N J Higgins presentation HR Directors Summit 2010

1. Evaluating People Management and
the Value Based HR Function
People Science®
19th January 2010
Nicholas J Higgins
CEO, VaLUENTiS & Dean, Int’l School of Human Capital Management
DrHCMI MSc Fin (LBS) MBA (OBS) MCMI
HR Directors Summit 2010
General distribution version
ICC Birmingham

2. All models, frameworks and related
information contained in this
presentation are the sole copyright
of VaLUENTiS and the International
School of Human Capital
Management 2002-2010
2002-2010.

3. People Science®
Analyse, Advise, Implement, Educate
www.valuentis.com
Professional Services
www.ISHCM.com

4. Smart. Smarter. Smartest...
Professional Services
www.valuentis.com
‘The leading human
capital management
specialists’
‘PEOPLE SCIENCE®’
Organisation Intelligence
to
improve organisation performance
improve organisation performance
• Human Capital Management Evaluation
• Employee Engagement
• Talent Management
• Workforce Productivity & Performance
y
• Predictive Analytics
• HC Forensics & Risk
• HR Function ROI Analysis
• Organisation Measurement
• Management Education
• Organisation Strategy
SOLUTIONS

5. Eight faculties:
Enterprise Governance and Leadership
Evidence‐based Management (EbM)
Human Capital Management
Human Capital Measurement
Employee Engagement
HR Leadership
HR Operational Excellence
Employment law...
...1 Masters HCMI practitioner qualification
4 executive programmes
6 practitioner programmes
80 short course modules
80 short course modules
Unlimited customised combinations...
One outstanding value
proposition

6. Content for today
1. Human Capital Management
2.
2 Employee Engagement
3. The Value-based HR Function part I
4.
4 The Value-based HR Function part II
Th V l b d F ti t
5. Summary
(including ‘The Repositioning of HR’)

7. Part One
A ‘bit’ on Human Capital Management

8. One for the road.....
“If you cannot measure it, you cannot
improve it.”
Original source attributed to Lord Kelvin 1824-1907, pioneer
of physics and thermodynamics, first UK scientist appointed
to the House of Lords

9. In modern management parlance.....
“What gets measured gets managed.”

10. In our HR social science world.....
Evaluation is a more appropriate word
for measurement.

11. So consider.....
HUMAN
CAPITAL
MANAGEMENT:
“Human capital management
is the term which is used to
describe an organisation’s
multi-disciplined and
integrated approach t
i t t d h to
optimising the capabilities
and performance of its
management and
employees.”
VaLUENTiS International School of HCM
2006

13. Human capital management as a ‘collective’
collective
Diversity
Di it
Employee centricity
Employer brand
p y
Leadership
Organisation climate
Organisation communication HR FUNCTION
Human capital INFLUENCE
management
Organisation design
effectiveness Performance orientation
Resourcing
Reward & recognition
Talent management
Training & Development
HR governance HR FUNCTION
HR operational excellence CONTROL

14. A conundrum to consider?
“
People, as we know, for many
organisations are a prime operating
cost/investment and thus contribution
to organisation performance.
Organisations spend considerable
sums each year carrying out financial
audits; but spend very very little on
very,
people management effectiveness
HC/HCM audits/evaluations
audits/evaluations........Why?
Why?
”

15. Evaluating People management in your
organisation: The Organisation Engagement
g g g g
‘radar/clock’
TRAINING &
DIVERSITY
DEVELOPMENT
TALENT EMPLOYEE
MANAGEMENT
813 CENTRICITY
EMPLOYER
REWARD BRAND
674
599 416
657
615
HR
RETENTION GOVERNANCE
742 431
684 487
HR
RESOURCING
642
OPERATIONAL
603 594 EXCELLENCE
628
‘Out-performing’
(world class)
‘Out-performing’ PERFORMANCE LEADERSHIP
(peer) ORIENTATION
‘Comparable’
796
(peer)
ORGANISATION ORGANISATION
‘Under-performing’ DESIGN CLIMATE
(peer) ORGANISATION
COMMUNICATIONS

