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Big Data, Predictive Analytics, Machine Learning – and Other HR Mysteries

Big Data, Predictive Analytics, Machine Learning – and Other HR Mysteries

Recently the HR Leadership Group of Northeast Ohio hosted David Bernstein, head of eQuest’s Big Data for HR/Predictive Analytics Division. David’s presentation was titled Big Data: Transforming the HR World through Data Analysis. While David pointed out the tremendous value HR predictive analytics can add, he also made a few points that many HR professionals can appreciate. For example:

  • The vast majority of organizations are still in the early stages of their HR analytics journey (still using Excel models for their analytics, etc.)
  • Very few people choose an HR career because they love numbers
  • In general terms, very few of us actually deal with Big Data (millions of lines of data, for example).

He also gave a great suggestion for helping individuals and companies in developing a reasonable set of expectations in terms of starting from scratch and getting to true predictive analytics. He suggested starting by developing an analytics mindset (asking the business questions that can be answered by HR analytics), then skillset (developing or acquiring analytical skills in HR) and finally acquiring the toolset (software, other tools). While I took comfort in Mr. Bernstein’s comments, I also recognize that, for most organizations, HR analytics is still mysterious and daunting.

Using David’s advice of starting with building an analytics mindset, I believe it is worthwhile understanding what HR analytics is – and is not. There are many analytics models available. One that I like a lot comes from Luk Smeyers through his company, iNostix. iNostix has created an HR Analytics Value Pyramid which is very helpful in explaining their four levels of HR analytics, which are, from low-to-high in value:

  1. HR Reporting
  2. HR Effectiveness Measures
  3. People Optimization
  4. Business Optimization

In a series of their own HR Analytics Insights blog articles, Smeyers describes examples and characteristics of each level that I find helpful in understanding and developing an HR analytics mindset:

  1. HR Reporting and
  2. HR Effectiveness Measures

Characteristics

  • Descriptive data/reporting
  • Single Source Data (HR data only)
  • Must have reporting
  • Low value to the overall organization
  • Looking at the past
  • Transactional
  • Always available, ‘just-click-on-the-button’
  • Mirroring Finance: optimization thru a better understanding of costs, ratios, productivity, effectiveness, efficiency,…
  • High ‘hygiene factor’ (see watch-out below)

Examples

  • FTE
  • Turnover
  • Labor cost
  • Number of new employees in a given period
  • Training/Recruitment cost
  1. People Optimization

Characteristics

  • Predictive instead of descriptive
  • Focused on optimization of core people processes and activities (eg. recruitment, training, on-boarding, talent development, etc.)
  • Business connected (using business data to understand impact)
  • Multiple Source Data (HR & business)
  • Looking at the future
  • Higher value – can create competitive advantage in HR processes and activities
  • Mirroring Marketing: optimization thru a better understanding of behaviors (of employees instead of customers, of course)
  • Transformational
  • But still…the ‘inside perspective’ (quoting Dave Ulrich), looking at (tactically important) HR activities

Examples

  • Employee churn risk predictions (risk scoring)
  • Performance predictions (eg. predict promotion readiness)
  • Identifying the characteristics of hiring success
  • Quantify ‘Time to Performance’ (new hire performance)
  • Identifying employee characteristics determining the chance of becoming an under/over-performer
  1. Business Optimization

Characteristics

  • Predictive
  • Focused on optimization of core business processes and activities
  • Business connected
  • Multiple Source Data (HR & business)
  • Necessity to break operational and functional silos to get access to data and to collaborate on the project(s)
  • Looking at the future: risks & opportunities (‘risk’ is the language of business!)
  • High value – can create competitive advantage in business processes and activities
  • Mirroring Marketing: optimization thru a better understanding of behaviors (of employees instead of customers, of course)
  • Transformational

Examples

  • Improving call center agent ‘time to productivity’ ratio, due to more effective onboarding training or coaching
  • Improving client satisfaction by predicting (and reducing) account manager churn risks
  • Reducing machine downtime by better operator safety training (based on predictive risk analysis)
  • Predictive staffing based on predicted case/business volume (law firms, retail banking, consultancies, technical support, logistics/transport, etc.)
  • Reducing road accident risk by predicting driver behavior based on tracking data (from the truck/bus tracking system)

The iNostix model may or may not resonate with you as it has with me. Those who are further down the path of understanding and implementing HR analytics may already have another model you like.

Recognizing that HR can add value by addressing business issues and questions through HR analytics is exciting. Creating that value will require use of multiple data sources, and understanding of future business risks and opportunities – all part of developing an analytical mindset.

