This is the final day (half-day actually) of the KnowledgeAdvisors’ 7th Annual Analytics Symposium. The general sessions as well as breakouts yesterday and today continued to focus on ways companies are collecting data for better decision making. I’m pleased to see the focus of discussion move beyond the Kirkpatrick 4-levels of measurement (as in “Are you measuring levels 3 and 4?”), beyond Phillips’ level 5 ROI (as in “What was the ROI for that program?”), to collecting data to make better informed decisions and making analytics and fact-based decision making a integral element of strategy and competition. So, the questions are: what are your talent initiatives intended to accomplish; why are those outcomes important to business success; what decisions do you want to be able to make about your initiatives and when do you want to make them; therefore, what do you need to know about the initiatives and the circumstances of their implementation, what will your standard of evidence be, which data will you collect and how, and what type of analyses will you perform? Kirkpatrick’s 4-levels and Phillips’ ROI method can be useful frameworks for specific purposes, but alone they do not constitute a purposeful decision strategy.Two more things:

• As noted in my post yesterday, Josh Bersin has created a comprehensive framework for thinking about measurement and decision-making across the entire process of creating, implementing, and evaluating human capital initiatives. Josh’s Training Measurement Book does a fine job of explaining his framework and guidelines for using it.
• All of this discussions about measurement, analysis, and dedcision-making inevitably take you back to the fundamental need to manage talent strategically. That means creating human capital plans aligned in detail with:
  • with your business strategies
  • the processes that enable those strategies
  • the human capabilities needed to execute those processes successfully
  • the drivers of and gaps in those capabilities
    • now
    • in the next 1 to 2 years
    • in the next 3 to 5 years
• Creating those written plans annually, including your measurement objectives and strategies, and reviewing them quarterly enable you to manage forward, quarter by quarter, toward that 1 - 2 year horizon as well as the 3 - 5 year horizon. They enable you to create a portfolio of short-term and long-term, operational and strategic human capital investments that you can then measure and adjust as your future becomes your present and as your internal and external environmental scans enable you to forecast new 1 -2 year and 3 - 5 year horizons.

These are the indispensable perspectives and competencies that Human Resources or Talent Management or Human Capital Management (whichever term your business uses) must have to fulfill its executive leadership role.State Parkway Partners can help you create such a capability in your organization. See the other sections of this website and the service offering presentations for more information.

This week I am attending KnmowledgeAdvisors’ 7th Annual Analytics Symposium. KnowledgeAdvisors is a great company focused both on its own and its clients’ business success and the advancment of human capital management as a business discipline. Wednesday’s opening Keynote was delivered by Cedric Coco from Lowe’s Companies. He posed and answered the question: How do we measure the value of, then optimize our company’s most strategic asset…our employees? Cedric described the Human Capital Business Model he and his team have built, and are continuing to develop. He begins with the view that people are the largest unmanaged asset in a company. “Unmanaged” doesn’t mean there are no managers: it does mean that companies do not have enough specific knowledge of the role people play in the company’s value proposition to effectively manage the recruitment, hiring, onboarding, engagement, development, and assessment of their people. The idea - which will be further developed today and tomorrow by Heather Maitre, Chris Hardy, Tom Davenport, Laurie Bassi, Dave Vance, Jac Fitz-enz, and Nick Bontis - is that people create value and those who invest in people create greater market value than those who don’t. The key, of course, is defining what precisely to invest in. So, Cedric’s team has done a lot of work and have determined: (a) that the factor that correlates very highly with specific business results like revenue, customer satisfaction, and lower costs is “employee engagement”; and (b) that there are very specific factors that constitute “engagement” in their company. They now know that if they invest in A, B, and C they can optimize engagement, and that engagement optimized to a specific measured level will produce a predictable level of revenue, customer satisfaction, and cost. This basic Human Capital Business Model is now the foundation of a very specific HR strategy, a focused creation of a specific employee experience, and an analytics strategy that will keep the company on top of changes in the factors that drive engagement and business results. Interestingly, Cedric and his team have also drilled down into the “employee experience” element in their strategy and, through lifecycle research, have defined what that experience should be like at each phase of the emploment lifecycle and how to measure it: acquisition, onboarding, engagement, and transition (to another role, to another company, or to retirement).It’s terrific to see such a disciplined approach to defining, developing, and rewarding the specific roles people play that drive specific business outcomes. As a bonus, Josh Bersin (Bersin & Associates) concluded the day with a view of trends and issues in the L&D and Talent Management worlds. The sad aspect of Josh’s research is how few companies have set goals for themselves to manage the acquisition, engagement, development, and retention of their most strategic asset…their employees. By the way, Josh published a book last year titled The Training Management Book. Josh has developed a framework for planning, managing, and measuring any intervention designed to improve the performance of people in a business. While it focuses specifically on training, you can immediately see how you can use the framework for other change initiatives. I highly recommend Josh’s book to all HR professionals.

