HRTech

HR heading for divorce battle over custody of Performance Management

divorceOriginally published by Inside HR 

The opportunity is ripe for HR to broaden its performance management definition and join forces with other performance management system owners within their organisations to establish a complete workforce performance framework, writes Rob Scott

A few years ago, HR functions would have been acknowledged as the custodian and owners of performance management together with the supporting technology. And if you went searching for a new performance management solution, you would struggle to find anything outside the HR technology vendor community.

But many would argue that traditional performance management has been less than successful in improving employee performance and business value over the last 50 years, and at most it was an annual or bi-annual exercise in HR process compliance by line managers and their subordinates. This naturally gave rise to alternate performance management solutions outside the HR framework.

Another trigger for change has been the move to the digital era. Modern technology has allowed the workforce to be increasingly mobile to the extent that jobs and location can be decoupled. The structure and nature of the workplace and workforce are radically transforming while the definition of an employee is largely irrelevant as more and more forms of “peripheral” work engagements are used. Contingent workers, “giggers”, freelancers, autonomous self-directed teams, agency workers, and outsourced/insourced teams are now part of the workforce fabric.

“Performance management can no longer be done in a standardised way, rather it must cater for the specific type of engagement relationship”

Generally the HR function hasn’t included these peripheral workers on their performance management radar, mainly because they are not permanent employees, are not linked to career or succession plans, are often not hired onto the core HR system, the performance process doesn’t cater for short-term activity or teams, or HR has no control or authority over their appointment. Most HR technology vendors have focussed their recent performance management software updates around the shift from rigid annual reviews of goals and objectives to tools that facilitate ongoing communication, coaching and mentoring of permanent employees. What they haven’t done is deal with effective measurement of and feedback to peripheral workers.

But away from HR’s eye’s other software systems, typically owned by operations, finance, marketing or procurement, tools such as Workforce Management (WFM), Contingent Workforce Management (CWM), accounts payable, freelance platforms, industry talent pools, social engagement platforms, social media platforms and others are actively geared to track performance against goals, assess quality, track activity through Internet of Things connectivity, provide team, company or individual feedback, and inform “re-hire” decisions.

Over the next five years, the size of the peripheral workforce will continue its upward trajectory. Analysts generally expect this number to be as high as 40 per cent of the total workforce by 2020. Even today, most new jobs created in Australia are part-time. Irrespective of the employment type, managers still need to focus and align their workforce to achieve their organisational and business specific objectives in the most efficient way.

“Continuity, engagement, feedback, opportunity and development are the collective cornerstone of an employer value proposition”

Performance management can no longer be done in a standardised way, rather it must cater for the specific type of engagement relationship. Some employees will still require traditional cascading-goal performance management, others may need social goal-setting and peer review, while others simply need a star rating and re-hire indicator.

Performance management now has co-ownership. The opportunity is ripe for HR to broaden its performance management definition and join forces with other performance management system owners within their organisations to establish a complete workforce performance framework. Continuity, engagement, feedback, opportunity and development are the collective cornerstone of an employer value proposition – it will be hard to achieve or maintain this if close to half the workforce is not included in a performance framework.

5 key considerations for HR

  • HR departments are no longer the sole custodians of performance management solutions.
  • The shift towards the digital economy has given rise to a new type of workforce which is not bound by time, location or permanency. Their performance management needs are significantly different to permanent full-time employees.
  • Modern operations management, procurement, financial and marketing software solutions cater for relevant forms of performance management and feedback.
  • Organisations need a workforce performance framework which is underpinned by choice and appropriateness rather than a single standardised approach to management of performance.
  • As the contingent labour force increases as a percentage of total workforce, greater urgency is needed to build strong relationships with these teams and individuals through new performance management approaches and tools.

ARTIFICIAL INTELLIGENCE: ARE HR PROFESSIONALS AT RISK?

