Innovation is in today’s economy the only possible way of constant and lasting success. This is true for any company, any business as it is true for any business function – also for HR. When talking about HR and innovation, there are mostly two lenses that are taken. Either it is discussed HR’s role in business innovation or HR innovations to drive business performance. Both is important without any doubt. Today, I want to focus on HR innovations.
HR as a function is long grown and today is comprised of a multitude of responsibilities and tasks. This has led to a very diverse function and overworked HR colleagues, not leaving much time or thinking space for innovation. In addition, legal or regulatory requirements and needs are holding HR innovation down. The level of regulatory requirements and the diversity of them (every country has its own set) is the highest for HR – much higher than for example in Finance – but to that aspect more in my next post.
Innovation for HR is a need, a requirement – not a nice to have. HR practices do make a big difference in core business metrics and aspects. Just looking at employee engagement or organisational commitment (both very strong drivers of employee performance and organisational effectiveness) puts innovative HR concepts and practices in the spotlight (see here). Still, you don’t see it very often. True innovation in HR is rare. HR is a conservative function in the companies that I have seen – and this also means that new things are first of all doubted before adopted once everyone has adopted them. Just thinking about the Ulrich Model and its adoption rate: Ulrich has published his first ideas about how HR needs to change in the mid 1990ies. Today we are almost in 2016 and still there are companies out there that have not yet transformed itself from a more traditional model.
But not only HR as a function is conservative – HR’s customers, at least the ones in the higher management, are still not understanding how an agile and modern HR organisation can transform their whole business and how organisational effectiveness drives business performance. Therefore, this main stakeholder group is not really interested in HR innovation – they are rather interested in HR cost cutting. Even when searching the web of science, not many (and especially new) articles on HR innovation can be found. It is an underdeveloped topic.
Making the case for HR innovation
Making the case for innovation in HR is not very difficult. Apart from core traditionalists, it is clearly understood which role HR should play in today’s business. Apart from payroll and personnel data administration (which are important, yes – and also, where you can innovate but it does not bring you much in ROI) there is a wide field of possible innovation areas: Performance Management, Succession Planning, Learning, Compensation, Organisation Management, Change Management, etc. the value adding processes of HR. All of these value adding processes have a correlational relationship to employee satisfaction and/ or organization effectiveness. And these in turn to business success – first of all top-line. Just having a look at the resource-based view of the firm (link), which is still the basis of most of today’s strategies – especially in HR – shows the link to performance and lasting competitive advantage. So if you want top-line growth, invest in HR innovation – in innovation of the value adding processes of HR. How to do that and how not to do that will be the topic of my next post.
Ask what HR can do for you!
Don’t get me wrong – I am bought into Ulrich and his idea on Strategic HR. Who is not these days? – It is for the last 20 years the dominant HR organizational model. And it was a big success – but it also brought some headache to HR and its customers (Senior Management, Line Managers and Employees). This headache has multiple reasons, but one I would like to spend some time on now.
Ulrich and his idea of HR is grounded in the SHRM research – maybe not explicitly, but at least implicitly. And this research direction mainly claims that HR strategy and business strategy have to be in line to be successful (in short). Nothing wrong with that – however, it got translated into reality in a way that is at least questionable: HR has to be strategic, all of HR admin work goes to Shared Services including the direct customer (employee) contact, the operational HR on-site support for managers is removed. The result was in many cases a cheaper HR than before – but also a more effective? I doubt that! In fact, one who has been forgotten in this whole space of strategic HR was the customer – and with him, effectiveness: Senior Leadership got a strategic HR Business Partner – have they asked for it? …and lost operational support – have they approved this? Line Managers have lost most of on-site HR support and were moved into utilization of self-services – did they want this? And last but not least, all employees have lost f2f, individual contact to an HR representative, replaced by self-services and an 0800 number – are they happy with that?
For many cases I have seen myself or discussed with my consulting colleagues, the above asked questions can be answered with “no”. Very often, the customer of HR was left out in planning an HR transformation and in designing the future support and interaction between customers and HR. If these transformations were good, they at least had proper Change Management to support Senior Leadership, Line Managers and Employees on their journey. But I have only very rarely seen a proper upfront customer engagement and inclusion of customers.