16. Ranges and targeting for HR strategy and
evaluation purposes
TRAINING &
DIVERSITY
DEVELOPMENT
TALENT EMPLOYEE
MANAGEMENT CENTRICITY
683 686
650 584 627
544 EMPLOYER
REWARD BRAND
795 492 724
594 392 558
HR
RETENTION GOVERNANCE
597 479 660
398
393
405
621 HR
RESOURCING 736 OPERATIONAL
481 EXCELLENCE
401 582
633 686
PERFORMANCE 561 613
640 LEADERSHIP
ORIENTATION
751
ORGANISATION 703 ORGANISATION
DESIGN CLIMATE
ORGANISATION
COMMUNICATIONS

17. Applications to date...
• HR strategy
• Employee engagement
• Organisation D
O i i Development
l
• Cultural assessment
• Pre-merger
Pre merger integration planning/Change management
• Workforce planning
• Leadership development evaluation
• Executive development
• Individual assessment of each ‘HCM slice’ and appropriate
HCM slice
intervention with more detailed analysis
• Human Capital Reporting
• IiP accreditation/Foundation Trust status
• HR functional contribution

18. Case studies (well vignettes!)
Private • Media
•Auto • Oil & Gas
•Biotechnology
Biotechnology • Pharmaceutical
•Business services • Professional service
•Chemicals firms
•Construction • Retail
•Distribution • Telecommunications
•Food Production • Transport
p
•Financial services • Utilities
– Insurance
– Investment banking Public
P bli
– Retail banking • Local Government
•FMCG
FMCG • NHS
•Leisure • Higher Education
•Manufacturing/Mining • Police

19. Delegate takeaway actions....HCM
1. What evaluation has my organisation done
in the HCM ‘slices’? (if not g to 3.)
( go )
2. What has been the driver in each instance?
3. Why does my organisation not see
evaluation
e al ation of people management as
important?
4. How do we know if any current or past
y p
people interventions have made a difference
in our organisation?
5.
5 Is our HR (HCM) strategy hampered by not
having sufficient knowledge?
6. As a function how much of an influence are
we really h
ll having in improving or maintaining
current HCM performance?

20. Part Two
A ‘bit’ on employee engagement

21. Employee engagement.....
“To understand and use the concept of
employee engagement, one requires
l i
three things:
1. A working definition
2. A model of components based on reality
3. A means of measuring and evaluating
Importance should also be given
to its organisational context.”
context.

22. EMPLOYEE
ENGAGEMENT
Employee engagement is an
‘outcome based’ concept It
outcome-based concept.
is the term used to describe
the degree to which
employees can b ascribed
l be ib d
as ‘aligned’ and ‘committed’
to an organisation such that
they are at their most
productive.
VaLUENTiS International School of HCM

23. Alignment/Commitment matrix
(quick guide)
‘Doing the right
things the right
way for the right
reason’
Individual’s
degree of
Alignment
‘Doing the wrong
things/ wrong ‘Feeling
‘Having to ‘Wanting to
way/ wrong they ought
stay’ stay’
reasons’ to stay’
Degree of
Commitment

24. Or another simpler way to
remember...(!)
remember (!)
Fully
congruent Knows what to
do/achieve but Fully
Could do more
unlikely to productive
achieve it
More likely to
likel Less than
Individual’s have optimally
degree of performance/ Job gets done productive -
capability Could do more
Alignment
g issues ‘well’
Likely to have
More likely to
performance, High
have objective
attitudinal
i di l probability of
b bili f
and/or
and/or wasted effort/
‘potential’
behavioural frustration
Incongruent issues
issues
Continuance Degree of Affective
Commitment

25. The challenge for the organisation (and HR):
Fully
congruent Knows what to
do/achieve Could do Fully
but unlikely to more productive
achieve it
More likely to Less than
Individual s
Individual’s have
Job gets optimally
degree of performance/ productive -
capability done Could do more
Alignment issues ‘well’
Likely to have
performance, More likely to High probability
attitudinal have objective of wasted
and/or
d/ and/or ‘potential’
d/ ‘ t ti l’ effort/
ff t/
behavioural issues frustration
Incongruent issues
Continuance
C ti Degree of Affective
Aff ti
Commitment

