A Mathematical Approach to HR?! : Promoting Responsible Use of Numbers in People Management

"If we must apply a Mathematical approach to HR, let us go beyond Arithmetic. Human Resource Management is more like a differential equation that can have multiple solutions!” I heard myself telling the Senior HR Leader. This was my fourth ‘encounter’ with this gentleman (See 'Passion for work and anasakti ‘, 'Appropriate metaphors for organizational commitment ‘ and ‘To name or not to name, that is the question’ for the outcomes of my previous interactions with him). This time, we were discussing the point of view that HR can get the elusive ‘seat at the table’ by being more data-driven, quantitative, objective and mathematical in its approach. Similar to what had happened during my previous encounters with him, this interaction also prompted me to think a bit more deeply about the underlying issues.

Mathematics and logic are immensely useful tools. The five and a half years of engineering education that I have received, my pre-MBA job as an Aerospace Engineer, the Social Research Methods related studies during my MBA and the initial years of my HR career spent in Compensation Consulting & Research Based HR Products  have made me very comfortable with quantitative and mathematical approaches to diagnosis and solution design.  Having practiced Six Sigma, I have experience in the process improvement approach of converting a physical problem into a mathematical problem, finding a mathematical solution and converting the mathematical solution into a physical solution.  I have also used quite a bit of statistics especially during the best practice & benchmarking studies during my five years in HR consulting. However, there was still something that was bothering me regarding my conversation with the Senior HR Leader.

Once I stayed with that feeling of discomfort for a while, things began to crystallize in my mind. The first thing that came to mind was an incident that happened a few years ago when my son was about 5 years old. I had bought him his first calculator and he was very excited.  For the next couple of days he was chasing me saying that “Tell me all your problems; I can solve them”.  It was an interesting task to convince him that most of the problems can’t be expressed in numerical terms and that even those problems that can be expressed in numerical terms can’t always be solved using the functions available in the calculator! When I thought about the matter a bit more, many other aspects came tumbling out:

• Perfect Logic coupled with Questionable Assumptions : Logic is a great tool for reasoning. The problem is just that any system of logic is only as good as its assumptions. Great logical reasoning skills with wrong assumptions will just lead to a wrong inference faster. While this would hold good for any field, the risk is higher in HR, as the domain has quite a few unsubstantiated assumptions. Yes, over the last couple of decades a significant amount of research has been done in the Human Resources Management (HRM) domain. But the very nature of the domain imposes severe limitations on validating the assumptions underlying  HR related decision-making (See  ‘Research and a three-year old’ and ‘Truths stretched too far’ for a more detailed discussion)

• Lost in conversion : When we look at applying the Six Sigma approach mentioned above (physical problem - mathematical problem - mathematical solution - physical solution) to HR, the difficulty is in ensuring that while converting the physical problem to mathematical problem the essence of the matter is not lost. Otherwise we might end up solving the quantifiable but peripheral aspects of the problem while the core of the problem (which is difficult to quantify) goes unattended. We must remember that many of the things that really count can’t be counted!

• Misuse of Mathematical Induction: This occurs when one tries to apply a purely mathematical type of reasoning to a human process where it doesn't apply. I came across an excellent example of this in a HR Shared Service Centre (HRSSC). The Head of this HRSSC was a firm believer of setting 100% accuracy (zero error) as the performance target. His strategy for making this happen included a motivational talk to the employees with the following line of reasoning: "Can't you do one transaction without error? If you can do that what prevents you from repeating the same 12,000 times? This is all that is needed to make an 'error-free' year and meet your performance target”.  While the above approach seemed to be perfectly logical it was completely unrealistic from a performance management point of view. The transactions involved a large amount of manual intervention making it highly error prone. The ‘zero-error target' ended up de-motivating the employees (instead of motivating them) as they were highly unlikely to achieve it. This brings to mind a Zen Proverb - "Water that is too pure has no fish"!

• Chasing the numbers: A related problem, that comes up especially when we try to quantify (because quantification is required for further processing) things that are difficult to quantify is that of making simplistic or overly optimistic assumptions to enable quantification and even to get the numbers that we want to get. For example, when we try to calculate the time required for doing a particular non-mechanical task (as the first step in estimating the required staffing levels), we often don’t take into account ‘invisible work’.  The invisible work arises from factors like complexity of the situation (that can’t be quantified easily) and the difference between ‘the process map’ and ‘the way things actually get done’. While in the case of the latter, it can be argued that the solution is to fix the process, it might be difficult in a situation when complex interfacing/influencing is required to do the task or in a situation where fixing the process is difficult at the level of the jobholder (as it involves fixing the ‘ecosystem’ around the process in addition to the process). Emerson was not too far off the mark when he said "The results of life are uncalculated and uncalculable. The years teach much which days never know"!

• Banning complexity and complex motivations : Another problem comes out of a definition of rationality (a mental model) that is too narrow. As Mencken says, "to every complex problem there is an answer that is clear, simple and wrong"! In many areas related to people management, there are deep psychological factors operating that render purely ‘logical’ approaches ineffective.  See ‘Performance ratings and the above average effect’ for an example.  Similarly, when we consider only the (visible) employment contract and ignore the (invisible) psychological contract another set of problems arise (See the series on ‘Salary negotiations and psychological contract’ for more details). Another example could be viewing the interactions with the labour unions (say in the context of arriving at a Long Term Settlement) as a purely economic negotiation exercise. The reality here is that a union is a political entity with a constituency to satisfy. Hence, even if the management offers a ‘competitive deal’ (by industry standards), the union leaders might have (internal) compulsions not to accept it and resort to various pressure tactics (including demonstrations and stoppage of work) - just to convince their constituency (members) that they have done all they can to force the management to offer a better deal (or the best possible deal). 

• House built on sand : We also have the interesting problem of processing/computing data without paying adequate attention to the ‘level of measurement’ that generated the data.  Typical problems involve taking ‘ordinal’ or ‘interval’ data and apply computing methods that are valid only for ‘ratio’ level data. This could be more of a problem in HR, since many of the HR professionals are not well-versed in quantitative methods. The numbers can give us a false sense of surety and doing Arithmetic operations with those numbers to derive inferences can give us a false sense of confidence on the decisions based on those inferences.  There is a huge difference between being able to calculate something and being able to understand it. If our objective is to influence that 'something', being able to calculate it without being able to understand it can create more harm than good. It often becomes very difficult to convince HR leaders who are ‘too sure of their numbers and calculations’ that HR process maturity takes time or even that ‘It takes 9 months to make a baby regardless of how many couples you put on the job’. This becomes very pertinent especially in those situations where a business leader or the CFO (without any HR background) has been moved into the HR Head role! This brings us to a more fundamental issue. The over-reliance on numbers sometimes indicates a (stated or unstated)  shift in the underlying paradigm for people management in the organization- from a relational paradigm to a transactional one. This is something that we must watch out for (See 'Towards a Philosophy of HR' for more details).   

