HR is under increasing pressure to prove its worth to the organisation. So how can it ensure its supporting role really makes a difference? Ross Bentley reports
Financial Times columnist Luke Johnson got the ball rolling in February when he described HR as a “necessary evil, and “a burden on the backs of the productive workers”. And more recently, a leading report from PricewaterhouseCoopers based on a global survey of 1150 chief executives said the reputation of the HR function “was at a low ebb” and there was “little evidence” to show that the influence of HR had increased in the boardroom.
But why all this negativity?
According to Mike McDonnell – chairman of the Chartered Institute of Personnel and Development (CIPD) in Ireland and, until recently, president of the European Association of Personnel Management – people are still questioning the worth of HR because it is a “qualitative function operating in a quantitative environment”.
While the effectiveness of most functions, such as sales and IT, can be measured directly by their results, McDonnell says it is much more complicated to calculate return on investment from an HR initiative.
“If you spend £100,000 ($209,000) on a new IT system, you know you will get X per cent efficiencies. But it’s much more difficult to pin down cause and effect when spending £100,000 on a leadership development program,” says McDonnell.
This predicament cuts to the heart of one of the main issues facing the modern HR practitioner –the pressure to come up with reliable evidence that demonstrates that an initiative or policy has brought real value to the organisation.
So what are the golden rules about evidence-based HR?
You should first establish how the ongoing data will be collected and whether you have the people and systems in place to do this, says Raj Tulsiani, chief executive at interim HR resourcing firm Green Park.
And even before the project has kicked off, data should be taken about the current situation you are seeking to improve, according to Ali Gill, managing director at HR consultancy Getfeedback. This can be done by looking at your own internal set of circumstances, but also by using industry benchmark figures, she says.
“You need to establish a baseline to measure any improvements against and to know what things were like before you started investing,” Gill says.
Gill also says it is important to ascertain early on how employee performance will be reinforced using the data. “If it isn’t used – what’s the value?” she asks.
And it seems that the longer you collect data the more meaningful results will be.
At the Royal Bank of Scotland, for example, head of human capital strategy Greg Aitken started collecting data in 2000. This has enabled him to draw up a leadership index, which uses a number of metrics to rate the leadership skills of individuals in the business.
By cross-referencing this data against sales and customer service feedback, Aitken says he can give a breakdown of what aspects of leadership exist across any group, division or department and relate how much these skills are worth in terms of sales and customer satisfaction.
“Headline figures like this have much more impact than a spreadsheet the size of Germany,” he says.
But there does seem to be a debate about what evidence HR should base its assumptions on, as the case studies that follow demonstrate.
At pharmaceutical company GlaxoSmithKline Susan Cruse says she has based some of her work on substantial research around engagement from the Corporate Leadership Council, which she says proves it is linked to employee performance. “The commercial argument has already been made,” she says.
But consultant Paul Kearns argues that this approach is dangerous because it may discourage HR practitioners from dealing with the specific issues relating to their organisation.
He says: “Trying to apply a macro-study to a specific organisation is problematic. Not all companies are the same – if you make the same assumption as everyone else you risk everyone running into a cul-de-sac.”
Deloitte on HR strategy
According to Susan Steele, the HR director at Deloitte’s UK consulting division, HR practitioners should decide on what evidence they need to find to prove success prior to launching any initiative.
“You need to figure out what success should look like,” she says.
“Decide on what your lead indicators will be –signs that your project is on the right track – and your lag indicators – longer-term evidence that shows you have achieved what you set out to do.” Which is how Steele’s team approached an initiative aimed at reducing the attrition rates of executive assistants within the firm, launched in January 2007.
Executive assistants support the partners and directors at Deloitte and play a vital role in allowing people to work efficiently. But in the run-up to 2007 there had been a real problem with too many executive assistants leaving their posts.
“Executive assistants had been misled at interviews as to what their role entailed, which led to dissatisfaction once in the job,” explains Steele. “With high attrition rates among the executive assistants the partners were unhappy – so we were offering unsustainable salary increases to assistants. We were in a corner.”
