But Aren't Best Practices Shared Already?
I had often suspected that within large corporations best practices in people management were not being shared throughout the organization, a suspicion that was later proven time and time again through my advisory work in the area of employment branding. While working with such organizations as Agilent, Starbucks, Wegmans Food Markets, MGM Grand and Deloitte, I found that when challenged to develop a catalogue of internal best practices or programs in the area of people management, most organizations would struggle to come up with a short list. (Developing this type of catalogue is an essential component of preparing to apply for employer of choice type awards programs. A breadth of programs is often needed to demonstrate that your organization is responsive to the needs of a diverse workforce.) Realizing that the short list generated wasn’t sufficient and way too generic, we set to uncover programs and practices that had been overlooked.
Every record of internal communications via any form was analyzed, interviews with long time employees and managers of the very best performing business units were held, and expenditures scrutinized. Had the budget for some program or practice that was truly unique been buried in something truly mundane such as “employee assistance?” Did one region do something that none other did that drove performance to new levels? These were all valid questions that very few people could answer. The answer of course was a resounding and startling yes. At Starbucks for example, the number of programs and practices with “wow” appeal grew nearly ten fold to more than 360. At Wegmans Food Markets (#1 on the Fortune 100 Best Companies to Work for in America list in 2005, and #2 in 2006,) a room of mid-level HR managers continued to be amazed as new programs emerged during interviews with other functional management.
This was a revelation. These were great companies by all measures, recognized as being great places to work and achieving stellar financial results, despite the fact that precious few new of all the best practices at play in fractured segments of the company. Think of the impact if every manager knew about the best people management practices of every top-performing manager around the world. The economic benefits of applying them would be staggering.
Internal Versus External "Answers"
Managers are constantly striving for ideas and solutions to remedy their people problems. They read, hire consultants, benchmark and through trial and error attempt to identify the tools are the most effective. Unfortunately, the volume of advice and reading material can be so overwhelming and conflicting that making quick use of it is difficult. When an idea or solution does seem to make sense, managers have no way of knowing that it might be applicable elsewhere in the organization. A superior approach is to focus internally on the people management practices that are known to work within the context of the organization and then develop a process to spread them rapidly throughout the organization.
Best Practice Distribution Differs From Knowledge Management
Many HR functions and businesses have set up knowledge management processes or web sites to make it easier to retain and transfer knowledge. Although knowledge management systems have proved that they can add value, knowledge management and “what works” sharing are not synonymous. Knowledge or information is not the same as a best practice, one is stagnant and the other is a tool or practice that is in current use. When knowledge is stored and retrieved, the reader has no idea of the relative usefulness or value of the information their reading. People management “what works” practices are different in that they only cover the tools and practices that have actually been used by successful managers. There is no theory or hypotheticals involved. Advice from any external source, whether it be from consultants or readings are just not as credible because they've never been implemented successfully in your milieu. In addition, because the practices have already been utilized by internal managers, it is clear that they already fit within the restraints of the company's culture, budget, values and policies.
Why Aren't Best Practices Shared Naturally?
It would seem only natural that managers would want to share their “what works” practices and problems so that other managers throughout the corporation could take advantage or assist, but past experience had proven that such sharing did not occur. Following basic common sense, we asked managers why they weren't sharing. The response was simple but startling. Almost universally the manager said something to the extent of “if I told corporate what I was doing, they would likely make me stop because it's not a formal program authorized by corporate". When you think about it, it makes sense. If you share something that works really well, someone might actually stop you from doing it.
There are several other reasons why managers don't share “what works” practices as frequently as they should. Some of the reasons uncovered include:
- Competition — most successful managers are competitive and most corporate compensation systems reward individual excellence. As a result, some managers see the sharing of “what works” practices as something that might actually hurt their performance because assisting other managers with their “what works” practices would bring the performance of other managers up to their level.
- No formal sharing process — managers often don't share their “what works” practices because there is no easy way to do it. Occasionally they mention best practices in meetings, but few managers attend meetings not specific to their organization. Without a formal process to make it easy, the amount of practices that are shared and the time it takes to share them would obviously be affected.
- No rewards — managers learn early on to do what is measured and rewarded so it's only natural that they don't see "what works sharing" as part of their job. In fact, if you ask them directly what their job entails, seldom believe in or mention sharing “what works” practices with other managers. If no one measures or rewards the amount and quality of sharing, it's only natural that it will not be a priority.