• Wishing away the paradoxes and dilemmas : People Management, by its very nature, is a field that is full of paradoxes.  A paradox occurs when there are multiple perspectives/opinions (doxa) that exist alongside (para)- each of which is true - but they appear to contradict/to be in conflict with one another. A paradox can’t be resolved in the same way a problem can be solved. To effectively deal with a paradox, we must wrestle with it till we reach a level of understanding (or wisdom) that enables us to see the paradox in a new light and arrive at the most appropriate solution in that particular context. Often, there are multiple solutions -making HR more like a differential equation (that has multiple solutions) and not like Arithmetic (where there is one right answer)! It can also be argued that dealing with some of the issues HR is even more complex than dealing with differential equations because in some of those paradoxical situations, the choosing from multiple ‘correct’ solutions is a matter of Aesthetics and not Logic! One can develop a keen sense of this 'Aesthetics' only through years of struggle with the paradoxes and dilemmas  in HR(See 'Truth and Beauty : Elegance and Motivations in HR' for more details)

So where does this leave us?  To me, best approach is that of ‘triangulation’, that combines qualitative methods with quantitative methods to develop a more comprehensive understanding of the reality. We should make an effort to figure out if the particular HR issue that we are dealing with is more like a ‘problem’ or more like a ‘paradox’ and deal with it accordingly (See ‘Making problems disappear’ for details). Data and analysis are very useful. But they are not substitutes for understanding and wisdom. Even when it comes to the matter of strategy making, it has been argued that the core strategy making process is essentially intuitive, with data & analysis being useful as an input/trigger for strategy making and also as tool for doing a reality check on the strategy created.  The same holds in the case of HR strategy also! We must also remember that in the physical world (outside Mathematics) there are 'singularities' where 'normal rules/algorithms' no longer work!

Similarly, benchmarking is definitely a very useful tool. But benchmarking should be done with the context also included (and not just the numbers).  For example, benchmarking a ratio like the ‘ratio of the total number of employees to the number of employees in HR’  can be misleading without the understanding of context specific factors like the mandate/deliverables of the HR function, the HR operating model, the degree of outsourcing, the degree of automation (degree of Employee and Manager Self-Service), profile of the workforce etc. Casual benchmarking, like casual sex, is easy but dangerous!  We must also ensure that HR processes and practices follow from the HR Philosophy of the company and not the other way around (a common problem that arises from the obsession with 'best practice benchmarking'). Yes, we must leverage numbers and the power of numbers in HR. However, let’s use them responsibly - by ensuring that the numbers and the calculations accurately reflect the underlying reality!

Any thoughts/ideas on promoting more responsible use of numbers in people management?

Paradox of 'business orientation of HR'

This post allows me to come back to one of the key themes for this blog – exploring the paradoxes in the Human Resources (HR) domain. Based on more than a decade of experience in HR, I can confidently say that HR is a field that is rich in paradoxes (Please see 'Paradox of HR systems' , 'Paradox of potential assessment', 'Career planning and the myth of Sisyphus', 'Paradox of hiring good people and letting them decide' and 'Crazy HR for crazy times' - for some examples).

A paradox occurs when there are multiple perspectives/opinions (doxa) that exist alongside (para)- each of which is true - but they appear to contradict/to be in conflict with one another. Going by that definition, ‘business orientation of HR’ qualifies as a paradox.

There is no conflict of opinion on whether HR should be business oriented. HR exists to support the business and hence it should be aligned to the business needs/goals/strategy. ‘HR for HR’ (‘I want to do some HR interventions and I will get the business to agree’) is definitely not a good idea. The paradox occurs when we look at how exactly should HR demonstrate this 'business orientation'.

There are multiple possibilities here - each with its own advantages and disadvantages. For example, HR can agree to whatever the business leaders say on people related issues ('after all, we get paid to support the business'). HR can take this approach to the next level by trying to ‘guess’ what the business leaders will be comfortable with and advocating that ('business leaders are our primary customers and we should be anticipating customer needs'). HR can also avoid surfacing issues (or suggesting solutions) that they think the business leaders will not be comfortable with ('business leaders are already stretched to the limits fighting for the survival of the company, how can we risk annoying them at this point').

This approach might help in reducing the number/intensity of possible arguments/conflicts between HR and business leaders on these issues and the associated investment of time and emotional energy, leading to faster decision making and smoother relationships. In this case, business leaders will ‘like’ HR and hence they will be more likely to cooperate in the roll out of basic HR processes and less likely to come down heavily on HR when HR makes a mistake. Hence conflicts are avoided - making life easier for both the parties involved. However, this can also lead to sub-optimal decisions (see 'Training the victim' for an example).

The other option is to develop and articulate an independent point of view – based on the HR philosophy of the organization (see ‘Towards a philosophy of HR’ for more details), HR functional expertise and an assessment of the context/situation.

This might turn out to be different from what the business leaders have in mind/are comfortable with and hence this can create conflicts and lengthy discussions/arguments and possibly delays in decision making. The business leaders might feel that ‘HR does not understand the problems that the business is facing’, ‘HR is becoming a pain in the neck’ or that ‘HR is being too idealistic’. This might lead to a situation where business leaders become very demanding – questioning the rationale behind each of the initiatives that HR comes up with. Thus this option can make life more difficult for both the parties involved. But if the conflict (of opinions between HR and business leaders) can be managed constructively, this option can lead to superior decisions and also to the development of mutual respect and trust. However, there is no guarantee that this can be achieved in all the situations.

So, which is the ‘better’ option?

It is possible that the business leaders were more open than what the HR professional had guessed. May be, they wanted HR to make an independent recommendation. Again, it is possible that the HR professional’s ‘independent assessment’ of the business needs/constraints was totally off the mark, making his/her point of view completely unrealistic. May be, the context is such that the conflict of opinion can’t be resolved successfully quickly enough for the matter at hand. Thus there are many possibilities here.

It can be said that if we take a long term perspective, if both the parties are competent and sincere and if the conflict can be managed constructively and quickly enough, the second option might give better results. But that is too many ‘ifs’ (3 in the last sentence!). It can also be argued that the two options mentioned above are just two extremes and that reality lies somewhere in between. For example, a particular HR leader might adopt option 1 in the case of some issues and option 2 in the case of other issues – depending on the context/nature of the issues. After all, ‘picking and choosing one’s battles’ is supposed to be a key requirement for survival in the corporate world!

An important factor here is the nature of the relationship between HR and business leaders. Often, HR does not pay sufficient attention to the relationship management aspect (positioning of the HR function appropriately, establishing the relationship, managing/shaping expectations, building capability and consistently meeting commitments/delivering value, enhancing the levels of mutual respect and trust etc.). See 'Nature abhors vacuum' for an example. This can be problematic as effectively managing the relationships with the business leaders can turn out to be the most significant enabler for demonstrating and sustaining 'business orientation'.

Of course, in this discussion about 'business orientation' we should not forget the other customers of HR- like the employees and first-line managers. There is an increasing tendency on the part of HR to give less emphasis to the ‘employee champion’ role because of the increasing importance given to the ‘strategic business partner role’ (see 'In praise of HR generalists' , 'Of specialists and business-alignment', and 'In the wonderland of HR Business Partners'). This can easily lead to situations where there is not enough focus on ‘employee engagement’ (other than the cosmetic efforts/peripheral initiatives – see 'Employee engagement and the story of the Sky maiden’ for details). As it is widely known, employee engagement is a good predictor/lead indicator of business results. Thus, if this 'business orientation' (and being the 'strategic business partner') is achieved at the expense of 'employee' engagement, the result might be 'strategic (long-term) harm' to the business.

It is also interesting to model this situation using the concepts of 'static' and 'dynamic' equilibrium (A chair has static equilibrium. A bicycle in motion has dynamic equilibrium. In a state of static equilibrium there is balance, but no change or movement - that exists in the case of dynamic equilibrium). A 'live and let live' kind of arrangement between HR and business leaders (that avoids conflict) is similar to 'static equilibrium'. But a scenario in which HR and business leaders openly & clearly state their independent opinions, followed by constructive debate/conflict leading to decisions that both the parties are comfortable with is similar to 'dynamic equilibrium'. This does not mean that the parties can't be passionate about their points of view/express 'strong' opinions. The requirement is just that they should not get too much attached to their opinions (see 'Passion for work and anasakti' for a related discussion).

