What are the real HR challenges facing a growing entrepreneurial company?

I see a reoccurring theme amongst SME companies I work with. The primary motivation to engage me often includes some concern over ‘HR’ responsibilities. This invariably translates into concerns about employment law compliance (I have long since accepted the popular interpretation of ‘HR’ translates to little more than compliance – sorry CIPD). The thing is most companies are worrying about the wrong things…

I’m not saying employment law is not important. It clearly is important to have the basics in place to protect your business and to know your main responsibilities. However it is about perspective and in many respects straight forward risk management. The problem is the media and ambulance chasing lawyers have gone some way to creating a false perception about the true risk of employment law.  

I recently worked with a small company who had those typical HR concerns and were worried about getting things wrong. They were a smallish, expanding and successful multi-site company employing around 20 people with a strong brand and customer base. It quickly became apparent that whilst they were indeed lacking in some basic HR compliance areas, their real challenges did not lie there.  As it stood they did many things very well - they engaged people in their work (without knowing engagement is something multi nationals spend huge amounts of money on!). They had grown through a strong sense of purpose, strong enabling leadership and a committed workforce. Their challenge going forward, particularly as they grew, would be maintaining these things.

The problem is these positive organisational factors often grow quite organically and more easily when the organisation is smaller and flatter. Once the organisation starts to expand (first beyond 10 people then beyond 20 and 30), developing and continuing this simply becomes more difficult. As people move further away from company leadership, it is harder for them both to express their ideas and be listened to. The tried and tested route for an organisation to respond to these challenges is to try and impose some structure and control through greater hierarchy. However the tension here, particularly for an entrepreneurial company, is that the flexibility and autonomy people enjoyed starts to become harder to maintain.  Creativity and innovation become harder to nurture, the company starts to become diffused and in short the organisation starts to turn into just another company.

These were the challenges I highlighted to my client. Moving forward with them firstly required education in that their people challenges were less about HR and much more about organisational development and internal communication. Yes HR was part of the equation, but if anything it was the easy part of the challenge. So what to do about these problems? We’ll discuss that in the next blog…

Perception Bias in Recruitment and How to Reduce it

Last week I was teaching undergraduate students in Edinburgh Napier University about perception theory and the implication stereotyping has on recruitment. Contrary to the popular wisdom of polite society, stereotyping is actually a perfectly normal psychological process. However this is not to say it does not cloud our judgement, particularly when it comes to making recruitment decisions.

As humans we constantly absorb huge amounts of information about the world around us. The sheer amount of data we absorb is almost overwhelming so processes like stereotyping help us filter information. We use existing information already stored in our brains to put people into boxes based on extremely quick observations. This enables us to make decisions quicker and to determine things like whether a stranger should be considered friend or foe. The ability to make a snap judgement is useful if you are in a potentially life threatening situation but less useful if you are trying to make a decision about an individual’s ability to perform a complex job. At this stage stereotyping becomes less useful to us. The problem is research from Monster indicates this important, yet very primeval way of interpreting the world, is still clearly an important deciding factor in recruitment interviews.

This is worrying. Logically we know that snap judgements are limited in effectiveness, regardless of how much someone believes they are “a good judge of character” (unfortunately nearly everyone does!). This certainly reflects my own experience; I have witnessed companies of all shapes and sizes rely on no more than a CV and a hastily prepared one to one interview. The consequences have been virtually always the same – consistently higher turnover due to recruiting the wrong people.

So what do we do about this? Firstly it’s about awareness. Once we realise we stereotype we can then sense check ourselves and let our logic and wisdom come into play. We can take practical steps to overcome perception bias.

Last week I was chatting with Michael Young, CEO of MBN Recruitment Solutions, with regards to how they employ their own people. MBN use an assessment centre format and when it comes to interviews they use a panel interview (comprising of more than just one person). Michael said everyone has to agree on a recruitment decision for the candidate to be selected. This clearly reduces the impact one person’s bias can have on the recruitment decision and Michael, who is a professional recruiter, was sure this more rigorous process which relied less on ‘feeling’ had improved the quality of new hires.

These steps also help the company to reduce the risk of perception bias and stereotyping.  Indeed any process which help objectivise the process is worthy of consideration. That is not to say that feelings are not important – at the end of the day people have to be able to work with one another. It is however about being prepared to try and assess people fully and being aware that if you don’t your unconscious self will be making big decisions based on very flimsy criteria. 

Richard Branson has scrapped holiday entitlement, has he gone crazy?

The BBC headline reads ‘The boss of Virgin Group, Sir Richard Branson, is offering his personal staff as much holiday as they want’! The casual observer might think Branson has finally lost it. Surely no one will work, it will be anarchy and everyone will be on endless holiday time? In reality I doubt it and I’m going to explain why. However in the interests of taking a balanced approach I’m also going to highlight what I see as a potential downside too.