26. Alignment/Commitment matrix:
Typical indicative map of reality in organisations
Fully
congruent Knows what to
do/achieve but Fully
4%
unlikely to 8%
Could d
C ld do more 21%
productive
achieve it
Less than
Individual’s More likely to
optimally
have
degree of 11%
performance/ 10%
Job gets done 13%
productive -
Could do more
Alignment
Ali t capability issues
bilit i
‘well’
More likely to
Likely to have have objective High
performance,
and/or probability of
16%
attitudinal and/or 12% 5%
behavioural ‘potential’ wasted effort/
issues issues frustration
Incongruent
Continuance Degree of Affective
Commitment

27. The unique VaLUENTiS ‘Five Domain’
Framework [for reference]
VaLUENTiS 5D Employee Engagement Framework
Line-of-Sight Work Environment
Objectives awareness Cultural elements
Behaviour alignment Team dynamics
Role ‘fit’ Organisation Communication
Performance management
P f t Resources
R
Feedback
operating culture Local management
Organisation design
Capability Physical environment
Performance/talent
management
‘Corporate’ Leadership
Remuneration equity Communication Career progression
Benefits Decision rights Competencies
Role equity
Work values Succession planning
Trust
Recognition Job/ Role architecture
Promotional aspects Training/ Learning
Coaching/ Mentoring
Reward (equity) Development
© VaLUENTiS Ltd 2002-10 VB-HR is a registered trademark of VaLUENTiS Ltd 2003

28. The traditional view of employee engagement
contributing to improved organisational
performance...
Higher Higher
Higher
employee organisation
productivity
engagement performance

29. The emerging view of human capital management
practice and employee engagement contributing to
improved organisational performance (as a system)
More effective
human capital
management
Higher
Higher
organisation
i ti
productivity
performance
Higher
employee
engagement

30. However,
However remember the converse
converse.....
More ineffective
human capital
management
Lower
Lower
organisation
i ti
productivity
performance
Lower
employee
engagement

31. The importance of employee surveys
“One of the most common ways of y
measuring employee engagement is
through the use of employee surveys.”
g p y y

32. Employee survey expertise model
HIGH
nagement
MYOPIC 20/20
foresight
pital man
xpertise
ex e
man cap
BLIND UNFOCUSED
Hum
LOW HIGH
Survey design & measurement
expertise

33. HIGH
20/20
MYOPIC
foresight
ertise
Result:
ent expe organisation has
Result: sufficient in-
misleading or depth, robust
erroneous knowledge to act
nageme
interpretation upon
pital man
BLIND UNFOCUSED
Limited i i ht
Li it d insight
man cap
Result: end up due to
with ‘garbage limitations of
in garbage out
in-garbage out’ HCM
Hum
syndrome knowledge
LOW HIGH
Survey design & measurement expertise

34. HIGH
MYOPIC 20/20
foresight
ertise
ent expe
16% 8%
nageme
pital man
51% 25%
man cap
Hum
BLIND UNFOCUSED
LOW
Survey design & measurement expertise HIGH
Sample: 147 employee surveys. All organisations with over 750 employees. ISHCM research team. Study carried out 2006-7

35. Employee surveys and engagement:
Ten B t
T Best practices from the field...(I)
ti f th fi ld (I)
View or apply employee surveys:
1. As part of a wider enterprise driven focus on people management
2. With the appropriate importance (
pp p p (not as a tick-box exercise)
)
3. As organisational feedback/diagnostics as opposed to just garnering
opinion, using a robust engagement framework in the process
4.
4 As an embedded annual/quarterly process not as one-off interventions
one off
5. With the importance of science in understanding the data and the various
systemic relationships that provide greater understanding and drive more
sustainable interventions
Source: Employee Engagement: Factors of Successful Implementation
Journal Of Applied Human Capital Management, Volume 2 Number 1 2008

36. Employee surveys and engagement:
Ten B t
T Best practices from the field...(II)
ti f th fi ld (II)
View or apply the employee survey process:
6. As a ‘means to an end’ and not the other way around
7. With emphasis on post-survey practice/intervention
8. NOT as a means of just benchmarking externally (but they see the
advantages of benchmarking internally)
9. In NOT over-focusing on the response ratio recognising that it’s j
g p g g just one
element
10.As mandatory, i.e. don’t postpone the process just because something
negative may have recently happened, i.e. it’s not about internal or
g y y pp ,
external PR
Source: Employee Engagement: Factors of Successful Implementation
Journal Of Applied Human Capital Management, Volume 2 Number 1 2008