I feel that, in general, dynamic equilibrium provides richer possibilities (sitting on a bicycle allows you to do things that you can't do sitting on a chair). But, establishing dynamic equilibrium might not be required or feasible in all the cases. It requires more time, effort and skill (as the equilibrium needs to be constantly reestablished) . It is also more risky (you are more likely to have a fall from a bicycle as compared to that from a chair - especially when you are learning to ride - which can be compared to the 'establishing the relationship' part/phase of the 'relationship management' that we had discussed earlier!).

Any comments/ideas?

In the wonderland of HR Business Partners – Part 1

The posts in this series constitute some sort of 'random' walks in the wonderland of HR Business Partners (HRBPs). Since our objective here is to explore the terrain (and not to reach anywhere in particular), we have the liberty of adopting the amazingly liberating philosophy of "if we take any path and walk long enough on it we are bound to get somewhere".

There are a wide range of HR roles that go by the HR Business Partner (HRBP) title. For the purpose of our discussion, let us focus on ‘pure’ HRBPs – HRBPs whose role is that of being a strategic business partner - to the business they are supporting. This would mean that they are supposed to have very little or no transactional/operational HR responsibilities. So these roles (HR roles that don't do usual HR work) are some sort of freaks of evolution- in the evolution of the HR function. Freaks occur in the course of biological evolution also. But they are unlikely to create much of a problem as they usually don't live long enough to reproduce. However since HRBPs can (and do) survive long enough in organizations to create (hire/develop) more HRBPs, it is worthwhile to take a closer look at them and their world.

I must say that I have handled HR Business Partner (HRBP) roles – in the not too distant past. Most of what I say in this series of posts are based on ‘hard experiences’ – mine and those of my fellow HR Business Partners – across organizations. While some of the observations in this post might seem funny, I have absolutely no intention to make fun of HRBPs. I know the challenges and complexities faced by HRBPs a bit too well to attempt something like that. Again, though I am in a specialist role now, I have a great amount of respect for HR generalists (see ‘In praise of HR generalists’), – including HRBPs.

In the wonderland of HR Business Partners – Part 1 : Seven guaranteed ways to make an HR Business Partner fail

A story...

Once upon a time, there was an HR Operations leader who was doing very well in his job - happily implementing HR processes & policies. Then the corporate HR leadership in his company came under the spell of Dave Ulrich’s ideas - or what they thought be Dave Ulrich’s ideas. They also saw other firms in their industry adopting such ideas. They did not want to be left behind. After all what is the fun of being in corporate HR - if you are not considered to be 'progressive' and 'state of the art'. So the inevitable happened - the company changed its HR operating model - worldwide.

Being ‘top talent’, our HR Ops leader was chosen to move into one of the newly created HR Business Partner roles - the roles that were supposed to take the HR function in the company to the next level of excellence and to add immense value to the business.

He understood that he should play a strategic HR role. He knew that he should partner with the business leadership. He knew that he was a high cost resource and hence he should produce good results-that too quickly. He wanted to do a good job – he was a top performer throughout his career.

So he worked very hard. In the spirit of collaboration and to ensure seamless service to the business, he did his best to proactively cooperate with other parts of HR and even with the finance & communications teams of the business he was supporting.

Many months passed. Our HR leader was feeling strangely uneasy. Initially, he could not figure out what was wrong. He was doing a lot of things - including participating in all the Leadership Team meetings of the business. He was in a role that was supposed to be the 'highest form of evolution' among HR roles. But he was not feeling happy. Sometimes he felt that he was like a 'mouse in a maze' - running here and there, feeling extremely busy, but getting nowhere. So he took a week's leave - to think things over. After he was away from the pressures of work for a few days, things started becoming clear in his mind.

He realized
…that playing a strategic role required skills he did not have & that these skills are not easy to develop - especially in a short period of time
…that what the business leaders expected from him was not really strategic
…that they wanted him to ‘manage the HR system’ – to ensure that what they want gets done
…that he was getting involved in issues that he was not supposed to – as per his role
…that he was fighting too much with other parts of HR - leading to too many escalations and that the global HR function was looking less like a 'team' and more like a 'house divided against itself'
…that Finance team was not taking him or his role seriously
…that he couldn't get reliable data to analyze business level patterns & trends on people issues
…that he wouldn't have enough results to show at the end of the year to justify his salary &
…that no one really understood what exactly his role was supposed to deliver

Being an intellectually honest person, he could not help wondering if he himself understood his role correctly & if his role really existed.

7 guaranteed ways to make an HRBP fail

1. Don’t define the scope and responsibilities of the HRBP role clearly

2. Don’t establish the performance measures for the HRBP role

3. Don’t secure the buy-in/agreement from the business leaders for the HR operating model, HRBP role, its deliverables and the choice of the role holder

4. Don’t make the other parts of HR (HR operations, specialist functions etc.) accountable to the HRBPs

5. Ensure that the HRBP does not have the data and analytical/reporting tools to derive the business-level patterns/trends on key people and business related parameters. This will create a situation where the HRBP can't work at the patterns/trends level (as they are supposed to do), prompting them to get involved in 'individual employee- level' issues (after all they have to something) - a great recipe for ensuring 'territory battles' with HR operations.

6. Move HR staff from other parts of HR into HRBP roles without verifying if they have the requisite competencies to be effective in the HRBP role. If you can't find any other role for a senior HR leader, move him/her into an HRBP role. Assume that the vacuum created by the removal of transactional/operational HR responsibilities will get automatically filled up by strategic activities (see 'Nature abhors vacuum' for more details)

7. Change the HRBPs frequently - before they have had the opportunity/time to understand the business or to build relationships and credibility with the business leaders

Now that we have heard the story of an HRBP and also derived some lessons from the story, let us explore what can be done to maximize the chances success in HRBP roles. Some of this can be derived from this post itself – by logical deduction. But some other aspects are not so obvious or easy. Anyway, we will look at some of them in the subsequent posts in this series.

Over to you for your comments/suggestions and experiences!

Crazy HR for crazy times!

It has been argued that insanity is a perfectly sane response to an insane environment. This also implies that ‘abnormal’ situations require ‘abnormal’ responses. While I have often talked about the connection between HR and madness (see ‘HR professionals and Multiple Personality Disorder' and ‘Career Planning and the Myth of Sisyphus’), here I am using the term ‘abnormal’ in the statistical sense of the term (i.e. not fitting into the normal distribution). So in this context, 'abnormal' just means ‘different from normal’.

The basic point in this post is that normal/usual HR responses (HR strategies/practices) are based on certain assumptions about the situation (context/environment) in which the organization (and hence HR) is operating in and when we are faced with situations where those assumptions are not valid, normal/traditional HR responses will not be effective. It also follows that when situations are radically different from usual/normal, we might need HR responses/practices that look very different from the normal/usual HR responses (i.e. responses that are ‘abnormal’) – and that is where we come to ‘crazy’ HR. Again, with the ‘abnormal’ situations becoming increasing common, effective HR responses/practices might also become increasingly ‘crazy’ – till we redefine (or even reverse the definition of!) what is ‘normal’ and what is ‘abnormal.

Now, let us look at a few typical practices/principles/assumptions in HR and explore the implications for the HR response when we are in contexts where those assumptions are not valid. Please note that these situations (and responses!) are not independent - there are common themes - and even contradictions - among them!