 

 

 

 

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Performance Management Practices – Time for a Change

Performance Management Practices – Time for a Change

Performance management is a hot topic in the HR community. Many companies have made business headlines by dropping the annual performance review in favor of more frequent performance feedback, including GE and Accenture. Others, like Gap, Microsoft, Expedia and Adobe have abandoned the rank order concept after noticing the practice caused more harm than good, especially in the area of employee morale.

Recently I attended a webinar about performance management that was co-hosted by the Brandon Hall Group and DDI, entitled Give Them the Opportunity for Their Best Performance.  The webinar explored the importance of performance management, why the annual performance review is a broken process and steps to improving performance management. Much of the webinar was based on a Brandon Hall whitepaper called Performance Management 2015: Coaching for Development Needed.

Based on a study that served as the basis for the whitepaper, almost all organizations (88%) have a performance management strategy, yet 71% rate their performance management as ineffective. Though there is a lot of talk about fresh performance management practices, the study revealed few organizations have made significant progress.

Here are the top findings of the study:

1. Performance management strategies are prevalent, but largely ineffective.
2. There is too little focus on the employee, and too much focus on the performance management process.
3. There is a significant lack of executive engagement in performance management.
4. In-the-moment feedback – as opposed to formal reviews — improves performance.
5. Few managers are skilled development coaches.
6. Most organizations enable performance management with technology.
7. Performance management data is still not fully integrated with other talent data.
8. Executives and senior leaders get more performance planning attention than individual contributors and hourly workers.
9. Pay-for-performance remains the typical PM approach.
10. Pay and performance discussions should be separate.
11. Forced distribution — the evaluation method whereby managers are required to distribute performance ratings in a pre-specified ranking — is on the way out.
12. The future of performance management promises more strengths-based development and in-the moment feedback.
13. Performance management budgets are expected to remain flat.
14. Organizations that believe they have stronger performance management tend to have collaborative cultures.
15. Strong performance management yields better business results.

The study also included interviews with top performing organizations and summarized ten leading practices for managing performance:

  1. Create the PM strategy in alignment with the business strategy, ensuring cascaded goals.
  2. Institutionalize PM as an ongoing process — not an annual event with a beginning and an end.
  3. Focus on developing employees’ strengths, not evaluating their weaknesses, and eliminate the forced distribution system.
  4. Decouple performance conversations from compensation conversations.
  5. Engage peers and subordinates in providing performance feedback.
  6. Review and revise employees’ goals regularly to ensure alignment with changing business priorities.
  7. Hold managers accountable for acting as coaches to develop employees’ strengths.
  8. Catch employees performing well (or not so well) and provide immediate feedback, and do so regularly
  9. Define and execute on targeted individual development plans (IDPs) enabled with performance support tools.
  10. Define a select few metrics to measure the business impact of performance management and monitor those metrics regularly for continuous improvement and to create a culture of high-performance.

By changing performance management to be in line with these ten practices, top performing companies increased customer retention, engagement and revenues by up to 20% each.

Transforming from a traditional performance management process is a journey, but according to CEO’s of the top performing companies, can be fast-tracked by prioritizing five calls to action:

  1. Teach managers to be effective development coaches.
  2. Eliminate forced distributions.
  3. Engage executives in performance management.
  4. Hold leaders accountable for developing employees’ strengths.
  5. Automate performance management and integrate it with other talent processes.

The study provides much more information and detailed results regarding performance management, and provides a detailed (complex?) High Performance Management Model. However, the webinar focused much more on training managers to be better coaches and to provide in-the-moment coaching to employees. These coaching conversations are at the heart of improved performance management.

As with any strategic initiative, gaining executive support is critical, as is budget support for training and automation. But in the short-term, encouraging coaching conversations is a great way to start.

 

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Attn: Business Leaders – Five People Actions You Can Take Today That Will Have a Positive, Sustainable Impact on Your Business (and won’t cost a dime)!

Attn: Business Leaders – Five People Actions You Can Take Today That Will Have a Positive, Sustainable Impact on Your Business (and won’t cost a dime)!

I’ll start by apologizing for what may be the lengthiest article title you ever saw. As Talent Management consultants, we advise business owners and CEO’s on long-range talent plans to help ensure they will always have the great people they need to succeed. We also provide talent management consulting services and solutions, and many engagements last for weeks or are part of an ongoing advisory relationship.

Often, while we are in the process of evaluating, recommending and implementing strategic plans and solutions, our clients ask “Isn’t there anything I can do today that will make a difference?”. We love their sense of urgency! Here are five actions that can make an immediate difference and have a long-term, positive impact.