Latest article published in InsideHR

would HR professionals be as enthusiastic about HR technologies if they contained Artificial Intelligence (AI) capability

Are we ready to be pushed down the proverbial pecking order of importance by sophisticated AI technology? asks Rob Scott

Very few HR and talent professionals would refute the value that technology has brought to their operations. HR functions have leveraged these tools to become efficient, effective, collaborative, engaging and more accurate. But would HR professionals be as enthusiastic about HR technologies if they contained Artificial Intelligence (AI) capability that could predict more accurately and make better business decisions than the highly educated, people-focused HR practitioner?

At what point does software that is able to pick the best applicant, predict who is most likely to resign or identify the best mentor for a talented employee, become a legitimate replacement for a highly paid HR practitioner?

Most HR professionals I engage with don’t believe this will transpire, citing the complexities of human behaviour, personal choice and the absence of universal logic in managing people in the workplace. In the short term I agree with them, but not for the same reasons they mention. In fact, when I look at how most HR functions rely on standard processes to manage certain events, I have no doubt that near-future HR technology will do a better job than humans in executing these rule-based processes. Our flawed minds can never achieve the same level of efficiency.

“AI in HR is maturing; we are seeing interesting algorithm designs, predictive analytics and automation solutions coming to market”

This is not to say that our current HR technologies are anywhere close to being artificially intelligent. Right now there is a lot of hype-spinning by software vendors about the predictive prowess of their tools, but in reality these are immature tools. We should, however, be under no illusion that sophisticated AI for HR is heading our way. As it becomes more credible and capable, it will displace employees who are focused on maintaining standardised HR processes and mundane transactional work. There is, however, a far deeper and fundamental reason why I believe AI will, in the short term, find a home as a digital assistant rather than as a replacement for HR professionals. It goes to the heart of a human emotion – fear. Having artificially intelligent machines making sophisticated and important people-based decisions feels threatening and generates a level of anxiety about our status as human beings. We are not ready to lose our “superiority” to machines, no matter how intelligent they become.

As an example, Microsoft recently released a small tool which guessed one’s age based on a picture you uploaded. The results were mostly wrong, however, the tool went viral. Why? The reasons lie in the notion that while the technology is inaccurate, we feel less threatened by it and are able to maintain our dignity and humanness.

This is a powerful lesson and opportunity for HR software developers. Building AI software that is too accurate and human-like is likely to be rejected or underutilised, not because its outcomes are incorrect, but because it pushes human beings down the proverbial pecking order of importance and insinuates that the work they are doing is demeaning and unnecessary.

“Building AI software that is too accurate and human-like is likely to be rejected or underutilised”

Of course, we shouldn’t forget that technology enhancements have been at the heart of mankind’s industrial revolutions and progress. New machines with capabilities that outshine human ability have typically been met with resistance from those affected, at least until new work opportunities borne from the new technology become evident. AI in HR is maturing; we are seeing interesting algorithm designs, predictive analytics and automation solutions coming to market, but future job clarity in a digital and AI age is still blurry. Until then, AI tools for HR will develop into great digital assistants under control of HR professionals. At least for now the role of the HR professional remains in demand. 

5 key takeways for HR 

  • AI is a growing phenomenon in HR. We are increasingly seeing the inclusion of decision algorithms, predictive analytics and automation tools in HR software.
  • Basic AI tools will have the ability to manage standard HR processes with little to no human intervention, ultimately displacing employees from these mundane roles.
  • Complex AI tools which can make human-like decisions are likely to be rejected in HR because of the implied threat to our status.
  • Whilst it seems far-fetched, HR professionals should start thinking about how to “manage” and integrate artificially intelligent machines in the work environment.
  • Digital HR assistants are already with us managing workflows, finding information and managing large amounts of data. We don’t need to fear AI.

Image source: iStock

HOW INTELLIGENT IS YOUR HR SYSTEM?

There are three key elements in determining how intelligent your HR system is
Original article written for Inside HR Magazine April 2015

The analytic functionality of modern HR software is meaningless without the right interest, creativity and skill of HR leaders.

You wouldn’t be wrong if the first words that sprung to mind as you read the title were “analytics” or “big data”, as they represent two of the three main components that drive HR system intelligence. Big data is really just a term that represents the massive amounts of information we create and collect in a myriad of digital systems such as email, collaboration tools, HR transactional, talent and payroll systems as well as our online social media activity using tools like LinkedIn, Twitter, Facebook and others.

