please refer to the book Corporate Culture Change (Bellingham, 2001). 2. Performance management can also enhance employee relations or cause real problems. Negative issues related to performance management revolve around clarity, fairness, standards, and compensation adjustments. Expectations need to be clearly and specifically communicated to employees. Employees need to know what has to be done to keep their job, and they need to feel that the requirements are achievable.

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Performance standards may include but are not limited to quality, quantity, timeliness, and manner of performance. Performance standards not only need to be clear, but also need to be fairly evaluated. In order to meet the fairness standard, managers need to gather information from multiple sources to ensure that they have input from people who are in the best position to evaluate the performance. Input gathering can be done informally by soliciting information from customers or other employees who work closely with the person being evaluated. Or, input gathering can be formalized through 360-degree appraisal methods. Issues usually arise when there are disconnects between the employee’s view of the degree to which performance standards were met and the manager’s view. When the manager believes an employee has not met standards, then the employee typically expects to have a reasonable amount of time to improve performance before termination, demotion, or pay increases/decreases take effect. When an employee receives an appraisal that is less than his or her expectation, he or she will likely want to know specifically what performance standard was not met, what evidence there is for unacceptable performance, and what opportunities there are for improvement. If the manager has set unclear expectations and has fuzzy evidence, there will surely be an employee relation issue. On the positive side, effective performance management can inspire great work. If a manager clearly states expectations and standards, provides regular feedback and coaching to help the employee meet the standards, and reinforces achievement through compensation adjustments, developmental opportunities, genuine praise, and/or promotions, positive attitudes will soar. When an employee understands the contribution he or she can make to the organization and has opportunities to develop capabilities to improve current performance, then employee relationships can be a positive asset in the organization. For more information on performance management, refer to Chapter 12. 3. Management behavior is the third major source of gain or loss related to employee relations. Management arrogance and ignorance cause the greatest amount of stress for employees. Managers who think they are above the rules and/or are unwilling to check their egos at the door, do untold harm to employee relations. Most employees despise condescending, patronizing, or dismissive behavior. Arrogance is the corporate plague. If arrogance is the leading cause of employee dissatisfaction, ignorance may be a close second. (By ignorance we mean a lack of awareness of commonly accepted standards of conduct, e.g., sexual harassment, respect for differences, basic decency.)

EMPLOYEE RELATIONS On the positive side, one of the most powerful reasons people stay in a job and perform well in a job is their relationship with their boss. Employees who feel good about the relationship they have with their boss are typically motivated to do great work. Managers who have good relationships with their employees tend to be responsive, respectful, supportive, and demanding. Employees generally want to do the best possible work for people who treat them well and provide them with challenging and meaningful work assignments. For more information on leadership behaviors that have a positive impact on motivation and performance, please refer to the books Spiritual Leadership (Bellingham, 2002) and Ethical Leadership (Bellingham, 2003).

Your Critical Success Factors

The Reality While the theory appears logical, the reality usually presents many challenges. Here are some examples from our experience: Stated values vs. day-to-day behaviors. The discrepancy between what appears on corporate walls as core values and the day-to-day behaviors of managers is at the root of most ER issues. When managers don’t walk the talk, it causes a great deal of employee angst and consternation. Many companies include innovation, quality, and teamwork among their stated values. When employees see quality compromised for speed or teamwork violated by individual aggrandizement, they begin to question the commitment the corporation has to its own values. Coaching vs. evaluation. Most employees appreciate feedback on how they are doing. Theoretically, performance reviews are supposed to be positive experiences for employees. After all, people like to know how they are stacking up. Performance reviews that focus on support, direction, and/or coaching yield positive results for both the employee and the manager. The reality, however, is that many performance review sessions are seen as judgmental, demeaning, condescending, unfair, or negative. These reviews cause a good share of employee relation issues. One of the challenges of HR professionals is to persuade line

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HR OPTIMIZATION managers to go to performance management training sessions. Most managers evaluate themselves as very competent in doing performance reviews, but the fact is that most are not. Old school vs. new school. The reality is that many managers have been very successful (in career and financial measures) in achieving their goals (career and financial) even though they behave inappropriately or illegally. Behaviors that may have been tolerated in the past are no longer tolerated now. Getting managers to acknowledge their inappropriate behaviors and to change them is a major challenge. In a diverse workforce with a wide range of lifestyle issues, an insensitive and/or clueless manager can fall into ER pitfalls haplessly. One critical task of HR professional is to keep managers abreast of changes in employment law and to make sure that training programs exist to address compliance issues.

Your Reality

104 Top Ten Lessons Learned 1. Creating a healthy and safe environment is the first step. 2. Focus on fairness. 3. Identify the values that are jeopardized or violated. 4. Train managers in how to conduct performance reviews. 5. Train managers in interpersonal skills. 6. Mandate compliance training, e.g., sexual harassment. 7. Regularly audit the culture. 8. Take an inventory of employee care programs and ask if they are sufficient. 9. Understand both sides of any conflict in detail before taking any action. 10. Form a “soul committee” with a specific charter to point out gaps between stated values and day-to-day behaviors.

EMPLOYEE RELATIONS Conclusions Effective employee relations addresses issues affecting employees, managers, and the organization. HR professionals need to walk the fine line of balancing all three of these components. The functions of employee relations are to improve productivity, morale, and job satisfaction. Several processes play a key role in discharging those functions: health and safety, performance management, conflict resolution, coaching, progressive discipline, and corporate culture. Clearly, the extent to which organizational leaders are willing to acknowledge the gaps between stated values and day-to-day behaviors affects the impact of employee care programs, but the standard of respect remains constant.

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Chapter

11 Change Management

Introduction Great companies manage change well. In these economic times, people realize that change is a way of life. That realization, however, does not eliminate the resistance people have to change. At a minimum, employees need to understand what changes are occurring and why they are occurring. Beyond the basics, people also want to know the desired outcome for a change and what’s in it for them. If people understand the rationale for change, how big the gap is between where they are and where they need to be, and how they will benefit from the change, it is easier for them to move to acceptance and commitment. People need time to process change. It’s unfair and unproductive to announce a change and expect people to make heroic jumps to the new state. Managers need to process changes with employees and include them in the thinking. Change means thinking differently, relating inclusively, and planning dynamically. If people can improve their thinking, relating, and planning skills, change becomes exciting.

Scale There is a range of possible outcomes in any effort to improve change management processes. Here is a scale to envision possibilities and assess current realities: 5: HR adding value to all change management initiatives. 4: HR adding value to most change management initiatives.

HR OPTIMIZATION 3: HR adding value to some change management initiatives. 2: HR at the table at some change management initiatives. 1: HR in the way of change management. Where are you on the scale now? Where do you want to be on this scale in one year?

_____ _____

Why Change

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Company K has endured dramatic changes over the past several years: the acquisition of smaller companies, the introduction of new software solutions into its suite of products, multiple reorganizations, several reductions in force, and hundreds of new initiatives and programs. In very few instances were these changes managed well. Typically, these changes have been imposed with minimal communication, involvement, or training. There have been few attempts to define the desired end state, assess the current state, and then mobilize efforts to close the gaps. Historically, changes have been announced in the organization and people have been expected to adapt and move on. This disruptive change has worn down the workforce. People need to see that new changes will be introduced with more analysis, dialogue, and discipline. If HR wants to be seen as a critical player at the table, change management represents a great opportunity. Business leaders know they need help on this issue. HR is in position to provide that help.

Your Reasons for Change

Critical Success Factors There are five essential phases for successful change management: Design, Diagnosis, Development, Delivery, and Determination. Each of these phases will be discussed below. Design phase: In the design phase, the most important step is to define the desired end state. The change sponsor must describe what success will look like after the change. One of the most useful ways to define the end state is to use a scale to define the range of possible outcomes that could occur as a result of this

CHANGE MANAGEMENT intervention. The design should result in a model that shows the interrelationships of the components, functions, processes, conditions, and standards related to the change, as we have done in this book. The key outcome for the design stage is a high-level strategy for getting from where you are to where you need to be, as described in the next two phases: Diagnosis phase: In this phase, the change agent assesses the current state and estimates the gap between the current state and the desired state. The diagnosis should include an analysis of the culture, past change efforts, organizational readiness for change, and some of the sources of resistance related to the change. One of the most critical success factors in this phase is the extent and depth of involvement of those impacted by the change. Key stakeholders need to be identified and assessed on their ability to serve as sponsors, change agents, and targets. It is also important during this phase to determine the degree of risk and the cost of the change. Change factors such as culture, history, and resistance also need to be taken into account. The end result of the diagnostic phase is to establish a sense of urgency for change. If the analysis does not create a sense of urgency, then the change sponsor should seriously question whether or not to introduce the change. In our experience, if there is no urgency, change efforts do not usually succeed. Urgency is essential to gaining needed cooperation. Reinforced complacency can act as a powerful force against change, particularly if people believe the status quo is acceptable. Development phase: During this phase, people and programs are developed to be able to bridge the gap between where the organization is and where it needs to be. Sponsors, change agents, and change targets are all identified and commitment secured. Systems and technology are also built or acquired during this phase. All of the learning programs, communication plans, and reward systems need to be created. This phase is the time to create a guiding coalition and to develop the vision and strategy for the change. In order to counterbalance the forces of complacency, it is necessary to create a more powerful force for change. No one individual is likely to be successful in creating organization-wide change. Putting together a guiding coalition means finding the right people—people with position, power, expertise, credibility, and leadership skills. It also means creating trust through carefully planned off-site events and many joint activities. The size of the coalition depends on the size of the organization and the scope of the change initiative. The end result of this phase is a well-defined solution that takes into account the people, cultural, process, technology, and financial variables required for success. Delivery phase: During this phase, the focus is on implementation. People acquire the skills and support they need to make whatever changes are desired, and processes are reengineered so that the organization can operate more

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efficiently and effectively. One of the most important aspects of the delivery phase is to communicate continuously to stakeholders and to empower people to take action in support of the change. The real power of a change initiative is unleashed only when most of those involved share a common understanding of goals and objectives. Communications are required to develop that shared understanding. In the delivery phase, it is critical to generate short-term wins and to consolidate gains in order to show momentum. All change efforts need visible, unambiguous wins at regular short-term intervals. The role of shortterm wins is to provide evidence that the sacrifices are worth it, to reward change agents, and to build momentum. A key success factor in this phase is to establish and monitor milestones for people, process, technology, and culture. Determination phase: During this phase, it is important to measure progress and to reassess what still needs to happen to achieve the desired end state. In the determination phase, inconsistencies between new practices and the old culture need to be examined. Change agents must listen for signs of resistance and address them directly in the context of the change initiative. Change sponsors and stakeholders need to change their language to reflect the new changes. Based on reviews of progress, this phase may trigger the need to loop back to a previous step and bolster the people or programs in ways that will enable them to succeed. The end result of this phase is to show clearly the value realized for the client.

Your Critical Success Factors

The Reality While the theory appears logical, the reality usually presents many challenges. Here are some examples from our experience: Scaling vs. skating. Scaling is the essential first step in any change effort. Without an agreed upon range of possible outcomes (scaled goals), the account manager will only be skating on the surface. A discussion on desired outcomes requires an in-depth discussion of what success really looks like to the client. For example, one client wanted to implement a technical career path process for all engineers in his organization. Instead of launching into a massive development effort to create these paths, the consultant asked instead, “What’s the desired

CHANGE MANAGEMENT outcome of this work?” After an hour of dialogue, the client was able to articulate that clarity, parity, and strength were the desired outcomes. Those values were scaled as follows: Clarity 5. Technical career paths and roles are competency based, clear, and functional, and all employees have direct access to development tools. 4. Technical career paths and the technical career ladder are well defined. 3. Career advancement for all positions is based on clear, objective, and measurable criteria within the organization (competency based). 2. Career advancement decisions and opportunities for individuals are based on discussions of technical prowess (abstract). 1. Career advancement is based on tenure and contacts.

Parity 5. Technical people are fully rewarded and recognized at each step in the career ladder at the same level as management progression within the industry. 4. Technical people are recognized and rewarded appropriately at each step in the career ladder at the same level as management progression. 3. Technical people are recognized as critical in the organization. 2. Technical people are only recognized and rewarded within their department (small circle). 1. Technical people are not rewarded or recognized adequately or appropriately.

Strength 5. Best people in most important jobs. All jobs are optimized (two to three successors identified for each and every position). Complete succession and talent development plan implemented. 4. Clear successors identified for all mission-critical jobs (for every job above 20 points for both technical and management job levels). This includes succession planning and assignment management. 3. Successors identified for many mission critical jobs. Optimization process completed on an annual basis.