HR is a support function, HR is a service function – and what we learn in services theory (for example from sales & marketing) is that you are most successful if you put your customer at the heart and center of your services strategy. Not new news – but why is HR not doing it then? Because it is very difficult in action. Integrating customers in upfront discussion of the why and how of an HR transformation is difficult as not many want to be involved, see the need or even understand what is going on. And the remaining ones that see an opportunity in being involved, often have views and wishes that are contrary to what HR wants to achieve with a transformation, making it difficult to respect these wishes. I am not arguing that however, believe that it is a necessity to deeper involve customers in the transformation of HR. How to?
Well, if you ask your customers how they would like their HR support to be or what they want to change, you probably won’t get very far with the answers. In fact, most will tell you that f2f support is the only way of interaction, that they do not need any strategic support, but HR to manage their people, etc. – who of you has not listened to such a story? What needs to be done is a full involvement of key individuals from all customer groups (however you slice and dice it inside your organization). These individuals need to understand the picture that HR wants to paint in terms of roles & responsibilities, technology support, and very important, understanding the concept of a modern leader (Line Manager), as well as what HR believes where they can add more value than today. Once you have achieved a proper understanding of that you can start the governance and structure based need discussions with your customers – and they should follow your ultimate thought of reasoning, but still have in mind what they need each day, week, month, year from HR to successfully enable their business and career. And this information is key in order to tailor your HR function towards what is needed and not towards what other companies did or some consultants tell you. No one except the business and employee representatives (and by that I do not mean the works council) know what they really need and HR needs to support this in the best possible fashion. Of course, this is a difficult and sometimes painful process to follow – but in my view it is the only way to be successful.
To support this customer focus and enable HR functions to respect it very early in their process, NEW HR is built on customer centricity first. Read my white paper on NEW HR to find out how.
The 5 generational workforce – the next big challenge for HR
A few years back we talked about the Generation Y and how it affects companies and their the workforces back then a big hype was created around a 4 generational workforce and that Generation Y is the first truly global generation with similar expectations, behaviours and skills. Actual studies of the Generation Y (once in they were in the workforce) have found out that this what not 100% true or right. They were not the same around the world. There was still a big difference between Generation Y in the US and Europe for example or between Europe and Asia for example. But one thing was true: They were very different from the generations before with very demanding habits and very different needs and expectations. This was something HR functions had to deal with in many ways: preparing the leaders of the company for this new generation, preparing policies, compensation packages, but most importantly, becoming better in communicating the reasoning of the company. Why does the company exist, why is the product or service good, what is it good for – and what does the company give back to society? Tough times for HR and leaders – and tougher times are coming!
The reasons for this big difference between the generations before and Generation Y are manifold and can be found in education, society, politics, etc. – and for a big part in technology. Generation Y was growing up with technology, with the internet. They were the first ones to be connected – and to expect this in professional life. Times are changing and a new generation is on the horizon: Generation Z – today’s teens will make up 36 percent of the global workforce in 2020. And this generation did not only grow up with technology as part of their lives – this generation spent their entire life “living” technology and social media. And they cannot imagine life without using technology and social media for everything everyday. This again raises the bar for HR functions and their workplace policies. But more importantly, it raises the bar for leadership and organization design.
We are at the beginning of the age of the 5 generational workforce: Generation Z, Generation Y or Millenials, Generation X, Baby Boomers and Traditionalists. And the differences between these generations can’t be any bigger. And this will also surface in the workforce and daily company life. An organization has to find answers to these differences: How do you lead and develop these different generations? How do you build multi-generational teams? How do you build effect organizations that are based on the strength of all of these generations? How do you ensure that every generation understands the others and also respect the other generations? How do you enable Line Managers to lead multi-generational teams? How do you upgrade ways of working to the age of Generation Z and still ensure that Traditionalists (most probably there won’t be too many of them anymore in the organization) and Baby Boomers can follow and be successful and productive in this new way of working? and more…
These are all questions that each and everyone responsible for people and for an organization should ask themselves – every day. And of you look at the questions in more detail, it should be HR to help answer these questions, to enable Line Managers. This is the new challenge for HR, starting yesterday. Is your HR ready for this? Many HR Organizations I have seen are not. To get ready for this as well as start answering the questions, start thinking about NEW HR and what really matters for HR from a task, responsibility and capability perspective. To learn more about NEW HR, check out this white paper.
The Capability Gap
Last weekend, I attended the yearly post-doc seminar of my Ph.D.-advisor. Many of his old students attended as well and we had some very lively and interesting conversations and discussions at the intersection of people, society, and HR. We talked about Intercultural Trust (Link), Organization Effectiveness, the Future of Work, as well as how to enable innovation within companies. Very interesting topics – and all have one thing (at least for me) in common: They all need the HR function as enabler, supporter, promoter and guide. I have said it already in one of my earlier posts – I believe (and am strongly encouraged by the academic discourse) that for a company to be successful in the next decade, it needs a strong, self-confident, enabled HR department which understands the business, business- as well as mega-trends, talent and talent needs, organization and organization needs. An HR function that has talent & organization performance at the heart and center.
