Organizational Development, Design and Learning
HR vs OD: let there be peace
Effective collaboration between OD and HR is key to optimising a firm’s ability to initiate and sustain high impact change, writes Wayne Brockbank
The remarkable and challenging world of change has been well documented. Sources of change continue to accelerate: radical revolutions in technology, big data analytics, information asymmetries, hyper-competition, uncertainty in capital markets, morphing demographics, geopolitical disruptions, climate irresolution, globalisation, income disparities and emerging market imbalance. In sum, the management of change is a competitive imperative for virtually all market-based institutions.
In the Human Resource Competency Study at the University of Michigan’s Ross School of Business, we have distinguished between two related but conceptually and statistically distinct aspects of change management: initiating change and sustaining change. Of the total impact of change management on business performance, 46 per cent is through initiating change and 54 per cent is through sustaining change. The overall message is that balance of the two is central to successful change.
Initiating change includes:
- Having a clear and market-based vision of the desired future that includes the case for change
- Aligning leaders from top to bottom and side to side around the vision, including senior leaders who champion the change
- Identifying and reducing resistance to change, and
- Building commitment of key implementers to support the change effort.
Sustaining change includes:
- Ensuring that the right people with the right training are in the right place at the right time to drive change
- Accounting for change initiatives in performance management, including financial and non-financial incentives
- Providing the necessary capital and informational resources
- Communicating the importance of the targeted changes, and
- Monitoring and learning from the change experience.
The roles of HR and OD
One challenge that companies face in their change management efforts is the clarification and integration of the respective roles of HR and organisation development (OD) in change management. Historically, OD professionals have tended to be the initiators of change – they identify and drive the momentum of change. They see themselves as the “change managers” who work with the line managers the make change happen, with the focus on initiating change as defined above. They see themselves as strategic partners who implement team-based change processes. A challenge is that they sometimes see HR as inflexible tactical administrators who are driven by processes that may be obstacles to change.
On the other hand, HR professionals tend to strongly influence the levers for sustaining change as described above. They apply focused discipline in ensuring that the supporting human and organisational infrastructures are in place to sustain the requisite changes. HR professionals may occasionally view their OD colleagues as disruptive, in over their heads, undisciplined and (ironically) insufficiently collaborative.
Unifying HR and OD
But what should unify HR and OD is greater than what separates them. The fundamentals that both must exhibit to be optimally effective are a full understanding of the business strategy, an in-depth sensitivity to external sources of change, and a shared view of the cultural capabilities that both must create for sustainable competitive advantage.
Most important is that they must both understand and appreciate the role that the other plays in change management and work together as partners in change. To do so, HR needs to develop greater OD facilitation and process skills while OD needs to exert greater expertise in ensuring that HR and organisation practices are in place to sustain change. They must work together to provide seamless change management processes that include both initiating and sustaining change initiatives. As they do so, they will optimise the full impact and effectiveness of their firms’ ability to initiate and sustain high impact change.
4 steps to unifying HR and OD
- Your HR and OD professionals should meet to develop a comprehensive change management process that includes the above steps in both initiating and sustaining change.
- The respective HR and OD professionals should become conversant with and appreciative of their respective roles in change management.
- Since both are working towards the shared end of effective change management, they should both have some level of competence in the other’s domain.
- They should then co-operatively ensure the seamless implementation of both initiating and sustaining change initiatives.
Organizational Development, Design and Learning
2018 Workplace Trend: Focus on Filling Internal Skills Gap
The rapid pace of technological evolution has shrunk the life of learned skills and increased the skills gap. With the uprise of the digital world encompassing virtual reality, robotics, software development the internal employee skills expire within short/no duration. The importance to remain relevant to the present work profile is an immediate and top requirement for executives, managers, and employees in 2018. It is a considerable move to invest in the talent management to re-skill or up-skill the present diverse & multi-generation workforce.
Talent developers, here, play a crucial role in bridging the internal skills gap and hence accomplished a place on top management board. They are the architect of an organization’s growth as they recognize the skills gap, create learning content, and hone relevant industry skills.
According to 2018 Workplace Learning Report by LinkedIn that interviewed 1,200 talent developers, 200 executives, 400 people managers and 2,200 employees, 94% of staff members agreed to continue with the present company if it devotes finance, time and efforts in their career development. Overall, 68 percent of surveyed employees favor learning at work. Additionally, 58% of employees prefer opportunities to learn at their own pace and 49% prefer to learn when necessitate. This is an important insight into the current workforce’s attitude.