My last two posts have been about managing performance through The Accountability Principle. It would be helpful - but not absolutely necessary - to read them before this post: Accountability - The Key to Performance Management posted April 29th and The Accountability Principle and Engagement posted April 30th.The antithesis of The Accountability Principle is The No-Nonsense School of Accountability. No-Nonsenseers have advocated performance management as it has been practiced at least since the 1960s. Managers give clear expectations up front, a thorough performance appraisal at the end, and regular feedback, maybe even some coaching, in between. If someone’s really off track, managers confront that right away. For top performers, there are rewards and recognition along the way. For poor performers, there is progressive discipline. For the rest, well, they have their pay checks and get to keep their jobs. What could be clearer and fairer and more motivating? The reality is that performance management is a fiction for the vast majority of people in the vast majority of businesses.

The beginning of the process - clear expectations or objectives and measures - often never happens except in general terms. When it does, it is seldom sustained because it is too difficult and time consuming to resolve all the questions that more systematic approaches call for:

Are these the right things to do to make the strategy successful? What’s actually being measured? Is that the right thing to measure? How accurate are the measures? How timely are the measures? Is the goal even achievable? What if unexpected forces make the goal either too easy or unattainable? What about all the things people do that are not measured but are critical to keeping everything running, how are these accounted for?

The middle of the process - performance feedback, and maybe coaching - seldom gets done because of the complexities of the business and the environment in which it operates.

Ambiguity delays judgment. Communication struggles with interpretation, completeness, and timeliness. Collaboration falters under the pressure of adversarial motives and contending views. New knowledge emerges that changes the playing field. Priorities change frequently and occasionally radically. Resources are reduced or diverted to meet new objectives. The measures chosen turn out not to achieve the real goal. Important aspects of the business are neglected to the detriment of the business in order to “make the numbers”.

The one piece of the process that eventually does get done is the performance review. But, this is usually viewed by both parties as an administrative requirement. There is very little accountability in this annual event because the beginning and middle parts of the process either have never happened or were pro forma or occasional at best.

Often expectations or objectives are written down for the first time when the performance review is due, and the past year is recollected from whatever reports or memory is available. Some organizations have feedback collected from people affected by an individual’s performance. But the biases of memory and the power of emotion and personal perspective make useful, accurate evaluation rare. Managers regularly pick the “rating” they “feel” is right and write the narrative to support the rating. In any case, the best that this process produces is a point-in-time judgement that usually has some marginal effect on the expected rewards.

The reality of managing a business is that there are no clear beginnings or endings. We estimate various measures and the forces that will impact them; but none of this is science, and all of it is affected by new knowledge that regularly is discovered about the past, present, and future. Priorities change, resources are redirected. We arbitrarily evaluate results quarterly and annually. But the goals we project, the measures we set, and the data we collect are very often not in one-to-one alignment and have only an approximate relationship to one another. While goals are essential to frame expectations, develop plans, and calibrate the actions we need to take, few, if any, bear a readily assessable relationship to the clear meting out of rewards and punishments the No-Nonsense School of accountability advocates as the driver of performance.

No-Nonsense performance management is a relic of industrial organization and a command-and-control system of management. No-Nonsense performance management should be replaced by The Accountability Principle.