Let’s start with the positives. First off all Branson has created yet more headlines for Virgin which we know he is great at doing. He has even started a UK wide national discussion on the subject so people are talking about him and Virgin. More innovation and daring from Virgin it seems…

However peer behind the headlines and you’ll see a more considered move. First off all, Branson knows a thing or two about human psychology. He’s banking that his personal team of 170 are by and large working with him because they want to. It’s a fair assumption that Branson already gives his people the core requirements of what research tells us motivates people at work. Dan Pink did a good job of summing it up as ‘autonomy, mastery and purpose’. Branson’s team are also more than likely to be competitively remunerated for their efforts too – however do not let this confuse the point. Money by and large is a poor day to day motivator. My supposition is that Branson knows that money is only really a problem if it is perceived as not being enough. Therefore I expect that he ensures his team are well ‘rewarded’ in this traditional sense of the word. Furthermore and arguably more importantly, I suspect that he and his senior leadership team are good at actually telling people they’re valued.

All of the fore mentioned factors allow him to bank on what he knows to work and that is ‘trusting people’. He knows he has the right people in place and by trusting them to make adult choices about holidays he is cutting back on bureaucracy and kicking an industrial era practice out of the 21st century…

Ok so that’s the positive view on all of this. Now for the negatives. If there were to be a downside of scrapping holidays, it will not be because people take liberties. In fact the problem could ironically be the exact opposite of the apparent benefit, in that people will not take enough holidays! Virgin is a successful company; it hasn’t got that way by accident but through hard work. I suspect many of Branson’s team will have migrated to him from other corporates. In my experience the underlying and unwritten rule is the same – long hours is the name of the game.

The risk for Virgin is that people take less holidays either because they forget to manage them or because they feel pressure that the best way to get on is not to take them. This could result in a dissatisfied and burned out workforce.

However I’m going to have faith that this will not happen and this is because of the man himself. Any initiative of this sort is hugely dependent on leaders walking the walk. I’ll go back to my earlier point and that is Branson simply understands human psychology and basic leadership principles. Indeed he has applied them throughout his career. As a happy coincidence he also seems to be a man who enjoys leisure as much as work.

If I were offering advice to Virgin it would be to make sure they monitor the situation to ensure that people do in fact take holidays. At any rate it will be really interesting to find out how this works out. From a purely human psychology perspective, I think Branson is on the money with this one.

Would scrapping holidays work in your company? It really comes down to the beliefs and values of the organisation. The reality is that for many organisations it would be a step too far because the conditions for it to work, which can be summed up as 'trust', do not exist.

What do you think?

Job Descriptions - the Good the Bad and the Ugly

Job descriptions are a fixture of working life. In theory they have many uses including workforce planning, recruitment, performance measurement and job evaluation. Unfortunately this theory rarely translates into actual practice. In my experience, job descriptions tend to spend the majority of their time gathering dust, with little bearing whatsoever on the day to day necessity of making a business successful.

One of the common practices I have observed is that job descriptions tend to be created for people. This might sound logical but I believe the reverse should be true. How often do you hear “we need to update your job description” as a response to changing tasks in an ever changing world? The exercise often becomes retrospective and the job description becomes a sort of memorandum to record what the individual has been or is doing. Surely all of this is the wrong way round and the question instead should be what work actually needs to be done in order to make the business successful? Only then should the skills and requirements to do the work be written down.

Earlier this year US tech company Zappos caught the media’s attention when they completely ditched job titles and flattened their organisational structure. They implemented an alternative to the hierarchy called the ‘holocracy’. One of the interesting features of the holocracy is the emphasis it places on job descriptions to help inform work activities. In the holocracy job descriptions are collaboratively formed by the team in order to get shared opinion. The interesting thing is people can be assigned more than one job description (which addresses the common problem of pigeon holing people). The role holder is then given authority to deliver the outcomes of his or her job description and I really like this bit – accountabilities and responsibilities are clear and properly delegated. Job Descriptions – or the work that needs to be completed is also regularly reviewed and updated to keep them relevant. Time consuming? Perhaps but then ask yourself how much time most companies waste on inefficiencies and duplication of effort.

Whilst the holocracy might not be suitable for all organisations, the lesson on job descriptions can be easily transferred. Keep them up to date and purposeful with work considerations as the priority. Whilst in some ways it might seem counter intuitive to make them about work (as opposed to the person) this can actually have an empowering impact on those doing the work, so long as accountabilities and responsibilities are properly delegated. The other lesson to take is the collaborative aspect – ask your team and colleagues to feed into creating job descriptions and do so with the company objectives in mind. Remember those doing the work will often have the best ideas about what the best ways are to complete the work.

As for those paper exercise job descriptions? I’d suggest you continue to let them gather dust!

Psychometric Profiling – Does it work?

One of the things I’ve observed throughout my career is how much things like personality, communication skills and behaviours contribute towards success – either at an individual or team level. Unfortunately these intangible so called ‘soft skills’ are notoriously difficult to measure or capture. Wouldn’t it be great if we could? Business activities such as recruitment, personal and team development would surely be enhanced as a result. It just so happens psychometric personality profiling claims to help with all of the above through the psychological measurement of people. But do these profiles work or are they just voodoo gimmicks and if they do work what basic lessons do we need to be mindful off?