37. A quote from Albert himself...
“Everything should be made as simple
as possible, b t no simpler.”
ibl but i l ”
This has
Thi h great resonance with the practice
t ith th ti
of effective people management and
engagement. t

38. The original Sears model
Employee Revenue
Retention Growth
Internal Employee External Customer Customer
service Satisfaction Service Satisfaction Loyalty
quality Value
Employee Profitability
Productivity
Putting the Service-Profit chain to work
Heskett, Jones Loveman,
Heskett Jones, Loveman Sasser Jr & Schlesinger
Harvard Business Review Mar-Apr 1994

39. Employee engagement and
Organisation Performance [example]:
We’ve moved on from the Sears model…
‘Macro’ model NHS version 1.11
Leadership
Leadership Trust
Shareholder
Employer
Employer
&& performance
value
brand
brand
governance
governance
Human
Human Work values Safety y
Work values Portfolio mix
Capital
C it l
Capital External
Line-of-sight Clinical External Patient
Customer Quality of
Revenue
Practices
Practices Line-of-sight X-selling
Satisfaction
treatment Satisfaction services
Growth
Development Staff
Employee Individual/ Patient focus
Development Individual/ Service Value
Engagement
Engagement team Value
Reward
Reward team Prompt service
Portfolio mix
Productivity
Productivity Proposition Patient
Work environment
Work environment Environment Proposition Customer UseProfitability
of Resources
X-selling experience
pLoyalty
Community
Service
Staff
Employee
Retention
Retention
Compliance
Compliance
‘Local’
oca
Local
‘Local’
Management
Management Cost control
Cost control
© VaLUENTiS VBM Analytics methodology 2008

40. Delegate takeaway actions....EE
1. Who is responsible for the project management
of employee surveying in your organisation?
2. What definition of employee engagement do we
use in our organisation?
3. What ‘Engagement’ model underpins this?
g g p
4. Are we aware of how effective our survey is as
an instrument in light of the survey expertise
model ac oss
ode across:
i. Question-Statement design?
ii. Breadth and focus of questions?
iii. Balance of QS question bank?
5. What do answers to the questions posed in the
‘best ten practices’ tell us?
6.
6 In light of my/our answers, should we be
answers
reviewing our organisational approach?

41. Part Three
A ‘bit’ on the Value-based HR function

42. Organisations have a trade-off in terms
of optimising performance against
investment in effective human capital
management practice.
More effective
human capital
management
Higher
Higher
organisation
productivity
performance
Higher
employee
engagement
The
Th HR function is
f ti i
at the heart of this
trade-off.

43. Value Based HR: The HCM-Org System model
Organisation
HC Reporting
Reporting
Organisation HC(M)
Measurement Measurement
HR Fcn
Priorities
Enterprise
p
Human Capital
Performance
Organisation HC/HR Fcn HR Fcn
HR Governance Strategy Activities
Performance
HC Management
g
Performance
Governance
HR Fcn
Resourcing
Organisation
g HC/HRF Value
Value Drivers Proposition(s)
Organisation HR Function
Business Model
43 Delivery Model

44. Value-based HR: HR as a portfolio of
service & compliance activities
High Simplified Corporate Governance
Value Add
Illustration Services
Professional
& Advisory
Services
Nature of
Activity
Employment Services
Transaction Services
Marginal
Value Added
Complexity of Interaction High
Low

45. The HR Function’s value parameters:
( the
(‘the magnificent seven )
seven’)
From the organisation perspective...
1. Improving individual and team performance
2.
2 Aiding or enhancing decision-making
3. Minimising loss of productivity
4.
4 Ensuring efficient (HCM) process
5. Fulfilling client-agent need
6.
6 Improving employee relations
7. 2-way communications with Line management

46. Plus this...
The
Th real ‘HR V l C
l Value Curve’
’
Value
contribution
(per unit)
HR ‘Activity’ (The ’93’ as defined by VB-HR™ Profiler)

47. HR and Line ‘value dissonance’
value dissonance
Value
contribution
(per unit)
‘Value
dissonance’
Means that HR can close
the expectation gap...
HR ‘Activity’ (The ’93’ as defined by VB-HR™ Profiler)