1. From long-term employment relationship to short-term employment relationship

This is a big one. Actually, 'continuity of employment relationship' can be treated as the basic assumption that underlies many of the assumptions in HR. If we look at many of the HR systems (like career planning, training and development, staffing etc.) there is often an assumption that the employees/prospective employees will stay with the organization for a long period of time. Now, if one is in a context (organization/industry) where the most of the employees spend much less than 2 years in a particular organization, these assumptions and hence HR strategies/ practices/ systems based on these assumptions, are obviously not valid/effective. So what makes more sense is to assume that the organization would be involved in 'managing' (planning/ developing) only a limited (often very limited) part of the career in the case of most of the employees and to design HR strategies/systems/processes accordingly.

Now, the idea here is not that the systems/processes should be designed to push most of the employees out in two years or less! The idea is just that the HR strategies/systems/processes should not ignore the ground reality - even if it is unpleasant.

In many contexts the reality is that most of the employees are likely to spend only a very limited time in the organization and that HR strategies/systems/ processes should deliver value to the employees (and enable the employees to create value for the organization) within that time while maximising the return on HR investment for the organization. Of course, if one has a reasonable chance to shape the situation (or to create a new reality that is more favorable), it makes sense to make an earnest attempt. May be the attempts to shape the reality (i.e. increasing the time that the employees spend in the organization) will be more successful-if they are focused mainly on some segments of the employees (we will discuss this further later in this post). But 'deluding oneself' or 'wishing away the reality' don't really help - and this brings us to our next point.

2. From trying to reducing attrition to redesigning HR systems to work well in a high attrition environment

The typical HR response in a high attrition situation is to try to reduce attrition. But after one has repeatedly tried this and has failed consistently, this response no longer makes much sense. A better option may be to re-design the HR policies/processes/systems so that they can work effectively in a high attrition environment.

As an example of re-designing an HR system/policy to suit a high attrition environment, let us look at the Training and Development system. In a high attrition environment, there is a high possibility that employees who have been trained (at a significant cost to the company) may leave the company to join a competitor. Now, there are multiple ways of responding to this. One option is to focus most of the training investment on top talent and on employees in critical roles (i.e. don’t try to follow the approach of providing training to everyone). Since they form only a small percentage of the total employee population, the organization (with even limited resources) will be in a better position to create a compelling value proposition for them. So the organization will have a much higher chance of ensuring good return on training investment. The training needs for the rest of the employee population should be met mainly through a shared training infrastructure that provides e-learning solutions for common learning needs. Of course, there are other approaches like skill-based pay, training bonds etc. that tries to ‘lock in’ the employee. But my preference is for the approach focusing on top talent and on critical roles.

3. From Job enrichment to Job deskilling

Designing/redesigning jobs to increase their motivational potential has been a key principle in HR. This is typically done by improving various dimensions of work like skill variety (the variety of activities required), task identity (the completion of a “whole” and identifiable piece of work), task significance (how substantial an impact the job has) and autonomy (the freedom, independence, and discretion that one has to do the job).

Now there can be situations where the opposite of this response (i.e. job deskilling) might be called for. Examples of this can be found in situations where is a critical need to

(a) Manage process risk - Creating detailed process maps that specify each step in micro-detail (e.g. level 5 or level 6 process maps) and insisting that the employees carry out each step as it is described can be good way to manage process risk/reducing chances of error (though it adversely impacts 'autonomy' and hence job enrichment mentioned above).

(b) Reduce cost - The same approach (detailed procedures - strictly enforced) can also reduce the skill-level required to do the job. This can obviously provide opportunity to reduce salary cost (as employees with lower skill profiles can be hired for the job) and training cost (as not much training is required).

(c) Operate in high attrition environment - Again the same approach (detailed procedures and lower skill profile) can make it easier to find and replace employees (as there is not much need to hunt for specialized skill profiles that can be difficult, time consuming and costly to find) and to minimize the adverse impact of employee turnover on work/deliverables (as the 'learning curve' of new employees can be very short because of the low skill requirement of the job).

But there can be many complications when we try to implement the above (job deskilling) idea. Let us look at a couple of the major ones.

The first one is that in some contexts the nature of the work makes the 'formulating detailed procedures and enforcing them strictly' approach difficult to implement - because there are certain parts of the job that require a high degree of skill/judgment/discretion. Here one can try to re-design the jobs so that the activities that require a high level of skill are grouped into a few jobs and most of the other jobs consist of activities that don’t require high degree of skill (where the above approach will work). Of course, this will work best if there is an opportunity to reengineer some of the processes so that there will be greater opportunities for re-designing jobs/grouping activities into jobs differently. Now, this has other advantages like further saving on salary cost (as we need fewer number of high cost specialist positions) and reducing attrition among the highly skilled jobs (as the specialist jobs get enriched in the process because the lower-skill parts of the job are taken away and as the organization can provide these specialists much better value proposition because they are small in number - making the additional investment required much smaller and manageable).

The second problem arises from the very nature of the job-deskilling approach - lower skill requirement for the job is likely to result in lower 'motivation potential' for those jobs (because of its adverse impact on the factors that drive job enrichment that we had discussed earlier). But this can also be avoided to a large extent. Here the trick is to change the profile of the candidates/jobholders. So if the job was being done (before the job re-design exercise) by a graduate engineer, the candidate for the deskilled job should not be a graduate engineer (who will find the job de-motivating) – it should be someone with only an engineering diploma/certificate. Now, what seems routine for a graduate engineer can still be quite challenging and motivating for a certificate holder. Of course, this approach also has cost advantages (as a certificate/diploma holder in engineering costs less as compared to a graduate engineer).

I am not saying that these are the only HR responses possible (or even the best responses) in the situations described above. My point is that certain situations require radically different HR responses – responses that seem so different from the usual/traditional HR responses that they appear to be crazy. But they are actually much more sane - as compared to the alternative of 'continuing to persist with the same (failed) normal/traditional HR response and expecting different results' - which incidentally was the way Einstein defined madness.

What do you think?

Why pigs have wings (Importance of differentiation in people management)

The more interesting part of the title comes from 'Through the Looking -Glass' (by Lewis Carroll). The other (related !) part - importance of differentiation in people management - is something that I have often thought about. There are many issues here. Is differentiation really important in people management? What types of differentiation are relevant? What are the implications of differentiation ? Is it worth the trouble and effort?

Now, there are many types of 'differentiation' possible in people management . We can look at differentiation in terms of the parameters on which differentiation is based on (i.e. input parameters/criteria) and/or in terms of the ways in which differentiation is implemented (i.e. results/outcomes). For example, differentiation could be based on (inter alia) performance, potential, criticality/ impact of the role, job level, job family, market value of the skill set, tenure, business unit etc. or a combination of them. Again, the differentiation could be made/ implemented in terms of (inter alia) compensation, benefits, recognition, career progression, development opportunities etc. or a combination of them.

If we look at the large number of input parameters and outcomes listed above, it becomes apparent that there are a large number of combinations possible here. The relevance of a particular combination would be context specific. To keep this discussion manageable, let us classify the input parameters into three broad categories - parameters that are related most to the
(a) individual (performance, potential, tenure etc.)
(b) position (criticality/impact of the role, job family, job level, skill set)
(c) part of the organization (business unit/function/geography)

I must say that these catagories are somewhat arbitrary and there could be some amount of overlap among them also. For example 'skill set' is related to both the role and the individual. It also raises some interesting questions like 'if an employee has a skill that is in the list of 'hot skills' (as defined by the organization) and if the employee is currently in a job that does not need that skill, should the employee be given any sort of differentiated rewards? ' OK, OK, let us come back to our discussion.