I have used and been on the receiving end of a number of Psychometrics - Clifton Skills Finders, Myers Briggs and DISC. Most of my experience of using psychometrics as a practitioner however has been through ‘DISC’ (which stands for Dominance, Influencer, Steadiness and Compliance). For those that don’t know, DISC was developed by 20^th century psychologist William Marston and grounded in the theories of psychologist Carl Jung.

Whilst I’m still constantly amazed at the accuracy of DISC profiles, it is important to note that in no shape or form do they capture the entirety of a person. The same goes for Myers Briggs. We are all, a product of nurture and nature which shapes our own values, idiosyncrasies and ambitions. What something like DISC does, is to give an indicator as to the types of personality and behavioural traits people exhibit. In work situations this knowledge can be very valuable.

Whilst psychometrics don’t measure abilities it is true that certain personality types lend themselves to some jobs more than others. For example it is entirely likely that most telesales roles will require some extrovert characteristics. So whilst a certain profile type is not a guarantee of competence it can help indicate broad suitability to roles or indicate fit into teams. Indeed it is for this reason that many companies use psychometrics to enhance recruitment processes such as interviews. Used in this way they can help to assess fit and help to shape recruitment questions.

Being a tool, psychometrics are only as good as the people using them or receiving them! I remember a former employer of mine where the CEO and one of the Directors both scored a high ’D’ (Dominance) which is often a trait attributed to strong leadership (though not necessarily good leadership). The two of them consequently branded it around and all of a sudden it became a badge of honour to be a high D. Unfortunately rather than drive good behaviours in the organisation, their profiles seemed to be an excuse for driving bad ones. “It’s the way I am” seemed to be the attitude. True to a point but the logic in using psychometrics for development purposes should be to plug inherent weaknesses or at least be aware of how behaviour can positively and negatively impact situations and others. Ironically the most respected and trusted director and manager in that company was a high S (Steadiness).

For those willing to learn the lessons, giving people a chance to think about their own inherent strengths and limitations is not only good for personal development but can work very well within a team situation. By profiling each person and sharing those results with colleagues, DISC can allow people to communicate more effectively through an improved understanding of self and one another. Certainly I have used it for this purpose and seen great results.

In conclusion psychometrics can indeed enhance recruitment decisions, help with team and personal development. Just remember they are only a tool and like any other tool it’s all about how they are used! 

Treat people like adults – the do’s and don’ts of implementing new flexible working legislation

On 28^th June new employment legislation on flexible working will be introduced. It’s an interesting development given that much of the recent changes to employment law have been ‘employer friendly’. On the face of it, this latest piece of legislation flies in the face of this – it essentially gives employees the right to request a flexible working pattern which to some might make it ‘employee friendly’ legislation (though the reality is the employer can still refuse the request). My argument is that this new legislation should be seen as both employer and employee friendly.

Will this legislation work? Perhaps. Though on my recent experience the UK government still have to convince at least some employers and HR professionals that this legislation is a good thing.

A couple of weeks ago I was at a business lunch for HR managers (the attendees were mostly from medium sized companies) which was hosted by a Law Firm. One of the employment lawyers spoke about this pending legislation and I found it interesting to observe the reaction in the room. It was decidedly cold. One lady made a joke about ‘being able to go more shopping’. That was the positive comment. Another two meanwhile made comments along the lines of “not telling their staff” (about the new legislation!) and “this would release the floodgates”. I sat there bemused and once again found myself rolling my eyes at how backward looking many in the HR profession are.

I don’t know…perhaps I’ve simply spent too much time with technology start-up companies and I’m losing my sense of ‘the real world’. Though if I am, long may it continue! I proceeded to offer another view and carefully said that, yes in certain job roles flexible working could be more difficult to implement, but that my experience of it has been positive. Only recently I had a chat with a colleague who told me flexible working (in his case condensed hours) allowed him to stay with his company for two additional years than he intended to do. He was able to meet childcare responsibilities but he also said he was no less productive as a consequence – in fact he was sure he was more motivated and productive because of it.

But perhaps my detractors will tell me that such fluffy examples are the exception. So back in the real world, why can’t more people get on board with the idea of giving staff a little more freedom or autonomy over their working week?

I can’t help but conclude that for many it comes down to a simple issue of trust alongside very engrained and traditional views about what ‘work should be’. It’s a worrying conclusion not least because the world has changed and is changing. Furthermore why would you want to work in a workplace dominated by such views? I certainly wouldn’t. It sounds like my experience of being in the army but without the cool stuff.

So what’s my advice? Well for a start don’t treat people like idiots (they will find out about this new legislation eventually) and don’t be afraid to tell them about this new legislation. But go a step further…why not embrace it? Why not look at ways to give people some more flexibility over their working week? Sure – different job types have their own constraints but I’d wager most employers could offer at least something. And what will you get in return? As I’ve written about many times before, people don’t just work for money and in fact it’s a poor motivator on a day to day basis. The science tells us people do generally want a sense of autonomy over their lives. If you can provide this you will help contribute towards a happier workforce. And even the traditionalists will have heard the old stories about a happy workforce and a productive workforce…

What now for Learning and Development Specialists?

