Tag Archives: Business Case

Tying Recognition to Values: Who Knew?

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Organizations that believe in driving an intentional culture – whether for engagement purposes, recruitment purposes, performance purposes, innovation purposes, or all of the above – might think it logical to tie their recognition programs directly to their values. But as it turns out, maybe not.

The new SHRM/Globoforce Employee Recognition Survey Winter 2012 Report has some interesting survey data and thought-provoking findings. The survey, sent to 6,000 SHRM members at the manager level or higher, had a response rate of 13% and a margin of error of +/- 3%. So, with 770 randomly selected HR professionals employed at organizations with more than 499 employees across North America, the sample size is large enough for the results to be interesting.

The broad findings are a little surprising – although the survey questions focused entirely on recognition, engagement and core values. (So, for example, the challenges of implementing healthcare reform don’t show up, nor do the issues of perceived talent or skills shortages.) But even within that context, these findings make me scratch my head:

#1  Employee engagement tops the list of HR challenges.

#2  Performance management remains stuck in neutral.

#3  Recognition programs fill the feedback and appreciation gap.

#4  Recognition programs have an observed positive impact on business results.

#5  Recognition aligned with core values leads to more effective managers.

#1  Employee engagement tops the list of HR challenges:  well, I do find that surprising – especially given the rest of the survey data. I might have thought that the issues of performance management done the same way it’s been done for 10-15 years (or not at all) would top the list of HR challenges. But no, employee engagement is at the top of the list. Despite (or maybe because of) the fact that most HR professionals haven’t been able to make the business case for investing in creating higher levels of engagement, it’s at the top of the list.

#2  Performance management remains stuck in neutral:  Performance management is the talent management infrastructure weak link. Most CEOs and other members of the C-Suite report that they know their system is ineffective. And what’s more they know their employees don’t like their current system either. That HR folks are “stuck in neutral” in this regard is perplexing. With the billions of dollars being spent on ineffective, unpopular legacy systems, this would seem ripe for corrective action — not being stuck in neutral.

#3  Recognition programs fill the feedback and appreciation gap:  so investing in new solutions that fill a gap rather than fixing the full system seems shortsighted to me. Don’t get me wrong. I think that there are recognition programs that powerfully engage teams, inspire individuals and create positive momentum for employers and their customers. Some of the new entrants that utilize social technology and are natively mobile are stunning. And worthy of investment. But should we be thinking bigger than filling gaps?

#4  Recognition programs have an observed positive impact on business results:  that’s research-speak for “we can’t quantify it yet but we think it’s real based on anecdotal evidence.”  ‘Nuff said.

#5  Recognition aligned with core values leads to more effective managers:  that’s it! If the data clearly support this finding, then this is the foundation for the business case that HR has been looking for. I’ve long believed that if the middle manager cohort was effectively trained and managed, the incidences of workplace drama and their resulting legal issues – and the resulting time-suck for HR – would be hugely reduced. Managers would be held accountable for managing. And HR could get to the strategic business of workforce planning and talent management leadership.

The following charts from the report show the “observed” connection between values-based recognition systems and managerial effectiveness in “acknowledging and appreciating” employees:

SHRM Globoforce Fig 8

SHRM Globoforce Fig 13

*Note:  the red circles on the charts are mine.

The finding that managers do a better job of effectively acknowledging and appreciating employees when recognition programs are directly tied to core values seems to stack up. But it also appears that managers do a better job of effectively acknowledging and appreciating employees simply by being given a recognition program to use. Either way works for me. And either way clearly works for employers and their employees.

But I’ll go out on a limb with the observable improvement in managerial effectiveness and agree that tying recognition programs to values is a winner. In fact, I’ll go so far as to opine that tying talent management in its entirety to organizational values will provide quantifiable improvement, not just observed improvement.

Interesting findings in this report. If you haven’t looked at some of the innovative new solutions in the recognition space maybe you should.

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Filed under Achievers, Annual Performance Reviews, Business Case, China Gorman, Data Point Tuesday, Globoforce, Managerial Effectiveness, Rewards & Recognition, Talent Management

From the Archives: Stick a Fork in Annual Performance Review Systems

While I’m traveling, I thought I’d re-post one of the most popular Data Point Tuesday posts from 2012.  Enjoy.

Today’s data points come from two recent surveys:  one from Achievers and one from Cornerstone OnDemand.  Both surveys show clearly that annual performance review systems’ time has come.  It’s over.  Time to stick a fork in them.

Well, it’s time to stick a fork in them if you’re interested in providing the kind of feedback to your employees that is focused on growing their skills, binding them closer to the organization and engaging their full and discretionary energy.