After our academic meeting, I met an old friend of mine who is in the HR business for more than 30 years now, being an HR Interim Manager for almost 15 years. So he sees and acts in many different organization’s HR functions. And this mainly as an interim manager rather than a consultant. He really sees both, organizations and HR functions from the inside and lives within this world for a dedicated period of time as an (HR) Line Manager. I have very engaged and lively updated him on the conversations I had earlier that weekend and for a minute or so, we were both very happy to (a) have such a fantastic future ahead of HR and (b) be part of that. But very soon, we got to one important question: Is HR, are the HR functions that we have seen, worked in, consulted ready for this future? And this is something we then got concerned about.
The first question was about the organizational structure and governance of today’s HR functions. These are mainly following the Ulrich Model. But, very often in Germany, this needs to be looked at closer. We both agreed that in many of the organizations we have seen, the “Personalreferenten-Modell” just got a minor update in centralizing the administrative services, CoEs got somehow created and the current “Referenten” (Generalists in essence) were renamed to HR Business Partners and told to be strategic now. This is not what Ulrich had in mind and of course not, what his model is about. But we both believe, and there is sufficient empirical evidence that a more traditional HR model is not ready for the realities to come. But even if a state-of-the-art Ulrich model got introduced, this does not necessarily mean that the HR function is ready to tackle the challenges and opportunities to come. First and foremost, the Ulrich model itself is already around 20 years old (with minor updates/ additions over the years) – and having it operate across the globe in many different companies, has surfaced some shortcomings. In addition, there are some systemic issues within the model (see here) that make it a bit hard to work. And last, but not least, the realities have changed and will change even more and faster since Ulrich has shaped his model of HR. A look to NEW HR (in press) is something I recommend.
But besides this organizational and structural capability gap, there is an HR professionals capability gap. A recent empirical study on the capabilities of german HR professionals has surfaced that only a minority got the right training, got a chance to acquire the necessary skills and competencies necessary to operate within a modern HR environment (see here). HR professionals in Germany (for example) were mostly still socialized and trained in a more traditional HR model with a more traditional approach and understanding of what HR is about. Capabilities necessary for the Ulrich model are often too little or absent. This is even more dramatic than the structural shortcomings. Organizational shortcomings can be compensated by highly motivated and capable professionals – professionals that lack certain key skills and competencies can not be compensated by a superior organization. However, this is nothing to blame HR professionals – even if they wanted to or even if HR leadership identified this capability gap, today, there are only very little possibilities (except a specialized, in-house program with professional instructors or going abroad) to acquire these competencies anyway.
In any case, both are highly important homework to be done as soon as possible. The mega-trends, business trends, future of work, changes in society and workforce are not waiting. They are already here or approaching fast. I encourage all HR professionals to perform a readiness check of their HR structure, governance and capabilities to see if they are ready for tomorrow. – and if you identify gaps, act now.
Talking real gender equality
My recent posts have been mainly about the HR Function itself. Today, I feel the need to talk about a broader topic which you could still see under the hat of Talent Management: Gender equality. For years and years we have talked about gender equality in most of our western economy. In Germany, for example we are also talking about women quota and other special “programs” to support gender equality. And the reasons to talk about this topic are today more evident than ever. McKinsey just recently has published a study on the “Power of Parity” which basically validates the economic profit of gender equality (Link). The findings of this study are very interesting, however, I believe that they need to go one level deeper. They list financial incentives and support,technology and infrastructure, creation of economic opportunity, capability building, advocacy and shaping attitudes, and laws, policies, and regulation as supportive measures to tackle gender inequality.
These measures are not wrong, however are mainly focussing on non-western countries (which is not wrong either as gender inequality is an even bigger issue there). But also in our western economy we do have inequality that we need to tackle. But the above mentioned special programs or the findings from the McKinsey report won’t help. It won’t help because it is not changing the fundamental reason of gender inequality, but are just alibi programs for all of “us” to say that “we are doing something”.