In the last blog I explored the 70/20/10 learning rule and I started to touch on the impact this way of looking at learning will have on organisations. For those that didn’t read it, don’t worry - The headline I’m concerned with is the number 70% because this tells us, quite logically, that most learning is completed on the job. Guess what – people learn all of the time! Wow, what a revelation!

 

I want to expand on this a little and to explore some of the changes it will take for many organisations to really embrace a true learning culture based on the 70/20/10 rule and inparticular nail the 70%, since this is the biggest number right?

Firstly it requires a big shift in mind set and a change from top down, directed learning to encouraging grass roots bottom up learning. This surely means a shift away from the rigid top down complex competency frameworks which people (particularly in big organisations) are supposed to follow and the consequential, endless battle to measure the workforce against said ‘competency skills’ and/or learning interventions designed to improve those competencies. It means moving towards a model where, yes people still have context and know what is important for them and their company to achieve, but the company on the whole is less concerned with trying to micro manage how people learn or go about doing their jobs.  It also means an end to the prescriptive training needs analysis or at the very least being more flexible on this approach.

 

 

In terms of making the 70% happen, the challenge for Leaders, HR and L&D professionals is to create the conditions so that this 70% is happening as effectively as possible. This can present a challenge and let’s not shy away from the attitudinal one amongst the workforce. Many people have become used to learning ‘happening to them’ i.e. training is something which happens on a course, is something you are told to do etc I recently encountered this sort of mind set and it’s not uncommon - don’t underestimate the challenge of change in this regard. This takes education on the part of the company but it’s also about accepting and then encouraging the natural learning and sharing that most of us will gravitate towards. This can be quite organic and I’m a believer that early adopters will help most of the rest to follow. The huge growth in MOOCs (Massive Open Online Courses) for example is down purely to people wanting to learn for learning sake. In fact this underlines the huge opportunities technology is presenting for learning and HR professionals. On the whole though it means Learning and Development professionals have got to move away from ‘doing’ to ‘facilitating’ and ‘enabling’. Learning Technology in particular is providing us with the means to facilitate, to enable and to allow people to learn in a manner of their choosing.

The 70/20/10 rule

We often think that learning in the workplace is something which ‘is delivered to us’. The traditional organisational learning scenario goes something like this: a student attends a course and learns from an expert via a training course.  From my own experience the primary value I extracted from the course (assuming it was good) was that it informed me about best practice, theory and allowed me to make new contacts. On the downside, unless I got the chance to put the learning into action quickly, I got skill fade.

This highlights the downside of the traditional training course; it’s often completed in isolation. It also ignores how learning really occurs within an organisation. This is because people learn continuously. This basic assumption is reflected in the concept of the ‘70/20/10’ rule. The rationale behind this is that 70 percent of learning is through practice and on-the-job experiences; 20 percent is through other people by exposure to coaching, feedback, and networking; and, 10 percent is through formal education-based learning interventions.

So if we take the 70/20/10 rule as a sound logic it throws up some pretty big challenges for those of us concerned with learning within organisations - how do we facilitate the additional 90% and in particular the 70%?

‘Facilitate’ is the operative word since by definition it is learning out with a controlled environment. The 10% is in theory easier to control (assuming people can be engaged of course). But how do we ensure people share knowledge with one another? To start with it is accepting and understanding the whole picture of learning and accepting that a large portion of this requires individuals to take the initiative. The best way to achieve this is to adopt a mind-set of enabling.  

Technology is one way to enable people within an organisation. An understanding of the 70/20/10 rule is allowing technological tools to take the evolutionary step in people’s minds from ‘staring at a PC screen and ticking boxes’ to something much more useful. In fact this change in perception is why the forthcoming Learning and Development/Technology event in Edinburgh, Crossover Edinburgh promises to be so interesting.

The clever application of technology needn’t be overly expensive or difficult either. For example a recent conversation with an Organisational Development consultant from a leading energy company revealed how they’re using their own version of You Tube to facilitate learning. They are essentially using online videos to help people collaborate and learn. This sort of technology is accessible.

Forgive my pun but what are the lessons here? Firstly it’s understanding the true nature of learning via the 70/20/10 rule and secondly it’s looking at the ways in which we can help facilitate this. This creates its own challenge but first and foremost it’s about adopting a mind-set around enabling people to learn.

Learning and Motivation

How do we learn? In a new series of blogs I am going to explore the science and methods of learning. I have long had a keen interest in learning methods and this has become of increasing interest to me due to in my involvement within Insight Arcade.

Early learning theorists surmised that learning was largely ‘cause and effect’; one of those key theories, ‘Operant’ learning, placed an emphasis on reward and punishment as a way to modify behaviour. I’ve direct experience of using this method as I was formerly a physical training instructor in the Territorial Army (now re branded the ‘Army Reserves’). I had at my disposal, the means, to dish out timely and instant punishment in the forms of additional physical exercise - not something most people relish! Was this an effective learning instrument? It kept recruits in line but it only ever really guaranteed that those people who were punished would do what was required not to be punished. It didn’t exactly engender top performance or a personal commitment to physical fitness. In fact I found too much punishment damaged performance by turning recruits off the idea of exercise. 