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HR OPTIMIZATION 2. Able to attract key talent into the organization. 1. No identified bench strength.

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Programs vs. Politics. The ugly truth about most corporations is that many individuals invest more time in political positioning than in program changes. Individuals typically resist change either because they have too much to lose from making the change or because they will have to exert too much effort to make the change. The reality of corporate life is that many people have carved out comfortable niches for themselves. They understand where the power is, they understand how to play the game, and they can get through their days without a lot of strain. Asking people to let go of a role they have worked hard to create for themselves is not an easy undertaking. Beyond letting go, other individuals just don’t want to do what is necessary to benefit from new ways of doing things. It might mean learning new skills, exposing vulnerabilities and weaknesses, or taking risks. Many individuals avoid all three of those challenges. Introducing new programs, therefore, requires more than simply communications and training. It requires equipping managers with the skills they need to deal with resistance. Habits and history vs. openness to change. Even if individuals can see the benefits of change, are willing to let go of the old ways, and take on the challenges of change, the organizational culture can still limit the success of any change program. How different departments are accustomed to working together might affect progress. For example, the sales organization might consider itself immune from many organizational policies. History also plays a role. If the organization has experienced many change initiatives that have not been sustained, then the credibility of new change efforts comes into question. In addition, habits are hard to break. If certain behaviors are ingrained in our approach to work, these behaviors are difficult to change. First, we need to be able to observe the habits. Second, we need to be motivated to change. And third, there needs to be some urgency to change. Without motivation, urgency, skills, and support, there is very little chance for successful change.

Your Reality

CHANGE MANAGEMENT Top Ten Lessons Learned 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Develop a business case as a first step, i.e., what’s the value proposition? Clarify the business change requirements and the desired end state. Conduct an organizational readiness analysis. Create a deployment plan and risk assessment. Develop and deliver an incentive and recognition plan. Develop and deliver a communication plan. Develop and deliver a training plan. Continually engage the senior stakeholders. Measure progress on people, process, technology, and cultural variables. Document learning and value realization.

Conclusions Effective change management addresses the current state, the desired end state, and the gap between the two. HR professionals need to clarify all three components with as much detail as possible. The functions of change management are to improve productivity, reduce deployment risks, and to align all capabilities behind the strategic direction. Several processes play a key role in discharging those functions: design, diagnosis, development, delivery, and determination. Clearly, the extent to which organizations either resist or embrace change affects the impact of change management, but the standard of meaningful change remains constant.

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Chapter

12 Performance Management

Introduction One of the most important aspects of a great job is to be able to perform at your highest potential and to contribute to the success of the organization. Performance management is a core business process that enables employees to align their efforts behind the organization’s strategic direction. An effective performance management system also promotes productive dialogue between managers and employees and encourages employees to grow and develop. Performance management is not about forms and procedures; it is about alignment, engagement, and growth. An effective performance management system clarifies the contribution each employee is expected to make to the business, supports the development of capabilities the organization requires for success, and encourages commitment and accountability.

Scale There is a range of possible outcomes in any effort to change the performance management system. Here is a scale to envision possibilities and assess current realities: 5: 4:

100% employees with Contribution and Capability plans written and reviewed; >95% rated participant or above. 90–99% employees with Contribution and Capability plans written and reviewed; 90–95% rated participant or above.

HR OPTIMIZATION 3: 2: 1:

80–89% employees with Contribution and Capability plans written and reviewed; 85–89% rated participant or above. 70–79% employees with Contribution and Capability plans written and reviewed; 80–84% rated participant or above. <70% employees with Contribution and Capability plans written and reviewed; <80% rated participant or above.  A contribution plan has three to seven SMART goals and objectives.  A capability plan has competency-based personal development goals.

Where are you on the scale now? Where do you want to be on the scale in one year?

_____ _____

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Company L didn’t communicate corporate goals or expect managers to conduct performance reviews. Since the organization operated in thick silos, each group had its own set of goals, but did not hold anyone accountable for achieving those goals. There was no operating plan and no feedback mechanisms to let managers know how well they were doing against the plan. This chaotic approach to performance achievement worked fine until revenues quit growing and expenses didn’t. When the expense and revenue lines crossed, the company realized it needed to apply more discipline to its performance management process. If Company L was going to survive and grow, it needed to have all its resources aligned behind its strategic direction.

Your Reasons for Change

Critical Success Factors Performance management should occur throughout the year as a continuous process. An effective performance management process helps managers and employees plan and review performance periodically to ensure optimum contribution, commitment, and capability. Achieving optimal performance requires ongoing communication, coaching, and feedback.

PERFORMANCE MANAGEMENT Performance management is an ongoing business process. When done well, it ensures alignment of employee efforts to business goals as well as employee engagement and performance growth. A performance management system plans and reinforces immediate and long-term development and encourages communication and feedback. Performance management is important to the individual and to the organization because  It links individual and team goals and efforts to organizational priorities.  It helps employees understand what is expected of them and how their work contributes to the overall success of the organization.  It enables organizations to manage change more effectively by providing a system for planning, communicating, and revising priorities.  It results in a performance history that remains with the employee in case of transfers or organizational changes. Performance management is process driven and shared by both the employee and the manager. Both should keep up-to-date copies of the plans. An employee should take an active role in his or her own success by  Becoming familiar with the performance management process.  Engaging in the process of creating contribution goals and capability development plans.  Reviewing personal performance and understanding management perspective.  Developing capabilities.  Seeking out feedback and continuing to learn. A manager should partner with the employee and serve as a coach throughout the performance management process. Specifically, the manager’s role in the process is to  Cascade goals to employees, making sure that the manager’s goals are aligned with the organization’s goals.  Collaborate with the employee as much as possible in planning for contribution, commitment, and capability development.  Involve the employee and others in reviewing performance and understand their perspectives.  Empower the employee to drive his or her own development and provide coaching and support.  Engage the employee in productive dialogue including accurate, meaningful, and fair feedback throughout the year.

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HR OPTIMIZATION

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At the beginning of the year, goals should be cascaded throughout the organization from senior management to the individual level using a balanced scorecard method. When the goals have been cascaded, employees build their own contribution plans. Throughout the year, contribution goals should be developed with new employees, transferred employees, or when roles change. After the contribution plans are set, capability or development plans are built to encourage ongoing learning and growth. Employee performance is a combination of contribution, commitment, and capability. Successful performance is a function of all three components. Contribution can best be measured through a balanced scorecard. A balanced scorecard is a plan that represents contribution areas such as customer focus, financial accountability, internal business process improvement, and capability development. Employees should identify into which areas their goals fit. Each department should be encouraged to have goals that are balanced, but it should not be a forced process. The scorecard is simply a thinking tool that promotes a multidimensional approach to performance. The example on the following page illustrates department goals and how they fit into a balanced scorecard [customer focus (C), financial (F), internal business process (I), and growth (G)]. In this example, customer focus pertains to both internal and external customers; financial goals include profit, revenue, operating margin, expenses, and business development; internal business process relates to operations, utilization, performance management, revenue recognition, etc.; and growth encompasses knowledge management, organizational learning, competency modeling, and training. If one goal addresses more than one key contribution area, there should be measurement criteria in each area that define success. If an employee is on an incentive plan, the contribution plan serves as documentation for the incentive goals. Some or all of the contribution goals can be applied to the incentive. It is helpful, however, to identify the weight each goal carries toward the incentive. For example, goal 1 may carry 40 percent of the weight in determining the incentive bonus. The manager and the employee who is on the incentive plan should identify those goals that should contribute toward the incentive. The selection could be based on the following:     

Significantly contributes to organizational and/or corporate goals Represents a stretch goal for the individual Highest priority goal Revenue-generating goal Customer-focused goal

PERFORMANCE MANAGEMENT Balanced Scorecard

Department Level Goal

Area CFIG

Improve responsiveness to level-1 customer inquiries

X

Increase approval rating on customer satisfaction survey

X

Measures, Targets, Timelines 90% resolved within 2 days by March 2003 Fully implement customer tracking system according to specs by Dec 2003

X

Mean of 7.3 on customer satisfaction survey by March 2003

Increase operating margin

X

15% operating margin each quarter

Reduce travel expenses by using online meetings

X

30% decrease quarter over quarter beginning in Q2 Develop tools and procedures by Nov 30

Define and implement a project management process

X

95% of project using set process by March 2003

Employees can articulate individual goals aligned to business

X

100% of employees by Dec 1

Implement cross-training program to optimize talent

X

5 cross-training assignments by June 2003

Create competency models for department jobs

X

10 jobs with identified competencies by March 2003

All goals should use the SMART acronym:  Specific:

Clear, concise, measurable statements of needed accomplishment.  Motivational: Meaningful, interesting, and challenging to the employee.  Attainable: Realistic based on available resources and reasonable growth.  Results-Oriented: Defined in terms of the outcomes that will be achieved.  Time-bound: Clearly defined time frame.

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HR OPTIMIZATION As mentioned earlier, commitment is one of the three critical success criteria for performance. Managers need to ask employees to commit to their jobs and the company because the company will not be successful unless each employee takes full responsibility for success. Building commitment, however, requires more than simply asking employees to be responsible. Management must take responsibility for creating the conditions and the culture that make high commitment a possibility. No one can force someone to be more committed to a job or a company. Commitment cannot be planned or scheduled. Commitment is a result of meaningful work and productive dialogue with managers. The emphasis in these discussions needs to be on the behaviors that demonstrate commitment rather than the subjective nature of the term. Employees and managers need to engage in honest conversations about supporting organizational direction and identifying barriers to achieving goals. Some important discussion questions include:  What prevents the employee from taking full accountability for the work?  What prevents the employee from supporting the organizational direction?

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 What motivates the employee?  What is important to the employee about the work?  What is de-motivating the employee about the job?  What is in the employee’s and manager’s control to change?  How do the employee’s values fit with organizational values? Three are several actions a manager can take to increase commitment. Actions will vary depending on the unique factors impacting an employee’s commitment. Some possible actions include:  Engage the employee in a discussion about strategic direction.  Encourage collaboration with another department or team member.  Work with the employee to identify projects of interest.  Connect the employee with customer issues and concerns.  Exchange information.  Make sure that goals are aligned with the department and organizational direction.

PERFORMANCE MANAGEMENT Capability or individual development plans address the competence that is needed to meet employees’ current job goals and/or to prepare them for their next job, or future business needs. Developing capabilities is much easier if competency models are in place for each job. If job models are built throughout the organization with roles, descriptions, and competency requirements well defined, then coaching sessions are much simpler because the manager and the employee can have an objective discussion of what’s required for success in a particular job and how well the employee stacks up on the competencies. Competencies describe the following: 

Knowledge, skills, and abilities needed to perform a job successfully



Behaviors and attitudes that differentiate superior performers from average ones

If an employee knows the competency gaps that are either precluding optimum performance in the current job or promotional consideration for another job, then he or she can create a development plan to close those gaps. Execution on the development plan, of course, depends on the developmental resources available and management support for learning and growth. In an ideal scenario, a manager would encourage developmental opportunities, identify the business outcomes that were achieved as a result of new learning, and recognize growth either through a merit increase or a promotion. If that scenario were repeated multiple times in a given organization, a learning culture would emerge. When discussing an individual development plan, the manager and employee should address the following questions:  What is the current level of competency of the employee?  What is the required level of competency to improve performance?  Which gaps are most critical to address?  What skills and knowledge does the employee require now, and in the future, to achieve desired results?  Who in the organization would be a good mentor or source of learning?  How will it become clear that the employee has strengthened his or her capability? On the following page, there is an example of an individual development plan.

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HR OPTIMIZATION Individual Development Plan

Capability/Development Goal

Development Activity

Present the corporate overview and handle typical objections successfully

  Observe 3 corporate overviews   Practice 2 presentations with team

feedback   Complete the Web-based training (WBT) on objection handling Be able to accurately assess critical customer needs and partner with them to address the issue

  Shadow a customer service specialist

Learn and teach the team about the best practices and approaches of three major competitors

 

Master advanced level Excel by March 3

  Complete Excel training  

Become advanced in project management process and procedures to complete complex projects to specifications

   

Become proficient in collaboration technologies

   

Involve cross-functional groups early in projects that impact their business

 

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on 2 customer visits   Complete the “Relationship Management” program

Join and participate in 1 professional association   Work with marketing and other resources to get competitor information   Conduct competitive analysis and present findings to team

   

At the end of the year, the manager evaluates the employee’s performance and schedules time for a productive dialogue with the employee. The purpose of the meeting is to review the contributions made during the year, the commitment demonstrated by the employee, and the progress on the individual development

PERFORMANCE MANAGEMENT (capability) plan that had been jointly developed. In this review session, it is particularly important to understand the employee’s perspective and to provide performance feedback about the employee’s contribution, commitment, and capability. An effective performance review takes into account the employee self-review, others’ feedback, and a mid-year progress discussion. It is critical to conduct the review in a fair and objective manner. Some tips for evaluating performance include the following:        

Evaluate specific, observable, and job-related behavior only. Recognize positive performance. Identify areas needing improvement. Avoid personal bias. Evaluate the entire year evenly. Avoid being too strict or lenient or rating all employees as average. Provide examples and use them in discussion. Don’t surprise the employee with critical feedback that he or she is hearing for the first time at the annual performance review.