“As the rate of skills, change accelerates across both old and new roles in all industries, proactive and innovative skill-building and talent management is an urgent issue. What this requires is a [talent development] function that is rapidly becoming more strategic and has a seat at the table—one that employs new kinds of analytical tools to spot talent trends and skills gaps, and provides insights that can help organizations align their business, innovation and talent management strategies to maximize available opportunities to capitalize on transformational trends.” - World Economic Forum
“Laddering up, the age-old pattern of career development is replaced by multi-directional career approach in the lattice world”, advised Cathy Benko, Deloitte Consulting LLP's talent game-changer. The employee can go for sideways or diagonal moves in order to put on competencies, experiences, and relationships.
It is reasonable to cater skills gap of the present pool of workers who are already aligned with the company culture and working style. This saves time and money compared to the new recruitment process. Moreover, in the automation world, the new employees’ skills will also get obsolete in near time. This calls for another training session with the new bunch of employees. Therefore, the vicious circle of learning & development is the core of a continuous ‘hot skills’ supply and holistic expansion of a company.
Bridging Skills Gap
The LinkedIn report highlights a critical issue in the talent development priorities. The talent professionals put a focus on filling internal skill gap according to the present needs of an organization whereas the company executives expect much more. The top management demands talent managers to identify future industry trends too and design skills curriculum. To unlock modern employee’s potential, it is important for both parties executive & talent manager, to reach a consensus here.
Nevertheless, getting out time for learning is a challenging task for employees, as stated by talent managers. One of the ways to overcome this issue is encouraging digital learning solutions to update the skills. The industry terms like “microlearning” and “just-in-time learning” for the present workforce are in-trend. Talent managers can meet learners on the platforms where employees are available such as emails and messages. The continuous interaction between the teams and managers to recognize skill requirement will fasten the process.
Organizational Development, Design and Learning
Performance management – the ”soul-sucking monster” of HR
The way we currently do performance management, to me, is one of the most destructive things HR has ever created. [It’s a way] to reduce employee engagement and really piss off all your managers.
Nick Holley, co-director of the Centre for HR Excellence at the UK’s Henley Business School, certainly doesn’t sit on the fence when it comes to performance management.
But it’s an opinion he has arrived at after extensive research, talking to a series of major global companies.
Despite his invective lobbied at performance management, Holley is not advocating scrapping performance management.
Nor is he hawking some new prescriptive new performance management tool that will magically solve the problem:
What I’ve learned from talking to a huge number of organizations is that there actually isn’t a right way of doing it. It’s not about whether you do use ratings or you don’t use ratings.
Holley adds that following best practice is “irrelevant” without context: it’s about organizations individually coming up with a process that works for them not blindly following the latest management group-think.
During his research, however, Holley did begin to discern similar approaches and attitudes among companies with successful performance management approaches. He has distilled their experiences into eight key pieces of advice:
All of the organizations with successful performance management approaches were fascinated by the latest research coming out of neuroscience and its theories about what motivates people.
In particular, there were three experts that people kept mentioning. The first of these was Daniel Pink and his book Drive: The Surprising Truth About What Motivates Us, which shows how the traditional carrot-and-stick style approach to motivating staff doesn’t work.
The second major influence was David Rock’s SCARFmodel, which basically pinpoints five areas – Status, Certainty, Autonomy, Relatedness and Fairness- which trigger the reward or threat circuitry in our brains.
The third is the idea of encouraging the growth mindset, outlined in the work of Carol Dweck, Lewis and Virginia Eaton Professor of Psychology at Stanford University.
How that is being translated into the workplace, says Holley, is the idea that performance management should move from being a historical process, looking at past achievements, to how things can be done better in the future. It also means changing it from a negative process of what people have done well (or failed at), to how people can do better in the future.
What’s also important is that performance management moves from away its obsession with individual goals and targets, when what’s important is the overall team or organization performing better. As Holley notes:
We are the most collaborative species in the world and yet what this does is force us to stop collaborating and to compete.
Own practice, not best practice
Instead of researching best practice, these successful organizations researched their own internal practice. Holley expands:
What they wanted to find out was: what is the impact on our organization? Not measuring process completion but measuring the unintended consequences of the process.