What do we mean by “accountability?” Today, when you hear people talk about accountability, you know that they’re talking about who’s going to pay the price of failure. They say, “I’m holding you accountable”; or “You better make sure someone’s accountable”; or “Make them accountable by tying those results to their incentive compensation.”

“Holding people accountable” has a hard-nosed, no-nonsense tone that lets people know that a real executive is in the room. It projects strength and a willingness to take action. It asserts that a clear threat of dire consequences is what will get people focused and performing. It calls for bottom-line measures and makes it clear that there will be no excuses for not achieving them. After all, what would accountability mean if people could avoid paying the price of poor performance by explaining it away?

This is, however, not the way accountability gets results. In the day-to-day activities of business, where all the work gets done, “hold them accountable” is useless as a management practice. It offers no guidance on how to use accountability to build a successful path from point A to point B. It just prescribes what to do with rewards and punishments when the clock runs out. It offers no process for reconciling competing objectives, for making sure bad decisions are not made just to make “the numbers” look good. It makes no provision for adapting to changing business conditions, taking advantage of opportunities, or responding to unforeseen threats. “Hold them accountable” hopes that fear of loss will make people perform. But “hope is not a method” (Gordon R. Sullivan and Michael V. Harper, Hope is Not a Method (New York: Broadway Books, 1997). The Accountability Principle is!

The Accountability Principle

“For any job, no matter how simple or complex, effectiveness will be proportional to the ability of people doing that job to explain what they are seeking to achieve, why that’s important to the business, how well they are doing and what’s causing their current level of accomplishment, and what needs to be different to fully achieve their purpose.”

Accountability fuels the engine of performance. It puts a fine edge on execution. It replaces the administrative rituals of performance management with engagement in the business and commitment to results. It fills the void of performance-focused communication with precise and continuing conversations about accomplishments and opportunities as well as about shortfalls and what needs to be done to overcome them. Accountability puts talent in the spotlight and exposes and corrects talent gaps early on.

The practice of “accountability” means that every person - either as an individual contributor or as a manager - is expected to “provide a periodic accounting” to someone - team leader, manager, board of directors, owner - about the results of what she is doing. The key questions to account for are:

• Are the business activities for which she is responsible achieving planned results or not?
• If they are, then what is driving that success and what needs to be done to sustain performance? Are there opportunities emerging and how can we take advantage of them?
• If they are not, then what are the root causes of the shortfall and what is she doing to remedy them? Are there threats emerging and how can we defend against them?

This use of The Accountability Principle moves the moment of truth way forward. By asking people to be accountable first for a well constructed plan and then regularly for accomplishing planned activities and producing planned results. The Accountability Principle improves the quality of business thinking and sharpens the focus on results from everybody beginning day one. Accountability establishes a regular dialogue so the person to whom the accounting is provided should be expected to

• ask questions to see if something has been overlooked
• provide information that will help solve a problem
• share a perspective that will shape more accurate thinking about a situation
• give encouragement where courage is needed
• stop a direction that will impede success
• obtain needed resources
• secure the support of others

Simply put, accountability is about two things: collaboration and engagement. Your thoughts?

More about this tomorrow.

In a big-picture view, human capital management is the process of making sure you have the right people, with the right competencies, in the right roles now and in the future. To be effective at human capital management, leaders at every level of the organization need to treat talent as an asset that produces value for the organization today and which can produce more or different value in the future. Unlike other organizational assets, talent belongs to the people in the business and not to the owners of the business. So, leaders have to embrace the challenge of engaging people in ways that cause them to invest their best abilities in the business, to improve the productivity of their talents over time, and to acquire new competencies that they enjoy and that the business needs. When recruiting and hiring, leaders need to assess candidates not only for the job that is open but for the broader role they could play and the more valuable contributions they could make over time.Much of our future leadership training and leader development will have to revolve around a full appreciation of the fact that talent is an asset that belongs to someone else yet accounts for a substantial portion of the current and future market value of the business. What percentage of your business’s market value is attributable to physical assets? What are your talent assets worth? What do you need to do about that?