However the flip side of punishment was ‘reward’ and I found positive reinforcement toward recruits was more effective. For example if I praised a recruit for doing well after noticing an improvement, I found this reinforced good behaviour and was likely to help motivate the individual. It also made the recruits less fearful of me, which as their instructor, was important. Fundamentally though I found that only those who really wanted to take part in my classes and who wanted to be fit, got the most out of it – no matter how much I praised or criticised.

What do the principles of Operant learning mean for those of us concerned with learning within organisations? On a day to day basis it tells us that operant conditioning has at least some importance in terms of shaping the behaviours of our workforce. Behavioural reinforcement – particularly positive – is an important part of the suite of skills required for coaching individuals. However as a principle by which to embed a culture of ‘deep learning’ and to drive the sort of innovative change many organisations now seek, I’d suggest it is only a small part of the total equation. 

I'm interested in asking people's opinions; how much do people think Operant learning is still used as a principle of learning within organisations?

The Psychology behind Pay

What is money? We know it’s the stuff in our pockets, the numbers in our accounts and the stuff we wish we had more off! Money is something we all use and to some extent think about day in day out, yet we never really stop to ponder what it really is. I would suggest that in essence, money is ‘value’ and it’s worth knowing this because in a work place context, it represents the value we place on an individual’s skills and experiences.

The issues around money as a motivator is a complex one. One of the earliest writers on the subject, Frederick Herzberg concluded that money is a poor motivator but can certainly be a de motivator! Certainly many managers understand that money is not a good motivator on a day to day basis and I am sure many will agree with Herzberg. So what can we do to ensure money is not a de motivator? It goes without saying that we need to have suitable systems in place which allow us to pay people on time and regularly. That should be relatively easy these days and even the smallest company can outsource this to a payroll supplier. Far trickier is how we set the levels of pay within our company (and how by definition place a ‘value’ on our staff).

One of the biggest mistakes employers make is to keep pay as secretive as possible.  This presents a couple of difficulties; the first being that it doesn’t engineer trust (have something to hide?) and the second that it is increasingly becoming untenable because of equality and diversity legislation. So what to do instead? I realise this is somewhat counter intuitive but why not be open about pay. At the very least be informative as to how you set and award your pay. People might not always completely agree with their pay but if it’s transparent, perceived as fair (next to some sort of objective criteria) and they understand the rationale behind it (e.g. I get around 60% of the average market rate for my skills and job role), it’s far more likely to be accepted.

I’ve seen different ways of setting pay in organisations from internally focused systems to those that peg their rates to the market one. One which places more focus on the latter is better in my opinion. That doesn’t mean pay needs to be the best in the market but if it is at least competitive, it demonstrates the company places a suitable value on the individuals skills next to other employers. Lastly all of this should be done to make pay as minor an issue on a day to day basis and your attention should switch to creating the sort of work environment which really does motivate people on a day to day basis!

What is trending in the world of HR in 2014?

As we look forward into 2014 it’s interesting to look at pioneering companies for examples of HR practice. These companies not only provide alternative examples of how an organisation might structure and manage its staff, but also perhaps, an insight into what organisations of the future might look like.   

Towards the end of 2013, US companies Netflix and Zappos shared insights into their organisations. Netflix built their HR philosophy on minimising employee control and having a ‘context’ driven leadership model in order to encourage empowerment. Zappos meanwhile started a process to completely scrap their hierarchy, creating instead a ‘holacracy’, without managers and job titles. Going forward, employees will be allocated into semi -autonomous work circles. Zappos say all of this is in order to boost innovation, empowerment and reduce bureaucracy. Whilst all of this might sound extreme, Zappos arguably represent the logical conclusion of the employee engagement agenda. After all surely you engage staff by empowering them?

 

 

Within more traditional sectors, we saw GlaxoSmithKline scrap individual employee performance related pay. This was on the basis that their previous remuneration policies were driving damaging behaviour. Seemingly running contrary to many in the sector, Swedish bank Handelsbanken, got on with running their successful bank without short term bonuses and by devolving decision making to branches (progressive yet refreshingly old fashioned). Both examples were encouraging; I have long been a sceptic of individual performance related pay and the damage it has caused in the banking sector has been huge.

What does this tell us? The previous examples are a curious mix of companies looking for sustainability and innovation. Netflix, Zappos and even Handelsbanken have accepted that you simply cannot control every facet of your organisation and to try and do so is counter-productive. They are talking about terms such as empowerment but backing these words up with meaningful action. Crucially these companies make their decisions based on a desire to be a leader in the market place.  Is 2014 the time for more companies to get on board with this philosophy?

Understanding Individual Performance in an Organisation

Employee performance is a favourite topic of mine because it is one which is often very misunderstood and in this blog I want to give you a sense of why I think this to be the case!
 

