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Archive for the ‘Human Capital’ Category

I attended the opening session, keynoted by Hillary Rodham Clinton. I didn’t write it up immediately, as i wanted a little time to reflect, and also to report on the “buzz” that would emerge.

I expected a loud, positive “buzz”. Mot so. The buzz, while positive, was not loud. I guess it boiled down to a perception that it was a good, well researched presentation. Expectations were high, and Hillary did fine. Just not an earth-shattering keynote.

What did i scribble while she talked?

Compliments. “HR knows what it takes to provide workers with the flexibility to care for children and aging parents. You also know what must be done to provide affordable health care to everyone.”

Big applause on health care.

No remarks on run for prez – she sure looks presidential in sincere blue suit.

Pointed out big importance of womens issues in the workplace, globally.

The best part of the presentation was 10 minutes of Q&A with SHRM CEO Henry Jackson.

Key points:

1. We’ve got to fix immigration. We educate students and then don’t let them stay. It’s a key economic issue.

2. Leadership is a team sport.

3 You can’t win if you don’t show up.

4. A whisper can be louder than a shout

5 Follow the trend lines, not the headlines

In closing, CEO Hank pressured her to return to our conference next year. She sidestepped that one nicely.

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Halfway through the strategic HR presentation frim Willis, and a problem just popped up.

The first points from Jennifer Barton were fine – she pointed out that stategues are being updated every year, not five. True. She explained that HR strategy was nested into Human Capital strategy, all of which were nested into Organizatuonal Strategy. All fine.

Then Debbi Davidson took the podium and hit a few personal tripwires.

She defined a single type of “High Performing Culture”. A very “Theory X” style, as McGregor would say. Debbi drscribed high performing culture as “an agressive and deliberate effort by senior leaders to focus on results. Anything that is not producing results must be redesigned.”

Wow. I’m all for efficiency, but the metrics most senior execs use for measuring hr are way out of date. Problem.

Then, there was this: “High performing cultures have high engagement survey scores”.

In my experience, not so much. You get high scores from the content and happy mid-pack. High performers are often very entrepreneurial, pushing the envelope. See the problem? High performers do NOT score well. They are pushy critical thinking types.

Anyway, i need to end on a good note. The core message was good.

1. Do a total reward strayegy
2. Focus on a high performing culture
3 Get Learning and Development right
4 Workforce planning. Gotta look ahead
5 Rewards and Recognition must align with the vision

That’s the summary. Off to the general seasion with the guy from Tom’s shoes.

I want some Starbucks, but the line is long.

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OK, this is too good.

The AP has just aired some “dirty laundry” about management issues – no surprise there – but it is the organization that is unusual.  It’s an HR beef from inside Al-Qaida.

It seems a mid-level operative has been blowing off meetings, not filing expense reports on time, not answering the boss’ phone calls, yadda yadda.  As the story says, “After years of trying to discipline him, the leaders of al-Qaida’s North African branch sent one final letter to their most difficult employee. Most of all, they claimed he had failed to carry out a single spectacular operation, despite the resources at his disposal.

The employee, international terrorist Moktar Belmoktar, responded the way talented employees with bruised egos have in corporations the world over: He quit and formed his own competing group.”  You can read the whole letter here.  The photo below is purported to be the offending middle manager.

For those of us who work in HR, how refreshing to realize that global terror organizations are, in a very basic way, as human and flawed as the organizations all around us.

Terrorist

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I have learned a few basic truths about CFOs. They like efficiency and accountability, dislike making snap decisions, and are always looking for a better forecasting model. They also appear to prefer cars with good gas mileage.

For some of these same reasons, they generally mistrust the metrics offered by Human Resources about the state of the organization’s human assets. This may soon change, based on the first draft of a comprehensive Human Capital Financial Statement that was recently printed in CFO magazine.

While the ink is still wet on the draft, the impact is starting to ripple through both the HR and Financial camps. You can read the draft here – http://tinyurl.com/6vs9jx9. If you click on the link, pay careful attention to the small link to the spreadsheet model on page 2. If you miss it, you can jump to it here – http://tinyurl.com/6sv9msa. Examining the data categories on the spreadsheet will give you a fast snapshot of the work that has been done.

This is big. Finance has long been frustrated by “soft” HR metrics, with little thought going in to the alignment of what is measured to the core mission of the organization. Worse yet, key decisions may be driven by bad data, with bad results. The wrong type of people keep getting hired, or wellness programs are launched that do not change behaviors in a meaningful way. By agreeing to a more “forward looking” set of metrics that are measuring reliable predictors, better feedback loops can support better decisions.

Simply put, having a functional Human Capital Financial Statement can become a significant competitive advantage. I understand that financial statements by nature are backward-looking, and this work is trying to offer data that anticipates (and plans for) risks. While this is not a finished work, I am pleased that the conversation is finally beginning about what “dials” should be on the “dashboard”.

Let me give a couple of examples that might help clarify the importance of getting the numbers right. Many traditional metrics for HR are well accepted, but may not be that useful. For example, it is often thought that measuring the rate of employee turnover is a high quality metric, as it is easy to calculate and common sense says that lower turnover is better. Not so fast.

Most organizations do not track the data needed to show the turnover of high performers vs. low performers. You WANT a high turnover rate on the low performers, right? This means you must align the performance management system with the turnover data. More advanced organizations are starting to link low turnover rates of high performers to higher bonuses of individual managers and supervisors. Behavior rewarded is behavior repeated.

