Think “Leverage,” not “Compromise”

7 11 2010

"Watchoo talking bout, Willis?"

Two or three years ago, I was working with a talented product manger who had a great analogy to explain to customers the value of a move to an integrated talent management system.  With my apologies for paraphrasing a bit, it went something like this.  Think of the way you commute to work.  You get into your car in the morning by yourself.  On the way to work you get to decide the route you take, where to stop for coffee, even what station to listen to on the radio.  One day, your CEO asks all of your team to start commuting to work together on the bus.  Sure, you’ll have to give up some things.  You’re no longer in control of the route, the speed of the car, or even the music on the bus.  But, the CEO points out, the time you’re not driving you can work on other things, you’ll be saving costs, helping the environment, and…you’ll all arrive where you’re going at the same time.

A few years ago this wasn’t such a bad pitch.  There certainly are cost and efficiency benefits of moving toward a single set of talent management products from a single vendor.  However, now in 2010 I’ve decided I no longer subscribe to this view of integrated talent management.  Here’s why. In that view, the move to a single solution is all about compromising for the overall good.  HR has of course been around for a long time, and the individual domains of HR, whether they’re compensation professionals, Leadership Development and O.D, or recruiting, they all have grown up and optimized for the services they deliver.  The “all ride the same bus” theory is about compromising that expertise for the greater good.  It’s like asking a patient to replace their prescription heart medication with a daily multivitamin – they’re going to be skeptical.

Compromise is the wrong focus.  Instead, focus on opportunity.  Look for “leverage.”  The great thing about an integrated system that automates various talent management systems is that it can connect processes whose manual nature made them too large, too unwieldy, and too inefficient to connect.  What I mean by “leverage” is finding out how you can leverage the expertise of people inside your company, but outside your domain, to meet your own goals better.

The “classic” example we’ve been preaching for years is allowing Recruiters to increase their quality of hire in a particular role by leveraging predictive indicators identified and measured by O.D. professionals they’ve never met. Ask yourself what other data or methods might exist inside your four walls that if brought to your own tasks at hand would better inform your decisions.   “Ask not, what you have to do to conform to a talent management system, ask what it’s going to do for you!” (yes, I’m totally embarrassed I just wrote that, but I can’t bring myself to edit it out).

This sounds great, I know, but there’s a bit of a gotcha inherent to proposition, it requires the right integrated talent management system.  As someone who has been involved with defining and building talent management solutions for five years, I can tell you that not all software is the same.  In many ways, it’s harder than ever to find “real” integrated talent management.   Virtually all of the vendors out there have almost “one of everything,” but your question should be “how’d they get there?”  So in that spirit I offer a new integrated talent management analogy…

A friend of mine lives in a desirable neighborhood in Austin, TX.  It’s very central to downtown and close to Town “Lake” (I keep telling these Texans it’s the Colorado River!).   The location is very desirable, but there is not much land to expand new construction in this neighborhood that has attracted a lot of affluent people. Consequently, when you drive around this neighborhood you find many houses that have been expanded upon their original plan.  There are a bunch of extra additions, added bedrooms, and interestingly placed second stories above that garage.

The point of my analogy is this– There’s a difference between a house that has been added upon, and one that was designed from the start by a single architect.  Building additions to a house that is already in place inherently means compromise.  Okay, so the paint on the addition is obviously different from the older brick of the house.  Not a big deal.  Where you really want to look is under the foundation.  What piece of the foundation had to be broken through to feed plumbing and electrics through?  When you laid the foundation for the addition, which parts of the originally house needed to be shored up or reinforced?  Did it get done right?

Okay, okay, the analogy only goes so far.  What I hope to convey is that integrated process is where “leverage” and opportunity lie.  When you’re searching for leverage in talent management, it’s the process that needs integration, the system software should not need “integration,” the software should have been purpose-built for integrated process from the start.



This one’s gonna sting…

24 08 2010

This one is going to sting true believers!  Those intricate Pay-for-Performance plans your company just spent hundreds of thousands of dollars to automate may have all been for naught.  While that’s not the sole premise of Daniel Pink’s new book “Drive,” as a talent management professional it may just be your key takeaway.   As Pink captures in his book, “when it comes to motivation, there’s a gap between what science knows and what business does.”