In an attempt to get the heart of the problem, an independent facilitator was contracted to lead confidential discussion groups with executive assistants to find out what was going wrong. Following from this, a working party made up of executive assistants and HR was set up to make changes to the way executive assistants were managed and recruited.
“Early proof that we were on the right track was that there was a drop-off in the number of crisis calls from partners and executive assistants, who have a standard procedure if they want to make complaints or have a work issue,” says Steele.
Follow-up evidence about a year after the initiative was launched came in with figures showing that attrition rates had fallen by between 20 per cent and 30 per cent and that recruiters were getting more applicants for executive assistant positions from internal candidates.
“In the past year we have shaved 33 per cent off the recruitment budget in this area,” Steele says.
Improving engagement at GlaxoSmithKline
Using established research as her evidence, Cruse – along with a GlaxoSmithKline (GSK) team –has spearheaded an award-wining initiative focused on the sustained health of the company’s executives and its effect on engagement and performance, which has been recognised by the Health & Safety Executive as a Beacon of Excellence.
Cruse’s conviction that employee engagement drives performance comes partly from research body the Corporate Leadership Council, which, in a survey of 50,000 employees, found that a 10 per cent improvement in engagement causes a 6 per cent increase in effort.
A starting point for the GSK project was an analysis of the engagement and energy levels within teams working globally across the pharmaceutical company, and whether people were achieving a satisfactory work-life balance. Assessments were carried out online by an external agency and respondents were able to answer anonymously.
The research identified that half of the sample were highly engaged with the company, but that half of these were showing signs of fatigue.
“We knew from work carried out by the health and safety executive and our own experiences that employees experiencing tiredness and fatigue are in danger of becoming less engaged with the business,”says Cruse.
This led to the initiation of a program across the organisation called Energy for Performance, which involves employees participating in a highly immersive two-day workshop designed to take a holistic look at the well-being of individuals.
It used 360-degree feedback techniques, health tests and reflective sessions designed to tackle issues around physical wellbeing and nutrition, as well as emotional and spiritual health.
Follow-up research showed there had been an uplift of 30 per cent in employees’ physical, emotional and spiritual wellbeing, while staff satisfaction scores had improved by 20 per cent.
But while one business unit is carrying out work to compare the performance of the sales team who have been on the workshop with those who have not, Cruse understands that it is difficult to link the improvements directly to bottom line results.
“There are many things that can confound these connections – any HR or occupational health initiative must be seen alongside factors such as the financial decisions climate and business strategies. We can claim contribution but not sole ownership of improved results.”
A different approach for Securitas
Business consultant Paul Kearns recently carried out some work with a European arm of security firm Securitas.
This involved working with a team made up of both operational and HR managers with the aim of aligning a new HR strategy to the business strategy of the company, by getting the best out of every employee to gain competitive advantage.
Kearns says the approach taken flies in the face of regular personnel methods where traditionally HR has been trained to follow HR best practice.
“This leads HR departments to follow what other HR teams are doing rather than introducing initiatives that are practical and focused on the specific issues at their organisation.
“It also means HR starts off thinking about what training would be suitable, what competencies need developing or how they can improve employee engagement. But this should be an end point – not a starting point.”
Kearns says what he did with the Securitas team was to look at the long-term strategic aims of the company and then break this down into operational measures – and then consider how HR can practically help in these areas.
One area the company wanted to improve on was the time each Securitas team took to respond to call outs.
“To get the best evidence possible, we didn’t break down the analysis into groups of security guards, but looked at each individual and how they were performing,” says Kearns
As a result, a performance chart was developed where every employee could see how they performed in terms of response times in relation to everyone else.
“This provided evidence on an individual level and highlighted what each person had to do to improve and wasn’t the sheep dip approach that you often find in HR projects,” Kearns says.
Courtesy of Personnel Today magazine. www.personneltoday.com