Tell Stories – More than any other duty, responsibility or accountability, your job is to lead. Talk to your people about the history, wins and heartbreaks that made your company a success. Tie the stories to your mission, vision and goals. Make ‘em laugh, make ‘em cry. This is the stuff ‘culture’ is born from. As CEO Chip Conley points out, “People want to work for a purpose, not just a living.”

Enterprise-Source your Talent Attraction Efforts – OK, I made that term up, though I did not originate the concept. Recently I attended a meeting where a CEO of a rapidly-growing tech company said he rarely pays recruiting fees, or struggles finding talent. His enviable success at pipelining and attracting talent is due, in part, to the company’s practice of asking every employee to broadcast openings through their social networks. The employees often add their own spin on what a great company it is to work for. Start today by asking every new hire for permission to do this.

Take a Valued Employee to Lunch – Sounds simple (and I admit it costs more than a dime). The one-on-one time spent building a connection with a valued employee is more important to the employee than you might think. Take time to get to know the person – family, hobbies and what is truly important. Ask for their input and insights on projects or changes that are impacting the company. Helping employees understand and feel they are important to the future of the company goes a long way toward keeping them engaged. Harvey Mackay, author of Swim with the Sharks Without Being Eaten Alive built a highly successful business and sold a ton of books with this approach.

Mentor and Coach – John Wooden said “The most powerful leadership tool you have is your own, personal example.” Learning and Development theory recommends hands-on training for 70% of overall development since it provides the highest learning retention rate. Take a rising star under your wing today, show the person what you are working on and how you make decisions. Ask the person to attend a board meeting or visit a customer with you to see how to build a business relationship. You’ll immediately increase institutional knowledge.

Smile and Say Thanks – To everyone. Employees, suppliers, customers and board members. Let them know how much you appreciate what they do to help your company succeed. Make your appreciation genuine and sincere by using the person’s name and referencing a specific reason why you are saying thanks. As Dale Carnegie said, “A person’s name is the sweetest sound”. For you as a business leader, saying thanks sets the tone for an appreciative culture.

In a Strategy+Business article about the book The Lives and Times of the CEO by Ken Favaro, Per-Ola Karlsson and Gary Neilson, the authors point out that CEOs must work hard to ensure that all employees, regardless of age, feel a sense of meaning, purpose, and engagement in their work. These five actions are a great way to do so – today.

 

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Top Performers Collaborate Better – and Get Better Results

Top Performers Collaborate Better – and Get Better Results

Many organizations are led by CEO’s with big personalities and reputations for ruling with an iron fist. Or at least they used to be. Today most leaders realize that people are their most important asset (and most expensive according to studies that show human capital costs at nearly 70% of operating expenses[i]). With the shift toward people-centric organizations, leadership styles are shifting as well.

According to an EY study of over 550 CFO’s and CHRO’s (Chief Human Resources Officers), high performing companies are characterized by C suite people who collaborate much better than those at lower performing companies. What is driving the need for greater collaboration among CFO’s and CHRO’s? The study identifies four key drivers for higher collaboration:

  1. Talent scarcity and rising labor costs.
  2. Elevation of HR within the corporate hierarchy.
  3. Rapid changes in corporate strategy, and the need for greater agility.
  4. Changes to operating models, requiring greater efficiencies.

Is your organization experiencing any of these symptoms?

What does better collaboration look like?

For CFO’s and CHRO’s, characteristics of highly collaborative environments include:

  • Greater maturity in organizational structure.
  • Greater involvement in strategic planning and decision making.
  • Wider adoption and greater use of analytics.
  • More rigorous HR measurement.

The results are impressive – higher EBITDA growth and strong improvement across a range of human capital metrics, including employee engagement and productivity. What organization would not enjoy those improvements?

So how can we get better at collaboration?

This particular study focused on the relationship between CFO’s and CHRO’s and described ten steps to build more collaboration.

  1. Make time for collaboration and seek out common commercial ground on business issues.
  2. Ensure both functions are involved in strategic decision making.
  3. Ensure business challenges are addressed from multiple perspectives.
  4. Transition from support functions to strategic functions.
  5. Build a culture of collaboration across functional areas.
  6. Look for ways to help each other solve problems.
  7. Focus on metrics that really matter.
  8. Make measurement a continuous, predictive practice.
  9. Apply a fact and data lens as a platform for deeper collaboration.
  10. Get strategic on workforce planning.

Though some of these suggestions are specific to CFO – CHRO collaboration, most can apply to other cross functional collaboration efforts. The payoff comes in tangible (EBITDA and HR measure improvements) and intangible (organizational agility, team building) forms. The benefits of greater collaboration among business leaders are evident. For CHRO’s, business leaders in general, and Learning and Development professionals, this is a topic worth further exploration.

[i] 2006 SHRM survey of over 700 companies.

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