Contribution, capability, and commitment are each critical to successful performance. Each is unique and should be considered separately and each may impact the others. Specifically, for an employee to contribute successfully, she or he needs capability and commitment. Additionally, external factors may also be impacting the employee’s success. In order to provide accurate and fair ratings in each of the three areas, it is important to consider what is supporting or hindering that employee’s success and plan accordingly. One way of rating performance in each of the areas is the following scale:     

Leader Role Model Contributor Needs Development Unacceptable

While the definitions and descriptions differ for each area, the same scale can be applied to all three. We believe that using the language of leader, role model, etc., is a more constructive way of rating than using a numerical scale. Qualitative ratings tend to be more motivational than quantitative evaluations. What follows are definitions and descriptions for each level on the scale for contribution, commitment, and capability.

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HR OPTIMIZATION Definitions:

Contribution

Commitment

Capability

Leader

Demonstrates performance beyond expectations and improves the way the work gets done.

Clearly demonstrates accountability for work and enhances organizational direction. Inspires commitment in others.

Teaches and leads others as an expert in job-related competence.

Role Model

Demonstrates performance beyond expectations (e.g., quality, timelines, and results).

Clearly demonstrates accountability for work and enhances organizational direction.

Demonstrates mastery of competencies beyond the stated scope of the job.

Contributor

Performs at the expected level for the job. Contributes to the success of the company.

Demonstrates accountability for his or her work and supports business goals and culture. Is committed.

Demonstrates the appropriate level of competence for the stated scope of the job. Is capable.

Needs Development

Performs somewhat below expected level for the job. Improvement is required.

Accountability for his or her work and/or organizational direction is not clearly demonstrated. Commitment is unclear.

Needs to improve competence to be successful in current position.

Unacceptable

Does not meet performance expectations for job. A performance improvement plan is required.

Demonstrates a lack of accountability for his or her job and/or organizational direction. Is uncommitted and undermines culture.

Does not demonstrate minimal level of competence for the stated scope of the job. Unskilled.

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PERFORMANCE MANAGEMENT Contribution refers to the results of the employee’s work. Considerations should be given to the employee’s job performance on significant goals, objectives, and projects that he or she worked on throughout the period. To achieve a certain rating, the employee must consistently perform at that rating level with regard to her or his formal contribution goals, the results of initiatives that were not tied to previously set goals, as well as other job responsibilities. Quality, timeliness, and results should all be considered. It should be noted that, regardless of job position, any employee can be a leader. Commitment is evidenced in the actions that demonstrate accountability, pride, and ownership in the work, the team, and the organization. Commitment is also evidenced in the actions the employee takes to advance or support the group or organizational direction. These actions should include helping out other team members within or outside the group, taking personal responsibility for outcomes, helping to keep others positive and focused, etc. Three dimensions must be considered: commitment to his or her own work, commitment to the organization, and commitment to supporting the stated values of the culture. When rating an employee on commitment, it is important to identify examples of how commitment is demonstrated. A manager should focus on the demonstrated actions that provide evidence of potential commitment. Ultimately, only the employee knows her or his level of true commitment. The manager is simply rating the demonstrated actions that impact her or his work, the work of the team, and the organizational culture. Capability is evidenced by the extent to which an employee applies and transfers their skills and knowledge. A person who teaches and coaches others in one or more areas is demonstrating the highest level of capability. Capability is also evidenced by the extent to which a person is the “go-to” resource in the department or organization because of his or her experience and skills. All three areas of performance (contribution, commitment, and capability) are unique and important, but one overall summary rating is needed. The purpose of the overall performance rating is to link the performance evaluation to the recommended merit increase or promotion where applicable. The overall rating is the manager’s summary evaluation of the employee’s total performance. Managers need to use discretion to determine the weight the organization gives to each of the three employee success criteria. Conducting a performance review requires advance planning and preparation. Open communication is critical. Managers should encourage a dialogue by asking questions and checking for understanding and opinions throughout the discussion. Some tips for managing the discussion follow:

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HR OPTIMIZATION Do:            

Put the employee at ease. Show a supportive attitude. Reinforce the positive. Be honest and candid. Encourage conversation. Actively listen. Ask about the employee’s opinion. Discuss specific examples. Ensure the employee understands areas needing improvement. Build on strengths. Stay in control. Summarize actions to be taken.

Do not:

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      

Discount employee perceptions. Focus solely on areas needing improvement. Dominate the discussion. Assume silence means agreement. Let the conversation get off course. Describe the employee’s behavior as better or worse than it is. Be vague or unclear.

In order for performance management to be effective, people need to feel that their work has a strong connection to corporate goals and understand the standards of performance on which they are being evaluated. In addition, the performance management system needs to be seen as fair and credible. Performance standards need to be seen as achievable and methods of measurement need to be seen as sound, e.g., a balanced scorecard approach. Managers play a critical role in the performance management process. Constructive managers help employees find solutions to problems at work, attain needed information and resources to do their jobs, and translate strategy into action. Constructive managers also pay attention to the factors that have the biggest impact on employee performance: understanding how to complete projects and assignments, enjoying work, having influence on the selection of projects, working on challenging projects that are important to

PERFORMANCE MANAGEMENT their personal development goals. Finally, constructive managers emphasize performance and personality strengths. On the other hand, managers who make frequent changes to projects and assignments undermine the fairness and credibility of the system.

Your Critical Success Factors

The Reality While the theoretical constructs underlying performance management appear logical, the reality usually presents many challenges. Here are some examples from our experience: HR process vs. business process. Performance management is a business process. It is a process for ensuring that all employees are aligned behind corporate objectives. Many managers see performance management, however, as an HR program—a low-impact process that requires them to fill out forms and do paperwork. Program vs. behavior. It’s not about the program—it’s about the behavior. Performance management, if done properly, is an excellent vehicle for engaging employees in dialogue and clarifying direction. The reality, however, is that many managers see it as a burdensome program that is pushed on them. HR professionals need to focus on the values and the tools, not on the program. Timing. While there is never a good time to conduct performance reviews, some times are better than others. If performance reviews are done at the same time as multiple other programs, they do not get the attention they deserve. Also, we have found it helpful to separate performance reviews from merit increases, so managers have time to reflect on the review and ensure that any compensation adjustments are tied directly to performance.

Your Reality

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HR OPTIMIZATION Top Ten Lessons Learned 1. 2. 3. 4. 5. 6. 7. 8. 9.

Start with corporate goals and objectives. Position performance management as a business process. Support managers with training and guidance. Be flexible. Focus on the value proposition, e.g., alignment, engagement, and growth. Trust managers to do what is necessary. Use differential evaluations and differential rewards. Link performance management to compensation and rewards. Don’t make assumptions about a manager’s knowledge, attitude, and skills. 10. Balance needs to fit the culture and shape the culture.

Conclusions

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In summary, performance management is an ongoing business process, not an event. The purpose of performance management is to facilitate alignment, engagement, and growth. Three important success factors in a comprehensive performance management process are contribution, commitment, and capability. The key processes that make performance management work effectively are goal setting, productive dialogue, and periodic reviews. Clearly, the extent to which managers are helpful and supportive, rewards are connected to performance, and people trust the system will affect the impact of a performance management program. The standard of alignment, however, will remain constant.

Chapter

13 Diversity

Introduction In a great company, people value differences, make decisions with diversity in mind, and act inclusively. These are the three critical ingredients of diversity. We know that diversity leads to innovation and improvements in the bottom line, yet we are reluctant to make a full commitment. We know that diversity deepens our acceptance and appreciation of differences, yet we hesitate to take bold action. We know that diversity improves teamwork and productivity, yet we continue to gravitate to homogeneity. We know that diversity gives us a chance to confront our own intolerance, yet we avoid the opportunity to connect harmoniously with persons who have walked a path unlike our own. What keeps us from acting more congruently with stated values? An experience with diversity might help us uncover the answer.

Scale There is a range of possible outcomes in any effort to leverage diversity. Here is a scale to envision possibilities and assess current realities: 5:

Diversity principles and practices are widespread throughout the corporation worldwide and are demonstrably linked to revenue growth and for attracting, retaining, and empowering employees. Company is benchmarked for its practices.

HR OPTIMIZATION 4:

Gender, racial, and international diversity practices and policies exist throughout the company. Employees and customers comment on how diverse the company is.

3:

The company takes strong steps to become more diverse through aggressive recruitment, staffing, and development of diversity candidates.

2:

Lack of diversity is recognized as problematic; plans are being created to move the corporation to a different situation.

1:

The corporation is mostly a homogeneous population of like-minded and like-thinking executives, managers, and employees. Cultural-, racial-, and gender-based statements are commonplace and have led to lawsuits and financial settlements. The status quo is unconsciously or consciously maintained.

Where are you on the scale now?

_____

Where do you want to be on the scale in one year?

_____

Why Change

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On the one hand, Company N is rich in diversity. Twenty-five percent of its employee population is Asian and it has a large number of people on green cards from other countries. Company N also values diversity of thought. On the other hand, Company N has less than 1 percent African American, 1 percent Hispanic, and 18 percent women employees. Its sales organization is particularly homogeneous. Instead of leveraging its strength in diversity, it is faltering from its homogeneous weakness. Sourcing efforts do not tap into diverse talent pools, and there is no advocacy and/or mentoring program for minority employees. As a result, innovation, teamwork, productivity, and profitability suffer. In addition, attrition of diverse employees is rising and there have been recent charges of sexual harassment. Company N needs to make diversity more of a strength in its culture.

Your Reasons to Change

DIVERSITY Critical Success Factors Benchmarking indicates the trend toward a broad definition, one that goes beyond the visible differences such as race, ethnicity, age, and gender. Here are several definitions used by different organizations:  Company N: “. . . differences that make each of us unique plus the similarities that bring us together.”  Hallmark Cards: “. . . about people, respect, and inclusion.”  Covance: “. . . is based on respect for one another and recognition that each person brings his or her unique attributes to the corporation.”  Fannie Mae: “. . . the varied perspectives and approaches to work that members of different identity groups bring that can positively impact the organization.”  Oracle: “. . . about expanding the range of opportunities for all our people—employees, owners, suppliers—to freely invest human capital, ideas, energies, expertise, and time.”  McDonald’s: “The governing word is inclusive. We describe it in the context of race, gender, physical abilities, sexual orientation, economic status, culture, lifestyle, geography, and thought. We don’t leave the subject of equal opportunity and affirmative action but instead expand on both by stepping into the marketplace. Now we have an opportunity to link the commitment to equal opportunity to the success of the business.”  IBM: “We believe that diversity—and fostering an inclusive workforce—is not only the right thing to do, it is also critical to maintaining a competitive advantage in today’s global marketplace. Inclusion is a business approach that embraces these diverse characteristics in a way that engages all employees at all levels, fostering both individual success as well as the success of the company.”  Bell South: “A third of all Americans belong to a minority group. A diverse workforce is not a luxury but a necessity.” Servicing and marketing to diverse partners challenges a homogeneous company. Companies and partners make buying and alliance decisions as much on “who the company is” as well as “what the company offers.” In an increasingly diverse workforce, many companies will not look favorably on a company that doesn’t seem concerned about diversity issues. As Bell South indicates, a diverse workforce is a necessity.