- Business case — most managers want to help the entire corporation, especially when their stock options or bonus are tied to company performance. However, if no one has made the business case to individual managers demonstrating to them the dollar impact of sharing “what works” practices and problems rapidly, they're just less likely to do it. I have found that even using conservative estimates, increasing the speed of best practice and problem sharing can result in dramatic performance gains. General Electric is known for its emphasis on best practice sharing. They call it passing the "hot potato" and they emphasize it because they see the value of speeding best practice sharing.
- Sharing problems can be embarrassing — most managers are reluctant to share problems because they are in effect announcing that they have failed. This fear of a failure is a natural phenomenon but is made worse in organizations that punish failure. Punishing failure and not talking about failure can have serious economic consequences as problems are repeated sequentially around the world when they could have been stopped in their tracks had a manager spread the word earlier.
Creating a Best Practice Distribution Program
The concept here is quite simple. In large and geographically dispersed organizations there are many practices that individual managers use in people management that work like gangbusters. Such practices are either hoarded by individual managers or there is no formal mechanism for sharing or transferring them to other managers. Similar problems occur when it comes to transferring “what works” practices and innovations in technology, but companies have learned to solve that problem through technology transfer programs.
There are HR functions at Intel and Sun Microsystems that research and develop new programs, but that's not what I'm addressing here. The issue here is how to transfer management practices that occur not as a result of any HR effort, but that occur "naturally" at the departmental or individual manager level. In fact, I've never found a formally budgeted and staffed best practice distribution program in any of the 200 plus companies and organizations I have advised around the world. HR needs to develop a formal program that is budgeted and staffed. It should be modeled after technology transfer programs but focused on people management tools and practices. Some of the steps of HR should take in order to implement a best practice distribution program include:
- Make the business case — before taking any formal action, HR must work with the CFO, a few managers known for their “what works” practices and senior management to quantify the impacts of slow or no best practice sharing. I recommend HR first identify whether there are “what works” practices in remote business units and regions by informally surveying top-performing managers. HR should also see if problems that are facing one manager exist beyond the local level. If it is found that best practice and problem "hoarding" exists, HR needs to work directly with the CFO's office to calculate the dollar impact of not addressing the problem or sharing a best practice quickly. The business case must be so compelling that individual managers will immediately see the dollar consequence to the business of failing to share.
- Create a function — the next thing that HR leaders must do is create a "what works" distribution function and a process to facilitate the sharing of “what works” practices and problems. That means allocating staff and budget. The key criterion for selecting staff must be the ability of said staff to easily relate to line managers (they should have experiences line managers).
- Develop metrics — HR needs to work with metric experts to develop a basic system for measuring best practice sharing and hoarding. The metric should start with the number and the quality of "what works" approaches, tools and problems that are transmitted directly by individual managers to the "what works" distribution function. The HR staff also needs to learn to do postmortems on companywide problems to see if the problem originated in a particular business unit or region and wasn't rapidly shared, resulting in a companywide problem. The last metric should be generated by a survey of managers that ask each one to name the individual managers that help them the most by sharing “what works” practices and problems. The resulting metric would be a list of individuals that managers felt contributed to their individual success through sharing.
- Develop rewards and recognition — it's not enough just to measure best practice sharing, it is critical that there be rewards for it. HR needs to make best practice and problem sharing part of the standard performance appraisal process for managers. Best practice sharing should be at least 10% of the bonus criteria for individual managers. Rapid sharing should also be part of the promotion criteria. In addition, individuals that have the courage to share their major "problems" should be recognized and celebrated in meetings in order to encourage others to do the same. The dollar amount saved as a result of the early sharing of problems should be part of that recognition. Successful managers that share their “what works” practices need to be corporate heroes and so recognized by senior management.
- Discourage NIH thinking — the fear that managers have about letting corporate know about their “what works” practices is unfortunately well-founded. If managers find that reporting practices or problems to headquarters results in reprimands and order to cease the practice they will immediately stop sharing. Unfortunately, too many corporate leaders have an NIH “not invented here” mindset. You can actually track this phenomenon by looking at the number of new ideas; tools and programs are implemented and see how many were originated outside of the corporate offices. It’s even more critical these days to celebrate and implement ideas coming from international offices because often a majority of the profits of a major corporation come from overseas operations. If a majority the “what works” practices are generated by corporate thinkers, it is highly unlikely that they will work in this incredibly diverse and fast-changing marketplace that we face today. A final approach for illuminating NIH thinking is to include international people in the best practice sharing team and to offer rotation so that corporate rapidly learns about the problems and the insights of managers that are physically located outside of corporate.