Occasionally on this blog I’ve engaged in a bit of integrated talent management vendor “heresy” by questioning some of the key premises on which the software we sell is based (see “Is Performance Management wasted on the masses?”).  But I think of myself as ‘product’ guy, and you know what the “Product Manager Hippocratic Oath” is, don’t you?  “Above all else, solve your customer’s problem!”   So with that in mind, I think it behooves anyone in the talent management space to take a look at Pink’s work and at the very least ask, “Are we getting the results we want?”

The real premise of “Drive” is that the business operating system of “carrots and sticks” works for rote tasks (say, working on an assembly line).  However, for any kind of work that requires human creativity or initiative, “if then rewards” do not work and in fact consistently produce worse results!  The first portion of the book is a treatise on the study after study and example after example that essentially prove this assertion (I’ll let you read the book, he argues it better than I would).  Instead pink offers a theory of “Motivation 3.0” that claims that for creative work that cannot be reduced to a set of rules, human beings are best motivated by three elements:  Autonomy, Mastery, and Purpose.

Of course what interests me most (aside from my own motivations of course) is understanding what implications this might have for talent management.  Our entire industry pretty much accepts en mass the premise that Pay for Performance is in fact the best practice way of creating and motivating high-performance teams.  Find, recruit, and align your “A” players, and then properly incent them to drive your business strategy.  However, if we confront the premise of Pink’s book, we’re forced to ask “Are we solving our customers’ problems’?”  And if not, is there a way we can help employers promote Autonomy, Mastery, and Purpose (systemized autonomy—oxymoron of the day?)

I’m sure the answers to the questions above are too big for a blog post even if I knew them.  What I can say is that if you have an organization of a few thousand people and you chose not to automate the business processes that support talent management, you’re losing efficiency that is costing you real dollars.  Is there a way to better use systems to truly engage and influence business outcomes?   Well, that’s one to ponder.

(Mike Ditson)

If a talent analytic falls in the woods and no one sees it…

19 08 2010

“If you were standing at a road, and all the cars were whipping by…and all you could do is take a snapshot of the way the road looked five minutes ago…how would you know when to cross the road?”

That’s the question put forth by a great ad that’s out now by IBM (Click here to watch).  It’s a great introduction to something that doesn’t get talked about much yet in the Talent Management space.  Every vendor would love to talk to you about how efficiently their system can present data in the form of reports and analytics.  Have you ever had one try to talk to you about how to distribute that information?

As I’ve noted in this blog before, Talent information is Business information, and because of that information has a “spoilage” date.  Out of date talent data might not get you hit by car, but it could push your business out into the proverbial traffic.  So if you’re contemplating a talent management system, don’t just consider capturing information, but also how you’re going to securely manage and distribute that information to those who need it most…in time to do something with it.

Integrated talent management systems, fully deployed, generate enormous amounts of data with several sets of consumers including HR, compliance professionals, and senior management.  However, most (but not all) systems today create an information bottleneck that essentially cuts off a huge potential consumer of talent information, your line managers.

As the talent management industry emerged, most companies focused their development resources on the collection of data.  The types of features that drove sales cycles were around workflow engines, form configuration, and user experience feature sets that focused on the “data in” problem.   For most systems, solving the “data out” problem was an after-thought, and the form it typically took was the addition of a third party reporting engine.

Custom report writing tools and data warehouse build outs are not a bad thing; they do allow you to get at the information you need.  Indeed, to make getting that information easier vendors have further supplemented their offerings by building out pre-packaged bundles of “talent reports” that encompass “best practices.”  However, the same tools that provide this information also introduced bottlenecks into the distribution of critical business information.  Rather than allowing line managers to view the information they need, when they need it, talent management tools typically make line managers dependent on third parties to create new reports.   Access to data is gated by the HRIT department’s queue of report requests or by the “Director of Metrics’” availability.  Walling off that data from your line managers means they lose flexibility, they lose speed.