Nobody really knows exactly how much data we collectively create. Whatever the volume or source, it’s really irrelevant, save to say that every individual in the workplace is creating a significant amount of data on a daily basis that could be extremely useful and valuable in the delivery of business- and people-related goals.

The data, however, is largely meaningless unless we firstly recognise what it is, know what value it will offer our organisations, and are able to apply analytical robustness in a creative and strategic manner to the raw data. Many will be familiar with the movie Moneyball, which highlights the power of using data and analytics to make business decisions regarding sportsmen. It’s now pretty common for top sports teams to measure a specific series of data points for each of their team members. They do this to ensure they invest in the right players from a hiring perspective, through to performance optimisation, risk (injury) management and termination.

system intelligence

This brings me to the third component which drives HR system intelligence – the human factor. While modern HR systems can be set up to provide historic, trending and predictive answers in a quick and consistent way, it takes people to ask the right questions, apply rigorous and causal measurement standards and to interpret the results correctly. System intelligence is far more than a set of logical technology sequences with a sexy user interface; it is a reflection of how the human aspect is applied to data interrogation.

What Moneyball also underscores is the need for absolute focus, commitment and trust in the analysed data. The real-life success of the Oakland Athletics baseball team, which the movie is based around, would not have happened if the right person, who loved and understood the data, was not part of the equation. This is important for HR functional and technology leaders to understand – HR analytics is not an activity you can simply add into your HR generalist’s job description. It’s a contributing factor to why HR departments have not been overly successful with their foray into the world of data analytics.

It’s good to see many HR system vendors actively embracing analytics directly in their HR software. Some provide fairly basic historic and trend analysis through online graphical reporting. Others are providing instant or embedded analytics that display results in a dashboard or by simply hovering your mouse pointer over an icon. More recently, we’re seeing diverse data and complex analysis engines being integrated into HR systems. These offer statistically valid predictions related to employee risk such as likelihood of resignation, best career move and ways to improve engagement.

The provision of complex analytic functionality by HR vendors is important; however, the HR system will not appear intelligent without the right human interest, creativity and skill. As tough as this may sound, your HR system’s perceived intelligence is a reflection of your HR leaderships’ views of data and analytics rather than the system-specific functionality. As we edge towards a completely digital work environment, HR leaders must address their role in future decision making through data intelligence.

HR system intelligence & HR implications

  • HR system intelligence relates primarily to its capacity to collect, analyse and represent data in a predictive manner such that it contributes to business and people decision making.
  • Just as sports teams have realised the value of people analytics in winning, HR must accept that there is significant business value to be gained by properly analysing HR and related data.
  • HR vendors will provide standard analytics in their solutions. These are useful, but should not be confused with the analytics that are unique to your business and HR drivers.
  • Data analytics is a specialist role that requires specific skill, a passion for finding answers in complex data and the ability to convey strategic messages from the results.
  • There is a direct correlation between your HR system intelligence and the level of interest in data and analytics from your HR leadership.

Rob Scott is global lead: HR strategy & innovation for Presence of IT, a leading consultancy in HR, talent, payroll and workforce management solutions.

Is your HR Technology adding value?

Most of the time, if you ask any HR leader to explain how HR technology is contributing to the achievement of business goals you get a somewhat perplexed expression, supported by an eloquent explanation which suggests it’s being conveniently ignored because it’s too difficult or not practical. Alternatively they reference the vendors marketing rhetoric which promise share-price improvements that would get Warren Buffett excited!

But HR is changing

It’s moving out of the administrative and transactional mould that has defined it for decades, and whilst the transition is often very slow and painful to watch, there are many organisations whose executives are maturing in their understanding of the unique value that HR functions can offer, and their direct contribution to business goals and strategy achievement. HR professionals can’t hide behind the mystique of psychology anymore; they need to show direct linkage from what they do and the outcomes it creates, including the role of HR Technology.