Look at the results of the special programs for example in Germany or what the quota discussion has caused. – some women were quickly promoted into board positions and as quickly removed again. The programs rarely had a long-lasting effect or enabled broad gender equality. Why is that? (a) because the main goal of these programs is to enable women to participate in today’s economic environment, play by today’s rules and (b) because fundamentally in society and economy nothing has changed. Just look at the so-called “Herd-Prämie” in Bavaria for example, which still promotes the role model of women staying home…
Our society is still dominated by middle-aged white males and so is the economic world. The middle-aged white male has shaped the business world as we know it today. It fits perfect to the needs and habits of this specific class. The rules, the regulations, the cultural and societal habits in this world were shaped over hundreds of years and institutionalized the middle-aged white male at the top of the pyramid. In biology one would say that this is an inhospitable environment for other species (like women). This is not going to change through special programs to promote women or in placing women in board positions. Of course, there are women that make it in this world, but most of these make it, because they play by these rules and behave like the middle-aged white male. Question is: Does that add any value? – No, it doesn’t.
Real gender equality can only be reached by changing the fundamental rules of how our society and the business world functions. Changing basic things like where and when to work, how to work, flexibility and availability, etc. – this does not mean compromising quality or outcome of work. As far as I am aware, there is no study that shows that physical presence or working long hours or working to a specific schedule will increase outcome quality or speed. I am sure that many middle-aged white males don’t like this and feel that things like availability, working long hours, etc. should be rewarded – and of course they are rewarded today. But, why?- Because these are all the things that women that do not want to play by the middle-aged male rules cannot deliver on. The fundamental understanding of how we work, what we work, where we work and that the outcome should be the only determiner for rewards needs to change before we can get even close to gender equality.
Now, does it even make sense to change all of this? – it seems rather revolutionary and expensive. And of course, around 50% of the society (and probably close to 80% of the working society) would not be happy with that, BUT: It is necessary and the only way to reach gender equality, to deliver on the calculations of the McKinsey study as well as to enable the real advantages of women at work: Having more highly qualified Talent available AND having a very different view on issues and a very different attitude and path on solution finding. All studies that say that mixed (gender) teams are more effective than non-mixed (gender) teams are based on men behaving like men and women behaving like women – and not women playing by the rules of middle-aged white males…
I believe that the starting point for such a revolution must come from within the economic world and then spreading into society. And within the economic world, my old friend the HR function must be the starting point for this revolution. HR needs to employ more women like this: Women that want to work part-time and still want a career, women that have children and still have ambitions, women that are highly capable but not 100% flexibly available. HR MUST start in implementing this, promoting this and then push this new attitude into the remaining organization. This revolution is necessary – there is no question around. I say stop all the special programs or quotas and start changing the fundamental basics of how we work.
SaaS and the commoditization of HR Processes
In one of my last posts on HR SaaS I was referencing the inability to customize SaaS solutions as one of the major advantages. I still hold this true, however, it also means that HR processes of companies running the same SaaS solution will be more and more similar, do no longer mean a competitive advantage. This is totally fine with the major administrative processes like payroll or employee data management. It actually is perfect for these processes, for example for companies that struggle with these today, as they will get an excellent, proven blueprint when implementing a SaaS solution that they can take to fix their own process. But what about the talent processes? – what about performance management, succession planning, competence management, etc.? These processes are absolutely critical and need to be a differentiation for the company. In times where employees, the talent is the most critical ingredient for a company to be successful and build competitive advantage, processes that are designed to keep such an advantage are critical and need to be differentiated from any other competitor, right?
Well, in principle this is correct, however, I still believe that HR SaaS solutions support this differentiation more than they hinder. Why? – there are four aspects that should not be underestimated:
(1) Process blueprint does not equal content – talent processes always consist of two important aspects, the process-flow or -map which shows step by step what needs to be done and the process content which tells you how it should be done. The HS SaaS solution only brings a blueprint for the what – tells step-by-step what needs to be done and brings it into a flow, into an order. What it does not bring is the how. How these steps should be executed and filled with life. Let’s take performance management as an example. The process blueprint will tell what the steps of the process are, like target cascade, target discussion, target agreement, etc. – but it lacks the how. And this is where the differentiation for competitive advantage comes into play. How are targets cascaded, how are targets split between company and individual goals, how is the conversation between employee and people manager set up, etc. These are the real value adding activities that no HR process blueprint provides.
(2) Process blueprint and SaaS provide time to focus on what is important – and with this part (see (1)) of the work in place, the process blueprint and step-by-step guide already done, the HR organization/ project can spend its time on what really matters and what really adds value. How is (if we stay with performance management) performance management utilized within the organization, what are the goals. How should it “feel” to be part of this process, how should the conversations be run? And how do we ensure that managers and employees are ready to embrace this process? With most of the talent processes it is very little about the actual process steps that should be done, but more with how these are executed.