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HR OPTIMIZATION

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Litigation and minority turnover occur less frequently in diverse companies. Companies that are not in compliance with EEO and Affirmative Action legislation are more vulnerable to legal action than companies that have made serious attempts to diversify. There is more innovation in diverse companies. Heterogeneous teams have been proven to generate a greater quantity and quality of ideas than homogeneous teams. Becoming an employer of choice attracts the best and brightest candidates. These candidates tend to represent diverse backgrounds and ethnicity. A level 3 company knows what diversity looks like and knows how to find diverse candidates. At level 4, the company does not necessarily look for someone who can conform to the culture, but seeks out people who understand differences in culture and can find the right entry points. We are living in a global economy. Companies need to do business in a multicultural world. Good diversity practices allow individuals in the United States to interact more successfully with employees in foreign locations. Changing demographics of employee, partner, and customer bases necessitates the understanding and utilization of all differences. Increased productivity comes as a result of leveraging the unique skills and capabilities of the global workforce. When there is a demonstrated desire to fully use all the talents of a diverse workforce, then people work harder and smarter. Diversity is about domestic diversity and about global diversity. Domestic diversity starts with recognizable differences in sex, age, race, and physical ability and moves on to the more subtle differences. Global diversity has multiple meanings:  Ensuring that we have local representation in countries where businesses reside.  Understanding that for Europe and Asia, diversity is first and foremost understood in terms of gender issues, and second, in terms of cultural differences.  Ensuring that every employee works from a global mindset and skill set with a sensitivity to differences.  Ensuring the HQ culture understands and adapts a global mindset. Businesses in the United States dominate the global economy. This power demands a level of cultural sensitivity in which most businesspersons fall short. One of the reasons that Americans have problems doing business in the international arena is because we typically are not well informed about cultural differences around the

DIVERSITY world. We also assume that businesses in other countries operate in similar ways to U.S. companies. An effective diversity program results in the capabilities to sail the Seven “Cs” with skill and grace. Differences in understanding across the globe on each of these business essentials will make the point: Commitment: Commitment in one country may mean something entirely different in another country, depending on cultural norms and values. Commitment in Germany may mean applying your intellectual gifts while you are at work, whereas commitment in the United States is usually translated as the number of hours you work in a day and how many vacation days you have left over at the end of the year. Consistency: Consistency in Japan may mean continuing to do things in the same way for 10 years. In the United States, it may mean meeting a performance goal for two quarters. Contribution: Contribution in the United States is roughly translated as performance plus leadership in the pursuit of corporate goals and initiatives. Contribution in Brazil may mean donating time and/or money to a community organization. Computers: A computer in the United States means a machine that will accommodate all the recent technologies and provide instant access to the Internet. Computers in Kenya may mean a machine that enables you to type and store letters. Competitiveness: Competitiveness in the United States is associated with fierce individualism and defeating the enemy. Competitiveness in Sweden may mean working together with colleagues to achieve differentiation in the marketplace. Confidentiality: Confidentiality in the United States means that your private medical records can only be shared among professionals. Confidentiality in Israel may mean that no conversations are shared with anyone without permission. Confrontation: Confrontation in the United States may mean directly challenging someone in a public forum. In Hong Kong, confrontation may mean politely pointing out incongruence between words and actions in a private setting. Companies in the United States have had too many shipwrecks on these Seven C’s over the past 20 years. We need to develop better radar screens that pick up clues to potential disaster. We also need to make more effort to understand cultural differences. Avoiding these shipwrecks means not pushing U.S. corporate programs around the world; it means thinking globally, and acting locally; and it means acknowledging functional, geographic, and business differences.

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HR OPTIMIZATION The three most critical success factors in a diversity program are aggressive sourcing, strong advocacy, and disciplined promotion procedures. Minority candidates are available to fill key roles if a company takes the time to search for talent pools that are rich in targeted groups. Assuming a company seeks out and hires a diverse workforce, it is critical to ensure that new hires have someone in the organization who will advocate for them and provide opportunities for visibility to senior executives. When promotions are being considered, companies that value diversity will make every effort to give minority candidates a fair shot at the opportunity. Just as companies need to seek diverse sourcing pools, they also need to build and use diverse promotional pools of internal candidates. Good people do not always look the same or talk the same.

Your Critical Success Factors

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The Reality While the theoretical constructs underlying diversity appear logical, the reality usually presents many challenges. Here are some examples from our experience: Affirmative action vs. quotas. The idea of quotas is emotionally charged. Some people believe that quotas are arbitrarily imposed and constitute reverse discrimination. Others believe that quotas represent a stake in the ground to establish a more diverse workforce and to acknowledge the disadvantages created by centuries of institutional racism. The principles behind affirmative action constitute a common ground for groups with opposing views. In March l961, less than 2 months after assuming office, President John F. Kennedy issued Executive Order 10925, which established the President’s Committee on Equal Employment Opportunity. Its mission was to end discrimination in employment by the government and its contractors. The order required every federal contract to include the pledge that “The Contractor will not discriminate against any employee or applicant for employment because of race, creed, color, or national origin. The Contractor will take affirmative action, to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, creed, color, or national origin.” It is here for the first time in the context of civil rights that the government called for “affirmative action.” The term meant taking appropriate steps to eradicate

DIVERSITY the then widespread practices of racial, religious, and ethnic discrimination. The goal, as the President stated, was “equal opportunity in employment.” In other words, affirmative action was instituted to ensure that applicants for positions would be judged without any consideration of their race, religion, or national origin; these criteria were declared irrelevant and taking them into account was forbidden. The Civil Rights Act of 1964 restated and broadened the application of this principle. Title VI declared that “No person in the United States shall, on the ground of race, color or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving federal financial assistance.” But within one year, President Lyndon B. Johnson argued that fairness required more than a commitment to impartial treatment. In his 1965 commencement address at Howard University, he said: You do not take a person who for years has been hobbled by chains and liberate him, bring him up to the starting line of a race and then say, “you’re free to compete with all the others,” and still justly believe that you have been completely fair. Thus it is not enough just to open the gates of opportunity. All our citizens must have the ability to walk through those gates. . . . We seek not . . . just equality as a right and a theory but equality as a fact and equality as a result. And so several months later, President Johnson issued Executive Order 11246, which stated that “It is the policy of the Government of the United States to provide equal opportunity in federal employment for all qualified persons, to prohibit discrimination in employment because of race, creed, color or national origin, and to promote the full realization of equal employment opportunity through a positive, continuing program in each department and agency.” Two years later, the order was amended to prohibit discrimination on the basis of sex. While the aim of President Johnson’s order was stated in language similar to that of President Kennedy’s, President Johnson’s abolished the Committee on Equal Employment Opportunity, transferred its responsibilities to the Secretary of Labor, and authorized the Secretary to “adopt such rules and regulations and issue such orders as he deems necessary and appropriate to achieve the purposes thereof.” Acting on the basis of this mandate, the Department of Labor in December 1971, during the administration of President Richard M. Nixon, issued Revised Order No. 4, requiring all contractors to develop “an acceptable affirmative action program,” including “an analysis of areas within which the contractor is deficient in the utilization of minority groups and women, and further, goals and timetables to which the contractor’s good faith efforts must

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HR OPTIMIZATION be directed to correct the deficiencies.” Contractors were instructed to take the term minority groups to refer to “Negroes, American Indians, Orientals, and Spanish Surnamed Americans.” The concept of “underutilization” meant “having fewer minorities or women in a particular job classification than would reasonably be expected by their availability.” “Goals” were not to be “rigid and inflexible quotas” but “targets reasonably attainable by means of applying every good faith effort to make all aspects of the entire affirmative action program work.”

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Such preferential treatment required that attention be paid to the same criteria of race, sex, and ethnicity that had previously been deemed irrelevant. Could such use of these criteria be morally justified? That is the key question in a debate that has continued for more than two decades. Quantity vs. quality. The authors believe that affirmative action efforts should abide by the principle established in 1971, i.e., that corporations should set targets reasonably attainable by means of applying every good faith effort to make all aspects of the entire affirmative action program work. Setting these targets should not be seen as setting quotas for the number of positions in a particular function, but as a meaningful attempt to share power with diverse groups of people. The sharing of power not only passes the real test of affirmative action, but also leads to better business results. Superficial vs. substantive. While many companies provide lip service to affirmative action principles, not enough commit to a substantive response. Superficial approaches lead to an entitlement mentality among employees at best and endless complaints at worst. The real substance of affirmative action revolves around opportunity. Not just opportunities for jobs, but opportunities to influence and to provide additional opportunities for the communities of respective minority groups.

Your Reality

Top Ten Lessons Learned 1. Create a diversity steering committee with broad representation. 2. Don’t focus diversity efforts on any one particular group.

DIVERSITY 3. Hire the best and brightest from every community. 4. Base promotions on performance, merit, and support of the diversity strategy. 5. Build a business case by sharing the research on the connection between diversity and profitability and performance. 6. Focus on creating a culture of respect and inclusiveness. 7. Configure your training from awareness to skills, and dovetail it with leadership and management development. 8. Develop plans and policies for inclusiveness: seek first to understand. 9. Establish a mentoring program. 10. Offer diversity and sexual harassment training.

Conclusions There are two components to a comprehensive diversity program: systems and culture. Systems include recruitment, talent management, and mentoring. Culture includes the norms and values that surround hiring and promotion. The functions of diversity are team optimization, innovation, and productivity. The processes for discharging those functions are sourcing, advocacy, and promotions. The conditions required to realize the full potential of a diversity program are entrepreneurial spirit, respect, inclusiveness, and straight talk. Clearly, the extent to which leaders think inclusively and value differences will impact the success of a diversity program, but the standard of success remains constant.

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Chapter

14

Measuring Human and Organizational Capital

Introduction This book is based on the premise that HR can transform itself from personnel administration to human and organizational capital development. That premise begs the question, How do you measure individual and organizational capabilities (human and organizational capital)? In this chapter, we will not only explore different measurement possibilities but also demonstrate how human and organizational capital are aligned to business needs.

Scale There is a range of possible outcomes in any attempt to improve business. Here is a scale to help you envision possibilities and assess current realities in your organization. 5: Human and organizational capital metrics used to improve business performance. 4: Decision support information used to actively manage human and organizational capabilities. 3: Standards set that enable the evaluation of human and organizational capabilities relative to peers. 2: Human resource information used to make business decisions.

HR OPTIMIZATION 1: Personnel data not used effectively for management or performance improvement. Where are you on the scale now? Where do you want to be on the scale in one year?

_____ _____

Why Change

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In Company O, metrics revolved exclusively around financial indicators. There was a lot of talk about people being the most valuable asset, but there were very few actions and initiatives that supported those statements. In Company O, the statement “People are our most important asset” was an empty slogan that caused more cynicism than commitment. Similarly, there was a lot of talk in Company O about the importance of aligning the culture, but few resources were allocated toward a systematic approach to make it happen. In short, the whole idea of human and organizational capabilities was a vague and amorphous concept that had no substance or credibility associated with it. The company was essentially operating on one cylinder and with one indicator on its dashboard—financial results. Unfortunately, the indicator was trending toward empty and the one-cylinder engine was sputtering. Company O needed a multivalve engine and a complete dashboard to measure performance.

Your Reasons to Change

Critical Success Factors The purposes of measuring human and organizational capabilities are to identify strengths, weaknesses, and performance gaps and to be able to develop and allocate resources appropriately across competing priorities. In order to determine whether current performance is acceptable, metrics must be compared on time, cost, quality, and quantity indicators against comparable benchmarks. Metrics can also be used to determine whether human and organizational resources are most effectively deployed. Human capital development is the process of improving an employee’s ability to assess, think, relate, plan, and act more efficiently and effectively. Human capital measurement is the ability to link improvements in human capital to increases in business performance.

MEASURING HUMAN AND ORGANIZATIONAL CAPITAL Building organizational capabilities means aligning people, processes, systems, and culture behind the business goals. In order to align people behind organizational goals, it is necessary to identify the individual competencies required for success and then either hire for those competencies or develop them in the workforce. In order to align processes behind organizational goals, it is necessary to identify the processes required for operational excellence and then either reengineer current processes or design and implement new processes to improve efficiency and effectiveness. In order to align systems behind organizational goals, it is necessary to understand what systems are required to enable people and processes and then either buy or build those systems. First, we understand the relationship between people, processes, and systems and the achievements of our goals. Then measurements are needed to assess the impact. Capabilities come in many forms. They not only represent the knowledge, competencies, skills, and experience of the workforce, they also encompass our ability to deliver quality products, make timely decisions, manage costs, share knowledge, respond to marketplace opportunities, optimize performance, and plan for the future. In short, organizational capabilities are the critical factors required to achieve our mission. Overall, organizational capabilities can be measured through individual and organizational excellence. Specifically, individual capabilities can be measured by providing employees with multiple-rater assessments of the competencies required for success in their jobs and through the performance management system. Organizational capabilities can be measured through an assessment form and through results indicators such as customer satisfaction, market share, revenue growth, and profitability. For example, VPs could be surveyed to identify the organizational capabilities required for successful execution of corporate goals and to assess the current strength of those capabilities. Based on that input, the organization can focus on closing whatever performance gaps exist in those capabilities. This gap analysis helps the organization set priorities for improving organizational and individual effectiveness. The overview on the following page lists various ways of measuring human (people) and organizational (process, technology, and cultural) capabilities. The indicators in each cell are simply examples of measures that could be used to assess how well the “capital development engine” is running.

