Is HR Stuck in a Rut?

A bit more than three years ago I left the HCM world to re-enter the world of purchase-to-pay and supply chain finance.  There had been some exciting new developments, not the least of which was supply chain finance.

As I re-engage with the HR world, however, I get a sense of de ja vu because there don’t seem to be many new developments or thought leaders.  The topics are amazingly similar to what they were three, five, even ten years ago: Performance management is still broken, the war for talent continues, and HR technology still promises to solve everything from talent acquisition to employee engagement.

Meanwhile, industry experts are still talking about how to do the same things better while surveying HR practitioners about HR priorities and best practices.  It’s quite the echo chamber so perhaps it’s not a huge surprise so little has changed.

There are a few fresh voices talking about things like employee experience, design thinking, behavioural economics, the gig workforce, holocracy, gamification, etc.  Some of it’s pure nonsense, or ahead of its time, but at least it’s new.  And some of the tech trends are truly exciting.

Nonetheless, after three years focused elsewhere, it feels like HR has gotten itself stuck.  Is it fear of failure?  Is it an ingrained tendency to follow rather than lead? Or is it just easier to talk about the same problems with like-minded colleagues than it is to rethink them completely?

Don’t Talk the Talk, Walk the Walk

Here’s an example of what I mean: If diversity and personalization are drivers of creativity and innovation, why do HR processes continue to trend toward standardization?  And if outcomes matter more than activities, why do organizations continue to measure things like number of training modules or performance evaluations completed?

I mean, sure, if you’ve taken the time to roll out an LMS or a performance management process – despite the fact that for more than a decade, experts have claimed performance management is broken while offering new best practices to break it in more up to date ways – you want to understand your participation rate.  I totally get that. 

Understanding your numbers is fine as you don’t confuse a high participation rate with success.

One of the problems facing HR today is confusing activity with outcome.  And it’s not just HR, because we humans latch onto anything we can measure.  The problem is that when it comes to people, some of the most important things can’t be measured.  So, in a way, it’s worse when HR does it.

And don’t bring up AI or block chain now as the magic dust or I’ll have to come over there.  AI and block chain won’t help measure the unmeasurable, although machine learning will likely have a huge impact on personalization.  At best, they’ll help you do a better job measuring or making sense of the things you already try to measure.  At least for a while.

Just kidding.  I totally won’t come over there.

Time to Rethink HR Conferences?

I know, they're really fun.  However, instead of talking about the usual tech trends and topics, why not talk about how to apply behavioural economics to innovation or incentive strategies?  Or how to ensure managers are inclusive and promote a culture of trust where innovation can flourish?  Or how to apply gamification principles to motivate the entire organization to achieve the impossible?  Or how to create healthy workspaces that inspire creativity and play?  Or introducing a 4-day work week?

Someday AI will know us better than we know ourselves, but it’ll still be a while before a a bunch of code – be it ever so elegant, unbiased and networked - understands people well enough to make accurate predictions about individuals in a fast-changing environment.  And quite frankly, HR will have about as much to do with blockchain as they do with SSL or Unix, i.e. you’ll use it without knowing you’re using it.  I don’t mean to be insulting but let’s face it, the business isn’t looking to HR to figure out distributed encryption or machine learning.

So why not use the time to talk about how to enable people to bring their best and most authentic selves to work?  My post The HR Journey from Productivity to Purpose suggests some ways to help you do that.

Predictably Irrational: Interactive Tools, Free Bagels and the Power of Appreciation

Picture courtesy of Villains WIki

I recently wrote a post about Dan Ariely’s fascinating work on behavioural science, Predictably Irrational.  You can read the post here, summarizing some of the key findings from the book, but after receiving several questions about how to operationalize this information I decided to write a follow up post.

1.      Everything’s relative: Humans understand and navigate the world by making comparisons.  That’s why when executive salaries were first published they skyrocketed rather than becoming more normalized, resulting in diverse organizational disfunctions.  It’s also why forced ranking can backfire in a high performing team.  From an HR perspective, it’s naïve to assume people won’t make comparisons regarding their own compensation, benefits, career progress, etc.  It’s therefore important to establish a perception of fairness in the organization, i.e. not equality per se but equal opportunity with a clear path to the next level of pay or responsibility.  I recommend investing in a visual career path as an employee branding and coaching tool (example below), because it creates an immediate frame of reference that helps people understand where they are on the journey and how to progress to the next level.  To promote higher engagement with the tool consider making it interactive, for example using Visme.  

Courtesy of Amoria Bond

2.      Emotions cloud our judgement even more than we realize: People like to think of themselves as fair and impartial but in fact most people are ruled most of the time by their own emotional biases. That’s why a great theory tends to break down in practice when it encounters the personal agenda, why nepotism exists, why people believe false information, and why the overarching goal of talent management as defined by Cornell University is to reduce the impact of human frailty (or bias) in decision making.  Although self-serving behaviour limits company growth by undermining people and trust, many organizations inadvertently incentivize confidence over substance and being seen over being impactful.  Whereas truly innovative companies stamp out undermining behaviours and recognize leaders who put team, customer or business first.  

3.      Don’t confuse social norms with market norms: Compassionate and authentic leadership can inspire great things from teams, and most people want to help others and be part of something greater than themselves.  So how do we explain bullying, marginalizing and self-optimizing behaviour in the workplace that prevent people from contributing as much as they could in a more supportive environment?  Amongst other reasons – including company culture - it turns out that monetary transactions bypass the helpfulness impulse and activate a ‘market norm.’  People behave competitively and won’t go the extra mile for a low reward when market norms are in operation.  If you’d like to learn more about how applied social norms such as recognition empower employees and drive higher performance, I recommend The Power of Thanks, co-authored by my former Compensation Café colleague Derek Irvine.  