A man named John Boyd, was the American Air Force colonel who essentially created the science of aerial combat.   Boyd earned the nickname “Forty Second Boyd,” because of his ability to “down” any other fighter pilot in mock dogfights within forty seconds.  He went on to develop the theory and science of fighter combat and heavily influenced the creation of many of the fighter planes the U.S. Military uses to this day (my old write up here).  One of the key tenants of his teaching is the “OODA Loop,” which posits that the winner of a dogfight will be the pilot and aircraft that can get inside his opponents turning radius (massive over-simplification alert).  The ability to turn faster, in a shorter physical space than your opponent pretty much guarantees your superiority in aerial combat.  The OODA stands for Observe, Orient, Decide, Act, has gone on to be widely adopted across multiple military and business strategies.

In a business situation, the ability to understand market circumstances and your ability to “get inside” your opponents decision cycle starts with your access to information.  The tightness of your line manager’s “turning radius” is greatly affected by their timely access to relevant business information.  To be nimble in talent management, line managers need to continually seek out the answer to four main questions (and their corollaries):

  • What are the roles that are critical to my business?
  • Do I have the best performers engaged in those roles?
  • How are they doing and can I help them do better?
  • Where do I find more top people?

One of the key benefits of an integrated talent management system that has built in the “data out” portion of the solution from the ground up, is the “just in time” nature in which it distributes information.  The system has the ability to collect the enormous amount of data needed to answer the strategic talent questions above, but it also has the ability to securely disseminate information to those who need it, when they need it.

It’s not just about having the data, it’s what you can do with it.

(Mike Ditson)

Job Profiles are where it’s at!

3 08 2010

A great deal is made in Talent Management circles over the “Talent” or “Employee” Profile.  Who do we have? What do they know?  What have they done?  What do they want to do?  And the ubiquitous, “how are we going to get anyone to fill these things out?”   All of these are fantastic questions to ask.  However, focusing  integrated talent management discussions to just employee profiles misses half of your opportunity—incidentally, the half you have more control over.  For leading talent management discussions, Job Profiles are where it’s at!

Integrated Talent Management is about automating (as best we can) the process that delivers the right talent to the right place, at the right price – just in time.  The best analogy to describe this investment to your CEO or board is that an integrated talent management process is your “supply chain for people.”  That description is not new, but never seems to catch on with HR.  Too many people wrinkle their nose at the idea of “supply chain” for people, believing it denotes that people are just “parts.”  It’s my blog, so I can speak frankly – shake it off! Talent management isn’t about “HR,” it’s about growing your business or cause!  Remember, everyone is not the same!

In truth, supply chain management is a great way to describe management of the demand for talent in your organization, as well as your available supply.   In a properly architected talent management system, the talent profile and job profile act as “two sides of the same coin.”  The Yin of Demand vs. the Yang of Supply.  Talent profiles provide detailed descriptions of your supply, either current employees or potential outside candidates.  A Job Profile is where you can go to either specify or learn about your talent “demand.”

Both Job and Talent profiles act as containers that collect the data generated by all of the assessment, goal, recruiting, and compensation processes you automate.  Done properly, Job Profiles become the businesses’ “dashboards” for different types of talent.  What do I mean by that?  Job Profiles differ from Talent profiles in their span of focus.  Where talent profiles are one-to-one relationships (one person, one profile), Job profiles have a one-to-many relationship with the data they represent.  Even if a Job only has one instance in an organization (e.g. “CEO”) there are still multiple talent profiles whose data may be linked or matched to that one Job profile – incumbent, past holders, candidates, etc.

If you read my last post “Performance Levers – Is Performance Levers Wasted on the Masses?” you’re aware that I’m a huge fan of workforce segmentation (you might want to go back and read that now- it’s riveting, I promise).  In that post I described what is a job that one airline segmented as critical to its profitability (spoiler alert).  It turns out that at this airline, known for its profitability, each gate agent acts as the “quarterback” for managing millions in dollars in cost per year (close to ten million using my pro forma numbers).  What workforce segmentation posits, is that the biggest bang for your performance management buck comes from finding the six to ten jobs that are most strategic to a business, and then relentlessly rooting-out performance variance in those jobs.