Let us start with a simple scenario. Sam is a very competent saleswoman and she works for a company who we will call ‘Old School’. Sam is in charge of selling a product which has become less easy to sell in recent months. Customers seem to be buying a competitor’s product which better meets their requirements. The recently implemented Old School CMS is time consuming and clunky whilst the company have recently introduced additional reporting procedures to try and control cost. All of this has created more bureaucracy for Sam. Her figures show a decline in performance from the previous year and going into her quarterly review, Sam feels frustrated, vulnerable and unsure about what to do.

During the meeting, her manager Nick, suggests that Sam should try harder to sell Old School’s products. “Yes it is tough but you need to be more innovative in your approach and need to try even harder” he tells her as he awards a ‘Requires Performance Improvement’ grade. Sam had already being working very hard but at least she is now sure about what to do. She leaves her review meeting feeling completely demoralised and the first thing she does is to phone a recruitment agency. The question is was Sam to blame?

A traditionalist like Nick might say yes. Yet what this example hopefully shows, is that an individual’s performance is actually impacted by many different factors out with the control of the individual. In Old School we saw external changes to the market in the way of new competition as well as significant internal change imposed upon Sam. What we’ve seen is the greater system impact her total performance leaving Sam stuck as something of a bystander to events. The renowned late American industrialist Edward Deming talked about the 85/15 rule – that in certain circumstances the system was responsible for up to 85% of an individual’s actual performance. We could argue about the actual weighting of this ratio but he highlights a very important point. If Nick had understood this he could approach the problem differently and work with Sam to look at the decline of performance in a more constructive way.

 

The misunderstanding of the multifaceted nature of performance can be hugely detrimental to business success and individual wellbeing. I’m not saying for one minute we have an abdication of individual responsibility, but surely if we recruit the right people in the first place and they pass their probation period, they’re competent to work for the company? I’ll leave you with one last thought, imagine how nicer work would be without a blame culture…

What do you think, does this example resonate with you?

The problem with Performance Related Pay...

I read an article in today’s Guardian which referred to performance related pay in the civil service. It got me thinking - I understand George Osborne plans to introduce greater performance related pay to the Civil Service in 2016. I don’t have an issue with reform of the civil service (although I don’t pretend to know much about the civil service if I’m honest) but I do have an issue with performance related pay. On the face of it, performance related pay seems like a logical thing to do. No doubt politicians think it is a good way to ensure results and demonstrate to the public that they’re being tough yet fair. After all “reward” equals “pay” right?

The unfortunate thing is there is very little (in fact next to none) evidence to show that performance related pay actually works! There is however evidence to show it can be damaging and actually drive the wrong behaviours. For many decades respected industrialists and academics have told us that money is a poor motivator. For example Frederick Hertzberg told us in 1959 that money is important to an extent - but only to a limited extent. Karl Dunkers ‘candle problem’ published way back in 1945 showed the limitations financial incentives have in driving results to complex problems. The fact is the ‘carrot and stick’ approach which encompasses things like performance related pay and performance appraisal rarely works and when it does, does so in limited circumstances.

The most powerful human motivation comes from within and there is a lot of evidence to support this. If you’re sceptical, apply this to your own life and you will see it makes sense. For example do you bust a gut to finish that 10k because someone is going to pay you? Do you volunteer with your local sports club because you will get punished? No of course you don’t. A cursory glance at some of the most successful entrepreneurs in the world is revealing. People like Branson or Zuckerberg talk about solving problems, coming up with innovative solutions, creation, having mastery of their work. In fact money is a consequence of their success rather than the driving factor.

Yet in late 2013 we’re still in a situation where politicians and many companies think the best way to motivate people is through performance related pay.

What's wrong at Grangemouth?

For a while things seemed to be going from bad to worse at Grangemouth. Depending on who you believe or what you read, there were various parties to blame. However truth is rarely black and white. Perhaps there is also another way of analysing the situation which has lessons for companies across the globe.

I look at Grangemouth and I see a classic ‘them and us’ culture. The question is where does this culture come from? Often this sort of culture is entrenched in the organisation but it comes from a set of unhealthy assumptions that will have existed for a long time.

If we look at the social science research about human motivation and productivity at work - how much is really achievable in a command and control structure? Whether you like it or not, if you insist on putting in layers of ‘management’, you are putting in place controls which stifle empowerment and extend your communication lines – they ultimately make people remote from the company.

Why do we empower? So we can raise human productivity but to do so properly we have to believe that people are inherently trustworthy individuals who can manage themselves. We have to start treating people like adults and sometimes the adults need to accept they’re adults too. We need to get away from this ‘carrot and stick’ (reward and punishment) approach to work because as Dan Pink tells us, there is no greater amount of research built up over the course of decades to show it just doesn’t work.

Does HR Work? Pt Two 'The Negative Influence of Employment Law on HR'

First of all, apologies for not producing an article in August! I’m going to blame some holiday time and the Edinburgh festival (which was exceedingly good this year).  So here I am in an increasingly dark September and ready to continue with my series of blogs entitled ‘what’s wrong with HR’. In this article I’m going to talk about employment law and the negative effect, I believe, legislation has had on the role of HR departments.