Based on our classification, the question now becomes whether it makes sense to differentiate based on individual, position or organization/business unit related factors? Different business unit in a company might face different markets (both product and factor markets) - with different dynamics and market practices. Business units might also differ in terms of their performance. Hence there is a strong case for differentiation. However, too much differentiation might lead to a situation where the employees in different business units don't really feel that they are working for the same company ! Thus, the organization culture and philosophy becomes a key factor in determining the extent of differentiation. Similarly, it can be argued that some positions in the organization have a much higher impact on organization performance and that some skillsets carry a greater market a higher market value at a particular point - there by making a case for differentiated treatment. Of course, we should keep in mind the fact that the list of critical positions and the list of key skills could change - sometimes quite quickly.

Now, if we examine differentiation based on individual related parameters a similar argument holds good when it comes to individual 'performance' - higher performance merits higher rewards. The case (if any) for 'tenure' based differentiation usually has more to do with organization culture/values. The case for 'potential' based differentiation (on a stand alone basis) is more complex. Anyway, the most common practice is to use a combination of performance and potential. This also leads to interesting situations and challenges. Please see 'Paradox of potential assessment' for a detailed discussion.

Now let us leave aside all these details and examine the core of the issue. I feel that the most important factor driving differentiation related decisions should be 'contribution/value addition to the organization'. So if there are some business units/positions/individuals that create more value to the organization as compared to other business units/positions/individuals they could be given preferential treatment. By the same logic, the extent of differentiation should mainly be a factor of the variation in the 'contribution/value addition to the organization'.

While this sounds quite neat/logical, there are a few important prerequisites to make this work. For example, everyone should understand and agree upon what exactly is meant by 'contribution/value addition to the organization' at the business units/position/individual levels. In addition to this we might need to include probable 'contribution/value addition to the organization' in the future, apart from the current ''contribution/value addition to the organization' (e.g. in the case of differentiation based on 'potential'). Also, it should be possible to track/ measure/ assess this relative 'contribution/value addition to the organization' (to the satisfaction of everyone involved) at all these levels . Again, there should clear norms in staffing the positions/business units to answer the question 'how can I move to that position/unit that gets better treatment'. As we can see all this could get quite complex.

As I see it, what really matters most here is the dynamic interplay of the factors (as opposed to a particular factor per se) in a particular context. For example, it is worth it to have a 'key talent program' ( that aggressively differentiates 'high performance - high potential' employees in critical job families) if we are in a context
(a) some positions (say critical positions) have a much higher business impact as compared to other positions &
(b) in critical positions, a high performer in creates much more value as compared to an average performer &
(c) it is very important that senior positions are filled by developing talent from within (say because of the nature of work and organization culture)
In such a context, the business case for the key talent program is clear even if the program could have possible side effects in terms of annoying a large section of the employees who are not part of the program. However, if one or more of the conditions mentioned in (a), (b) and (c) above do not hold good (or if they hold good only to a limited degree/extent), the business case becomes less compelling.

While this does not negate the existence of the complexity that we were discussing earlier, it can be seen that some patterns can be found amidst the complexity that can lead to actionable inferences in the area of differentiation in people management. Also, while we are caught up in all this talk about differentiation, we should not forget the importance of 'individualization' (managing each employee as a unique individual - please see previous posts like 'Paradox of HR systems' and 'Feasibility of mass career customization')- though it is not really 'differentiation' - in the sense we are using the term here.

Paradox of 'HR Systems'

"But I don't need HR systems", said the senior business manager. I had gone to this gentleman to seek his buy-in (and sponsorship, if possible) for implementing an internal HR product/ solution that I was managing at that time. The main selling point for the HR product was that it would improve the effectiveness of core HR systems in the organization (like Staffing, Rewards and Training). I had just finished my sales pitch and then I was hit with this response. Actually, he was not being difficult. He had a point. This gentleman was managing one of the most profitable units in the organization. This unit had a relatively small number (as compared to the total headcount in the organization) of employees - but with a highly specialized (and difficult to find/retain) skill set. His point was that because of the nature of the skill set and high business impact of the positions in his unit, key people related decisions (hiring, rewarding, training etc.) are directly handled by him and his direct reports in a highly individualized manner and this has been working very well. So any (standardized) HR system/process would be more of a hindrance for him in running his unit !

While the above scenario is not representative of the typical organization context in which HR systems function, it brings us to an interesting paradox in 'Human Resource Systems/ Processes'. There is a clue in the name itself. The words 'system' or 'process' convey an impression of standardization/ consistency. The word 'human' implies a unique individual. As I have mentioned earlier (while discussing the various terms used for HRM), the new business environment has forced organizations to pay more attention to the 'human' part (as opposed to the 'resource' part) of 'human resource management'. This has resulted in a quest for more individualized approaches for managing people (See here for an example in the domain of career development. Another example could be the shift/progression from 'level/grade-based' to 'position-based'' to profile-based' to 'individual-based' approach in compensation and benefits management.). Now the question is that "how can standardized processes/systems be effective in managing unique individuals?" But we can't jump to the conclusion that HR systems/ processes are not required. Absolute chaos can result if there are no HR systems/processes - especially in the case of large organizations. Moreover, how can we forget what we have learned about 'procedural justice' ! However, it has also been established that human beings are managed most effectively in small units. This again brings us back to the importance of customised approaches to managing people - at individual and small group levels - even as many organizations are becoming larger in size. Thus we have a paradox in the true meaning of the term - multiple perspectives/opinions (doxa) that exist alongside (para)- each of which is true - but they appear to contradict/to be in conflict with one another.

One 'solution' that has evolved/emerged in response to this paradox (which is often seen in MNCs) is to establish well-defined processes across the organization and also to give a lot of decision making power to the managers. For example, the process (steps/procedure) for giving a salary increase (or a promotion) would be very clearly defined; but the manager has absolute freedom to decide on the quantum of salary increase for a particular employee (or to decide whether or not to promote a particular employee) subject to an overall salary increase/ cost of workforce budget for the entire team. Thus, highly individualized approach can be taken for managing a particular employee while maintaining standardization at the group level.

People management is a field which is full of paradoxes (for more examples of such paradoxes please see paradox of 'hiring good people and letting them decide' and paradox of potential assessment). . The 'human' dimension of the issues in this domain is one of the main contributing factors. Also, any system (including a human system), when it becomes sufficiently complex, becomes difficult to 'manage' in the normal sense of the term 'manage'. As I have mentioned earlier (while exploring the behavioral science foundations of HR), a key prerequisite for managing is the ability to predict. In the case of complex systems, we face a dilemma - predictions about the behavior of the system that can be made accurately are not very relevant/helpful in managing the system and predictions that are relevant/helpful in managing the system can't be made very accurately ! However, a paradox per se is not a bad thing. If there were neat/linear solutions to problems in people management there wouldn't have been many deep-specialist jobs in HR (which in turn would have forced many of us to look for jobs in other domains !). Paradoxes also contribute to the richness of the domain. However, managing paradoxes might require approaches that are different from traditional problem solving methods. They might need approaches similar to those that I have described in posts like 'Making problems disappear' , 'Wisdom-level consulting' and 'Of problems, paradoxes, koans and wisdom' - approaches that reflect simplicity at the other side of complexity !

Any ideas/comments?

Related posts : See here and here for related posts.

Towards a philosophy of HR

"HR is like gardening", said a senior HR professional when he was completely drunk. "We are not using any functional expertise in this recruitment assignment; our role in this project is similar to that of a pimp", said a Project Manager from a reputed HR consulting firm when he was in a reflective mood. "The HR leadership team is thinking about strategies to build the firm for the next 150 years", said a global HR leader in a 150-year-old MNC. Three senior HR professionals and three interesting perspectives - in three different contexts.