(3) Execution does not equal blueprint – the real differentiation, and this is more true with the talent processes as with any other processes (where it is still true though), the major factor is execution. Performance management is not successful because it is executed and followed step-by-step, but because of how it is executed. Do employees understand their goals, their target achievement and how it relates to the rest of the team and company. Does it motivate employees to bring their best to the table every day? Does it offer real life and supporting improvement feedback and methods? This is where most of the project time should be spent, not on the steps in the system.
(4) IT does not equal 100% of the process – last but not least, not all process steps will be executed within the new HR SaaS system. There are many steps outside, left and right of the system. And defining these steps as well as the content of these steps can bring additional, major value. Let’s also stay for the last aspect with performance management. Performance management often is still a three-part process: target agreement, mid-year review, end-year review. And these are the steps tracked and supported by a system. However, the real value of performance management does not really lay in any of these processes. The real value is in between. Management of performance every day, supporting employees in improving their skills and abilities every day, promoting employees into “bigger” roles – this is what really supports performance improvement and what a people manager needs to do every day with his/ her employees. Supporting people managers in doing this, building the infrastructure and competence within a company to do this, improving these parts of the process every day. This should be the focus of HR, not a system – and the SaaS blueprint supports HR in doing so by bringing an “almost-ready-to-use” process blueprint to the table.
In essence, SaaS solutions enable HR organizations to focus on what really matters and enable differentiated HR solutions to build a competitive advanced workforce.
Intelligent self-service selection: Purpose over possibility
In my last post I have clearly voted pro SaaS solutions, also because they have self-services and customer friendliness built-in from the beginning. This, however, should not be synonymous with implementing all of what SaaS offers. And this is true especially for (manager) self-services. Not everything that is possible, does always makes sense to be implemented.
Let’s have a look at what is possible for example in Workday (SuccessFactors does not look very different), managers can for example:
- view various reports about their team and specific employees
- request various adjustments to their team and specific employees such as promotions, terminations, requisitions, title changes, job changes, create, freeze or delete positions, initiate transfers, adjust their organizational structure and assignments, adjust pay, start disciplinary actions, change work locations, etc.
Basically, there is almost nothing a manager can’t do by her- or himself anymore. Wow, this is fantastic, isn’t it? This really enables HR to focus on the true strategic, value-adding activities – and, it enables a lean HR organization as many activities are now self-serviced by employees and managers. And of course, once you implement Workday or SuccessFactors, you pay for the whole package, so utilize the whole package, right?
Well, let’s step back for a minute and think through what we just did…the basic idea of self-services is to enable and empower employees and managers to do what they are anyway responsible for. And yes, when it comes to employee self-services, this is almost 100% right (changing addresses, bank account details, family status, etc.). But when you look at manager self-services, this needs a closer look and discussion. I actually recommend strongly to NOT enable all manager self-services, but to be very selective around these.
(1) Yes, manager self-services enable the HR organization to be more lean as activities are taken out and into self-services. But does that really serve the organization as a whole? – No, as the activities need to be done anyway – now the manager has to do it and I believe that in most companies, manager time is more valuable and expensive than HR admin time. So basically, self-services make HR activities more expensive.
(2) HR is performing HR activities every day, they are trained to do so and know how it works – both, from a process/ system perspective but also from a policy and legal perspective. The likelihood of mistakes is relatively low. Managers though do many HR self-service activities only a few times a year, so are not really familiar with the process/ system and most important, they are not trained in HR policy or labor law, so don’t know what they can/ should do and what not. The likelihood of mistakes is much higher – and therefore, the potential savings are mostly eaten up by wrong decisions or actions taken by managers.
(3) For some of the possible manager self-service activities, HR wants to have a strategic discussion first, like recruiting new employees or change organizational set-ups. These discussion are important and I believe that HR is adding value here, but does it really make sense that managers can execute these activities in self-service then? – either they are not talking to HR and just executing them via self-services (which is not in HR’s interest) or they first talk to HR and then have to do everything on their own? – where is the logic and customer orientation?
(4) What about company culture? – does your company culture actually empower managers to be responsible for these “HR” activities? If not, don’t go down that route as it is contradictive and will fail. Of course, I am a big supporter of empowering line managers and bringing responsibility (especially people responsibility) where it belongs, but not in all cases, the line manager should be the responsible person. It sometimes still should be HR.
