“Shareholder Aligned” Performance Culture Principles (Continued)
If you missed the first part of this list, check out part three of this series.
- Build a competitive advantage – to establish industry dominance through talent, every talent practice must be periodically benchmarked against the practices of known and developing talent competitors and upgraded to consistently ensure superior results. Example: When refreshing the corporate careers site, a competitive assessment should be conducted to determine what leading edge features have/are being adopted by talent competitors and what remaining pain points could be addressed to produce a best-in-class effort.
- Agility and flexibility – in a fast changing business world, shareholders expect that all functional programs and processes have the capability of adapting rapidly to changes in the business, economic or the competitive environment. In HR, that means that strategies, budgets and resources must shift to meet changing needs and opportunities. This need for flexibility might also mean that HR approaches are customized to fit the unique needs of mission-critical regions, business units and key employees. Example: When the business acts on an opportunity and expands into a new region recently vacated by a competitor, the organization may prioritize recruiting efforts for mission critical and revenue producing roles through execution of a custom employee referral program to decrease total time to new venture profitability.
- Rapid learning – in a rapidly changing and hard to predict environment, the key corporate competency is rapid learning. In order to be capable of making rapid changes, every staff member and program in HR must develop a process to continually learn and rapidly share best/next practices from inside and outside its industry. Example: Using micro-blogging services like Twitter, the learning and development organization could support rapid learning by searching for and following individuals that routinely share links to information of value to specific job families. The tweet streams developed for each internal unit would provide employees with representative survey of what topics, concepts, and information were shaping the future.
- Increasing innovation and calculated risk-taking – relentless competition and decreasing global barriers to entry render traditional continuous improvement processes incapable of keeping pace with product/service evolution. Instead, all core business processes. Including those in HR, must encourage and support quantum innovations (i.e. innovations that produce at minimum a 20% increase in performance). Employees and managers cannot be expected to increase their level of innovation saddled by years of ad hoc policy making, process design, and bureaucracy, so organizations will need to challenge age old assumptions and remove many organizational barriers to innovation. Example: Performance evaluation processes could be retooled to recognize and reward employees who have taken risks, failed, and leveraged the learning experience to later produce successful innovations.
- Foster competition – while most shareholders love industry dominance, most also admit that healthy competition prevents complacency. Organizations need a reasonable level of internal competition between employees and business units in order to drive faster internal improvement. Example: Competitions might be held between managers on producing high-quality employee referrals, best practice sharing or releasing talent to other business units. Employee competitions could be held for the best employer branding video or for the most effective mentoring of new hires.
- Use data based-decision making – functions like finance, customer service and supply chain have produced superior results by adopting an evidence or data based approach to strategic planning and execution. For HR to follow in their footsteps, talent related decisions need to be made more accurate and repeatable throughout the organization. This will require HR to leverage more and more cross functional databases and to develop predictive models that will make it easier for managers to make fast and accurate people management decisions. Example: Leveraging operations data that indicates use of temporary workers in safety roles exceeding 30% of budgeted labor hours significantly increases risk of safety incidents, the staffing function may advise over hiring in safety roles to create a buffer of well trained safety personal capable of covering projected attrition and trended absenteeism.
- Predict upcoming events –shareholders expect functional leaders to be forward-looking. Ensuring this requires a process to forecast and predict future talent opportunities and problems. Providing managers with alerts about upcoming issues allows them to act proactively, taking advantage of talent opportunities and mitigating people-management problems before they get out of hand. Example: Leveraging competitive intelligence processes, the recruiting function may learn that a primary competitor plans to ramp up operations in a key location in which your organization is currently dominant. Recognizing a tight labor market for the specialized talent needed, the recruiting function alerts managers to the impended threat and identifies the positions that will most likely be targeted allowing case-by-case retention plans to be proactively developed.
- Aim for top talent – shareholders are generally not satisfied with average returns and organizations that manage to the average are most likely going to produce average returns. In order to produce industry leading results, the organization needs an abundance of top talent in key jobs (because top performers may produce ten times more than average performers). HR must learn to focus resources on top performers by developing processes that have the capability of attracting, developing, moving and retaining top performers. Gone is the mentality that equitable treatment and equal treatment are synonymous. The goal should be to continually improve the ratio of top performers to average performers in key jobs year over year. Example: In partnership with the business development function, the organization might develop a key talent target list of notable individuals in and outside the industry of interest to the organization. A special cross-departmental team within HR would then spearhead a coordinated effort to build a dream job for each, attract them, convert them, and continuously deploy them in the most beneficial roles.
- Root cause and failure analysis – preventing major people-management problems from reoccurring throughout the organization requires that you identify and address the root causes of problems that do occur. Following every major failure, HR must conduct a failure analysis, looking beyond the obvious symptoms to identify the underlying reasons why problems occur. Program designers must also learn how to identify the critical success factors that are essential for any HR program to be the best in the industry. Example: Exit interviews might indicate that key employees are leaving for additional compensation; however a secondary root cause identification process (i.e. post-exit interviews) might be used to confirm or invalidate the preliminary justification.
- Broad reporting – shareholders expect widespread reporting to drive both transparency and accountability. Broad distribution of ranked people-management results by manager makes it easier for individual managers to compare their results to the superior people-management results that top managers are producing. By widely distributing ranked performance lists you increase internal competition, while simultaneously letting poor performing managers know which top-performing managers they can approach and learn from. Example: Widely distributing “ranked” employee retention reports to all managers might be championed by HR to increase healthy competition and learning on retention issues between managers.
- Global capability – even in medium-size firms, HR is now expected to be competitive in the global talent marketplace. As a result, all people-management processes and programs must be engineered to operate effectively on a global basis. Because different regions have unique problems and practices, this means that rather than operating under a “one-size-fits-all” approach, all major HR programs and processes must support customization to meet unique needs. Example: Rather than assuming that the factors that influence employee retention are the same around the world, HR would identify regional differences and then segment their retention advice and tools so they are customized to fit each region or country.
- Utilize technology – Technology is the ultimate enabler, and as a result, the effective use of technology must be present in every HR program and process. HR services must support 24/7 execution, and all staff members must be well-versed in the latest technologies relevant to their field. In addition, HR must learn to supplement a narrow range of solutions with technology enabled alternatives that might be more productive or cost-effective. Example: rather than relying on intuition to determine if one of their key employees is about to quit, HR could provide a manager with access to software that would statistically calculate the numerical probability of each employee leaving within the next six months.
Taken together, these principles or characteristics cover the factors that differentiate a “shareholder aligned” function from the traditional HR function. If you apply these principles to redesigning HR, you will get a function that is dramatically different both in its approach and produced.
Up Next …
In the next installment of this series, I’ll share an overview of what each of the major HR functions will look like in a “shareholder aligned” HR function of the future.