Let’s look first at the Achievers data.  As part of a survey fielded in April of this year, employees were asked how frequently they would like to receive feedback from their managers.  HR professionals and CEOs were asked how frequently they thought employees in their organizations would like to receive feedback from their managers.  Do the answers surprise you?

No surprise that employees would like to receive feedback immediately or on the spot – or at least weekly.  Maybe a bit of a surprise that both HR professionals and CEOs know this.  Here’s the question, though:  if employees, HR professionals and CEOs all know that employees don’t want feedback in an annual context, then why are the majority of performance feedback systems in use today based on an annual model?

Making matters worse, Cornerstone OnDemand published survey results from late 2011 with related findings:

  • only 37% of employees report that they’ve been given useful feedback from their manager/employer in the performance review process
  • Only 32% said that their performance goals are aligned with their company’s business objectives
  • Only 20% have established career goals with their manager/employer

So.  Annual feedback systems satisfy no one from a frequency perspective.  And feedback systems in general are not providing useful feedback for employee skill growth or engagement – or in line with business objectives.

At this point you could say, “Yikes!” and start moaning.

Or, you could say, “This looks like an opportunity for HR to make a significant contribution to the success of the business!” and start collecting similar data from your organization to identify whether this opportunity is real.  If it is real, I see the building of a compelling business case in your future – just in time for the FY2013 budget planning process.

And a new more powerful way to engage employees and manage performance in your organization could be right around the corner.

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Filed under Achievers, Annual Performance Reviews, Business Case, Business Success, China Gorman, Cornerstone OnDemand, Engagement, HR Data, Performance Feedback

ROI of People Focused Organizations

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The holy grail in HR is providing hard, compelling data-based evidence for the ROI of investing in people.  With this data, HR is in the strategic driver’s seat of the budgeting process.  Without this data, HR is resigned to the furniture conversation.

Want some new people investment ROI data from a source that even your CEO would pay attention to?  How about The Boston Consulting Group (BCG)?  They’re a big time global business strategy consulting firm that your CEO respects.

For the third time since 2008, BCG has partnered with the World Federation of People Management Associations (WFPMA) to publish its Creating People Advantage report.  The most current, published in October, is Creating People Advantage 2012: Mastering HR Challenges in a Two-Speed World.

The findings are the result of BCG’s analysis of responses to an online survey that polled 4,288 executives from companies throughout  a number of industries, 102 countries, and six major global regions.  Additionally, 63 HR and other executives from high profile companies all around the world were interviewed.  The survey and interviews covered 22 HR topics and the report includes interesting case studies from companies like L’Oreal, Samsung, and Daimler Trucks.

It’s a fascinating – and very readable – report and the findings won’t surprise you.  In fact, the top three critical topics for HR leaders around the world remained the same as in BCG’s 2010 global survey:

  • Managing talent
  • Improving leadership development
  • Strategic workforce planning

The data are compelling and the comparisons between countries and regions of the world really are interesting.

The big bonus, though, is the report that is appended at the conclusion, From Capability to Profitability: Realizing the Value of People Management. It’s loaded with economic data that compares the HR practices of high-performing companies against those of lower-performing ones in critical areas, including talent management, leadership development, and performance management and rewards.

The bottom line is that companies that demonstrated proficiency in the 22 key HR areas experienced revenue growth that was up to 3.5 times higher and profit margins that were 2.1 times higher than those of less capable companies.  And guess what those increases did to their share prices?

BCG 2012 People Companies Outperform the Market Average

Think your CEO and CFO are interested in higher revenue and profit growth rates?  Think the board might be interested in higher share price growth rates?  Think they might be willing to invest in practices that would accomplish those outcomes?  Yep, me too.

The budget season has long passed, and you’re locked in to the 2013 operating plan.  But take a look at the 22 key HR practices in your organization that this report covers and start a file that will hold the data to build the people investment plan for 2014. It takes some time to gather the foundational data to build your investment business cases.

Start now.  Start tracking the data.  Start setting the benchmarks. Start thinking in business cases.

And quit talking about furniture.

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Filed under Boston Consulting Group, Business Case, CEOs, China Gorman, Connecting Dots, HR, HR Data, Human Capital ROI, ROI, WFPMA

Building the HRM Technology Business Case

The highly anticipated CedarCrestone 2012-2013 HR Systems Survey White Paper, 15th Annual Edition was released at the HR Technology Conference in Chicago last week.

If you have any thought of adding HRM technology to your budget next year, the data in this report can be the foundation of your business case for the investment request.  Even if you aren’t going to ask for technology investment money for FY2013 this report will give you important data for managing your technology in new ways.