4.      Expectations shape perception: Expectations colour our experiences, which is why two people can share the same experience but describe it completely differently.  Employee engagement research shows that people who feel appreciated and recognized at work are also more likely to enjoy their jobs, trust their managers and believe they are compensated fairly.  It’s almost like there’s no downside to this whole recognition thing…

5.      Free has magical properties: People can’t seem to resist the lure of the freebie, which creates all sorts of interesting possibilities for creative total compensation packages.  One of the companies I worked for that was consistently voted a best place to work in the competitive Bay Area paid a bit less than competitors but offered free Noah’s bagels and cream cheese two days a week.  You can’t beat a good schmear.

6.      It’s hard to let go: People like to keep all the options on the table for as long as possible, which is why limited availability or putting a time limit on options can help create clarity and spur people into action.  When preparing for significant organizational change it’s important to give people time to prepare, but it’s equally important to ‘burn your ships’ and start working in the new way.  Too often, people and organizations get stuck between old and new, spreading valuable creativity too thinly across too many initiatives.  My recent blog post on failure and innovation spotlights the role of leadership in focusing creative energy.

7.      First choice results in a better experience: The person who raises their hand first is in a unique position to set the tone or volunteer for a choice assignment, while less assertive voices may be unheard or ignored, leading to less satisfaction in the outcome.  A more inclusive strategy is to ask everyone to write down their thoughts and pick someone at random to share their notes first without interruption until everyone has had a chance to speak.  This tactic has the advantage of enabling introverts to have an equal share in the discussion, which doesn't usually happen.

Picture courtesy of Impulse

So there you have it: interactive career paths, recognition programs, free bagels, clear priorities, and more inclusive discourse can help put behavioural economics to work in your organization.

Thanks for reading and as always, comments and additional suggestions are welcome.

Working Girl

Predictably Irrational: Behavioral Economics, Talent Management and Employer Branding

Inspired by my recent work sourcing and coaching speakers for the 2018 TEDxTUM event in Munich, I’ve been devouring great books by former TED speakers. One of these that stood out was Dan Ariely’s fascinating work on behavioural science, Predictably Irrational. 

If you don’t mind paging through a seemingly endless stream of creative, low cost experiments involving chocolate, beer, and unsuspecting MIT students, you’ll learn some amazing things. Some things you might have already known or suspected, but other things may surprise you because they not only irrational but predictably irrational.

I recommend the book, as the experiments are sometimes hilarious and always instructional, but here are a few highlights for talent strategy:

1.  Everything’s relative: If you want people to choose A instead of B, introducing a third option that is a slightly worse version of option A will make A more attractive than B and also make it easier to reach a decision. The reason is that making A better than something also makes A seem better than B. This is useful information when designing total compensation packages as well as communicating bad news.

2.  Emotions cloud our judgement even more than we realize: We know people tend look for data points to justify the decisions they already want to make, but if you ask people to predict how they would decide in a moment of emotional excitement, it turns out they are vastly wrong at predicting their own behaviour - even with the benefit of experience, meaning Dean Martin got it wrong. That’s why creating a positive emotional response to your employer brand is so important, and why charismatic and caring managers can do more for the business than complicated performance management strategies.

3.  Don’t confuse social norms with market norms: This is important for businesses trying to be the ‘caring employer’ because trust implies a social relationship. If the company doesn't live up to that trust and tries to fall back on impersonal market norms when something goes wrong after building a relationship based on social norms, it creates a trust problem that’s difficult to come back from. This distinction is a critical part of defining your employer brand, i.e. don’t position yourself in terms of social norms unless you can also deliver an employee experience that lives up to your promise.

4.   Expectations shape perception: If I give you two menu choices and one is described as, ‘lightly braised pork medallions with a caramelized puree of autumn apple,’ and the other as, ‘pork chops with apple sauce,’ it turns out that a richer and more emotion-evoking description leads people to expect a more enjoyable experience, which in turn becomes a self-fulfilling prophesy. Similarly, a higher price creates the expectation of a superior product, which in turn creates a more positive experience. Important note for HR when defining your employer brand: Don’t confuse richer and emotion-evoking with longer and/or full of buzzwords.

5.   Free has magical properties: If you normally charge $2 for a service and offer a $1 discount, the impact is very different from a reduction of $1 to free, even though the difference in both cases is $1. Rationally speaking, there should be no difference and yet people can’t seem to resist the lure of the freebie. This creates all sorts of interesting possibilities for HR and compensation professionals to design compensation packages in creative ways.  

6.  It’s hard to let go: Any good sales person understands the value of the hard deadline when the current offer vanishes forever. Anyone working for a business in transition has experienced the treadmill of adding new workstreams while still keeping legacy parts of the business on life support (tips for avoiding here). People like to keep all the options on the table for as long as possible, which is why limited availability or putting a time limit on options can help create clarity and spur people into action.  For any HR manager who's had to chase people to complete the much hated engagement survey, a 'Free gift card if you respond by 3PM today' strategy can work wonders.

7.   First choice results in a better experience: In an interesting experiment where four menu options are offered to four people, the person who chooses first is more likely to enjoy their meal more than the others. The people who choose next feel subtly pressured to make a different selection and are then more likely to experience buyer’s remorse and wish they’d ordered the same thing as the happy early adopter. This highlights the potential of making people feel they are getting special consideration or ‘first dibs’ on a new project or opportunity.

Understanding how behavioral economics shape behavior and perception can help strengthen your talent management strategy and create a more positive employee experience.  If you'd like to read more about behavioral economics, I wrote a similar post for marketing professionals here.

Thanks for reading and comments are always welcome.

Working Girl