The Holy Grail for integrated talent management is to deliver on the promise of the “Predictive platform.”  That is, based on a proper description and understanding of a need (demand for work) match prospective talent (supply of people) to that demand in a way that predicts successful outcomes.  All of HR’s obsession on skills and competencies measurement comes down to “how do I best understand the types of people that are the most successful  in certain roles (in our organization), so I can go focus on finding more of them.”

It is as part of the above quest that Job Profiles become your dashboard for driving business results.  If you’ve done the hard work to determine which jobs drive the economic results in your business you know which Job Profiles to look at.  Automated talent management systems generate lots of data from all your employees about several different processes.  A job profile “inherits” data about all employees from a certain job code “auto-magically.”   That means you can tag Job’s as “critical” or “strategic” and spend your time only on those jobs.

From this point the Job Profile serves as an aggregation point for data that answer Talent Management (really business management) questions you need to answer.  For instance, the Job Profile can answer the following question—“For the critical jobs that drive my economic business results:

  • What is the performance distribution curve for all the people across the company in this job (e.g. “gate agent”)?From there you can drill down in the data—show me the curve for a specific airport.  Show me the curve for agents that work specific routes.  With specific equipment (i.e. “planes” – little airline lingo for ya!)
  • Now show me just the high performers (so we can discern what is like about them and get more).
  • Show me the low performers (so we can develop them or move them out of the role).

These are simple examples.  Any data point you get about a single individual in a talent profile can be aggregated across everyone in that job code.  Average tenure in a specific role.  Potential assessment distribution curve.  Compensation vs. market across everyone in a job.  Bonus earned across everyone in a job.  Source of hire across everyone in a job. Lead recruiters involved with high performers in a certain job.  Candidate pipeline for a critical job. And on and on and on.

Talent management information can be collected for everyone, but the creation of so much data can distract HR and senior management from the system’s true potential.  Forget the noise.  Find and focus on the roles that drive your economic results.  Use Job Profile’s as your dashboards for talent management.  Job profiles are where it’s at!

(Mike Ditson)

“Performance Levers” – Is Performance Management wasted on the masses?

16 06 2010

"You're all individuals!"

Automated Performance Management for the masses is overkill, and only drives HR further into its role as a “support” function.  Does your senior management really care if your receptionist’s goals are aligned with your strategic plan?  Of course they don’t.  Influencing the behavior of employees that are not core to your strategy can be done through your corporate culture, which doesn’t come with a subscription fee!

What your Performance Management dollars should be focused on, and give highest priority to, are the job functions that drive your strategy.  This is a simple concept, and you already know this intrinsically.  It’s the 80/20 rule (a.k.a. Pareto’s Principle) – “eighty percent of the effects come from twenty percent of the causes.” That means that the effort of a small subset of an organization is disproportionately responsible for the success of its strategy.   

Driving cascading goals to everyone in your organization only waters-down your overall performance management effort.  Your line managers are on the hook to execute company strategy.  Software can help in this effort by “operational-izing” (to coin a term) the behavior of employees in the job functions that directly affect your strategy.   Automating performance for the other eighty percent is really more of a “nice to have.” 

One of the most basic tools of financial management is the concept of “leverage.”  Put a little equity in, borrow against that equity, and build the value of the assets.  The leverage provides a “kicker” that boosts the investors return on investment.  Operational management should be approached in a similar way.  By segmenting roles that drive value from roles that are more support roles, managers can give highest priority to what roles drive their results.  In essence, for a specific strategy there are key roles that act as “Performance Levers.”

 An example:

What’s the most strategic job at an airline?  When presenting this example to groups I usually luck out and someone takes the bait by answering, “the pilots, of course.”   As mentioned in the article covered by my previous post (Performance Variance is your ENEMY!) not all positions are as strategic as they seem.  In the case of pilots, the job function is less strategic because of the extremely small level of performance variance in the job.  Fortunately for we travelers, from company to company most planes take off safe, and land safe.  Pilots are a vital role, but strategically, there really isn’t any opportunity for competitive advantage based on pilot performance (unless you’re Sully!).