Ask people about HR and the chances are that they will talk about a function that is there to hire and fire. I often found myself resisting this charge because to me HR was always about enabling people to work effectively, to boost performance and reduce cost. It was heavily based on psychology and evidence gathered over the course of a century. Indeed this was why I got it into it in the first place. But it has become clear this was my perception rather than the one held by people at large and indeed it wasn’t one which stood up next to my own experiences as an HR employee. In my defence a cursory glance at the Human Resource Management books in the library of Edinburgh Napier University is far more likely to support my original view of things. So why the disconnect between the boffins in the library and the public and practices of many HR departments who have adopted the role of hirer and firer?

Some of this has been undoubtedly brought about by various Westminster governments, particularly the Labour one. I recently chatted with a colleague from the CIPD, a person who is a little longer in the tooth than myself (but with age comes lots of experience)! He told me that when he started his career in the late 70s, employment law was pretty much “on one pamphlet of paper”. Oh how things have changed! We now live in an age where employment law is on many, many pamphlets of paper!

The ogre of employment law has grown and this hasn’t been helped by a growing blame/get rich quick litigation culture and the growing cottage industry around it which includes law firms through to HR/Employment law companies who promise to ‘keep your business safe’.

To be fair I understand within this climate why a company must address and comply with employment law and it is natural this should fall under the remit of HR. Unfortunately and with a few exceptions, HR at large has become concerned with what I will unapologetically call “ar8e covering”...I know you wouldn’t encounter such a term in the Harvard Business Review but this is my blog and I’m only bit part academic.

What is the result of this ar8e covering? Many HR departments have become convinced that their very purpose in life is to prevent litigation. The trouble is I’d argue that this has had damaging consequences for their businesses. Unless you’re a law firm your company doesn’t exist to prevent litigation - it surely exists to supply a product or service? Unfortunately the need to prevent litigation doesn’t sit well with enterprise. In practice this mind set of ar8se covering manifests itself in anti innovation tools such as draconian staff handbooks aka patronising rule books. Then there is my most hated bogey man of all, the appraisal system.

 It seems many HR departments do employment appraisals, not just because they mistakenly think it will improve performance, but because they think it important to have a paper trail “in case something goes wrong”. Indeed if you go along to any performance management presentation from a lawyer this is what you will be told to do – make sure you have a paper trail and an appraisal system. This is regardless of the fact that most appraisals are completely useless at fulfilling the paper trail role, a point a good employment lawyer recently made to me in private.

“Ahh but litigation damages company reputation and costs money” I hear many HR people and lawyers say. True it undoubtedly can but this doesn’t let HR off the hook. Rather I think it’s about keeping it in perspective. I’ll bet you the cost of defending and losing an unfair dismissal is far less damaging than nurturing an a8se covering culture. True the former will cost you some money but the second will eventually put you out of business.  Ask any entrepreneur if innovation and bureaucracy go hand in hand and listen to what they say. In fact if the best thing your HR department does is to keep the company compliant, I’d suggest you outsource this responsibility to one of the employment law companies because I’d wager you’ll find it cheaper than the cost of employing a HR manager.

Furthermore if we look at the employment law burden it’s not actually as onerous as many believe. The media like to report the horror stories such as the discrimination claims against city banks where huge pay outs are awarded. These are proportional to the company wealth, particularly ugly cases and are the exception to what really goes on. In fact the median pay award in 2012 according to law firm Morton Fraser for unfair dismissal was £4,560. The reality is tribunals don’t want to put companies out of business. Changes to employment law in July of this year should further reduce the risk to businesses.

So what should a company do? By all means have some sensible measures in place to prevent litigation; have good employment contracts and yes, have a sensible handbook with corresponding policies and procedures (but please, please resist the temptation to have a handbook written in patronising legal language). You might even want to have a good relationship with a reputable employment lawyer as a prudent measure. However don’t let them rule the roost and above all else, try to accept that you can’t mitigate against every eventuality and accept that to attempt to do so is damaging.

In fact the best way to protect your business is to adopt an altogether different mind set – that people are Innocent until proven guilty and that most people are trustworthy who want to do well. Build your company and HR practices on this basis. Be very questioning of your existing employment policies in terms of what they really do for your business and why they are in place. Treat people like adults, support them and engender a culture of responsibility and true empowerment as your principles. Can your HR department support with this? If not, question why they are there.

Am I an idealist? Unashamedly so. But I recently read that the famous proponents of the sort of trusting culture I mentioned, WL Gore & Associates, have never made a loss in their 50 year plus history. So there must be something in it.

In the meantime, I’m going to be happy to continue to tell people why my version of HR is much more than hiring and firing.

As ever happy to hear your thoughts!

Does HR Work? Pt One "Recruitment"

This year, The Chartered Institute of Personnel and Development (CIPD) have been trumpeting the organisations 100 year anniversary. 100 years is quite a landmark and it prompted me to reflect on the HR profession and my experience of it.

Therefore in this brand new series of blogs I’m going to explore some of the main areas of the profession and cast a critical eye over them.