A big part of human capital management will be:

• providing the networks, job assignments, project assignments, and coaching that develop the conceptual thinking skills, problem solving skills, and interpersonal skills leaders need to engage people
• implementing practices and processes that cascade through the organization to make a “talent as an asset” mindset part of the organization’s DNA
• expecting leaders at every level to provide a regular accounting of the increased productivity of the talent assets for which they have leadership responsibility

Although it has always been true, it is even moreso today: the future is invading the present at an accelerating rate. There is no such thing as a sustainable competitive advantage. So, we need to shake up and speed up the present to be able to sustain our ability to find new advantages with which to compete in the future.

I invite you to participate in what I hope will be an ongoing series of lively conversations about mangaging talent and investing in human capital. There are a myriad of topics related to all of the aspects of acquiring, developing, and retaining the talent your business needs now and in the future, and we would like to address them all as our thinking and your thinking evolves through dialogue, research, and experimentation. So, where to begin?

The bottom line is a good place to start. At the KnowledgeAdvisors’ 6th Annual Analytics Symposium early in March, I particularly enjoyed being exposed to the work of two organizations doing great work in this area. The first was McBassi & Company. Laurie Bassi and Daniel McMurrer http://www.mcbassi.com/ have developed methods for measuring human capital capabilities and then connecting them to a company’s bottom line outcomes - see “Maximizing Your Return on People” (by Bassi and McMurrer) in the March 2007 Harvard Business Review. The second is the Institute for Intellectual Capital Research and its Director, Dr. Nick Bontis http://www.nickbontis.com/main.swf who has developed methods to causally connect human capital investments to specific financial outcomes. You can see his papers and books at http://www.nickbontis.com/Research.htm.

So, the challenge to business leaders is to be more transformational than transactional. That means recognizing that the overarching and constantly repeated question for HR has to be how to make human capital more productive. The place to start always has to be with the human capital performance the business needs today and in the future to execute on its strategy, run its operations, and achieve specific measures of success. The art and science of human capital management is then to work backwards to identify the leverage points that will produce the performance needed. I’m anxious to hear your thoughts and examples!

Manage Learning Strategically

We will show you how to move away from a demand-driven service and how to become a value-driven strategic partner. We will guide you as you build your:

• Annual Learning Plan and budget in a way that is aligned to business strategies and managed as a portfolio of prioritized investments.
• Measurement Plan aligned to the human capital performance objectives required by your business strategies and operating plans.
• L&D Strategy Assessment and Roadmap: your organization structure and staff roles; decisions about selective insourcing and outsourcing of roles; learning technologies and vendor selection; learning design methods for different delivery media; and your use of performance support.

Managing Learning Strategically (Open in Notes view to see narration)

Managing Performance Strategically

For decades, the major emphases in performance management have been performance objectives and performance assessment. Important as these are, they only become strategically important when they are integrated into a coaching culture, development opportunities, recognition, and rewards that increase workforce competencies, engagement, and retention. We will help you build your:

• Annual Talent Engagement and retention Plan focused on developing a “talent as an asset” mindset in your leaders at all levels and managing their adoption of practices which evidence that mindset.
• Measurement plan focused on increased competency in the workforce, on selected measures of engagement, commitment, and retention, and on the adoption of “talent as a mindset” practices.
• Assessment of and Roadmap for your “people leadership” capabilities.

Managing Performance Strategically (Open in Notes view to see narrative)

Managing Talent Strategically

Strategic talent management is about taking a systemic view of your business strategies, identifying the key roles in those strategies, and ensuring that you will have enough of the right people with the right competencies to make the business successful year after year. We will help you build your:

• Annual Integrated Workforce Plan in which you take a holistic view of the entire talent management process for each line of business and identify near term and longer term initiatives. Within the context of business strategies, your planning process will address workforce planning, talent acquisition, on-boarding, learning and development, performance management, and rewards and recognition. The result will be a coordinated, comprehensive plan.
• Succession Planning Process to address leadership roles, pivotal positions, and key positions challenged by competitive and demographic forces.
• Assessment of and Roadmap for your talent management capabilities including core issues such as data integration, process coordination, and technology support.

Managing Talent Strategically (Notes view with narrative will be available 12/08/11)