Your Critical Success Factors

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Process 1 Forecast accuracy 2 Sales/Customer 3 Sales from products released in last 2 years 4 Improvements in competencies 5 Number of customer references 6 Number of customer bug fixes 7 PLM market share 8 Decision accuracy*

People

1 Turnover rate 2 Percent of employees with balanced scorecards

3 Attraction of top talent* 4 Retention of top talent 5 Diversity 6 Employee Commitment*

Quantity

Quality

4 Revenue per employee 5 Goal alignment*

1 Avg. span of control 2 # of new breakthrough products 3 # of new customers

Technology

Human and Organizational Capital Metrics

3 4 5 6 7 8

Shared values Customer loyalty Clear authority* Predictability* Community relations* Knowledge capture and transfer*

1 # of volunteer days per employee 2 # of cross-functional teams

Culture

HR OPTIMIZATION

12 Training costs per employee 13 Cost/Rev* 14 Cost of sales

10 Cost/Hire 11 Cost/Training day

Cost

*Measured by Organizational Capability Assessment

9 Speed to market with new products* 10 Sales cycle 11 Average duration of customer relationship

7 Time to close open reqs 8 Time to develop new capabilities 9 Zero latency

Time

9 Adaptability*

10 Cost/Customer loss 11 Costs/New customer 12 Profitability

6 Speed to market

7 Productivity* 8 Customer profitability

MEASURING HUMAN AND ORGANIZATIONAL CAPITAL

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HR OPTIMIZATION The Reality

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While the theoretical constructs underlying human and organizational capital measurement appear logical, the reality usually presents many challenges. Here are some examples from our experience: Quantity vs. quality. Most organizations think about measurement in strictly quantitative terms such as reductions in time or cost or increases in speed or revenues. While these are critical elements of measurement, it is also important to take into account qualitative dimensions such as the ability to think creatively and relate interdependently. Human and organizational capital measurement requires consideration for both quantitative and qualitative dimensions. According to Watson Wyatt, superior human capital practices are not only correlated with financial returns, but also increased shareholder value. In their research, Watson Wyatt found key links between human capital and shareholder value creation. The key links were in rewards and accountability: a collegial and flexible workplace, recruiting and retention excellence, communication integrity, focused HR service technologies, and prudent use of resources. Clearly, each of these links has a quantitative and qualitative dimension. We need to make sure that we have an appropriate balance between these two types of measures. For example, turnover is typically measured by the percent of people who leave a department during a given quarter. That number, by itself, is often misleading. If the turnover consists of world-class talent with missioncritical responsibilities, then it is a real problem even if the number is low. If, on the other hand, mediocre talent with nonessential responsibilities is leaving, it may not be such a bad thing. Limited vs. expansive. The image of human and organizational capital is still limited by the “personnel” legacy from which it is evolving. The people factor has been historically measured by headcount, turnover, and costs. This view typically assumes that all people are interchangeable and replaceable. It doesn’t take into account the reality of today’s labor market or potential value of those employees taking leadership roles. If everyone is viewed as having leadership potential in a given moment, independent of position or title, then the potential value-add is dramatically expanded. A limited view of human capital is to measure and track what people physically do on their jobs and the tangible results of their work. A more expansive view is to measure how well people assess, think, and relate to others and what they contribute to intangible assets. Similarly, if organizational capital is measured by the independent contributions of each department, it may miss the contributions generated by interdependent functioning. Having an expansive view of the possibilities helps assess what the appropriate measures should be.

MEASURING HUMAN AND ORGANIZATIONAL CAPITAL Your Reality

Top Ten Lessons Learned 1. Create a broad, multidimensional framework to measure human and organizational capital. 2. Manage and regularly clarify expectations from the top. 3. Make sure you have adequate resources and infrastructure for measurement. 4. Recognize contributions to human and organizational capital as well as financial capital. 5. Facilitate open discussions and the sharing of ideas. 6. Foster trust with key functions across the organization regardless of their support. 7. Support cross-functional teaming and actively involve all levels of the organization. 8. Always assess the “build versus by trade-off” against the measurement of progress. Don’t let the “not invented here” syndrome get in the way of making progress. 9. Develop a set of common terms and definitions. 10. Start with pilot projects in supportive functions.

Conclusions The components of a comprehensive human and organizational capital measurement initiative include knowledge capital, people capital, and cultural capital. The functions of capital measurement are to improve return on investment and to increase market capitalization. Several processes can be employed to measure human and organizational capital: define requirements, capture knowledge and capabilities, organize information, disseminate information, and leverage capabilities. Clearly, the extent to which a company understands the value of capital development affects the measurement efforts, but the standard of impact remains constant.

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Appendices

Appendix

A Customer Satisfaction Survey

Dear Colleague, Now that our new HR management team is in place, we are getting a feel for the culture and how HR can best serve your needs. We are very excited about what we have learned so far about the people, the products, the processes, and the technology that makes our company grow. In an attempt to provide you with the best possible services, I would like to ask you to give us feedback on what you perceive as the most important and most effective services from HR. Over the course of the last year, we have sharpened our focus on customer satisfaction and defined specifically our priorities. Your input will enable us to ensure that we are providing the services that are critical to you and your business success. On the following pages is a survey that lists all of the current HR services. For each service, there are three columns. In the first column, please indicate how important that service is. In the second column, please indicate how effectively you think HR is performing the service. In the third column, please indicate if you think the service has been getting better or getting worse over the past 6 months. Please use the following 4-point scales for your ratings:

HR OPTIMIZATION

Rating

Importance

Effectiveness

Direction

4

Critical to business success

Highly effective

Much better

3

Very important

Effective

Better

2

Important

Ineffective

About the same

1

Not important

Very ineffective

Worse

Here is an example of how each service might be rated:

Business Consulting

Importance

Effectiveness

Direction

4

3

4

150 Business Consulting: Working with senior managers to think through strategic and tactical priorities for business issues, including strategy, structure, and staffing. Thank you very much for providing us the feedback we need to focus and improve our services. We will share the results of the survey with you as soon as they are summarized.

Thank you.

CUSTOMER SATISFACTION SURVEY Human Resources Customer Satisfaction Survey For these questions, please rate your responses according to the following scale:

Rating

Importance

Effectiveness

Direction

4

Critical to business success

Highly effective

Much better

3

Very important

Effective

Better

2

Important

Ineffective

About the same

1

Not important

Very ineffective

Worse

Effectiveness

Direction

Importance Benefits

Benefits: Designing and delivering noncash compensation, including days off (e.g., vacation, sick days, etc.), health and dental insurance, accident liability protection (e.g., life insurance, disability income continuation), employee assistance plan (e.g., alcohol counseling, financial counseling, elder care and child care referral), tuition reimbursement, and 401(K). Comments:

Business Consulting Business Consulting: Working with senior managers to think through strategic and tactical priorities for business issues, including strategy, structure, and staffing. Comments:

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HR OPTIMIZATION Importance

Effectiveness

Direction

Change Management Change Management: Influencing company decisions, activities, and management practices through the application of HR skills and business knowledge. Diagnosing, developing, delivering, and determining the results of organizational interventions designed to facilitate strategic implementation. Comments:

Compensation

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Compensation: Ensuring that employees are paid fairly and in line with market comparables. Also, reducing pay inequities within each organization and developing a rewards philosophy that attracts, motivates, and retains great talent. Comments:

Compliance Reporting Compliance Reporting: Ensuring the adherence of business practices with applicable federal, state, and local laws as well as with internal policies and procedures. Also, educating managers and employees about these laws. Comments:

CUSTOMER SATISFACTION SURVEY Importance

Effectiveness

Direction

Diversity Diversity: Achieving diversity of talent at all levels in all organizations. Meeting EEO and AA guidelines. Comments:

Employee Information/ HRMS Employee Information: Collecting and maintaining information on employees throughout the world, including personal information, job-related history, benefits eligibility and enrollment, educational achievements, hiring paperwork including offer letters and signed agreements, and compliance-required records such as I-9s. These data need to be maintained with accuracy, timeliness, and appropriate accessibility/confidentiality. Comments:

Employee Relations Employee Relations: Establishing and maintaining positive and direct communications among employees, working with managers to build and support an environment conducive to open exchange of information. Third-party conflict resolution/mediation; coaching, counseling and feedback; team building; individual/group awareness and assessments. Comments:

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HR OPTIMIZATION Importance

Effectiveness

Direction

Globalization Globalization: Taking cultural and regional differences into account for all decision making and implementation. Comments:

Leadership Development

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Leadership Development: Creating, providing, and evaluating learning opportunities, either internally or externally delivered, that maximize people management and leadership effectiveness (e.g., performance management, coaching, delegating, developing direct reports, leading teams, inspiring commitment). Comments:

Learning and Development Learning and Development: Identifying, providing, and evaluating learning opportunities (e.g., career development, technical training, skills training), either internally or externally delivered, that maximize employee capability and align with business objectives. Comments:

CUSTOMER SATISFACTION SURVEY Importance

Effectiveness

Direction

Performance Management Performance Management: Aligning individual and organizational capabilities behind the mission. Also, engaging employees in productive dialogue about commitment, contribution, and capability development. Comments:

Employee Services Employee Services: Making it easy to do business with HR. Facilitating employee transactions and employee changes as efficiently and effectively as possible. Comments:

Recruiting and Internal Mobility Recruiting and Internal Mobility: Attracting, sourcing, selecting, and hiring quality candidates to fulfill needs in a timely manner, either through direct advertising, recruitment firms, employee referrals, or other means. Maintaining databases of applicants and reporting on staffing metrics (e.g., filled/unfilled positions, source of hire, cost per hire). Facilitating internal career movement for employees. Comments:

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Appendix

B Critical Consulting Skills

The Skill of Positioning Introduction to Positioning The role of HR has been evolving over the past several decades. We need to discriminate where and how we invest our time. If we believe that the highest value we can provide to the organization revolves around generating best solutions through collaborative processing, we need to find ways to reposition ourselves in the organization and to align our energy behind that goal. Indeed, HR consulting has changed dramatically in scope and depth over the past 50 years. These changes can be best understood if we look at major events in each decade and how those events shaped our thinking. In the 1950s, our function was called personnel. We helped to hire people, orient them, pay them, provide them with benefits, and let them go when the time came. Organizational leadership was of the command and control variety that emerged naturally out of the military experiences of World War II. As long as we kept our leaders out of trouble, we were seen as doing our jobs. In the 1960s, a new battle cry was heard: “Question Authority.” This mentality was born in the Vietnam War era and dominated the thinking of young people for at least a decade. It was also in the 1960s that our work became more commonly referred to as Human Resources. Leaders began to realize that employees needed more than to be told what to do while at work; they needed to be heard and have a sense of involvement in their jobs. HR was called on to

HR OPTIMIZATION make sure the company was in compliance with its own policies and procedures and that it was not violating local, state, or national laws. In the 1970s, organizational leaders began to give more than lip service to the idea that people are our most important asset. Given that recognition, many training companies were created to help develop employees to their fullest potential. HR either developed and delivered its own product or purchased off-the-shelf training programs from a burgeoning supply of vendors. “Trainthem-up” became the new demand from corporate leadership, and HR responded in the best ways it could to satisfy its customers. Primarily, however, HR was still positioned as a “pair of hands” to perform tasks for management.

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In the 1980s, the Quality Movement came into being. “Meet commitments in accordance with requirements” and “Do it right the first time” became the songs of the day. Leaders started demanding more responsiveness to their needs and asked for customized services to help them meet their business challenges and improve product quality. HR was expected to develop people and to reduce the costs of poor quality. It had elevated its positioning from performing tasks to meeting business objectives and from “pairs of hands” to relationship builders. In the 1990s, as the global economy imposed new demands for continuous innovation, HR started playing a more visible and vital role in the organization. Some leaders perceived HR as business partners and asked their assistance in enhancing organizational and individual effectiveness. In the early years of the decade, the term “human capital” came into common parlance as the Information Age imposed demands on people to process information more quickly and to leverage knowledge more effectively. Leaders started looking to HR for solutions to their human, organizational, and business issues. They expected internal consultants to help them navigate in a world in which idea generation was more important than patent protection. Human resource development (HRD) had now positioned itself as providing value-added systems and solutions to meet business requirements. It was seen as the primary developer of human capital. As we have entered the new millennium, business leaders are now looking for a new relationship with HR. They are hoping consultants will help them enhance their human and organizational capital and help them refine and develop the leadership skills to grow the business in the new economy. They are hoping to develop interdependent relationships in which new possibilities for growth are generated. This shift in expectations represents an enormous positioning opportunity for HR.

