Sunday, 30 May 2010

Confidence, engagement and human capital


   Indy replied to my recent post on engagement, and my question about why Kenexa’s, and other, engagement surveys don’t seem to pay as much attention as I’d expect to the social aspects of engagement.

His view:

“Who's right and who's wrong? That's a big discussion - but my instinct is to take the middle road and say rather that you and Jack are talking about two different things.

Assuming the picture shows some of his results, he's talking about the commitment of an employee to an organisation - or possibly a "job." The social stuff is about how connected someone feels about the work that they do. The decisions people make are a mixture of two axes...

Actually, now I've typed that, I don't know if there's a clear divide, the axes are not orthogonal. My experience is that even if someone really enjoys their work in a social sense, they may move if some of Jack's factors are a problem. And vice versa...

One thing I'd throw in is that there are different situations, but a lot of the time, individuals in a job are choosing between staying, or moving to one that is essentially similar. Social engagement is often a tipping point issue..”


I think Indy’s right.  These are different, albeit interconnected, things.

And actually, something similar was thrown up at the conference.

So Kenexa define their engagement index as the average level of agreement for:

  • I am proud to tell people I work for my company
  • Overall, I am extremely satisfied with my company as a place to work
  • I rarely think about looking for a new job with another company
  • I would recommend this place to others as a good place to work.


But in one session, we looked at another survey on employee confidence.  I’m not sure if this survey focuses on activities or outcomes, but Thomas Rasmussen from A.P. Moller Maersk certainly defined it as the end people outcome of:

  • Employee Engagement
  • Good leadership (leading at the right level)
  • The right organizational setup (large enough roles.


There’s certainly no reason that confidence couldn’t be an outcome based index.

It goes back to the point I made last year as part of a longer series of posts on engagement surveys that we should really be focusing on surveying much more than just engagement:

“In my last post, I provided some advice on surveying the engagement of your workforce.  But why stop there?  What's so magical about engagement which means this is the only thing you think about surveying, when human capital consists of so much more?  As I've described, engagement is just one bucket inside the bigger bucket of human capital.  And this itself is contained within the even bigger bucket of organisational capability (human + organisation + social capital).  So why not survey these?”


The need for social connection may not show up as part on an engagement index, depending on how you define it (pride, satisfaction, retention, advocacy in the case of Kenexa), but this doesn’t mean that this, or things like confidence, can’t have a sizeable impact on discretionary behaviours and business results.

It’s important to focus on outcomes rather than just activities, but we need to ensure that we’re paying attention to the right ones.

Any more thoughts?


Cross-posted from Strategic HCM.


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Friday, 28 May 2010

Promotion (and salary) envy


   My last post argued that despite Jack Wiley’s findings, the workplace is a very social environment, and we need to influence its sociology, if we want to maximise engagement and collaboration.

And as I stated at the summit, social media has a role to play in this, but so does lots of other things we’ve traditionally done within HR.  Like the way we promote people, and pay them…

Interesting then to see these two articles today:

1.   The workplace is a seething hotbed of promotion envy – HR Magazine (UK)

“A survey of more than 1,300 employees finds the office is dog-eat-dog after 34%, of employees in small businesses said that they would purposely sabotage a colleague's chances of a promotion, rising to 62% in larger businesses.”

And why?  “because they believe their co-workers would do the same to them if the situation were reversed”.


2.   BT union demands inflation-busting pay rise or they'll strike – Management Today

“It’s a bit hard to imagine anyone looking at the strategy currently being employed by the unions at BA and using it as model for their own industrial relations. But that appears to be the case at BT, another once-nationalised giant that’s been feeling the pain lately: its biggest union is threatening to walk out on strike unless management agrees to an inflation-busting 5% rise. Now it’s true that things are looking up at BT, and the £1m bonus CEO Ian Livingston stands to pocket as a result is being used by the unions as justification for their demands. But at a time when we’re barely out of recession, when unemployment is rising and BT itself has just shed 35,000 staff, isn’t it about time the union faced up to harsh economic reality?”


Yes, but if we see organisations as societies in their own right, and acknowledge that people will behave dysfunctionally if they believe they’ve been treated unfairly in just a relatively minor way (eg being passed over for promotion), then how do we think people are going to react when their CEO gets paid 40 times their average salary (£850k salary plus £1.2m bonus never mind his share options compared to an average salary of £50k)?

Is it really that hard to predict?


As Andy Kerr, deputy general secretary of the Communication Workers Union has said:

"It's all about fairness. We don't mind senior executives getting bonuses, but we want all staff to share in the success of the company."