Taking the example further, in the Human Capital Financial Statement, there is a “High Performing Employee Differential” that enumerates the impact high performers have on an organization. If the performance management system is measuring the number and quality of high performance employees, then the metric can reliably appear on the dashboard. Is the wellness program paying off by helping motivate high performance? Clearly, the accuracy of the metric comes down to the quality of the data. It’s all connected.

I have often been puzzled by the willingness of HR departments to stick with meaningless metrics for decades. Measuring the speed of hiring, rather than the quality of the new hires. Measuring the turnover rate, not the quality of what is leaving. Measuring the head count, not the productivity. Measuring participation, not behavior change. And so on.

The Human Capital Asset Statement allows organizations the ability to look at human capital as a value producing factor; not just a cost. Trending the value contribution of the workforce during 2009, a difficult year, would have given great insight into the jobs and facilities that were adding value. You may know about the importance of critical high visibility roles, but be blind to the impact of hidden factors that impact client retention and profitability. In a good Human Capital Financial Statement, these should be measured and brought to light.

This is exactly where we are starting to head in this brave, new world of better metrics. My final point is the significant impact this will eventually have on equity markets and investments. Organizations frequently state that employees are their most valuable asset, yet publicly traded organizations provide little information on this “most valuable asset” to investors or the public. The Securities and Exchange Commission requires extensive disclosure regarding all major assets including financial, physical, and technological/intellectual property. However, they do not require disclosure of what is, for most organizations, their largest annual operating expense. Human capital and talent management are differentiators of success and sources of competitive advantage.

In a future world, human capital will finally be reported as a part of public financial statements. This will be big.

I work in HR, and we HR Professionals have known that talent management and wellness is important for quite some time. We have worked hard to get our recruiting, learning, total compensation, performance management, engagement, and other practices in order over the past decade.

With Human Capital Financial Statements, I hope we finally see a payoff.

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A storm of ideas has a precursor – a blizzard of postcards.  The SHRM Annual Conference is in two weeks, and I am booked into San Diego for the big show.  As your humble correspondent, I will be reporting from the front lines about the content and quality of the conference.  And the quality of the minibar.

That reporting begins now.

The first wave of postcards has hit.  I have done some marketing forensics and tell a lot from the sales pitches.  FIrst, the volume of postcards is up a little from last year they have the bucks to send mail.   Also, the volume of vendors is way up.  This year?  2981 listings in the vendor directory.  Last year? 2113.  That statistic isn’t perfect, as organizations can be listed in multiple categories, and many of the service firms that made it through the recession have diversified into multiple areas of expertise, and therefore show in multiple categories.  Whatever.

Another issue is the “bait” needed to get people to come to the booth.  Last year the gift of choice was a dashboard GPS system. The year before?  iPod.   This year?  iPad.  Offer it, and they will come.

The waves of postcards on the beach of my desk...

I’ll take a harder look at the type and style of sales pitches, and report back.  The conference is ON.

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A fragment of truth just filtered through.  We can use Health Insurance Reform to fix the recession. 

 I have CSPAN on in the  background as I do some writing and something catches my ear.  First, a confession.  I find Nancy Pelosi irritating as a speaker.  I met her a few months ago in DC – also met Mike Pence.  Politics aside, she would benefit from some coaching on how to make a good speech.  But I digress.

In her buildup to the vote on health insurance reform, she made a very truthful remark.  At about the 10:19 pm mark, she was speaking at a rate of 200 words per minute with gusts to 250, she noted that many employees are “Job Locked” – held prisoner to a job only because of the health of their family members.  She said under this bill, “their entrepreneurial spirit will be unleashed.”

Wow.  I think she is right.  Think about it – what percentage of high performing staff at mid sized organizations are only there because of health issues and insurance? Lots.   They should be working because of alignment with values and a good relationship with their boss.  Instead they are working as hostile passengers on the bus.

Good organizations have high performing teams because of managers who listen and lead, and staff who are engaged.  Now that health insurance reform is here, we must help organizations keep their best people when the handcuff of health insurance comes off.  I read the fine print – the exchanges won’t be in place for years, but we have to get ready.

Time to get out in front of this wave of change and surf it, rather than resist the rising waters and possibly drown.  That, and fix Mike Pence’s hair.  It’s a little too perfect.

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An interesting conundrum. 

In the arms race of hiring, we have always looked for any clue that could reliably predict success.  Good scores in an assessment?  Do they use their napkin properly at lunch?  Do they have executive hair? 

Which brings me to credit reports. 

I feel guilty.   When I speak on the subject of Luck in the Workplace, I have mentioned the rationale of using credit scores to predict behaviors in applicants.  I have worked with several organizations that, on my advice,  implemented credit report checking along with other screening methodologies.  I felt good about it at the time, but that was before the cratering of our economy that began in the early afternoon of October 13, 2009. Our world has changed, and it has changed my outlook on the usefulness of credit report numbers in the hiring process.

Simply put, a huge number of good, productive workers now have poor credit histories, and the usefulness of the report has fallen away.  There is an excellent news story on the subject here.  Maybe in a few years it will return as a useful predictor, but it is causing more problems that  it is worth.

Get back to solid behavioral interviewing, use valid pre-hire assessments, and a good set of application questions.  Leave the credit history alone until we all recover…

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