CRITICAL CONSULTING SKILLS These trends can be summarized in the chart below: ’70s ’80s ’90s

Personnel HR HRD

Tasks Objectives Systems

’00s

HCD/OCD*

Solutions

Pair of Hands (P) P + Emotional/Relationship Issues (E) P + E + Information Technology and Organizational Development P + E + I (I = Interdependence, Innovation, Integrity)

* Human Capital Development (HCD)/Organizational Capital Development (OCD)

Based on interviews and focus groups at Company P, there is also a dramatic shift in roles underway. Company P’s HR desires to be positioned and perceived as a partner for value-added business solutions. It wants to be at the table by helping business leaders think through issues in multidimensional ways; empowering them to develop their talent and their teams through new skills and stateof-the-art technologies; and coaching them to set and reset priorities based on changing marketplace conditions. Accomplishing this change in positioning will make HR central to the business. Individual positioning, however, has to be conducted in the organizational context. Readiness and receptivity will change in each organization. Some organizations may embrace elevated positioning, whereas others may reject it.

Positioning Overview Positioning means creating the perception of serving as a value-added partner for business solutions. Positioning is an important functional skill because it gets consultants “at the table” where they are able to help leaders think through business issues. There are four key steps in positioning:    

Scaling Assessing Learning Elevating

The desired outcome for positioning is to make a SALE to your client that results in an intervention that leads to a positive business outcome. The four steps—scaling, assessing, learning, and elevating—will help make that SALE.

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HR OPTIMIZATION Step 1: Scaling The Idea Scaling is the ability to describe a range of possible outcomes from a given intervention. It recognizes the reality that any intervention can be for better or for worse and sets the stage for the consultant to talk intelligently about resources required to achieve a desired end-state. The generic scale for describing the range of possible outcomes is as follows: 5: 4: 3: 2: 1:

Ideal Fully acceptable Minimally acceptable Less than acceptable Destructive

Example Referring back to the introduction to positioning and how HR has evolved over time, the following scales could be used to describe a range of outcomes from our positioning efforts:

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Perception of HR 5: 4: 3: 2: 1:

Capital Development Engine Human and Organizational Capital Development Human Capital Development Human Resources Personnel

Key Values of HR 5: 4: 3: 2: 1:

Leadership Enhancement of people and organizations Conservation of resources Compliance with internal policy and external regulations Keeping out of trouble

Primary Positioning of HR 5: Collaborative processing capabilities 4: Partnerships 3: Solutions

CRITICAL CONSULTING SKILLS 2: Services 1: Products Relationship Goals 5: Interdependent partner 4: Collaborative partner 3: Preferred provider 2: Internal provider 1: Vendor Your Turn Select one of the scales above and/or create a scale that best represents the range of outcomes that could be achieved through the repositioning efforts of HR in Company P. 5: 4: 3: 2: 1:

Step 2: Assessing The Idea Assessing is the ability to determine the gap between current state and desired future state. It enables the consultant to engage the client in a meaningful and authentic discussion about where the client is and where he or she wants and needs to be. Example Using the scale for HR positioning described above, the executive staff determined that HR had primarily provided products and services in the past and needed to reposition itself as a partner for value-added solutions. 5: CPC 4: Partnerships (where we need to be)

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HR OPTIMIZATION 3: Solutions 2: Services (where we are now) 1: Products Please note that moving up the scale to partnerships does not mean that HR would no longer provide products, services, and solutions. To the contrary, HR’s ability to form meaningful partnerships with business leaders is dependent on its ability to deliver high-quality products, services, and solutions. It is simply elevated positioning that helps to get HR “at the table.” Your Turn Using the scale you created in the previous exercise, assess where you are and where you need to be. 5: 4: 3: 2: 1:

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Step 3: Learning The Idea Learning is the ability to discover as much as you can about your clients’ business so that you can engage in meaningful dialogue about their needs and challenges. Continuous learning will improve your ability to engage in active inquiry, strategic visioning, and collaborative processing. Example Continuous learning is one of the six guiding principles of consulting, along with excellent communication, expectation management, proactive resource management, commitment to quality, and positive business impact. This appendix suggests the following applications of the continuous learning principle:  Understand the client’s developmental objectives and assist the client in attaining those objectives.  Leverage existing templates.  Align staff developmental needs with business needs during project staffing.  Provide stretch opportunities in order to gain experience outside individual comfort zones.

CRITICAL CONSULTING SKILLS Your Turn Think about a client with whom you are currently working or with whom you may work in the future. What could you do to learn more about that client’s business opportunities and issues?

Step 4: Elevating The Idea Elevating is the ability to demonstrate that you can add value to more business challenges at higher levels than others currently believe. This step is critical because it helps you break free from whatever limits your client may believe you possess. An organization consists of a variety of components, functions, and processes and operates with certain conditions and standards. You may be perceived as being able to function effectively in a limited number of components, with a particular level of management, under certain restrictive conditions. Elevating whatever perception limits you is a critical step in positioning. Example The chart on the following page represents one way to describe an organization. This chart indicates where one HR consultant is perceived as functioning most effectively. This hypothetical consultant is having difficulty breaking free from the perception that she is not able to add value to executive-level thinking, particularly outside of R&D. She is looking for ways to elevate her positioning both upward and outward. Your Turn Using the chart on the following page, or one you create yourself, please indicate where you believe you are currently “boxed-in” and fill in the cells where you believe you could add value.

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HR OPTIMIZATION

Marketing

Sales

G&A

R&D

Services

Policy (Management Committee) Executive Grades (2–3) Management Grades (4–5)

X

Supervisor Grades (6–7) Individual Contributor

164 Positioning Exercise Now you will have an opportunity to put all the positioning steps together to make a SALE.

Background A Company P vice president states in a meeting that he wants to dramatically improve the cycle time on a key process because it will save money and time plus reposition the company against competitors. He indicates that previous efforts have failed, but he does not know why, nor does he care. He believes that people lack commitment to divisional goals and thinks it’s high time that people stop protecting their turf and start acting more like a team that is accountable for success.

Your Situation You were not present at the meeting, but heard about it from a credible source. You were not asked for help, but believe that you understand enough about his plans that you can add value.

CRITICAL CONSULTING SKILLS Exercise How could you use the positioning skill to improve your relationship with this client? Pair off with another HR business partner and role play what a positioning conversation might look like. The person role playing the client should be open to your initiative.

Summary The four most important principles to remember about positioning yourself effectively with a client are 1. If you are able to understand the limits currently placed on you by a client’s perception of you, then you are better able to break free from that perception. 2. If you learn as much as possible about the business challenges of your client, then you will be able to engage more effectively in active inquiry, proactive advocacy, and collaborative processing. 3. If you are able to describe specifically the range of desired outcomes that will most likely occur based on a given intervention, then you will be positioned to assess the current gaps between current state and future state and to estimate the resources required to close the gap. 4. If you are clear about what you are bringing to the table as a consultant, then you will be able to make better choices about what you offer the client in terms of products, services, solutions, partnerships, and possibilities.

Contracting Skill Introduction to Contracting Contracting is making explicit agreements on    

Expectations the consultant and the client have of each other. The results they want to create. The method they will use to deliver the results. How they are going to work together.

Contracting is one of the most critical consulting skills. The degree to which you are successful in contracting is the degree to which you will be successful in satisfying your clients’ as well as your own needs. There is a simple formula that supports the concept of contracting:

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HR OPTIMIZATION

Client Satisfaction =

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Results Expectations

The results of your work are only as good as the expectations that your client has. Effective contracting is the best way to ensure that results meet expectations and, thus, that both the consultant and the client are satisfied as a result of having worked together. Simply stated, contracting is the process by which you make promises that you can really keep, promises that will give you and your client satisfaction. Contracting is an iterative process. It comes into play in all five phases of the consulting process: Design, Diagnosis, Development, Delivery, and Determination. The contracting process is never complete because conditions change and because the client and consultant continue to gain new insights into the intervention model. The contracting process normally mirrors the complexity of the client request. If the client request is for a long-term project, you can expect the contracting process to involve multiple conversations with the client and other stakeholders. If the client request is for a single event or a technical request such as compensation or benefits information, the contracting process will likely be much shorter. (If you are having difficulty finding an issue or intervention that requires a contract, you can always default to change management because there are always new initiatives being introduced that require this service. Every new initiative requires some level of change management if it is going to realize the value intended.)

Contracting Overview Contracting is the ability to define explicitly the components, functions, and processes of a consulting intervention. The contracting skill is important because it results in clear statements of opportunities, challenges, objectives, scope, approach, methodology, time frames, roles, resource requirements, deliverables, metrics, and confidentiality concerns. The basic contracting steps are    

Clarifying the request and the desired outcomes. Assessing the situation (gathering data). Exploring alternatives. Reaching agreement.

Although these steps generally occur in this order (CARE), you may have to revisit a step based on new information that you uncover in the contracting process.

CRITICAL CONSULTING SKILLS Just as excellent positioning will increase your chances for a SALE, contracting requires great CARE if you want to achieve outstanding results.

Step 1: Clarifying the Request and the Desired Outcomes The Idea This step begins with understanding who the client is. Although this step seems obvious, it is frequently missed in the consulting process. The person making the request may not be the client. In a staff support function such as HR, confusion may occur when a request is received from a generalist on behalf of the actual client. In these instances, it becomes critical for the internal staff group to reach a shared understanding of who the client is and how they will work together to deliver the desired results. In the Company l, with its Core Solutions and Business Partner functions, confusion may occur regarding who has primary responsibility for what as it relates to the 5Ds contained within the consulting process: Design, Diagnosis, Development, Delivery, Determination. When the project involves a long-term commitment or has a high degree of complexity, the persons who are responsible for the work will almost always need to have direct client contact. It is absolutely essential to define roles and responsibilities between Core Solutions and Business Partners in all phases of the intervention. The point is simple: Unless you can contract directly with the client, you have only marginal hope of achieving the results you or your client wants. Moving forward before clarifying the request and the desired outcomes ensures that you will    

Waste energy in conversation and design. Not deliver client satisfaction due to varied expectations. Lack the commitment required for success. End up exhausted and personally dissatisfied.

The second part of this step is to determine the client outcomes. When consultants take the presenting request, immediately promise to act on it, and start designing an intervention based on the request, clients never have a chance to think through the results they want to accomplish as a result of the request. The omission of this step is very likely to lead to disappointment and frustration. Use of the scaling step, presented as part of the positioning skill, will help the client and consultant clarify what the problems, goals, and desired outcomes really are. This step can be tiring for both the client and the consultant, but the clearer you are about the outcome, the more effective you can be in all phases of the consulting process. Vague discussions will leave the door open for unmet

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HR OPTIMIZATION expectations on both sides of the table. When outcomes are written clearly, they can then be used as guides before, during, and after sessions to check progress. The term outcome is used intentionally here (as opposed to objectives): Outcomes suggests focusing on determining what participants will be able to do as a result of the work you are designing. Using outcome language generally helps clients clarify the actions they want and need. Example The Project Initiation Form (at the end of Chapter 9) is a good example of what should be included in clarifying a request. It suggests an appropriate level of detail for defining who the client is, what is being requested, and what the desired outcomes are. Your Turn Use the Project Initiation Form to clarify a request you have recently had from a client.

