Transformative HR: Robust Analytics to Define & Achieve Success

HRIQ Speaks with Ravin Jesuthasan, co-author of Transformative HR, whose extensive experience includes the design and implementation of workforce and people systems that align with an organization’s strategic drivers and the creation of shareholder value. HRIQ: How has the way in which human capital decisions are made changed over the last several years? RJ: There have been a number of significant forces reshaping the talent and HR landscape for the last several years. HR organizations are under mounting pressure to get improved results from their talent — results that create real value in the business. And although many HR functions have made significant strides in terms of making more structured, well-informed decisions about their human capital, decisions about HR and people management are still often made on the basis of instinct, historical precedent or the uninformed preferences of various stakeholders. There have been many resources thrown at this problem over the years. One only has to look at the investment in technology that HR has been able to deploy over the last few years in its pursuit of more data. The investment in HR technology is probably comparable to the investment in technology for other parts of the organization. HR has gone from being fairly data poor to, in some respects, to being overloaded with data. Yet, we continue to struggle to use this data effectively and generate the evidence associated with HR investments. The growing complexity of the workforce and global economy demand a new type of HR – one in which HR executives ask better questions about business issues, develop alternative solutions and clear choices for business leaders, and ultimately run more business-relevant HR operations. The future of effective human capital decision-making lies in improving the function’s ability to make decisions based on evidence. What is the evidence-based method you have created, and how will evidence-based change take HR leaders to the level where they need to be? "Evidence-based change is a mind-set and approach to making HR decisions. In evidence-based change, the principles….are combined with a robust change-management process to ensure a sustainable competitive advantage for the organization." This method helps HR and business leaders pull on critical change levers in their organizations to ensure sustainable change and enhanced performance that is highly relevant to the business. This evidence-based change framework is founded on research and best practices that work. We studied effective talent management across a wide range of successful organizations, many in the Fortune 50, and discovered some basic principles at the heart of these best practices. The five principles are: Logic-driven analytics Segmentation Risk leverage Integration and Synergy Optimization Can you briefly outline the five principles that put HR where companies need it to be? Logic-driven analytics is about identifying the most pivotal issues that an organization needs to focus on and using robust analytics to describe the issue and the likely outcome from addressing it. Logic-driven analytics ensures common frameworks and mental models for analyzing issues and defining success. [eventPDF] Segmentation is about discovering the strategic categories of employees and potential employees, by understanding the most vital differences between them. These strategic categories are based on what the organization needs from employees and potential employees (demand-side) or what the organization can offer to attract or motivate them (supply-side). Identifying these differences allows an organization to craft unique deals that meet the needs of particular segments, and target those deals to the segments with the biggest impact. Risk Leverage transforms the traditional mindset that risk is bad. Risk is merely a deviation from an expected outcome, and it is something that can be analyzed, planned for, managed and exploited to the economic benefit of the organization. Taking the right risks is often as vital as avoiding the wrong ones. Integration and synergy are about understanding how different HR solutions mesh with each other and other organization processes to deliver a unique and distinctly compelling proposition to the organization and the workforce. It is about ensuring that decisions work together in concert and reinforce each other such that 1+1=3. Optimization follows on from segmentation and is about exploiting the differences between employee groups to enable the organization to realize the optimal value exchange between itself and a particular group. It means identifying where and how certain investments will yield an excess return while minimizing or eliminating investments that are underperforming. To quote your colleague John Boudreau, how can HR go further to "embed analytical discipline and sophisticated systems thinking" to drive better strategies, better outcomes and better employee engagement? Embracing an evidence-based change approach is a new mindset for many HR leaders. It does not have to be overwhelming – the key to "embedding the discipline" is to get started in at least one or two critical areas. The cases in Transformative HR offer real examples of best practices in applying analytics to a variety of important human capital decisions for their organizations – in particular those aligned with the things that really matter to the business. Furthermore, the HR leaders behind the cases