What is the basic 'philosophy' that underlies the domain of Human Resources? Does this (and should this) vary significantly across organizations? Is it a clearly defined and commonly accepted philosophy ? If not, can we derive some sort of 'emergent philosophy' from the way the craft of HR is practiced ? How has this philosophy been evolving? Is it worthwhile for organizations to invest time and effort in formulating and articulating an HR philosophy?

Now that I have been working in the HR domain for a decade, these are some of the questions that I have found myself thinking about quite a bit these days. Of course, I don't claim to have definite answers to these questions. What I do have are some 'thought fragments'. So the objective of this post is to seek comments from the readers so as to have a discussion on the topic.

Since this is a very broad topic, let us make a couple of simplifying assumptions for the propose of this discussion. Here we are taking about HR only in the context of business organizations. We are using the term 'philosophy' in a limited sense, to mean the basic assumptions, premises or tenets that underlies the field of HR.

There are many ways to approach this topic. One of them is to look at the applied behavior science foundations of HR. It can be said that the objective of applied behavior science is to understand human behavior in order to make predictions regarding probable behaviors in various situations so as to be able to influence those behaviors. This 'understand-predict-influence' sequence underlies all applied behavior science including Human Resource Management. From this it can be inferred that one basic assumption in the philosophy of HR is that it is possible to understand and predict human behavior so that it can be influenced to be in line with the organization objectives.

Another 'trick' that is often used is to look at the various terms used for HR and derive inferences from the choice of words. Here we comes across many terms, including Human Resource Management, Human Resource Development, Personnel Management, Human Capital Management, Talent Management etc. Then we could make 'inferences' like

(a) use of the term 'Management' indicates the intention to 'control' (more than what is meant by the term 'influence')
(b) use of the term 'Resources' implies that employees are a factor of production or even that they are essentially costs of production that needs to be minimised to the extent possible
(c) use of the term 'Capital' implies that employees are more like assets than costs and hence they are worth investing on or even that they add significantly to the value of the firm
(d) use of the term talent and avoidance of the term resource implies that employees are like investors who invest their talents in the organization and that they would continue to do only if they see attractive benefits like rapid appreciation in the value of their talent and good revenues in terms of salary.

While some of these 'inferences' do not necessarily follow from the terms, they do give us a flavor of the underlying assumptions.

Now if we look at many of the HR practices (that originated many years ago), we can figure out that they make some assumptions like 'continuity of the employment relationship', 'good amount of predictability regarding the business growth and hence career growth' etc. If we examine what actually happens in organizations these days (especially in highly dynamic industries), we are likely to find that these assumptions no longer hold good. Please see here for an illustration of this point in the context of career planning. Based on this we could argue that some of the basic underlying assumptions and hence the de facto philosophy of HR is evolving - often quite rapidly.

It is interesting to note that to some extent this 'evolution' also gets reflected in the changing names for the various sub-functions in HR. For example the function of 'Compensation' (which can be interpreted to mean that the organization is compensating the employees for some harm done to them) evolved into 'Rewards' and then into 'Total Rewards'. Another example could be the 'Training' function evolving into 'Learning' function. Training sounds like something that is done to the employees (or even forced upon the employees), almost similar to training animals. Learning happens inside the minds of the employees and hence can only be facilitated (and not forced upon the employees) by the 'Learning' function. Of course, the change in the name need not always imply a change in the underlying assumptions/philosophy. But it does show that it is fashionable/desirable (at least from a PR point of view) to have (or at least to create an illusion of) a more progressive philosophy of people management.

Now let us look at the basic issue of why should we be bothered about the 'philosophy of HR'. The 'philosophy of HR'/'basic assumptions in HR' in a particular organization context shapes the way the employees are managed in that organization.

Lack of a clearly articulated and understood 'philosophy of HR' can make the organization susceptible to 'taking up the latest fad in people management and discarding it soon after to take up the next one'. It can also result in highly inconsistent attitudes/practices in managing the employees (e.g. swinging wildly between high empowerment and high control, between large investment in employee development and no investment between 'intense focus on encouraging employees to form emotional bonds with the company and 'downsizing and then scaling up shortly after that' etc. This in turn can cause a lot of avoidable confusion.

More importantly, the 'way the employees are managed' will influence how the employees respond to that/how the employees behave in the organizations. What happens here is similar to the 'Pygmalion effect'. Thus 'wrong/bad' assumptions/philosophy, might result in creating 'wrong/bad' reality. For example, 'Theory X' kind of assumptions/philosophy (i.e. that the employees are inherently lazy and will avoid work if they can) in people management will promote 'Theory X' kind of behavior among the employees. Hence, though the 'initial reality'/'employee behavior' might not be in line with 'Theory X kind of assumptions', after people management based on 'Theory X assumptions' have been practiced for some time, employees might start to behave in a fashion that validates 'Theory X'. This makes people management a very dangerous domain !

We also have to be mindful of the possible conflict between the stated HR philosophy in an organization and the 'actual' HR philosophy practiced in the organization. What really matters is the HR philosophy (basic assumptions about HR) that emerges/can be inferred from (or gets reflected in) in the decisions made by the organization. It will be a tragic-comic situation if an organization says that 'people are our greatest assets/people are our main source of competitive advantage' and at the same time practices 'downsizing' and/or 'cutting employee benefits & training' as the first response (instinctive response!) to any business downturn. There is no better way to create mistrust and cynicism in the organization ! The same holds good at the level of managers also. Managers (especially direct supervisors) represent/symbolize the 'organization' to the employees and the real 'HR philosophy' of the organization (as perceived by the employees) is the one that gets reflected in the behaviors of (or in decisions made by) the managers. So we can't overemphasise the need for congruence between the 'articulated HR philosophy' and the 'HR philosophy in practice' ! It is interesting to note that discussion mirrors the discussion on the need for congruence between the 'espoused values' and the 'enacted values' in an organization. Logically speaking, HR philosophy of an organization should be closely linked to (or even derived from) the core values of the organization. Thus, the issues at the level of core values are likely to get reflected at the level of HR philosophy also!

So, these are some of my preliminary thoughts. Now over to you for your comments.

Paradox of 'potential assessment'

Most organizations have some sort a process for assessing the 'potential' of its employees. This is very much required as the 'fallacy of promoting an employee to a new job based on high performance in the current job' is well known. There won't be many HR professionals (or even business managers) who haven't heard about the 'tragic story' of the 'star salesman who was promoted to the sales manager position and failed miserably'. So the business case for 'potential appraisal' is quite strong.

The problem begins when one asks questions like

a. How exactly should organizations go about assessing potential?

b. Can potential assessment be done (within the organizational constraints) in a reasonably valid manner?

c. If there are serious doubts regarding the validity of potential appraisal in a particular organization context, is it worth the trouble and effort to put in place a potential appraisal process in that organization?

There are different points of view when it comes to the answers to these questions and that is what makes potential assessment paradoxical. A paradox occurs when there are multiple perspectives/opinions (doxa) that exist alongside (para)- each of which is true - but they appear to contradict/to be in conflict with one another.

The common methods used for 'potential appraisal' include managerial judgment, 360 degree appraisal, psychometric testing, assessment centres etc. Sometimes, a combination of these methods are also used. In most cases the choice of method(s) is driven mainly by the amount of time and resources that the organization is willing to invest in the process and the 'cultural readiness' of the organization. Sometimes the choice could also be driven by things like 'casual benchmarking', latest seminar attended by the HR Head, pet methodology of the consulting firm hired etc.