So what is the answer? An airline is a utilization business.  This is an over-simplification, but essentially “planes in the air are earning money, planes on the ground are costing money.”  There is an airline that is well known for its financial performance (that will remain nameless here) whose strategy focuses on its Return on Assets (the planes are typically leased – more of that “leverage” thing).  Making sure the planes are in the air for more of their available capacity means reducing the time needed to turn a plane at the gate.   Less time on the ground equals less cost.

It turns out that one of the jobs that directly affect this airline’s strategy is the Gate Agent.  As part of its operations the gate agent serves as the “quarterback” for the various teams that unload/reload, clean, supply and board the plane.   Here’s where the 80/20 rule and performance management becomes interesting to your COO, not just your SVP of HR:

  • The company owns or leases 544 planes.
  •  Say that 75% are in service at any given time, that’s 408 planes. 
  • Based on the number of flights the company says it averages per day and per year, the average plane has 6.2 flights per day (that “.2” must be when I’m stuck on the tarmac).
  • Made up number here.  Say it costs a plane $100 per minute to be on the ground (airport fees, wages, vendors that do resupply, etc.  Probably varies by airport- could be more, could be less).
  • Say the average time on the ground is 60 minutes.  Multiplied by 6.2 times per day that’s $37,200 in cost per day.  Multiply that by 260 work days in a year and your mild-mannered gate agent is now “General Manager” of $9,672,000 in cost per year.

Listen, the math is imperfect (I lifted numbers from their website fact sheet), but the concept is sound.  The really interesting part is managing out the performance variance.  If you’re not paying attention to hiring and development, your performance results will fall into a standard distribution.  Some good, some bad, most medium.  The GOAL OF PERFORMANCE MANGEMENT SHOULD BE TO SKEW THAT PERFORMANCE DISTRIBUTION TO THE RIGHT—for jobs that are critical to your strategy.  Accross hundreds of gate agents, how much cost could be rooted out of this business by reducing the turn time from sixty minutes to 59? To 58? To 45?  An integrated approach to talent management lets you hire, measure, compensate and develop people for those jobs that are key to your strategy (not your receptionist).

(NOTE: for another example of a business changing its strategy through key roles, see my post: “Nobody hates a Talent Management sports analogy more than me!”)   

To be clear, this post is no late night, Jerry McGuire, “fewer clients, less money” manifesto.  If you don’t automate your appraisal process for everyone you’re just wasting your time and your money. However, automating performance for everybody, completely misses the real potential of performance management.  The true goal of Performance Management is to materially increase the market value of your organization.  If you are not after that, you’re operating in classic HR “support” mode (which is ok, but don’t kid yourself that you’re really doing performance management).  If integrated talent management can be proven to affect financial objectives, in a material way— senior management will pay much more attention (and budget dollars) than they will to automate a yearly appraisal process.

(Mike Ditson)

Performance Variance is your ENEMY!

14 06 2010

My favorite “Vice President” joke, which I heard from the author Roger Dawson years ago on Secrets of Power Negotiating:

Two assembly line employees are having a debate about the number of VP’s employed at General Motors corp.  The first man declares, “GM has so many VP’s they have a VP of Headrests!”  The second man says that is “nonsense” and they make a bet on it.  To settle the bet they make a call to GM’s main switchboard and ask the operator to connect them to the VP of headrests.  Without missing a beat comes the answer, “certainly sir, will that be driver’s side or passenger’s side?”

If you’re a talent manager this may come as a shock.  Your company’s Vice Presidents are not the positions most strategic to your company.  In fact, if you’re implementing an integrated talent management system or Performance management system only to find the very best VP’s you’re missing an opportunity, and relegating your efforts to just “HR.”  Even if you’re rolling out automated goals and appraisals you’re still not truly managing talent, you’re just adding efficiency to a business process – this is just your first step, “table stakes” for managing talent for business results.