Well, yes.  It is.  I’ve used the terms envy and dysfunctional in this post.  But I don’t mean to indicate that they’re that negative, that they’re things we should expect people to be able to avoid, or that they’re limited to a small group of people (let’s just call them ‘C’ players, shall we?).

I don’t and they’re not.  They’re  very natural emotions, behaviours and reactions that affect us all.

We’re human.  We’re social animals operating in social environments.  We’re not cogs in a wheel.


Interestingly, I included BT as a case study organisation in my presentation on social media and HR.  And think that in many other ways, it’s a very people-focused business – for example, its long-standing policy of avoiding compulsory redundancies  (it’s also a former client).  But with this sort of pay differential, can any organisation really be that socially functional, or that effective?


Picture credit: nicked from HR Magazine’s article, sorry.  I did want to include a picture of someone ‘slapping their forehead’ but they don’t seem to have any of these in wikimedia commons where I try to take my pictures from – and I didn’t think its alternative suggestion of ‘shopping in moorehead’ was that relevant!


Cross posted on Strategic HCM


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Thursday, 27 May 2010

Social engagement – fact or fiction?


   In my end-of-day keynote at Kenexa’s Euro Summit, I talked about how the social aspects of an organisation play an important role in influencing the engagement levels of employees.

I referred in particular to some of:


I used these arguments to suggest that much of what engages us at work comes from our relationships with the people we work alongside.

So I was paying particular interest to Jack Wiley’s keynote at the start of the day in which Jack described the findings of Kenexa’s 2010 WorkTrends survey, wondering to what extent this social type of engagement would appear in their research.

The answer is it didn’t.  Hardly at all – just in terms of the #10 reason that people leave (feeling part of a team).


I carried on anyway – and I don’t think anyone noticed the divergence in our views.

But what’s behind the discrepancy?  Who’s right, who’s wrong.  I’d love to learn your views.


Cross-posted on my Strategic HCM blog


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Tuesday, 18 May 2010

Reinventing Organisation


    This post continues my review of Julian Birkinshaw’s ‘Reinventing Management’ book.  UY97WDM42EPH

In this book, Birkinshaw discusses the role of a company’s management model, ie "the conscious choices made by a company’s top executives to define how work gets done”.

I noted in my last post that:

“The required distinction isn’t between management and leadership, it’s between internal and external, or the organisation and the business.

To me, Julian’s management model isn’t a model of management vs leadership, it’s a model of the organisation vs the business.”


I want to explain a bit more about this.

In my book, and in my Strategic HCM blog, I talk about a human capital value chain which produces human, organisation and social capital.  What I’m really talking about here is a value chain for the organisation, rather than Michael Porter’s value chain for the business (which I also write about, along with a further value chain focused on customer loyalty).

Here are some relevant points from my book (I’ve just updated the text to refer to the organisation rather than human capital alone):

“There is a third value chain driven by human, organisation and social capital.

In this chain, the current potential of the business, including the value that people associated with the business may choose to invest in it, are the ‘raw materials’ that form the inputs to the value chain. These inputs go through a series of transformational processes that could be part of a major change programme. Alternatively, they could just be the activities undertaken by individuals and teams who are flexible and adaptive to change and who, by responding to emerging situations, transform the way that business is performed.

The output of the processes is improved organisational capability which provides a return on human capital. This capability is also expressed as human, organisational and social capital but is now created value, intangible capability, not just a ‘resource’. It is valuable, rare or unique, sustainable over time and not easily imitated. This capability provides the basis for business sustainability, differentiation, competitive advantage and transformation.

The progression from the customer to the organisation value chain is similar in nature to the progression from Porter’s value chain to the customer- driven one. Businesses can always access financial capital if they have got profitable customers. Businesses can always find customers if they have got appropriately capable people. Again, this is not saying that either investors or customers are unimportant – but by moving focus to a deeper source of value it is possible to have a greater impact on the business.

This is why Richard Branson at Virgin has always said he focuses on people first, customers second and shareholders third. Jack Welch at GE stated ‘there are three key measures in business – customer satisfaction, employee satisfaction and cash flow, in that order’ but later admitted he had listed customers and employees the wrong way round.

Again, we could just see this as an extension of Porter’s value chain or of the customer value chain with more focus on employees but, also again, it is really something different. This chain has its own focus and its own output, the potential for sustaining and transforming the business, rather than margin or loyalty. In particular, unlike the two previous value chains, the output of the organisation value chain does not have a direct financial impact. This is simply as a result of the fact that we are working with intangibles. Porter’s value chain delivers a current financial impact. The customer value chain delivers this in the future. The people value chain provides the potential for a transformed level of financial impact.”