I feel that the basic issue in potential assessment (which sometimes does not get enough attention) is 'potential for what?'. Many answers are possible here. They include

1. potential to be effective in a particular position
2. potential to be effective in a particular job family
3. potential to be effective at a particular level
4. potential to take up leadership positions in the company
5. potential to move up the organization ladder/levels in an accelerated timeframe etc.

Logically, the first four answers should lead to the creation of a capability framework that details the requirements to be effective in the job/job family/level/leadership positions that we are taking about. Similarly, the fifth answer should lead to identification of attributes/capabilities that enable an employee to quickly climb up the organization ladder.

It is interesting to note that since these capability requirements can be different for different organizations a person who is rated as 'high potential' in one organization might not necessarily be rated so in another organization (and vice versa) - even if we rule out any errors in measurement. However, the capability frameworks (especially the 'behavioral competency frameworks') tend to be quite similar across organizations (for a variety of reasons including the generic nature of the frameworks, attempt to include all possible 'good' behaviors in the framework, casual benchmarking of competency frameworks, hiring the same consultant to develop the framework etc.). Hence, assuming reasonable consistency of measurement, the potential ratings for the same person might not vary too much across organizations - unless the underlying definitions of potential (i.e. answer to the question - 'potential for what?' mentioned above) are different across the organizations.

The potential assessment has to be done with respect to the requisite capabilities mentioned above. Depending on the nature of the particular capability, the method for assessing it can be chosen keeping in mind the organization constraints/context specific factors. In many cases the employees might not have had an opportunity to demonstrate the requisite capabilities (for the future/target job) in their current/previous jobs. This would call for some sort of simulation, similar to those used in assessment centres. For some aspects of particular capabilities that are close to work styles/ personality attributes some sort of psychometric testing could also be useful. Psychometric testing also becomes useful if the fit between ‘certain dimensions of the organization culture and the employee’s personality’ gets identified as a key factor for potential. Managerial judgment (especially if it is calibrated through an in-depth discussion by a group of managers who have had significant amount work related interaction with the employee) and 360 degree feedback are useful to supplement the data from assessment centres/from other assessment tools - particularly from a data interpretation/'reality testing' point of view.

In the choice of methods/process, it is very important to strike the right balance between accuracy of the assessment (from a validity point of view) and the time/resource investment required (from a sustainability point of view). Some capabilities are easier to develop through training/experience in a short period of time while it is not the case for some other capabilities. So if the time/resource constraints do not allow the potential assessment to cover all the capabilities, the capabilities that are difficult to develop through training/experience in a short period of time should get priority. Of course, we need to look at the relative importance of various capabilities for enabling effectiveness on the job. Thus, to achieve a reasonable amount of validity, 'potential assessment' requires a significant amount effort and if the organization is not willing to use anything other than 'judgment of the immediate manager' for assessing potential, the usefulness of the assessment becomes doubtful.

This brings us to the issue of how would the organization use the results of the potential assessment. Most common practice is to combine the potential assessment with the performance assessment in order to arrive at some sort of 'talent classification' that segments the employees into various categories and to define particular courses of action for each category (e.g. promote, invest, retain, develop, move out etc.). It has to be kept in mind that even if the performance assessment has been done in an objective manner, if the validity of the potential assessment is doubtful, the talent classification and the consequent actions become debatable.

There are also other interesting dimensions here such as whether the organization would disclose the results of the potential assessment and talent classification to the employee in question. Not disclosing this could create issues related to transparency and even those related to data privacy/data protection. Disclosing the information might lead to a situation where the employee questions the results/methods, forcing the manager/organization to explain how exactly were the results arrived at and also the steps taken to ensure the validity of the process/ results.

There is also the issue of employees who were assessed to be 'low potential' feeling discouraged/demotivated. Sometimes, these negative reactions are even worse than those to a 'low' rating on performance. In many organizations, the results of potential assessment for a particular employee tend to remain the same across years (especially for assessment of 'leadership potential'). Thus once employees get a 'low rating' on potential, they might feel that they will never get an opportunity to take up leadership positions. Many employees also feel that they have a better chance of influencing their performance rating as compared to influencing their potential rating, especially when the potential appraisal process is not very transparent.

I have also come across situations where the potential assessment has been misused. Sometimes potential assessment is positioned/communicated to the employees as 'purely for capability development' though the potential ratings get used for making key decisions that impact the employee's career advancement. Of course, there could be much worse scenarios. Many years ago, when I was doing a diagnostic study of the HR systems of a company, I was told that though the performance planning and review system of the company provides an option to the employees to disagree with the manager on the performance rating, no one exercises that option. When I tried to investigate the reason for this, I found that the process provides for a 'potential rating' in addition to the performance rating and that the 'potential rating' is not even shared with the employee. It was common practice among the managers in that company to give a 'low' rating on potential for any employee who disagrees with manager on the performance rating. Since a 'low' rating on potential would have ruined the career of an employee in that company, no one wanted to take the risk of disagreeing with the manager on the performance rating. I hope that this scenario is a rare one. However, the point is that potential assessment can be misused and this could have serious adverse effects on employee engagement and retention.

Thus, the organization needs to think through the entire gamut of issues related to potential assessment in its context (objective, methodology/process, validity, initial investment/effort required to put the process in place, time/effort required for each cycle, sustainability, use of the results, employee communication, cost benefit analysis etc.) before a potential appraisal system is put in place. While perfect solutions may not be feasible/required, it does require thinking though multiple scenarios, options and implications and making informed decisions/trade offs. This would enable the organization to maximize the implementation effectiveness and to minimize/mange the possible adverse side effects of implementation. This is the requirement for being able to give a positive answer to the question that we started off with (Is it worth the trouble and effort to put in place a potential appraisal process in the organization?)!!!

Social capital, restructuring and attrition

Social capital in an organization refers to the collective value of all social networks (connections among the individuals) in that organization. These connections have 'value' for both the organization and the employees.

A significant portion of the 'work' in organizations gets done through these connections (often referred to as the 'informal organization') rather than through the 'formal structure' in the organization. These 'connections' motivate employees to do things for one another beyond what is specified in the job descriptions. Hence social capital has a positive influence on productivity. The importance of social capital in the creation of intellectual capital has also been recognised. Since these 'connections' are difficult to copy, social capital could be a source of sustainable competitive advantage for the organization.

These 'connections' (social capital) could also help in addressing 'relatedness' needs of the employees. So in addition to enabling the employees to get their work done faster/easier/better, these 'connections' contribute in meeting their their social/'connectedness' needs. Thus social capital could add to 'personal effectiveness at work' and the 'total employee deal' as perceived by the employees and hence it could have a positive influence on employee engagement and retention.

Organization restructuring is one of the popular ways of responding to a dynamic business environment. While the business case for restructuring is quite compelling in many contexts, the hidden costs of restructuring in terms of loss of social capital often gets overlooked. Restructuring breaks up the human networks/connections in organizations and dilutes the social capital in the organization. Since (as mentioned above) these connections are valuable for both the organization and the employees, there could be adverse impact on the organization (in the form of reduced productivity, reduction in the rate of intellectual capital creation, increased employee turnover/ attrition etc.) and on the employees (in terms of reduced engagement, work effectiveness, satisfaction etc.). Of course, many of these factors are interrelated and hence the adverse effects could get amplified.