demonstrate a high-intensity of purpose and perseverance; they have confidence that HR could do great things for their organizations – and are committed to making those great things happen. In particular, there are three key attributes that stand out about the HR leaders behind the cases – courage, business-mindedness and boundarylessness (the willingness to stretch beyond the customary limits of HR). First, recognizing that talent management is not an imprecise art form or an intuitional process, but a rigorous science based in metrics that tie to strategy at the highest levels - requires courage, and a willingness to take risks and learn from mistakes. Without their courage, innovative changes could never be achieved. Further, in each case, the HR leaders looked beyond the confines of "We’ve always done it this way!" to review the evidence, and make business-minded choices that put entirely new processes into action. Finally, they each reached far outside their boundaries to entirely new ways of thinking. They partnered with other key functions or brought in outside experts when needed, and they used mindsets that went beyond the boundaries of HR. Their courage, business-mindedness and boundaryless thinking brought sweeping, effective change. What are some preliminary changes that executives can put into place in order to deliver sustainable competitive advantage? There are many ways to implement aspects of evidence-based change to help deliver a sustainable advantage. Here are some suggestions for getting started: Assess your organization against these 5 principles and identify the biggest gaps Prioritize specific activities to close these gaps Develop a multiyear road map for sequencing and implementing Taking this approach looks at the entire system - relying on evidence as the basis for making talent decisions and investments. Beginning with an assessment also sets up HR leaders to deliver greater strategic impact because they will be aligning the critical human capital issues with relevant business objectives. Can we end with some examples and/or case-studies of leading global organizations and how their experience and successes have led to the insights we’ve just discussed? Looking at Logic-Driven Analytics, one diversified financial services company had to reinvent itself, having suddenly been spun off from its parent. Strategic elements like payroll, talent management and rewards, even benefits and a call center, were gone. HR’s role had to change from responding to whatever individual transactions its internal customers wanted, to aligning itself with the business at the top. Their task: to re-create all the elements that were cut off. Using logic-driven analytics, HR and senior management targeted the right issues, got the metrics, acted on them and measured the outcomes. They also used Segmentation to work on their turnover of top performers while also remedying new-hire failure. Under extremely tight deadlines, they met all their goals. Another principle, Risk Leverage, came into play at a government investment agency in Malaysia. This agency sought to strengthen leadership development, not in any one company, but for the nation as a whole. The agency’s leaders identified leadership as a national resource, and they set up a program to provide broader experience to their high-potential middle managers by moving leaders between cooperating companies in an exchange program. The goal was to accelerate development of these identified high potentials by thrusting them into an environment markedly different from their present job. Their new role would last between six months and two years. The talent then would return to their original company — with no poaching. Participating CEOs saw the program as good for the firms, good for the individuals and good for the country. This process risked organizations giving up talent to other organizations: Would they return? Would their experience be effective? After implementing the program, payoffs came in terms of expanded skill diversity and creation of a national leadership resource. The organizations involved found their talent did indeed return and, further, got promoted sooner in their original company. And the CEOs who took the risk found that it had paid off handsomely. Optimization: Sometimes getting it right means doing things differently in different places. Optimization is all about redirecting investments away from areas with low impact to areas of higher value, based on the evidence. One example is a hospital where HR needed to rethink its egalitarian view of its talent. Rethinking led to a very different view of the high employee turnover at the food service unit. . A closer look at the root causes revealed that the food service segment provided entry into the job market for low-skilled workers and represented a feeder pool for other jobs in the hospital. Instead of attempting to reduce turnover with pay raises, HR and senior management decided that mentoring those workers to develop other skills for future positions would be a more optimal investment. With training, these workers could move out of food service to higher-level jobs in the hospital, turning them into valuable long-term employees. Food-service turnover that fed the pipeline for other hospital positions was worth the costs. This is a great example of understanding the logic of the business and optimizing the investment. Interview conducted by Alexandra Guadagno, Editor for HRIQ.

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