I go on to explain that the organisation value chain in the context of the balanced business scorecard (see the slide above):

“The organisation value chain describes a transformation in which a number of inputs, including the existing capability of people in the organization, progress through a series of activities based on the organisation’s people management practices to provide tangible and intangible resources and capabilities. These then produce impacts in the rest of the business which show up in the business process, customer and financial perspectives of the balanced scorecard. The value chain actually forms one part of an integrated value chain with the strategy map of the balanced scorecard, where ‘output’ in the HCM value chain leads on to ‘business processes’ in the balanced scorecard. This integration is the reason for the CIPD’s description of human capital as a ‘bridging concept – defining the link between HR practices and business performance in terms of assets rather than business processes’.”


In my view, it’s this organisation value chain that Birkinshaw writes about in his book.

Each of these chains, the business chain and the organisation chain, require both leadership and management. Birkinshaw’s model isn’t really a Management Model at all – it’s simply an organisation strategy / design.

The distinction is important.  So for example looking at the experience of Shell and Lehman, Birkinshaw notes “That the right Management Model for a big oil company is not necessarily the right Management Model for an investment bank”.  This isn’t necessarily true.  It could still be the implementation of this – the management of the organisational design – that was wrong.  From a leadership / strategy perspective, it might have been exactly the right organisation design (or management model).

(And anyway, “Your Management Model can only become a source of advantage if you find ways of working that separate you out from the crowd”, so there isn’t just one right management model / organisation design anyway.  As Julian notes later on, Linux, Google and Microsoft all operate – successfully – with different Management Models.  So can oil companies and investment banks.)

Or take the example of peer assists introduced by John Browne at BP. This was one of the processes scrapped by Tony Hayward.  Why?  Well according to Christopher McLaverty, BP’s head of Leadership Development, it was because BP had been “over led and under managed” – so BP also saw this (rightly, I think) as part of their leadership, not a management, approach.


The distinction is useful because it shows that business and organisation (not leadership and management) focus on two separate outcomes – the business focuses on customer satisfaction and financial results.  The organisation focuses on organisation capability – human, organisation and social capital.  And this allows us to focus on outcomes rather than activities which helps to make our activities more strategic.

Birkinshaw’s management model focuses on new ways of co-ordinating activities, new ways of making decisions, new ways of defining objectives and new ways of motivating employees - all activities.  My organisation value chain focuses on what is really important - human, organisation – and social advantage.  Activities are only useful to the extent that they lead to these.  And once an organisation is clear about the type of organisation capability it wants to create, it can easily choose the activities that will lead to the required outcome.

The example of AG Lafley’s Connect + Develop open innovation approach at Procter & Gamble is instructive.  Birkinshaw suggests that Lafley made a public commitment to changing the company’s innovation model.  I don’t think he did, did he?  He made a public commitment to an outcome – that 50% of P&G’s innovation would come from outside the company.


We need to look at outcomes rather than activities.  Organisation not management.  Reinventing organisation.  Strategic HCM and Social Advantage!



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Wednesday, 12 May 2010

Progressive politics in the UK


   What an interesting few days it’s been.  I’m immensely impressed with our new Cabinet as it has emerged so far (I’m particularly looking forward to Vince Cable taking on the banks)*.  And the way the leaders and others seem to be working together.

And I’m also impressed with the new high-level policies as well.  I know Labour representatives are regretting the lost chance of a new progressive alliance, but in my view, the new government’s policies are in fact quite progressive.

The Conservative party’s policies were already a significant departure from the past and I think Cameron’s Big Society is one of the most interesting and innovative ideas in politics at the moment.  Combined with the Liberal agenda, and the increase in the income tax threshold etc, make this a very different style of Conservative government.

To an extent, this shouldn’t be surprising.  Life has moved on.  Thatched confronted a sluggish and dysfunctional economy and society, and I think most of her responses to that situation were appropriate.  By 1997, things had changed, and the need for a more united society had become a more pressing requirement than making further improvements in the UK’s competitiveness.

Most commentary on the coalition points to the UK electorate’s unwillingness, post the MP expenses scandals etc, to give any one party a majority.  I think it’s more than this.  People increasingly understand the need to focus more on collaboration and less on competition, and we want to see this in our politics as well.



* Whoops.  I’ve just heard about Erick Pickles!


