ATD Blog
Wed Nov 12 2014
When asked to explain why there is such lag in the way top managers assess their talent practices versus the way they assess other areas of their businesses, Jeffrey Pfeffer, Thomas D. Dee II Professor of Organizational Behavior at the Graduate School of Business, Stanford University, gives a typically succinct answer. “In spite of what everybody says, they don’t actually care very much about talent management, and that’s reflected in their behavior.”
Pfeffer continues, “If those managers actually cared, they’d fix the problem, but they don’t. If you want companies to care about the problem, then you need to have a different set of senior leaders. We select senior people for a set of skills and backgrounds, which are often in financial management, and they have a worldview that emphasizes cost-cutting and efficiency. That is a perspective that seldom sees people and organizational culture as a source of competitive success. Of course, there are exceptions such as Google, SAS Institute, and some other companies that are sincerely concerned about the attraction, retention, and motivation of their talent and people.
“However for the most part, the executives who now run a company such as Hewlett-Packard aren’t showing that concern. There was a time when Hewlett-Packard was a strong culture organization, where people mattered. Now it is a company that has spent more than $32 billion on acquisitions and in the end have a market capitalization much less than their initial value plus the $32 billion. Carly Fiorina, former chief executive at HP, was in a fight to the death for the acquisition of Compaq. Now, Hewlett-Packard is going to split itself up and spin off its hardware business, having just spent some years putting itself together and spending a fortune in the process.”
In all of this, people are fascinated with doing the mergers, split-ups, restructuring, and layoffs. At the same time, there is very little concern or attention about talent and talent management. “Currently, top managers seem only to care about deals and how do the deals play with Wall Street. Until you get different people, with a different perspective of where business success comes from, nothing is going to change,” says Pfeffer.
Meaningful HR metrics
Some people believe that meaningful HR metrics are difficult to obtain and are measured on a much longer cycle than measures for other parts of a business. For instance, an HR professional may know on an hourly basis if his factory is working well, but it may take him a year to find out if Suzy is progressing well as a manager.
However, Pfeffer thinks “HR people basically haven’t done a good job of trying to figure out what the end-and in-process measures are. If we’re making a car, making semiconductors, or even doing things that would have a relatively long time horizon, such as new drug development, a company would spend enough time and intellectual energy to figure out what some relevant in-progress measures might be. Perhaps, not on an hourly basis, but at least so executives could get some sense of how well they are doing. I think in HR they basically have thrown up their hands and given up.”
There are measures available to assess ongoing HR performance. Pfeffer points to Theresa Welbourne, who runs a company called eePulse. Among other metrics, Welbourne’s company sells a short survey that traces employee engagement and energy on an almost continuous basis. Those measures can diagnose where engagement is strong and where it is weak, and can be used to learn what is effectively improving or reducing employee energy. Energy mapping can be used to understand the hidden and informal network in any organization. In addition to mapping energy, it can be used to understand and identify innovation hubs, areas of behavioral excellence and centers of excellence. The knowledge obtained from energy mapping helps create learning that is shared with others in the organization. All of this is done in real time and done as on-going data gathering.
“It isn’t sufficient to do employee surveys once a year. You need a sense of flow. You can measure physiological reactions and simple attitudes on a daily or even on an hourly basis if you want to. We have the web, where companies like Trip Advisor and Yelp are updating ratings of restaurants, hotels, and products continually. Uber, by connecting riders to drivers through its apps, updates its data continually. This is going on in all sorts of businesses. However, HR basically hasn’t spent the time to do more frequently updated measures and surveys, and again I think it’s mostly an issue of they don’t care. They think if they do a once-a-year survey, that is enough. However, taking surveys that infrequently is not inevitable,” says Pfeffer.
He continues, “There’s no law that says you have to do a long employee survey only once a year, or in the case of Stanford, once every several years. I think that’s ridiculous. In many other domains, except HR, we have the ability to get real-time updates or at least more frequent updates about what’s going on. It reflects where we began this conversation: most in HR don’t care about getting more frequent data. They say if this isn’t really data that I’m going to use in decision-making, I really don’t care about it. Why would I spend time and effort getting it more regularly?”
Ask intelligent questions
Evidenced-based management, as described in Pfeffer’s book, Hard Facts, Dangerous Half-Truths, and Total Nonsense: Profiting from Evidence-Based Management, can help turn this situation around. “The short answer of what we’ve seen in the field with evidence-based management is when people make decisions based upon the best available theory and data, they do better than when they make their decisions based upon hunches, casual benchmarking, or what they believe to be true. We would not tolerate in any other field, certainly not in medicine, the casual and uninformed approach to making important decisions, particularly about people’s wellbeing, as we do in HR,” states Pfeffer.
Learning executives can help their companies start an evidenced-based management movement. According to Pfeffer, “Evidence-based management isn’t about statistics and data; it’s about a way of thinking. One of the things you see when you talk to many senior executives is almost a complete absence of intellectual curiosity.
“In the words of one of my colleagues and friends who is CEO of a big company, ‘A question well asked is half answered.’ If you can ask intelligent questions about what’s going on, and if you are interested in finding out the answers, you can hire the people to run studies and do the statistics. I think the reason why there is so little interest in evidence-based management has much less to do with the math phobia of HR people, and much more to do with the fact that they don’t think like scientists. They don’t formulate hypotheses; they don’t say, ‘If we did this, what happened and why.’ If they were intellectually curious, they’d hire somebody to answer that question, but it seems to me they’re not even interested in asking the questions.”
Pfeffer adds, “I think HR professionals see themselves in the ‘doing business’ rather than the ‘figuring it out business’. An HR professional thinks he has to implement a compensation program; he has to implement a talent retention program; or he has to implement a recruiting program. He has relatively little concern with the ‘figuring out business’. He feels as long as he can justify doing these things, there is relatively little interest in figuring it out how to make it better; why it works the way it does; whether it’s appropriate for us; and what are the underlying assumptions on which it’s premised. Not many in HR are asking those kinds of questions. Frankly, I think it’s because we haven’t trained or selected for people who think like that. Of course, there are exceptions, and Google is one of them.”
It’s not just a matter of HR people being averse to data. Pfeffer explains: “You can recruit appropriate talent into the HR function if you pay people properly and give them a real voice at the table. I think if CEOs were interested in HR people who are asked to perform evidence-based management (and they are at a place like Google or SAS Institute), then you would either have HR people who are interested in those questions or you’d have different HR people.
“This starts at the top with CEOs who see these questions and ideas as the plumbing of their company in the true sense of the word. In many companies, as long as the waste gets carried away and everything operates pretty well, no one asks how the toilet operates. If you ask them, many executives will say, ‘People are the most important asset,’ but they really don’t act like they believe that,” Pfeffer concludes.
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