In analyzing the more than 1200 survey responses to identify key common practices, the CedarCrestone team (led by Lexi Martin) used these four independently validated key financial metrics to identify the highly successful organizations:

  • Revenue per employee:  Top performers is $681,903 vs. $352,576 for all others
  • Profit per employee:  Top performers is $317,508 vs. $131,157 for all others
  • Operating income growth (EBIT):  Top performers is 61% vs. 11% for all others
  • Return on Equity:  Top performers is 23% vs. 10%

Once the pool of top performing organizations was created, the analysis for common practices began and resulted in identifying the following Seven Practices of Top Performing Organizations:

  1. Top Performers have standardized processes and sophisticated change management processes.
  2. Top Performers are more likely to already have, or be planning a move to, a SaaS HRMS.
  3. Top Performers avoid extensive customizations of their HRMS.
  4. Top Performers have higher user adoption of employees, and manager self service, and shared services.
  5. Top Performers are more likely to have an integrated Talent Management system on the same platform as their HRMS solution.
  6. Top Performers have more sophisticated business intelligence solutions in place and more often put these tools in the hands of managers.
  7. Top Performers have more HR technologies in use and spent less on HR technology per employee.

The CedarCrestone 2012-2013 Survey White Paper goes into great detail about each of the seven best practices with quick characteristic overviews as well as deep data dives.  Well written and easily understood, this report is full of really useful information – whether you’re an HR department of one or one hundred.

The best practice that caught my eye was #7:  Top Performers have more HR technologies in use and spend less on HR technology per employee.

Regardless of the application category, Top Performers have more technology in place than the others.  We place each respondent in a technology application adoption quartile:  62% of Top Performers are in the top quarter of application adoption vs. 35% of the other publicly traded organizations; the categories of BI (Business Intelligence) and social applications both had 20%+ differences in adoption  between Top Performers and non-top performers.  And all of that technology still comes at a 12% lower cost per employee! 

It may seem  counter-intuitive that more technology means less cost, or that more technology means less humane-ness.  But what’s more humane than the organizational stability that comes with success?  What’s more humane than a highly profitable business that’s able to invest in talent?  What’s more humane than the organizational growth and longevity that higher levels of productivity produce?

Download the CedarCrestone report here, get a cup of coffee and spend an hour on the data and conclusions.  You won’t be sorry because these dots connect.

It’s budget season. You need the business case to invest in HRM technology and this report will give you most of the firepower you’ll need.  You could be a hero at this time next year!

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Filed under Business Case, CedarCrestone, China Gorman, Connecting Dots, EBIT, HR Analytics, HR Data, HR Technology, HR Technology Conference, HRM Technology

Best-in-Class Engagement Metrics

The Aberdeen Group just published a fascinating report, The Rules of Employee Engagement:  Communicating, Collaborating and Aligning with the Business, that looks at what best-in-class organizations are doing about engagement and why they’re doing it.  Author Madeline Laurano takes a pretty deep dive into the subject and her analysis reveals some pretty intriguing conclusions.  What hooked me from the start were the three metrics for performance criteria to distinguish best-in-class companies for employee engagement:

  • 71% of employees exceeded performance expectations, compared to 14% of Laggard organizations
  • 85% of 1st choice candidates accepted an offer, compared to 8% of Laggards
  • 72% of employees rated themselves highly engaged, compared to 9% of employees of Laggard organizations

Most of the statistics we see about the value of engagement focus on tying engagement scores to financial outcomes.  No question:  we need that.  Data about the outcomes of engagement are helpful in building business cases for investing in the employee experience.

But tying other types of outcomes to higher engagement scores can also be helpful – like the number of 1st choice candidates accepting employment offers.  If a talent shortage truly is the number 1 concern of CEOs and their boards around the world, as the latest Lloyd’s Risk Survey suggests, then strategies that effectively raise the likelihood of securing the top talent you go after should be of interest. And it makes sense that A+ talent likes to affiliate with other A+ talent.

And connecting the dots between engagement outcomes and high levels of individual employee performance also makes sense.  I’ve long wondered at the value of trumpeting the engagement scores of every employee — when we all know that it’s the most effective employees’ opinions we care most about.  Linking employee performance and engagement scores makes a great deal of sense to me.

Take a look at the report.  I think you’ll find the data extremely useful.

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Filed under Business Case, Business Success, China Gorman, Connecting Dots, Economist Intelligence Unit, Engagement, HR, HR Data, Lloyd's, Performance Feedback