First up is Recruitment...

I read a statistic recently which reckoned that companies underestimate recruitment costs by up to 95%! This is because they fail to see the associated costs of recruitment such as management time. This is quite staggering but it didn’t massively surprise me. Recruitment is certainly an expensive pursuit but it’s also important for other reasons which were best explained by a colleague of mine and experienced Financial Director, Jon Brigain.

 
Jon used to work for a leading soft drinks company with a reputation foged in adrenaline sports and I recently asked him how they maintained their culture in such a vibrant and fast moving company. His answer was simple and to the point - “Recruitment”. Jon said their policy was to only recruit people who bought into their values and would thrive in their culture. One of the key ways they achieved this was through a transparent recruitment process – essentially it was important that the candidate knew exactly what he or she was getting themselves into. I found this fascinating but there is a science behind this too which is to do with motivation. Human Behavioural Psychology tells us the most powerful type of motivation is intrinsic as opposed to extrinsic motivation. That means you ideally want people who want to work for you more so than because they have to i.e. it’s a job and they want to be paid (which is extrinsic motivation).
Recruitment is also an opportunity to get things off on the right foot with your new employee and also leave those who aren’t successful with a favourable impression. In HR circles we refer to this as the candidate journey i.e. the process from attraction to hire (or rejection) which I often liken to treating the candidate like a customer. This is an area where many companies fall short. Remember the old marketing adage about people being more likely to share a bad experience? We live in a connected world where thanks to social media every Tom, Dick or Harry can easily tell the world about their bad experiences. If you treat your candidates badly don’t be surprised if it hurts your business reputation.  It is therefore very important to think about how you get your candidates in the first place...

So I now come onto the relationship between HR and the Recruitment industry. Many laymen and women think HR and Recruiters are the same (I commonly hear recruiters being described as HR) but this is a mistake because they’re quite different. Recruitment is about placing people in companies and is really quite a lucrative business because it’s essentially sales. Now I want to make it clear that I’m not here to trash the whole recruitment industry because I realise there are good recruiters out there and I recognise there is a need for good recruiters too.

Professional recruiters can be particularly important in markets which require very specific hard to get skills or experiences, such as in senior level appointments or specialist roles. However I do have an issue with the practices of many high street recruitment companies.  If you haven’t had one yourself, speak with a friend or a colleague and I guarantee you it won’t take long to find someone who has had a bad experience with a recruitment agency. I also have an issue with the way many HR professionals are so blasé about their use of agencies.

So if we think about intrinsic motivation and transparency, as I had mentioned earlier, what do recruitment agencies do to help you achieve this? A typical recruitment agency advert on any given day on any jobs board, will read something like this: ‘We have a need for a marketing assistant in a leading company within an exciting industry’...such an advert contains no real information whatsoever about the company or the sector (this is to prevent the candidate going straight to the client company and thus the recruiter loses their fee). By what definition is this providing transparent information to the candidate? What bothers me is the HR communities collectively limp response. Yes I get that sifting CV’s is time consuming and agencies do this, but you know what – get over it! If your HR department’s response to a vacancy is to quickly pass it over to an agency, I’d be asking them some hard questions.

However I did say that sometimes you do need to use recruitment agencies so there might be some good answers to those hard questions. But there is a right way and a wrong way of using a recruitment agency. To do it the right way, it should be about partnering with a company which really understands your values and whose candidate experience will match your own expectations. There is a lot to be said for outsourcing things your less good at but it might be that a Recruitment Process Outsourcing (RPO) company is a better bet than a high street agency if you’re recruitment requirements are regular and more standard. Your HR people should really know the difference between the two...

Inside companies themselves, recruitment systems, procedures and processes are often sub-standard. Poor use of recruitment agencies invariably starts because of poor internal practice. I have witnessed processes which are inept to the point that they result in increased cost and a poor candidate experience.  Remember we're talking about a fundamental company task here! A typical hallmark of such a process is that it is 'reactive' and in such senarios application of technology is often hap hazard at best.

You may also want to look at recruiting yourself. I do appreciate the internet and social media has become something of a double edged sword - giving easy access to candidates yet at the same time making it easy for the wrong candidates to apply.

However clever application of technology can be incredibly effective. We have had so many advances in technology that commercially available candidate management systems really do allow you to streamline processes and rather than see the Internet as a source of angst see it as an opportunity! For instance the capacity now exists to advertise multiple adverts at the touch of a button. Couple these technological solutions with candidate focused process mapping (when looking at processes you can't forget the candidate is the customer!) and tools such as psychometric profiling and we have a whole suite of methods available to help HR reduce the 'risk of recruitment', be cost effective, improve candidate experience and get that all important candidate fit. It’s also a place to be inventive with the interview itself – Jon told me he used to take people on a night out and to the climbing wall! Why not?!

I’ve been critical here and I also realise there are plenty examples of good recruitment practices but my feeling is that HR to date is way behind the curve on where it should be with this most fundamental of people tasks. So in this respect at least I’m going to have to say the profession isn’t cutting it. What do you think?