As we have seen above, organization restructuring and the consequent loss of social capital could reduce the 'value' that the employees derive from organization and hence this could lead to employee turnover/attrition. The social networks bind the employees to one another and hence to the organization. It can also be said that one of the reasons that the employees don't want to leave an organization (to join another organization) is the reluctance to 'start all over again' (in terms of having to build new networks/connections). Thus if a restructuring breaks up their existing connections, employees might have less reason to stay on in an organization. Costs of attrition are well known. Apart from these costs attrition also leads to a further erosion in human capital as more social networks/connections get broken when employees leave. When 'key' employees (with a large number of strong connections) leave the impact on social capital would be more. It is also possible that employees might leave in groups if these groups have a large number of strong connections within them (especially if another organization offers an opportunity to maintain these connections).

Thus one of the key hidden cost of restructuring could be in terms of loss of social capital and its ripple effects. Loss of connections/social capital could lead to attrition which in turn leads to a further erosion of social capital. This could lead to a vicious cycle and organizations should be careful about this. When an 'impact assessment' is done for the proposed restructuring exercise, the impact on social networks/connections/social capital should also be factored in. Since these social networks also serve as communication channels, the communication strategy for restructuring requires even more emphasis (as the restructuring could have broken up some of the existing communication channels). The overall change management plan should give specific attention to retain key people (people with a large number of strong connections) so as to reduce the erosion of social capital. The plan should also focus on creating an environment that would facilitate building of new connections to replace the old ones hence to restore and enhance the social capital in the organization.

See a related post here.

Career planning and the myth of Sisyphus

Career planning is one of the most interesting rituals in HR. But before we come to career planning let us look at the myth of Sisyphus. We come across Sisyphus in Greek mythology. The myth says that because of his trickery Sisyphus was cursed by the gods. As a result of that he had to repeat a maddening procedure forever. He was compelled to roll a huge rock up a steep hill, but before he reached the top of the hill, the rock always escaped him and he had to begin again. Actually, similar stories exists in other cultures also. For example, in my home state (Kerala) there is a similar story about Naranathu Bhranthan. Naranathu Bhranthan was considered to be a 'siddha' (an 'enlightened' or 'realized' being) though some of his behaviors appeared to be rather 'strange'. He used to follow the same procedure as that of Sisyphus (though not on a full time basis!). But he was doing it out of choice. Also in his case the stones would not automatically roll back. So he would manage to get many big stones to the top of the hill. Then he would push them down one by one and he would laugh loudly as they roll down the slope. We will come back to Naranathu Bhranthan later in this post. As I have mentioned in an earlier post, myths are important as they contain eternal truths, though myths might be too true to be real.

Now let us come back to career planning. Organizations in general and HR professionals in particular, invest a lot of time an effort in career planning. There are very good reasons for doing so. A large number of studies have shown that 'opportunity for career development' is one of the most important things that employees look for in an organization. So the organizations (and HR professionals) have to do something about this. The typical response is to map out career paths. Since organizations are keen on approaching this 'strategically'/with a long term perspective, these career paths provide the 'growth paths' extending over many years. Since there are many types of employee profiles, employee preferences, positions and career options, often these lead to a huge amount of detail. This of course implies a large amount of time/resource investment. But there is a paradox here. In many industries (especially in sectors like IT/ITES/BPO in India) the attrition rates are very high. So in many organizations most of the employees would leave before they complete 3 years in the organization. Hence these long term career plans get wasted in the case of most of the employees. This is where Sisyphus comes in. We put in a lot of effort in formulating detailed career paths (like Sisyphus rolling the huge rock up the hill). But before they could make significant progress along these nice career paths most of the employees leave (or 'escape' like the rock in the case of Sisyphus). So does 'career planning' amount to some sort of a 'Sisyphus-like curse' for HR professionals?

May be the situation would improve if we can target career planning efforts to those employees who are likely to stay on with the organization for a long time. While it can be argued that career planning itself would reduce attrition, this does not seem to work very well in many organizations. May be career planning (at least in the traditional form) would have a significant influence only on some employees (who already have a some sort of a long term perspective and also have a good degree of person-organization fit!). Of course there are more innovative approaches to career development that are being experimented.

Another way to look at this situation is to say that the 'career planning ritual' is both 'necessary and beneficial', though the manifestation of the results might not essentially be in terms of employees moving along the prescribed career paths. The ritual itself might help in building positive energy and it might also considered to be a necessary condition (though often not a sufficient condition) for positive organizational outcomes. May be we are more like Naranathu Bhranthan than like Sisyphus. This would imply that we are formulating these career paths knowing that most of the employees won't really follow them. So we are like Naranathu Bhranthan who was following the 'Sisyphus-like' procedure out of choice. By the way, the word 'bhranthan' in Malayalam language means a 'madman'. So we can see that though Naranathu Bhranthan appeared to be 'mad' to many people (and hence he was called a 'bhranthan'), he was the 'master of his madness' and that he was laughing at life itself (remember - he was also considered to be a 'siddha'). Perhaps career planning in rapidly changing high attrition environments would always be a maddening activity. But each one of us can attempt to be a 'master of the madness' rather than being a slave. May be we can also laugh like Naranathu Bhranthan used to do (though not so loudly - lest we might be considered to be 'mad' by the 'masters' in our organizations !) when the employees grow beyond (or even 'jump' out of) the elaborate career paths that we had created with so much effort !

So are you laughing ?

Note: Please see here for another example of the connection between HR and 'madness'.

Paradox of 'hiring good people and letting them decide'

How do we build a high performance organization? There are many 'answers' to this question. There has to be many answers (or at least 'attempted answers'), because, this is the core issue in 'management'. Hence, most of the management literature should be dealing with some aspect of this this question ('quest' !) in some way. So we have many approaches/answers. There is one particular approach that I find to be particularly interesting. It is something like this : "Hire good people and empower them to decide what is to be done and how it is to be done". The basic idea here is that in a complex and rapidly changing environment, it the traditional approach of specifying (to each employee) what exactly has to be done is unlikely to work. So it is better to hire good people and let them figure out what needs to be done.

I am not saying that this approach is 'wrong'. My point is that there is a paradox here. In order to hire 'good' people the organization has to use a definition of 'good' (a 'working definition' of what 'good' means in their context - so that it can be used in the hiring process/ as the selection criteria). After all one can't do hiring without some sort of criteria (implicit or explicit). This leads to an interesting situation. This definition of 'good' (implicit or explicit) is colored by the current thinking in the organization. To put it in another way, the criteria for a good hire gets influenced by the organization's (often implicit) understanding of what is to be done, how it is to be done and hence what sort of a person can do it. So the existing limitations (and prescriptions of what is to be done/how it is to be done) gets built into the hiring criteria at least to some extent.

Let us look at the most common example of this situation. Organization 'A' is in trouble. The organization does not have a clear understanding of what is to be done to get out of this situation. So it decides to hire a 'good' CEO and let him/her figure out what needs to be done. However, when the organization chooses a 'good CEO' that choice is colored by the explicit/implicit definition of 'a good CEO' which in turn is limited by the current thinking/consciousness in the organization. This can be addressed to some extent by looking at 'best practices' (what has worked in CEO selection elsewhere in similar situations) and by using external advisers. But this might not always work as the the uniqueness of that particular organization context might get missed out and also because the external advice/best practice information often goes through one level of processing within the organization (when decision making is done by existing people) which in turn brings in the limitations in the current processing/thinking in the organization.

Hence the approach of 'hiring good people and letting them figure out what needs to be done' might not be as simple as it appears to be. Actually, it can not be simple. Otherwise it would have been very easy to build and sustain high performing organizations.

Any comments?

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