Basically, it all comes down to being very selective about manager self-services. Yes, enable self-services where the line managers have or should have the responsibility like performance evaluations, managing their teams, etc. – but only if managers are ready to do so, which means trained in both the technical part to do so (which is really easy nowadays with the customer friendly interfaces of Workday or SuccessFactors) as well as the actual management part. Only when managers understand what they are doing, what it means and how it integrates into the bigger picture, only when managers are enabled to talk to their employees and have real people manager capability, only when your company culture enable and promotes this – only then, enable these self-services.
And of course, there are self-services that I believe should not be enabled in any case. These are self-services where HR has a vital role to play (like deciding about how a capacity gap is filled – recruiting a new employee is not always the right choice) and self-services where HR needs to ensure that transaction does not mess up the organisational structure of the company in the system (actually a lot is depending on this structure and once it is messed up, it usually brings hick-ups to all sorts of non-HR processes, too) like transferring employees from one department to another (yes, the decision of this is between line managers).
Intelligent, company culture and manager readiness based selection is the key to self-service success.
HR going SaaS
We are in the midst of a new HR Technology Wave. Many of my current client discussions are around new HR Technology – mainly about SaaS and the differences between SaaS and traditional on premise solutions.
First of all I am delighted to see that so many companies are actually considering an upgrade of their HR Tech infrastructure. It is really necessary as most of their systems are between 6 and 10 years old – and everything but state-of-the-art. But what should you do today? Which way should you choose? Renew your on-premise solution or go into SaaS? Before I answer that, let’s have a look into the two to understand the differences.
On-premise
On-premise solutions are the traditional HR technology. Basically your SAP HCM or your PeopleSoft. It is those big ERP solutions where you have everything in-house and you own the solution. Most of the time these solutions are heavily customized to fit the company’s HR processes and organization.
Advantage of these solutions is that you “own” it and that they are proven and reliable. Dis-advantage however is that basically all really relevant on-premise solutions will be obsolete in the new future. Both, Oracle and SAP have decided that the future of HR Technology is in the cloud and that on-premise solutions will be discontinued sooner rather than later. And even if they are still supported, they are not actively developed anymore. No new functionality.
HR SaaS
SaaS stands for Software as a Service – and that actually tells it already: You do no longer own the software and run it on your own servers, but you have a license to use the cloud based software, managed by the provider. Best known HR SaaS systems are Success Factors and Workday. Both were complete new players in the market when they started out. Today, only Workday is still independent. Success Factors was bought by SAP.
There are several factors that make these solutions superior to the on-premise solutions. But before I dive into that, the main disadvantage: A big part of these solutions is still developed on the go. These solutions are not yet final, ready. For example, none of these support european payroll. You need to have a separate payroll system to pay your employees. For Success Factors, SAP at least offers its on-premise solution for payroll as a quasi-cloud-software. Also, not all existing modules can be used in all countries. Both solutions come from the US and are designed with US regulations in mind, so when coming to non-US countries, you might face some difficulties with local labor law or data privacy. However, both companies work on that very heavily and for most countries, there are no issues anymore.
The major advantage of SaaS solutions is however, that they were designed with a different mindset. Where the on-premise solutions were designed with HR Admin in mind, SaaS solutions were designed with Talent Management and the employee and manager experience in mind. They are much more focussed around the current (and future) issues and questions HR is facing than the on-premise solutions: Analytics? – built-in! Easy to use, mobile self-services? – built-in!
Another advantage – and I am strong about that being an advantage – is that you cannot customize SaaS solutions. You can only configure them. This means that companies and their HR Organizations can no longer keep their old, antiquated, “we have always done it this way” HR processes – but they have to buy into the way that the cloud providers envision the processes. Of course, you can still configure them to be closer to what you as a company and specific HR Organization needs, but within limits. This is really great, as it enables global processes and focusses the discussion during HR transformations on the things that really matter.
In essence…
For me, there is no question what do to. SaaS is not the next revolution in HR technology, but it is already the norm. A recent Towers Watson study has shown that HR SaaS solutions are the dominant solution. Companies that either start with HR technology or are upgrading from a current system, choose HR SaaS systems: Workday in the US and Success Factors in Europe. In addition, if you want to prepare your HR function for the future, you can only do that with a SaaS solution. I do not see any reason to not go SaaS.