- Talk to the managers — even with all of the systems outlined above, it is critical to build relationships with top-performing managers that tend to understand their issues and the barriers they see to sharing "what works." These managers must be encouraged to talk to other managers so that barriers are reduced and that everyone feels comfortable with the process of sharing.
- Proactively seek out "what works"– even when you convince managers to willingly share "what works" practices, you are only half way to your goal. This is because many managers are modest or in some cases, don't even realize that they have the best performance and thus the “what works” practices within the corporation. The only way to overcome this "not knowing" is to track metrics reports and look for "exceptions". For example, if you look through a turnover report and you find that one manager has a 1% turnover rate where similar managers have a 20% turnover rate, you need to talk directly to that manager to see if that low rate is just an anomaly or whether they are utilizing any very effective tool or program to reduce turnover.
- Proactively seek out "what doesn't work" — there is also a significant benefit in seeking out low performing managers and business units in order to identify the practices and tools that "don't work". Identifying them and encouraging managers to report them can save managers a lot of grief because they don't have to try practices that have proven not to work within the organization. By reducing wasted experimentation, you can save managers a lot of frustration and money.
- External sharing — if you study innovation as I have, you rapidly learn that a great deal of innovation occurs outside of the corporation. As a result, the HR "what works" distribution team must also have a program to identify the best practices of other major firms in the people management area. A word of warning, these practices cannot be automatically shared with everyone because they are designed to work and other organizations. Instead, what must happen is that these external best practices must be shared with a few managers and only after they have proven to be effective and have been modified to fit your organization's culture, budget and policies should they be then distributed to all managers.
- "What works" and "who's got the problem" reporting — convincing managers to share or transfer their "what works" practices is just half the battle because you also have to find a way to convince managers to actually adopt them. One of the best ways to get managers to adopt new people management tools and practices is through performance reports that are distributed to every manager. Take for example the problem of turnover. You can preach to managers about adopting better retention tools to reduce turnover until you're blue in the face but most still will do very little. However, if you distribute to every manager the first of each month a report on turnover performance that ranks every manager by name from the very best to the very worst on their turnover performance, you'll get everyone's attention right away because no one likes to be at the "bottom" of any list. The part of the report that makes it a "what works" distribution tool is that next to each manager’s name, the primary tool, approach or program that the manager utilizes is listed. This report should be delivered in conjunction with a “who’s got the problem” report that simply lists all of the managers that are currently encountering major people management issues. The report lets individual managers know that they're not the only ones facing these types of people management problems, and allows other managers to identify and contact the managers that might be able to help them through the stage of the problem that they are currently in.
- Internal consultants list — it would be a mistake to expect corporate or HR to carry the entire burden of solving people problems for many reasons but in particular, corporate individuals just don't carry the same credibility and "hands-on" experience as other line managers do. One way to involve the best performing managers in the improvement process is to get them to agree to serve as "internal consultants" or mentors to other managers that are facing similar problems. HR merely solicits their support and then lists them in a consultant/mentor directory which is categorized by people management problems. For this to work, obviously there have to be limits set on expectations of people asking for help so that they don't take up too much of the managers time. In addition, managers that participate need to be recognized and rewarded for taking time away from their "day job" to help others.
HR leaders are constantly looking for low hanging fruit that can provide significant strategic value to the firm. In my experience, the one program that fits the bill as having the most strategic impact is developing a "what works" distribution function within HR. To begin with, you don't have the "fight" anyone over the responsibility because no one currently pays much attention to "what works" sharing. Next the process is logical and simple to understand. Similar sharing programs occur in technology, so you don't have to start from scratch to design the program or convince senior managers that this type of program can work. Such programs produce immediate results because they only require sharing of one or two "what works" tools with a few key managers to get immediate and positive feedback. The only difficulty in setting up a "what works" distribution process is the fact that you would be a pioneer in HR. Very few firms exist for you to benchmark against, so you have to have what all great HR leaders have, courage to implement something that everybody else isn't doing already. Unfortunately I find that courage is rare, but if your that sort of person, congratulations, you're about to become a corporate hero!