This idea is one that I was brought to by a Harvard Business Review article entitled “A Players,” or “A Positions”? The Strategic Logic of Workforce Management.  The article, by Mark Huselid, Richard Beatty, and Brian Becker eventually was turned into a full book, The Differentiated Workforce; however, half an hour with the article will get you the basics.  The published summary of the article is a great place to start:

“A single-minded focus on finding and developing A players misses the point.  A better approach is first to identify strategically critical jobs, then to invest disproportionately to ensure that the right people-doing the right things-are in those positions.”

I’ve read and reread this article multiple times over the years and it is still the best argument for an integrated talent management system.  Here’s why.  As the article argues, your company simply cannot afford to pay above market rates for every position or job in your company.  Fine you might say, we “Pay for Performance,” meaning we pay the most to our top performers.  Sounds great, but here’s the problem—the successful execution of your strategy cannot tolerate performance variance! 

Every strategy is built on the backs of specific “key jobs” (or “A Positions”) in your company.  Your strategy may have one key job or it may have ten, but no matter what any strategy can be segmented into “key work” and supporting or “not so key” work.  This is really a fancy extension of Peter Drucker’s famous saying, “your back-office is someone else’s front office.”

So the key concept of the article is that the way to achieve business results through strategy is by focusing on the work (i.e. jobs) that most influence your strategy.  This is a perfect match for an integrated talent management system whose anchors are “people” and “positions (jobs).”  We’ll explore examples of this in the next post.

(NOTE: by the way don’t take from this post that VP’s aren’t important.  Senior management teams set the tone for your entire company.  They’re extremely important.  However, true leverage comes from segmenting the positions that are key to your strategy, and then managing those positions.)

  (Mike Ditson)

Everyone is NOT the same

7 06 2010

Ok, admission time. Years ago I was one of those people who at one time was maybe not-so-crazy about the whole concept of “HR.” I had a fairly typical over-generalized view of the Human Resources department as “overhead,” or the at least part of the bureaucracy and not part of “the solution.” So when a co-worker told me about a product management opportunity at a vendor that sold enterprise HR software my first reaction was “hmmm….HR…ew.” However, I respected this person and decided to check it out. Of course I took the job. I took it for a whole bunch of reasons, including the people I would be working with. But one reason I hadn’t expected was an ignited interest in the potential for HR to make a material impact on a company’s productivity.

It’s five years later and I have a much different (hopefully more educated) view of what Performance Management products can do; however, I am still, well…smitten by the idea of using technology to positively impact a company’s financial results. So far customer results have not reached that higher goal. Don’t get me wrong, I can point to customer after customer that has automated the Performance appraisal and goal management processes to get greater efficiencies, cost savings, tax savings, freed up opportunity costs and even a little big of employee engagement. There’s certainly an ROI for the use of the tools, but what I’m after is that material difference – meaning, “something note worthy enough that it might affect an investment decision.” And of course, I mean in a positive direction.

One thing that HR frequently gets criticized for (rightly or wrongly) is it’s egalitarian approach to employees. Everyone is part of the team. No one is “better” than anyone else. Everything has to be fair. Every job is just as important. Certainly on a human level respecting individuals is the right way to treat people (not to mention compliance issues). At the same time, there is a certain demarcation line between administrating and operating where HR really becomes “Talent Management.” Because “Talent Management IS Business Management” (see earlier posts) it is inherent to the practice that everyone is in fact not the same. Talent management understands what good business managers understand, that in any group of people in the same jobs, performance varies. In any job type, you’ll have people that represent the “big hammers, the medium hammers, and the small hammers.” Each has its use, and each has a different value to your firm.

I believe that achieving a material positive impact on your financial results (using integrated talent management) will be achieved by focusing on who and what is not the same. So with that as a teaser, I’m kicking off a theme for upcoming posts to “It’s the data, stupid!” I plan to include the following topics (more or less in this order):

  • “A Players” or “A positions?” A fantastic HBR article that’s shaped my thinking.
  • Performance Levers – the most bang for your talent management buck.
  • Job profiles are where it’s at!
  • “Human Sigma” Another HBR article – where employee engagement meets workforce segment.
  • Leadership Software

Stay tuned.

(Mike Ditson)