HR Customer Satisfaction – making HR customer centric
I recently had some interesting client discussions about HR Customer Satisfaction and measurement of it. First of all, I find it really, really good that HR organisations are interested in this topic. However, I haven’t seen many of these. Sure, almost every HR organisation’s Shared Service Center has the typical questionnaire or telephone interview for every 10th customer or so – but real end-to-end all-inclusive HR custom satisfaction is something I haven’t seen often, but believe it is important. HR is a supporting function and a service function that needs to do what is best for the business and the overall company’s success. But how do you know if you do this if you don’t measure or assess it? – sure, there are HR and HC metrics that you can measure and that provide some insights – but HC metrics are about the workforce as a whole and therefore more than just HR work influences them. HR metrics on the other hand are mainly process driven and give you an idea how single processes perform – but don’t tell you anything about their contribution towards the company’s success.
So let’s measure HR Customer Satisfaction, let’s ask HR’s clients how happy they are with the HR services they receive. What looks easy from the distance gets a bit more complicated when you look in detail. You cannot just ask about satisfaction as satisfaction might be influenced by many different variables and alone it does still not tell you if “what HR is doing is the right thing”. Also, the best way to drive up satisfaction is to give everyone what they want – but this would not be in line of what I believe HR should be about. From my perspective, you have to dig a bit deeper and get a 360° picture of HR to understand its performance and (more importantly) improve its performance and customer satisfaction.
So how do you do that? – Well, it is a bit more complex, but still doable. The major questions I believe should get answered by such an effort are:
- Is HR doing the right things
- in the right quality
- at the right time
- to the right customers
- at the right costs
And therefore, you should design your assessment tool around that.
The most important question is if HR is doing the right things – you can be excellent in your work, but if you are not doing what is needed, than you are not supporting the overall company’s success. So I suggest, starting with senior leadership interviews. Be open and honest with your most senior stakeholders. Perform qualitative interviews to assess if your HR organization is doing the right things: today AND tomorrow. Listen to what they say and how they rate different aspects of HR service (and by service I include the Business Partners as well as the CoEs – because in the end, HR is a service function). This forms the basis of everything else.
Next, go broad and survey your complete workforce – but segmented: Segment different workforce types to be more precise and get more insightful results. For example separate blue-collar from white-collar, separate management from non-management, etc. – and survey for two things mainly: how is the perceived quality of the services they receive, and let them assess the most important services they receive – not everything. And the importance depends on the job each responder has to perform every day. Like this you will have a good overview of quality, time and customer centricity.
This leaves us with costs. You cannot assess quality and satisfaction without costs. Of course the more money you “throw in”, the higher the possibility of good satisfaction results. But, who can afford this? Who should afford this? – I suggest complementing the satisfaction survey with a high-level benchmarking to understand in comparison how much money is spent to reach the level of satisfaction and quality. This does not have to be a big effort – just compare people and non-people costs against your competition and similar size/ organized organizations. This will give you a good understanding on where you stay.
In addition to these two efforts, there are two analyzing tools that are close to my heart. Number one is about the HR employee as a human at work. As I have found out in my recent research study and what is supported by years and years of academic and popular research is that the perceived service quality of HR services (and again, this includes business partnering and centers of expertise) is dependent mostly on the individual HR employee and his/ her:
- will to perform
- ability to perform
- possibility to perform
and therefore, to find out not only about perceived satisfaction, but also be able to tie it back to specific objective insights and be able to increase satisfaction, survey all of your HR employees on these three categories. I guarantee you that the results will be very interesting and will help you with improving perceived satisfaction.
Last but not least, analyse and understand from a strategic point where you are good at and where you need to improve. Take all the results and insights you gained from the surveys and from the benchmarking and run a series fo HR SWOT workshops. With the different insights from leadership, management, 3rd party comparisons and deep understanding of how your HR team is ticking, you are able to really assess and improve your HR department starting at the strategic end.
Now, again, once you go through the steps, it seems actually not so difficult – but what is really difficult for most HR organizations is the feeling of being exposed to all employees and management. From a change perspective this is really tough and needs to be managed so that no harm is caused, but everyone within HR understands and accepts this as a fantastic opportunity to improve quality.
Whenever I have run similar efforts at my clients, the success was overwhelming. If you approach HR customer satisfaction in this all-inclusive, 360° way, you get more than just an idea how satisfied your clients are with your services. You get:
- a differentiated view from all important customer groups on satisfaction
- not only a satisfaction score, but sufficient insights to improve satisfaction
- senior leadership attention and buy-in which will help you not only in improving satisfaction, but across your whole portfolio of HR initiatives
I suggest you start today and ask your customers at all levels on all services about their satisfaction and what they are missing. I know that this is not an easy undergoing, but it is definitely worth it!