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Tuesday, 11 May 2010

Lynda Gratton and the Future of Work


   I was at London Business School last night for a session on the Future of Work.  Most of the session focused on the attendees’ thoughts about this future, supported by Lynda’s consortium:

  • Five trends: globalisation, technology, demographics, low carbon, society (reduction in trust, increase in self-employment).
  • The dark side of the default future: isolation, fragmentation, exclusion, addiction.
  • The bright side of a crafted future: transparency, choice, co-creation (eg 2000 scientists at CERN collaboration together, meaning that the first 15 pages of their articles are taken up with the names of the authors).


Most interesting for me was Nokia’s prediction that by 2015 5 billion people will be connected across the blog, and Lynda’s question, what happens when you join up 5 billion people?

In Lynda’s view, one change is from competitive isolated individuals to connected, innovative crowds:

“The future is about relationships – the quality, extent and depth of relationships both virtual and real.”


Crowds can be very innovative, but for this to be the case, there needs to be diversity – you need to be connected to people very different to yourself.

We finished with these suggested actions:

  • Making wise life choices
  • Finding regenerative communities
  • Developing carbon neutral capabilities
  • Preparing for five generations at work.



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Tuesday, 4 May 2010

Julian Birkinshaw: Reinventing Management (“There must be a better way of running large companies”)


   I’ve posted on Julian Birkinshaw and his work at MLab quite a few times previously:


Well, over the last couple of weeks, I’ve been reading Julian’s latest work, Reinventing Management.

It’s an interesting and thought provoking read, mainly concerned with the need for companies to develop a ‘Management Model’:

“A Management Model is the choices made by the executives of a firm regarding how they define objectives, motivate effort, coordinate activities, and allocate resources – in other words, how they define how work of management gets done.”


Julian’s main point is that organisations need to define what their Management Model is, and his suggestion is that each Management Model consists of these four dimensions (whilst recognising that this is not a comprehensive list):


I totally support the need for employers to clarify how their organisations are going to work and support anything which encourages this, so I generally feel very positive about the book.

I particularly like the way Julian shows that web 2.0 can be combined with real-world activities – something that I’ve been arguing for within this blog.

I also like the focus on developing strategy (or ‘Management Model’) from looking at what’s working in the organisation ie through a process of understanding, evaluating, envisioning and experimenting (which Vineet Nayar at HCL Technologies labels an inside-out approach – see my arguments with Dave Ulrich & co on this).

And I like Julian’s thinking on emergence: “If you provide very few rules and very little structure, most people will figure out for themselves the best thing to do, and the best way of coordinating their activities with those of others” – I can see lots of opportunities for this, for example in performance management.

Having said this, I’m also pleased to see that he suggests that employers can still control social activities within the organisation too – not everything needs to be down to emergence: “Emergent behaviour is necessary for experimenting with new opportunities but it needs to be coupled with processes for harnessing and focussing effort” (I’ve got a blog post on this coming out shortly).

Similarly, with hierarchy: “Hierarchy is not going away.  Large organisations will continue to be an important part of the business landscape, and large organisations need some level of hierarchy to function.”


However, I do also have a number of quite major reservations about the book.

I don’t agree that Julian’s ‘Management Model’ is a useful place to start a management reinvention.  The Model is simply a set of aligned activities – you still need something to align these activities upon.  You’re much better off starting with a particular outcome, whether this is a set of values, a BHAG etc (I suggest ‘mojo’).

And I’m also not completely convinced about some of the dimensions in the Model.

Hierarchy and Collective Wisdom in particularly, don’t seem to me to opposite ends of a single scale.  Julian claims “Hierarchy assumes that the boss always knows best” but it doesn’t have to – it’s simply a way of organising responsibilities.  And the opposite of hierarchy is flatness.

Similarly, bureaucracy and emergence - the opposite of emergence is control.


I also don’t agree with the way Julian distinguishes management from leadership.

The book is supposedly about management – about how companies implement their plans.  It’s therefore intended to avoid ‘more alluring themes’ such as leadership, change and strategy.  However, I don’t think this it does.  This becomes particularly clear during the review of IBM’s Values Jam – if there’s anything more focused on leadership than this, I don’t know what it is!

The required distinction isn’t between management and leadership, it’s between internal and external, or the organisation and the business.

To me, Julian’s management model isn’t a model of management vs leadership, it’s a model of the organisation vs the business.  I’ll explain more in my next post.



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Looking back to May 2009


   You may also be interested in these posts from April last year:


Or even from the year before?

My contact details:

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Photo credit: Decoetzee