Step 2: Assessing the Situation

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The Idea Once you have a clear idea of the actual request and have identified the client’s desired outcomes, the next step is to do a brief assessment of the situation. There are several areas you will need to explore in your contracting conversation: 1. The background of the request in detail and its connection to the business priorities 2. The project outcomes and why this request is important to the client 3. The scope of the project, i.e., what are the boundaries (what’s in and what’s out) 4. The approach, time frames, and any urgency issues 5. Roles and responsibilities (who needs to be involved and at what level) 6. Resource requirements 7. Potential resistance and current barriers that are or could inhibit progress 8. Deliverables 9. Metrics 10. Confidentiality concerns

CRITICAL CONSULTING SKILLS Here are some additional thoughts on selected areas: Background: It is important for the consultant to have a solid understanding of the business situation that has precipitated the request and, equally important, to understand how the request fits with the priorities of the business. By gaining this information, the consultant will be better prepared to make recommendations that are consistent with the business priorities and provide participants with a meaningful context for this work. Objectives and Motivation: By understanding what is important to the client about this request, the consultant can be more effective at designing the work plan and at soliciting client input in the areas where they have the most passion. In some cases, you may discover that the client is motivated not so much out of his or her desire for the work, but because his or her boss wants it completed. This is an early warning signal for obstacles you may encounter in fulfilling the request and lets you think about ways to engage the client on a different level. Scope and Boundaries: Perhaps one of the most frustrating consulting experiences is the problem of “Scope Creep.” Whenever you find that your target group has suddenly expanded or that your end product is arbitrarily transformed into an interim milestone, you have entered the land of Scope Creep. It is imperative that you identify from the beginning who the intended group is and what the scope of your work is regarding beginning and end points. By making the boundaries of the project explicit, you eliminate the potential for confusion when you are midstream in the work. It is useful to state not only what you think the boundaries are, but also what is out-of-bounds based on your understanding of the project. By having this conversation, you and the client can reach agreement on what scope for the project will best enable the achievement of desired outcomes. Then, if later on in the project either you or the client feels that the scope needs to change, you can re-contract for timing and design options. Time Frame and Urgency Issues: You must get a sense of the client’s timing in your initial conversation. There is usually more flexibility in the timing than is initially communicated, and you need to distinguish between what is important and what is urgent. Some clients have a great sense of urgency about relatively unimportant projects. Other clients may have insufficient urgency for very important projects. In any event, you need to know the time parameters under which you are working because they will impact the approach you recommend.

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HR OPTIMIZATION Resistance and Barriers: It is important to know early what issues you may be facing when designing a work plan for a client, particularly if the project spans a longer period of time. This information helps you to know who you may need to spend time with prior to outlining the work plan and tips you off about what will be important to consider when designing the work. When the project you are asked to support represents significant organizational change, you can expect there will be some resistance. Knowing the source of the resistance and the reasons behind it can be powerful in helping you to be effective. Sometimes you will even face resistance with the client in the contracting process. It is important to understand that resistance is an emotional response and has little to do with you personally. Resistance takes a number of forms. Here are a few of them:

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 The client has no time to see you or discuss the project with you.  The client overwhelms you with data.  This is the real world—the client implies that your theory may not apply in her situation.  The client responds to your overtures with silence.  The client acts confused most of the time.  The client is overly critical.  The client exhibits a drive for instant answers. When you find yourself with a client who is resistant, the following advice may be helpful:  Don’t take it personally.  Slow down and try to identify what form the resistance is taking.  Listen intently to what is being said and play it back to the client to see if you are understanding her or his point.  Engage your curiosity and shift to questions for understanding.  Name the resistance you are sensing and wait for the client to respond.  Provide options for moving forward that address the concerns expressed. Roles and Responsibilities (Who needs to be involved and at what level?): In addition to having a clearly defined project scope, it is also important to know who needs to be involved in the project work and in what capacity. Some clients and other stakeholders want to be extremely involved in the details of project planning, while others want to be kept informed of progress. The more people who are involved in the project planning, the more time required to formalize a plan. On the other hand, the more involvement you have on the front end of a

CRITICAL CONSULTING SKILLS project, the more commitment you will have to draw on to help ensure a success. Through this conversation, you and your client can begin to identify what level of involvement makes the most sense given your outcomes and time frames. Up to this point, everything we have covered should take place in the initial client meeting. With an understanding of all the topic areas discussed, it is helpful to go away and think about what you have read and heard and get back to the client in a couple of days to talk about options for moving forward. We recommend that you set a date for the follow-up meeting before you leave the first meeting. This allows you to spend some time processing what you have heard so that you can generate some alternative approaches. It also lets the client know that you have considered the request with thoughtfulness and care. Once you have made explicit the desired outcomes, assumptions, and possible approaches, you and the client can determine if you have enough data and information to move forward. Sometimes—particularly with projects that are complex and span a longer time frame—there is a need for more investigation about the presenting problem or opportunity the client wants to address. Perhaps the client has asked for help because she or he does not have a good handle on what the real issues are and needs an objective third party to help sort them out. Gathering additional data before the second client meeting is also helpful when you are beginning a project that represents a significant change. It is often beneficial to conduct interviews or focus groups with participants before the work begins to build some rapport with the client group, surface issues and concerns, and answer outstanding questions they may have. This step can be a powerful and productive method for jump-starting your project. Clients and consultants, however, must jointly answer the following questions before gathering data: 1. Why are you collecting the data and how will you use it? 2. What method will you use:     

Individual interviews Focus groups Surveys or questionnaires Observation Document review and analysis

3. Who will conduct the data analysis? How will they analyze the data? 4. How will you communicate the findings and to whom?

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HR OPTIMIZATION Once you have collected, analyzed, and given feedback on the findings, you are now prepared to move to the next step. Example Clearly, assessing the situation requires a great deal of steps and a great deal of thought. Before exploring alternatives, it is important to summarize what you have discovered by this point, then determine whether or not the discovery phase should consist of one interview with the client or a thorough data gathering and analysis effort. Your Turn Take the time to role play an interview with a prospective client and then summarize your findings using the 10 sections identified in the template.

Step 3: Exploring Alternatives The Idea

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Now that you and the client have a shared understanding of the outcomes, request, and business situation, you may move on to exploring alternatives. The consultant should be prepared to make at least two suggestions of ways of reaching the outcomes and should make their recommendations based on their experience and expertise. The consultant will need to discuss the upsides and downsides to each approach as well as the requirements of each approach. The articulation of both client and consultant needs for each approach is extremely important. Some negotiation typically occurs during this step. The consultant must be clear about what is and is not realistic for the time frames and must be able to think with the client about what is most important, providing alternatives and cautions along the way. The consultant must know his or her own limitations, the limitations of any design, and the additional requirements in terms of time, money, and additional resources that will be required to deliver against the outcomes. When this step is completed, the client and the consultant should both own the outcome. The following needs should be explicit:    

Resources required (people, time, and budget) How the client and the consultant will participate How other stakeholders will be involved Ground rules for working together

 Preparation time

CRITICAL CONSULTING SKILLS According to Peter Block, there are two things we constantly need to work on: 1. Stating clearly—sometimes at the risk of overstatement—what we need and want from the client to make this project work 2. Being cautious—sometimes at the risk of understatement—about the results we alone will deliver on this project One of the most difficult tasks in this step is to get the client to commit to the necessary time investment to deliver the outcomes. The consultant must be clear about how much time is needed and why it is important. The consultant needs to have the capability and knowledge to make the time requirements explicit. If the consultant knows that the time requirement for a project is a minimum of six days given the deliverables, then he or she must make it clear to the client and state why. If, after this discussion, the client insists that only two days are possible, then negotiate for what you can promise relative to the objectives for those two days. DO NOT commit to squeeze a six-day process into two days by shortening the time frame. Be aware that every change you make relative to time dedicated impacts the outcomes you are attempting to deliver. Always let the client know what you expect in terms of their participation in all phases of the project, and find out from them what successful participation on your part will look like to them. The consultant must be able to identify the skills that the group will need to build in order to deliver the outcomes. For example, if the group cannot engage in a conversation without blame and hostility, interpersonal skills training may be required. If, after clarifying your needs to the client, there is no agreement, consider backing away from the project or see if there is another plan that would be better suited to deliver the outcomes. Example Please refer back to the contract you developed earlier and explore alternative approaches, roles, and resources. These are the three areas of the contract that typically require the most negotiation. Your Turn Refer back to the summary you created based on your client interview. Explore alternative approaches, roles, and resources.

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HR OPTIMIZATION Step 4: Reaching Agreement The Idea You are now ready to make agreements with your client. Some conditions may have shifted since your initial conversations, so you will need to revisit and agree on the outcomes and approach. Next you will need to agree on how you will work together. Identify and gain agreement on ways to operate given the challenges of the project. Specifically, you want to reach agreement on the following:        

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Overall approach and activities Milestone dates and time frames Dealing with resistance Creating the time and space to conduct the work Key decision points and the decision-making process How conflicts and concerns will be addressed How to assess the impact and evaluate the results (metrics) The next steps (e.g., who will do what by when)

Example Please refer to the contract you developed. Your Turn Please take the time to reach an agreement with a prospective client.

Contracting Exercise Background Your client is a manager for a department of 100 people. She has been in the position for three months and is new to the Company P. After assessing her current organization and the business plan that she has to implement, she recognizes the need for a Chief Developer position. This title is consistent with organizational titles within the department, but she feels this person needs to have a much higher skill base than any she has observed inside the organization. She is particularly interested in this person’s ability to build collaborative relationships with potential external partners. She needs a person with superior interpersonal skills and an ability to think creatively about new business opportunities. She believes that her current employees are very tied to doing business the same way they have been doing it for years and are missing opportunities.

CRITICAL CONSULTING SKILLS She feels that by putting someone with a different approach on her team, the entire group could develop further. In her previous company, she had a lot of success working with three recruiting agencies. They did a good job helping her articulate the role requirements and sourcing against them. She plans to call them to help her work on this position. Meanwhile, there are internal processes and postings that need to be completed. Situation Your manager has submitted a form to you for the Chief Developer position at a salary of $60,000. You have contacted her and set up a face-to-face meeting. You believe that $60,000 for a Chief Developer is grossly under-market. There are other people in the department with the same title who are making $60,000 per year with much less experience and skill than what you believe this manager may be looking for. You have a lot of concern about finding someone to fill the role for that kind of salary, and you are interested in partnering with her to improve collaboration in her department—a much bigger role than helping her handle the administrative details associated with this recruitment effort. Exercise Your objective for this initial meeting is to complete as much as possible of the first two steps of the contracting process relevant for the initial meeting. Your goal is to have sufficient information to be able to go away from this meeting and create a proposed plan of action that would address the client’s human and organizational needs. Remember to clarify the next steps with the client before closing the meeting.

Summary The basic ingredients of an effective contract are captured in the chart below:

Who What Where When Why How Individual Development Team Development Organization Development

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HR OPTIMIZATION When you develop a contract with your client, you need to be clear whether the primary function of the intervention is individual development, team development, organizational development, or a combination of the three. Once the functions are established, you simply need to reach agreement on the 5W/H components to accomplish the function. You may want to use this chart as a check step for the contracts you develop. Key principles to remember about contracting include the following: 1. If you clarify who the client is and what exactly they hope to achieve as a result of the proposed intervention, then you will avoid wasted energy and dissatisfaction and increase your chances for high commitment and ultimate success. 2. If you are thorough in your assessment of the situation, then you will be able to do a much better job of defining resources, roles, and responsibilities. 3. If you give your client alternative ways for achieving desired outcomes, then the client will be more engaged in the process and assume more ownership for the outcome.

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Effective contracting may be the most critical skill in the consulting process. When effectively applied, it ensures a satisfied client and positive business impact. There is an abundance of tools available to support you in the contracting process, a few of which have been included here. The key to successful contracting, however, rests in the principles of being authentic, having a learning orientation, and trusting yourself. If you complete the contracting steps using those principles, you are well on your way to a positive consulting experience.

Productive Dialogue Skill Introduction to Productive Dialogue A consultant must have the capability to engage clients in productive dialogue through inquiry, advocacy, mental modeling, and generative thinking:  Inquiry means asking questions and listening to seek understanding and to get the client’s frame of reference.  Advocacy means giving your viewpoint and perspective in a way that is well received by the client.  Mental modeling means constructing multidimensional frameworks that can be used to match images of the problems and solutions.  Generative thinking means creating new and more productive ways of getting work done.

CRITICAL CONSULTING SKILLS Only through these skills can the consultant get to the essence of the request and understand the beliefs and mental models motivating the client. The consultant must be able to recognize when the client’s request is really masking another desire, a more fundamental desire. Productive dialogue enables the consultant to get to the real issues and opportunities. Frequently, clients do not know what or how to ask for help, so they ask for what they think they need vs. what it is they really want. If the consultant accepts the request as stated, he or she may design an intervention that complies with what the client requested, but one in which the client’s fundamental desires are not being met. Investing time to understand the “real” request is paramount in delivering the desired results. These conversations take more time and test the beliefs of both the consultant and client regarding what good service looks like. Slowing down a conversation to surface assumptions and gain a full understanding of the problems, issues, and opportunities, however, can be a challenge. Therefore, it is critical for the consultant to be able to explain his or her reasoning for pursuing the dialogue at a deeper level and to assess the client’s patience level during the interaction. Client tolerance for probing can be a critical success factor in any intervention. The challenge is not to let our own beliefs get in the way of having a productive dialogue.