48. PERFORMANCE EMPLOYEE EMPLOYEE HRIS &
HR ORGANISATION RESOURCING TRAINING & (TALENT) REWARD RELATIONS HEALTH & MEASURE- PAYROLL
GOVERNANCE DESIGN DEVELOPMENT MANAGEMENT & COMMS SAFETY MENT
2.1 5.1 8.1
3.1 6.1 7.1
1.1 Organisational 4.1 Performance Risk Management/ 10.1
ement
t Workforce Total Reward Employee 9.1
Employer brand Design/ Capability Needs (Talent) Regulatory Payroll
Planning Programme Communications HRIS Strategy
Planning – Assessment Management Compliance/
BU Level Assessment Security
2.2 10.2
4.2 5.2
Organisational 3.2 6.2 Employee/
1.2 General Training Performance 7.2 8.2
Design/ Capability Candidate Wage And Salary 9.2 Manager
HR Value Design, (Talent) Benefits Risk Assessment
Planning – Identification Management HRIS Planning Interaction/
Proposition Development and Management
Multi-country Services Problem
Delivery Development
Level Resolution
tal anage
2.3
23
3.3 7.3 8.3
Organisational 4.3 5.3 6.3
1.3 Job Profile Attendance/ Leave Accident 10.3
Design/ Capability Training & Performance Bonus/Incentive/ 9.3
very map
HR Delivery Services/ Of Absence/ Exit Prevention and Time Reporting
Planning – Development Reviews Stock Options HRIS Support
Structure Requisition Interviews Training
Global Level Management Compensation
Processing Programmes
4.4 7.4
2.4 5.4 9.4 10.4
1.4 3.4 Technical/ 6.4 Return-To-Work 8.4
Job Classification/ Succession Employee Special Pay,
uman Capit Ma
HC Reporting Candidate Functional/ Policy Senior/ Executive and Job Health/Medical
Evaluation (Talent) Research & Adjustments And
Selection & Procedure Compensation Accommodation Programmes
Management Modelling Deductions
Training
10.5
2.5
3.5 4.5 5.5 7.5 Payroll
1.5 Organisation 6.5 8.5
Temporary and Employee Attendance Company Policies 9.5 Accounting/
HR Capability Restructure/ Expatriate Incident Tracking
Contractor Induction/ Management And Procedures Benchmarking Recon/ Manual
Change/ Compensation and Reporting
Staffing Orientation Calculations &
Development
Disbursement
y-Deliv
7.6
76 8.6
86
2.6 4.6
3.6 5.6 6.6 Collective Managing
1.6 Acquisition/ Competencies/ 9.6 10.6
General Employee Compensation Bargaining/ External
HR Policy Divestiture/ Start- Skills Model Measurement and Tax Reporting/
Employment Coaching Analysis/Pay Negotiating/ Consultants/
up Due Diligence/ Development And Reporting Audit
Services review Consultative Outsource
Support Assessment
Processes Providers
2.7 6.7
5.7 7.7 9.7
1.7 Managing 4.7 Healthcare/
Employee Work Practices Employee 10.7
HR Performance/ External 3.7 Leadership/ Welfare/ Statutory/
Counselling/ Case For Represented Records/Case Employee
Strategy Review/ Consultants/ Relocation Management Other Benefit
management Employees management/Data Reimbursement
Activity
Audit
A dit Outsource
O t Development
D l t Programmes
P
Maintenance
Providers
1.8
10.8
Managing 5.8 6.8 7.8
3.8 4.8 9.8 Statutory
External PM Compliance Pension Conflict and Issue
Outplacement Executive Reporting/ Benefits/
Consultants/ Support Management Resolution
Services Development Interfaces Miscellaneous
Outsource
Admin
Providers
Hu
6.9
69
5.9 9.9
Retirement 7.9
3.9 4.9 Consulting To Managing 10.9
Planning/ Corporate/
Employment Law Career Line Managers On ASP/software/ Reporting/
Counselling And Community Social
Services Development Performance Outsource Interfaces
Administration Responsibility
Issues Providers
6.10
5.10
3.10 Managing 10.10
4.10 Managing 7.10
Consulting Line External Managing
Consulting On ASP/ERP/ Government/
Managers On Consultants/ Outsource
Managerial Issues Software Legislative Issues
Staffing I
St ffi Issues Outsource
O t Providers
P id
Providers
Providers
4.11
3.11 7.11
Managing
Managing Managing
ASP/ERP/
ASP/software/ External
software/
Outsource Consultants
Outsource
Providers
Providers Global HR Profiler™
© VaLUENTiS 2003-10

49. Hum
man Capital Man nagem
ment
A
Activit
ty-Delivery map
y p:
t mple
Live client exam
pp p
What happens to the HR spend?