Performance Management – hoping for a revolution
Wow, since also Accenture chipped in and is doing away with Performance Management in the traditional way, the discussion got really big. Everywhere you look you see articles, comments, point of views on Performance Management. I am really, really happy about this as I believe that this topic is overdue for a revolution! When you then read these articles and comments as well as when you speak to clients, they say that they are doing away with it because it takes too much time from Line Managers and HR. Sometimes you even read that people involved in the process are starting to question if there is any value in this process at all – businesses are changing, organisations are changing, ways of working are changing, the pace is getting faster – and all of this should be supported by an annual process? Of course that cannot work – and these two reasons are two important reasons why Performance Management need to be rethought.
However, there are more important ones which are not too obvious. When you read on or talk more to clients, they all come to the same issues they see when thinking of doing away with Performance Management:
- But how do I decide who gets what bonus?
- But how do I decide whom to promote?
And these two questions really show me the need for a revolution here.
Let me explain. In most companies where I have seen Performance Management in the traditional way (and there are not yet many out there who are more futuristic), Performance Management actually is a process which serves three purposes:
- Ensure that Line Managers talk to their employees
- Plan and decide on bonus payments
- Plan and decide on promotions
- and sometimes a 4th one on communicating company targets and ensure understanding of it/ ensure that employees understand their importance for the overall company goals
The Performance Management process is perfect for these purposes, isn’t it? And on top, as it is an HR tool with numbers, objectives, target measurement, performance discussions and at the end a ranking of all employees (similar to the school report of your kids), it is 100% objective and ensures that only the best get promoted and that your effort you dedicated to work during the last year is valued monetarily. Fantastic … but wait… Let’s step back and have a look again what I wrote and make a reality check.
First of all: who has seen an objective Performance Management process? – this is nonexistent as at the core of this process humans assess humans, and therefore it is a mix up of many different subjective assessments. That does not make it objective. And how do you compare performance of different employees in different jobs? And how do you make sure that all Line Managers use the rating scale in the “correct” way? Truth is, the Performance Management process is used to mask the fact that it is a very subjective act in which the Line Managers with the most power distribute the money and future power (promotions) in a way that fits to their individual motives. In addition, I would even say that it is not used to motivate employees, but to “shut them up” and ensure that they act in conformity with a Line Managers thinking. Question: Is this what you want or need?
Second: It is called Performance Management – so at its core it is supposed to manage the performance of employees (aka motivate employees to bring their best every day). But when you read through the articles or listen to the discussions, it is all about bonus payments and promotions. And this is where the real revolution is necessary: Re-think how to motivate employees to bring their best every day. It was so easy in recent years to just “believe in” the bonus payment and promotion chances that many HR practitioners have forgotten about the core of Performance Management – and (most important) that a monetary reward does NOT necessarily lead to the performance and behaviour one might want or need.
We are all humans and have more than one (money) motive to go to work and bring your best performance every day. And not so new research shows that the traditional model of “better performance through more money” does only really work for manual work. But where do we really have pure manual work today anymore? Sure, it is still existent, but where we really need to manage performance, where it is really mission (and company) critical, we normally don’t have manual work, but mental work, brains. (interesting video here) And these need to be motivated in a very different manner.
What I am saying here is not new. Research in psychology, sociology, organisational science has proven this for years, but wasn’t listened to. I hope that now is the point to start listening again.
In essence, there are two paths you can go now:
- The easy path if you just need a process to distribute money (bonus), just call your process “Bonus Process” and all is fine:
- Tweak it a little to reduce the workload
- Slice it up into two or four pieces to reward performance closer to the actual behaviour that you want to support
- Give the money into Line Managers hands and let them decide how to allocate it as they can see performance and reward it more direct (which has proven to motivate better) – this also leads to Line Managers needing to speak more often to their employees (although it is sad that this is needed to motivate them to talk to their employees…)
- And be more honest and transparent about this as well as the career process; careers and promotions are not decided during the annual performance management process, but every day in a very subjective way – and this is not bad, it just shows that we are all humans.
- But if you really want to motivate your employees to bring their best everyday, you have to rethink what motivates people and how can you align this with the company strategy and business – and in the end you might do away with your annual bonus? – This is scary though, but necessary.
Let me know your thoughts.
Chief HR Officer 