HR leaders are far more business savvy too, they will rattle off their business goals, they are succinct in articulating the meaning of value for their organisations, they understand cost, growth, quality and risk drivers, and they are familiar with industry and global issues, opportunities and constraints.  So what’s the problem – why are so many HR leaders resistant to show how the performance of HR Technology has or could advance the business objectives and strategies?

Addressing the problem

Some of the answer to this question may lie in previous bad experiences with “template” measurement frameworks such as the Balanced Scorecard. These tools are often introduced as off-the-shelf “best practice” which generally lead to disappointing outcomes. It’s the one reason that I loathe HRM software vendors pushing a “best practice” mantra. HR leaders wrongly believe the hard work related to measuring their HR Tech value contribution has been done for them. It can never be true – your objectives, environment and how you want to achieve your business outcomes using HR Technology are absolutely unique. You need to do the hard, detailed work yourself.

Another reason is simply lack of know-how and practice. Most HR professionals have a social science background which engenders greater qualitative rather than quantitative focus. That’s not an excuse of course, learning how to build a causal-effect model which shows where HR Technology is leveraged, is not difficult~ it just takes some practice and adherence to some basic principles such as:

  • Making sure your selected measures are strategic and aligned to company goals
  • Not making assumptions about the cause-effect relationships. You need to test it and prove its validity
  • Setting realistic targets, not everything needs to be 100%
  • Having clear ownership of the measure. Someone who is passionate about achieving a business outcome, and is constantly tweaking the framework
  • Being practical – don’t overcook the requirements or the data needed
  • Telling your story. Contextualize the results and explain what it means in business terms

By way of a simplified graphical example, I recently had the opportunity to help a client think through a cause-effect model for “Innovation” – one of their strategic business objectives. The HR director wanted to explain how their HR technology was directly contributing and supporting this objective. When we finished the model, it became very easy to explain how this would be achieved. A key learning for the client was to link the HR Technology to “drivers” rather than the performance areas.

I’ll point out again that proving the “cause-effect” (performance areas in graphic below) is critical to establishing credibility. For example, my client had to validate that “Empathy for client’s needs” really did cause “Enthusiasm & Engagement” in their environment. Once that was established the drivers for performance were identified and agreed, and HR was able to determine which HR Technology was required and how it would be used to deliver measurable outcomes.

exampleOf course there is a lot more work and involvement from other business functions behind this simple graphic, but hopefully it’s apparent that with some careful thought and focus, the real value of HR Technology can be measured and explained. Your next business case for HR Technology funding should be much easier to achieve if you have this in place!

THERE’S MORE TO SAAS THAN SIMPLICITY

written for and originally published in Inside HR magazine (Feb 2015)

Despite the simplicity and effectiveness of new SaaS tools, maximum value will only be realised by making fundamental changes to key areas in business, writes Rob Scott

You could be forgiven for thinking the relative simplicity and user-friendliness of modern HR SaaS solutions need less business transformation effort to embed them effectively into a HR and business environment. The oft vendor pitch of having a newly acquired SaaS HR solution “up and running” in a very short timeframe is very appealing to buyers, particularly if they’ve had prior ERP project experiences encompassing flashbacks of complex and error-prone planning, designing, testing and cut-overs etched into their long-term memory.

However, the lure of a swift, pain-free and cost-effective implementation can mask the very real need for a transformed business environment that supports the new SaaS HR solution. The HR SaaS value and business benefits won’t be achieved by simply switching on the software – this is insufficient and must be augmented by making fundamental changes in at least six key areas. The honeycomb below portrays the facets of effective HR SaaS value creation, and as you can see, there is more than “simplicity” at play.

What’s different about HR SaaS?
I am often asked whether HR SaaS solutions are the same as older on-premise solutions, but “just in the cloud”. While functionality is often similar, the principles behind SaaS design, delivery and value creation are fundamentally different and will require a different approach and focus to on-premise projects. As you read the honeycomb elements (see graphic) the obvious “cloud dilemma” is the disparity between the time to implement the SaaS solution (usually four to 12 weeks) and the time required to transform the business. The latter takes much longer and requires careful and advanced planning.