50. Remember earlier the Human capital
management as a ‘distilled collective’...
distilled collective
Diversity
Di it
Employee centricity
Employer brand
p y
Leadership
Organisation climate
Organisation communication HR FUNCTION
Human capital INFLUENCE
management
Organisation design
effectiveness Performance orientation
Resourcing
Reward & recognition
Talent management
Training & Development
HR governance HR FUNCTION
HR operational excellence CONTROL

51. HR FUNCTIONS
HAVE
CUSTOMERS
WRONG!

52. HR FUNCTIONS HAVE
CUSTOMER-AGENTS;
MANAGERS AND
EMPLOYEES ARE BOTH
CUSTOMERS AND
AGENTS

53. THIS IS NOT TO BE
CONFUSED WITH THE GOOD
PRACTICE OF ADOPTING A
CLIENT BASED ETHOS OR
INTERNAL SERVICE BASED
APPROACH WITHIN THE HR
FUNCTION

54. To illustrate.....
• Think of an organisation’s performance
management system:
– Who is it for?
– Who benefits?
– Who are the ‘players’ to make it effective?

55. Part Three
A ‘bit’ on the summary

56. ‘THE REPOSITIONING
OF HR’

57. HR lexicon – new common terms
Then d
Th and now......
...1999 ...2009
• Employee champion • Employee engagement
• HR shared services • Talent management
• Competencies • Employer brand
• Business partner • Human capital reporting
• Benchmarking • Reward strategy
• Knowledge management • HCM intelligence
• Diversity • Human capital
• HR scorecard management

58. HCM versus HRM (‘ten for starters’)
Source: NJH bl (hcglobal.blogspot.com June 2008)
S blog
HR Function HCM Function
Too often a major focus on delivery Sees delivery structure as ‘a means’ with
structure as an ‘end in itself’
end itself subordinated focus
Cost-efficiency focus Value contribution focus
Commonly defaults to ‘process’ Defaults to ‘outcome(s)’ as mandate
Benchmarks simple operational metrics in Comprehensive multi-faceted measurement
the main (evaluation) framework
Espouses HRM integration Executes HCM integration
Evidence based management not practised Evidence based management as underlying
systematically ethos and embedded practice
Mainly compensates for poor line ‘Expert-monitor’ role to management,
management t manager as agent t
Still embodied with Industrial relations Operates with organisation performance
legacy perspective
Interventions too often driven by cause Driven by business case supported with
without evaluated business case cause where necessary
In too many cases a rebadging of personnel Evolutionary phase from current confusion

59. With regard to people...
Management is doing
M ti d i
things right;
Leadership is doing the
p g
right things.
Peter F Drucker
(November 19th 1909 - November 11th 2005)

60. And so with the HR Function...
HR Management is doing
M ti d i
things right;
HR Leadership is doing the
p g
right things.

61. HR going forward (as HCM):
• ‘Business’ mindset with evidence-based approach
• Much stronger link between strategy, measurement
g gy,
and people management effectiveness
• Far more sophistication and integration of IT enabled
processes
• More analytical and measurement reporting skills
• Decreasing administrative focus (‘taken as a given’)
• More innovation around HR functional delivery (for
example the ‘product-service’ construct)
• HR function working as a collective not ‘silo’ strands
• HR people having T-based skills profile not generalist
versus specialist

62. Ten common areasHCM function
of HR
7...
improvement.....
i t
Personnel 20
2016 2016
2015 2015
2014 2014
2013 2013
2012 2012
2011 2011
2010 2010
The reality choice
for HR functions

63. Delegate takeaway actions....VBHRF
1. Which function are we HCM or HR? (tick 1 only
for each parameter)
1. HR or HCM
2. HR or HCM
3. HR or HCM
4. HR or HCM
5. HR or HCM
6. HR or HCM
7. HR or HCM
8. HR or HCM
9. HR or HCM
10. HR or HCM
HR OVERALL HCM

64. Questions
64