Productive Dialogue Overview There are multiple forms of conversation. Estimate the relative frequency in your organization of each of the six examples listed in the chart on the following page. Productive dialogue is the ability to discover the real problems that need to be solved or opportunities that need to be maximized. The use of productive dialogue reduces the chances that an intervention becomes a problem rather than a solution because it raises expectations and doesn’t address underlying issues. There are four key steps for productive dialogue:    

Getting the client’s frame of reference Giving your own point of view and perspective Merging images Generating better ideas

The purpose of these steps is to gain a deeper and clearer understanding of the client’s situation, the causes of the situation, and possible solutions for achieving the greatest business impact.

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HR OPTIMIZATION Step 1: Getting the Client’s Frame of Reference through Active Inquiry The Idea Productive dialogue cannot occur without the willingness and ability of all participants to understand the other person’s point of view through active inquiry. Inquiry is primarily a function of listening and asking questions.

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Type of Conversation

Description

Purpose

Monologue

One way

Share or impose a point of view

Debate/Discussion

Two or more people in monologues

Win the debate or control the outcome

Vested Discourse

People are assigned positions to hold without compromise

Find important questions embedded in an issue

Productive Conversation

Balanced advocacy and inquiry; good use of listening

Convergence and/or surface meaning, assumptions, and mental models

Strategic Dialogue

Judgment is suspended on a selected topic or question. No conclusions or time limits.

Divergence and/or raise collective intelligence

Productive Dialogue

Judgment is suspended. No set topics, set ground rules, time limits, facilitation, or conclusions.

Divergence, unity of spirit, deeper and broader inquiry

CRITICAL CONSULTING SKILLS Listening The key to effective listening is to hear not only what is said but also how it is said. When you are listening to what is said, it is important to discipline yourself to hear the whole message. Often a sender will initiate a message by setting the stage, for example, “The morale here has sunk to new lows.” Then the sender will usually give you the story line, for example, “Work loads have become excessive—it seems like the pile on my desk just keeps getting higher and higher and I see no end in sight.” The sender is likely to end the message with some key words that help you understand something of importance to him or her for example, “I’m really frustrated by the amount of time I spend preparing for and participating in meetings.” One of the pitfalls of listening is cutting the person off mentally before the key words are communicated. This can happen, for instance, if the sender’s statement triggers something in you that you want to communicate (for example, you may be experiencing signs of fatigue and stress yourself). To listen how a message is sent, you need to tune in to the volume, pace, and tone of what the person is saying. Sometimes the way a message is sent is more important than what is said. For example, is the person speaking loudly, rapidly, and with a hostile tone, or at a more moderate volume and pace in a pleasant tone? In listening to the content of a message and how it is sent, try to avoid some of the pitfalls of listening so that you can gather more complete and accurate information. Try following these tips for effective listening:      

Resist distractions. Suspend judgment. Recall the content. Reflect on the meaning (why the content is important). Reflect on the volume, tone, and pace. Paraphrase the content in your own words.

Asking Questions Everyone knows how to ask a question: “Where is my report?” “What’s for dinner?” Productive dialogue, however, requires knowing more about the use of questions to advance your inquiry. Questions come in two basic varieties: open and direct. Open questions encourage others to talk and to share their understanding of the given topic. These questions cannot usually be answered in a few words; they often require lengthy

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HR OPTIMIZATION replies. Direct questions, on the other hand, can be answered in a word or a short phrase. They help you focus the communication and obtain specific information. A third type of question, the leading question, will be mentioned briefly in this section. The leading question often causes communication problems by manipulating people into an agreement. Examples Listening Jane says, “Things around here never change. Every time I ask for help, I get passed on to the next person. It seems like no one will listen to me. How can I get my job done when I don’t get support from the others?” Setting the stage: Story line: Key words: Paraphrase:

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“Things around here never change.” “I always get passed on; no one will listen.” “I can’t always get my job done; I don’t get support.” Feels discouraged because she can’t achieve her performance goals.

Jane’s opening sentence introduces the topic and sets the stage for what’s to come. She then conveys her feeling of discontent by stating that she keeps getting passed on to the next person and no one listens. Her use of the words, “get my job done” and “support” are the listener’s cues to the importance that Jane places on achieving her goals. Jane’s overall message is one of discouragement and frustration because she can’t perform at the level she would like and no one seems willing to help. Asking Questions Open: Direct: Leading:

“What do you think about John’s work?” “Where do you work?” “You do like working here, don’t you?”

Your Turn As a consultant, you will be asked to analyze a variety of situations and to propose possible solutions. The following exercise will help you use the listening and asking question skills to advance your inquiry and get the client’s frame of reference. Two members of the group will role play an interaction using a situation familiar to most members of the group. The interaction must involve one member of the pair communicating his or her thoughts about a situation in a particular organization. The other member will actively inquire by listening and asking questions.

CRITICAL CONSULTING SKILLS Step 2: Giving Your Perspective through Advocacy The Idea Giving your perspective means presenting your views in an honest, straightforward, and clear manner. Clients will usually respond well if you show genuine interest in their frame of reference through listening, asking questions, and demonstrating understanding. It is much more difficult, however, to get them to listen to and appreciate your point of view. There are several key points to remember when you give your perspective and/or advocate a particular point of view.  When giving your perspective, use the principle of reciprocity: people tend to listen to those who have listened to them.  Think before you speak. Before advocating for your position, decide whether it should be given. Organize your point of view before you state it, and then make it clear and brief if you decide to deliver it.  Avoid using words and tones that are antagonizing and that will block your message from getting through. In the same vein, avoid exaggeration and abstract concepts.  The goal is not just to give your perspective, but to have it heard; therefore, it is important to assess the reaction to it and to demonstrate understanding of both verbal and nonverbal reactions.  Be clear about your expectations. Never assume that they are known.  When you are reviewing someone’s performance, focus on specific behaviors and facts. You should give your perspective when 1. It is important for the client to know where you stand. 2. Your responsibilities require it. 3. You have something you really need to say. Example In the following demonstration, notice how the consultant gives his perspective to a manager who is having a hard time dealing with a low performing employee. Goal: To get the manager to take a stronger stand with an employee. Perspective: “I know you believe you have done everything you can to get Charles to raise his standards and performance, but it seems to me that you have not been as clear as you could with him and you have not let him know precisely

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HR OPTIMIZATION what the consequences of continued poor performance might be. For example, in your last performance review, you gave Charles the highest rating and you did not indicate any behaviors you expected him to change. In the next conversation you have with him, I hope that you will tell him two or three behaviors he needs to change if he wants to be successful in your department.” Evaluation: Language is specific, understandable, and free of “roadblocks.” Your Turn: Please write down your viewpoint regarding this manual.

Evaluate your viewpoint. Be  Specific.  Understandable.  Roadblock free.

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Now write down your perspective on a client. In your viewpoint, try to include the following:  How you feel and why you feel that way  An example that helps the other person know exactly what you mean  A statement that communicates how you wish the person would change his or her behavior and/or how you wish the situation would improve

Step 3: Merging Images The Idea Merging images means being sure that you and the client have agreed on problem definition, root causes, and possible solutions. It is not enough to get the client’s perspective, give your own perspective, and then move on. Consultants need to assess the gaps between their perspective and the client’s perspective, particularly as it relates to an understanding of problems, opportunities, causes, and solutions. Then, through productive dialogue, the consultant and the client need to attempt to come to a common understanding. The following chart may provide a helpful framework for engaging in productive dialogue.

CRITICAL CONSULTING SKILLS

Get

Give

Merge

Inquiry

Advocacy

Alignment

Situation (Problem or Opportunity) Cause Direction

This chart depicts how a productive dialogue might unfold. The consultant gets the client’s view of the situation and gives her own. Together they discuss the situation and try to reach a common understanding. Then, the consultant gets the client’s view of the causes for the situation and gives her own. Together they discuss the causes and try to reach a common understanding of the root causes. Finally, the consultant gets the client’s view of what solution would best address the root causes and advocates for her idea of the preferred direction or solution. This process results in productive inquiry, productive advocacy, and productive alignment. Manager View

Consultant View

Merged View

Situation

People aren’t forthcoming with new ideas.

There is very little push back on doing things in ways that no longer make sense.

We need to create an environment that encourages generating innovative solutions and challenging conventional ways of thinking.

Cause

People don’t have the skills and confidence they need to make their viewpoints known.

There is a fear that pushing back may result in retribution.

Lack of trust and confidence are keeping people from speaking up.

Direction

We need to train people in presentation skills.

We need to train managers in how to be more welcoming, attentive, and supportive.

Let’s figure out how to equip individuals and leaders with the knowledge, skills, and attitudes they need to create a safe environment for speaking up.

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HR OPTIMIZATION Example The table below summarizes a productive dialogue between a manager and a consultant regarding the results of the Employee Opinion Survey in the manager’s department. In this case, the manager is concerned because the results indicated that people in her department didn’t feel safe to speak up. Your Turn Reflect on a recent dialogue you had with a client. Use this table to summarize what you covered well and where there may have been opportunities for improvement.

Get

Give

Merge

Situation

Cause

184 Direction

Step 4: Generating Better Ideas The Idea Generating better ideas means continuously learning and being open to new possibilities for improving performance. Clearly, in the example above, as the manager and consultant continue their dialogue, they will generate new ideas for creating a safe environment. We need to avoid the trap of getting so locked into an agreed upon solution that we close ourselves off to better ideas. In reality, the whole idea of productive dialogue is to be able to continuously generate better ideas and then implement them in practical ways.

CRITICAL CONSULTING SKILLS Example In the speaking up example summarized above, the manager and the consultant realized that they had not had sufficient dialogue on the cultural part of this problem. They decided they needed to get a better sense of the norms and values that were influencing employees’ willingness to speak up. As a result of this dialogue, they decided to construct a simple culture audit to assess learning norms and values in this particular department. Your Turn Please review the table you completed in the last section and engage a colleague in dialogue about ways you might improve on the solution on which you had agreed. Write down the ideas that you generate as a result of that dialogue.

Exercise for Productive Dialogue Background Company Q has conducted a global Employee Opinion Survey. Results of the survey indicate there might be some issues around “speaking up.” The management committee wants to ensure that the Company Q has a safe environment for generating innovative ideas and for challenging conventional wisdom. A rigorous analysis of the data indicates there are individual, leadership, and cultural factors contributing to the problem. Individuals and leaders need to improve their knowledge, skills, and attitudes; and the culture needs to strengthen values and norms related to trust. Situation Your client has just received the results from the Employee Opinion Survey for his department. His department scored toward the bottom on “Speaking Up.” He is concerned about these results and wants to take appropriate action. Exercise Engage your client in a productive dialogue about what to do about the survey results. Remember to use the productive dialogue grid on page 183 as a guideline for the discussion. Be sure to engage in active inquiry and proactive

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HR OPTIMIZATION advocacy. When you merge images with your client, make sure you take into account any alignment issues that may be related to your possible solutions.

Productive Dialogue Summary There are three key principles to remember when using the skill of productive dialogue: 1. If you actively inquire about the client’s frame of reference, you will get a much clearer understanding of the problem and the gaps between your image and the client’s image. 2. If you proactively advocate for your point of view relative to the situation, cause, and direction, you will be able to influence your client to think differently about problems and possibilities. 3. If you merge images with your client about problem, cause, and direction, you will increase ownership for the solution and ensure that the intervention is aligned with business requirements.

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About the Author

Richard Bellingham, Ed.D., is the CEO and founder of iobility, a New Jersey based consulting firm specializing in aligning human and organizational capabilities behind the corporate mission, vision, and values. He has more than 25 years of experience working in the areas of business transformation, organizational learning, leadership development, team development and ethical leadership. Dr. Bellingham has established a solid track record in leading management teams to align corporate culture with business strategy, accelerating technology deployment, and coaching executives how to lead change. Dr. Bellingham has held senior executive positions within major corporations including Northern Telecom, Parametric Technology Corporation and Genzyme Corporation. Over the past 20 years, Dr. Bellingham has worked with other 200 organizations worldwide. A representative sample of the clients and the respective initiatives include:      

AT&T: Managing changes associated with divestiture IBM: Acquisition of Lotus Development Merck: Consulting skills training Westinghouse: Culture change focused on innovation, quality, and teamwork Lotus Development: Business Leadership Forum Sears: Integrated health management system

HR OPTIMIZATION    

M&M Mars: Employee Involvement Parametric Technology Corporation: Precision deployment Groove: Success acceleration Harvard University: Establishment of Inquiry Group for Intelligent Organizations

A widely published author, Dr. Bellingham has written over 50 books, articles, manuals, and training guides including:      

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Leadership Myths and Realities The Manager’s Pocket Guide to Corporate Culture Change The Manager’s Pocket Guide to Virtual Teaming The Manager’s Pocket Guide to Spiritual Leadership Ethical Leadership, Second Edition The Complete Guide to Wellness