SaaS value

Ownership: On-premise HR solutions are generally owned by the IT function because of the inherent technical complexity and association to hardware; however, HR leaders are becoming the primary SaaS buyer and must therefore take primary accountability for the solution. For many HR lea
ders this will be foreign, but the ownership change is a key driver of value creation.

Skill: HR functions must build system administration (configuration), data management, project management, analytic, social media, mobile and gamification insights in order to appreciate, manage and leverage the capabilities of modern HR SaaS systems. These are not complex skills to learn and should ultimately become standard knowledge areas for all HR staff.

Behaviour: Modern HR SaaS solutions are designed around regular interaction and collaboration with other employees. These are not transactionally dominated systems, but rather tools that remind, inform, connect, advise, analyse, predict, gather, share and enable people’s effectiveness in unique ways. Interventions will be required to activate these new behaviours.

Relations: HR must actively co-ordinate relationships between the CIO, IT function, marketing, finance, the vendor (who owns and houses the software) and external support services. These relations are both strategic and operational in nature and dependent on the new HR skills noted earlier.

Practices: Gone are the days when you apply updates to your HR system annually. SaaS solutions are automatically updated three to four times a year, meaning HR will be accountable to lead a review (with support from IT and others) of new functionality and determine if and how it will be used. SaaS solutions offer “choice”, and HR must think beyond the concepts of standardisation as a best practice.

Leadership: Executives and senior managers dictate organisational maturity. Without the right level of maturity in place, HR is often fighting an uphill battle of acceptance, which will result in SaaS tools being sidelined and unlikely to return business value.

SaaS tools are in many ways a saviour for HR. The simplicity of these new solutions is offering organisations great opportunities to rethink people engagement and value generation using modern technologies. HR must step up and embrace this with understanding and commitment.

HR SaaS: what you need to know

  • SaaS HR software solutions are fundamentally different from earlier on-premise solutions and require new business transformation initiatives to get maximum value.
  • SaaS HR solutions are much simpler to set up and use, however, this simplicity and ease of use should not cloud the important business environment changes required to support these tools.
  • Taking ownership and accountability for the HR systems is no longer technically biased, it has moved to a functional level predominantly, which must be led and co-ordinated by HR.
  • The IT function remains important for technology strategy, integration, standards, security and quality control of all systems, but HR must be accountable.

Your (HR) data will find you

I’ve never been a fan of telling other people what to do, think or say. I find it arrogant and demeaning at both a personal and professional level, and aside from situations warranting it (e.g. your immediate safety), you quickly lose respect and credibility. In many ways HR reporting has committed this same offence. For some reason HR leaders continue to produce standard HR reports and dish these out at regular intervals to management and executives for examination and supposed insight into their business operations. I don’t know about you, but I haven’t met too many leaders or managers who are excitedly waiting for the next HR report to land on their desk or email in-box.

Standard HR reporting has reached retirement age, and should be put out to pasture. It’s a reactive way of looking at your business and people management, and has its roots in a time when HR had to spend hours and days collecting, fixing and consolidating information into spreadsheets before distributing a report that added little value. Managers don’t need a report to tell them they have 3 vacancies unfilled, or that it took 47 days to fill a position or that 7 appraisals are still outstanding. They know all of that before they get the report. Sadly I still see many HR functions fixated on producing their “monthly report”.

Most modern HR systems have dashboard, trend analysis and mini analytics that replace the need for Standard HR reporting. This is much more effective and removes the constraints (and arrogant assumptions) of standard reporting by offering line managers a choice of information to support their decision making, and more importantly, they get it immediately. At a minimum you should be providing this approach to managers.

This approach doesn’t however go far enough. If line managers don’t know what questions to ask or what data or information is relevant, they won’t get the best outcome. This shouldn’t be seen as a loophole for HR to get back into a telling mode, but rather an opportunity to define how information finds the line manager based on their people related and enterprise social on-line activity.

Its good to see some of the leading HR vendors moving into this space together with strong predictive analytic tool-sets. The algorithms behind these tools are complex, but also configurable to suit your environment and solutions. It does however require a significant rethink about decision making in general, not just related to HR information, but including the interplay between other internal and external data sources.

Check out my previous blog “Is WFM  the new HR?

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