One person gave me this great quote: the problem with performance management is that it’s become the Swiss Army knife of talent. What he meant by that was the core concept was good, but all the different people in HR have all added their own little bits.
As a result, organizations end up with, what Holley colorfully describes as:
A soul-sucking monster that’s attached to the business, which sucks the life out of people.
Ratings systems are a clear example of “soul sucking” at work. According to Holley, anyone who receives a ‘3’ rating, no matter how it is dressed up with positive language, will hear the word ‘average’.
It’s no better for the high performers. Those with high ratings won’t be motivated to work harder – why should they when they are already scoring highly?
Rating systems only generate resentment and short-termism. Worse still, as a rating is given a number, it’s seen as an objective fact. This is simply “rubbish” contends Holley, and it says more about the person doing the rating than the person rated.
So organizations need to be honest about how much time they are wasting internally on performance management procedures that don’t contribute to the business and simultaneously wreck motivation of staff.
Think business, not HR
When these organizations design their performance management systems, this is not an HR-driven process. According to Holley:
The CEOs I interviewed all said this is the single most critical tool in delivering our strategy.
If they focus too narrowly on HR concerns, then there’s a danger the “Swiss Army knife of HR” will rear its ugly head.
Instead, what they successful organizations do is identify the area of performance that is most going to make a difference to their business and that fits in with their company culture. Microsoft, for example, identified that it is collaboration that is the key quality that drove business success, so it sets up a performance management approach that values and encourages collaboration.
The organizations focused on one or two key things rather than try and take on too much. The emphasis was on the quality of the conversation between manager and employee, not the process.
This could involve scrapping ratings. No matter how they are dressed up, ratings are basically used as a tool to decide compensation, but there is actually a far simpler solution: managers can decide for themselves. One EMEA executive summed up the absurdity of the system, pointing out to Holley:
I have the power to make multi-billion dollar Capex decisions, but I couldn’t decide percentage pay increases for my immediate reports.
Far from creating mayhem and massive pay increases, in practice is that managers will simply talk to their compensation and benefits expert about the current market situation and make their decision accordingly. And he or she will take that decision far more seriously, because they cannot hide behind a rating.
According to Holley, the successful organizations involved key stakeholders in the design:
Didn’t go away into some darkened bat cave in the middle of HR and create something and then think how they’ll sell this to the business.
Instead, they worked with the business from the get-go, taking longer on the process if necessary, to ensure they had the full backing of all relevant people.
This could also involve talking to people outside the organization. Companies with European Works Councils or those closely monitored by regulators will need to talk to them and include them in the process.
Most of the organizations piloted their new system rather than design in one go, because, says Holley, no matter how much a design is modified, unexpected things can happen:
Have the self- confidence to admit when you’re wrong. Whatever you do, it won’t work the way you expect and if you try and defend that you’ll undermine your credibility.
These successful organizations built in an expectation that they may get it wrong at first. This flexibility extended not just to the design process but how it was rolled out to employees.
The organizations were all rigorous about what they measured. But measurement does not equate to ratings and doesn’t mean putting a specific number to success. Holley explains:
Measure but never forget what is meaningful is rarely measurable and what is measurable is rarely meaningful. It’s not just about producing numbers. How do you measure if they are the right goals? You have conversations with people and it’s subjective. You can measure that, but you just don’t put a number against it.
Quality of dialogue.
All of the firms recognized that the real issue was not the performance management process itself, but the quality of the dialogue. So they focused on providing training, not just for the managers, but the employees being appraised as well. Holley adds:
They also made training mandatory, because otherwise, guess what, the people who’d go on the training were the ones who’d be good at it anyway.
To emphasize how important performance management was to managers, it was made quite clear that there would be consequences for people who did not go on the training.
According to Holley, these eight stages:
Are actually how we should think about HR in general. To me, good HR people are curious; we are fascinated by the art and science and heart of HR and by the way, we are actually fascinated by our business, by understanding what a particle accelerator actually does or whatever business you’re in.
Holley acknowledges that changing entrenched approaches to performance management involves a lot of risk and takes an “awful lot of courage” to step into the unknown.
But then, if the alternative is to carry on living with a “soul sucking monster”, this doesn’t sound such a terrifying step.
Holley’s take on what has become the whipping boy for all HR’s ills is enticing, but it is by no means an easy fix. It’s not simply a question of following the latest methodology and shoehorning it into your organization.
What Holley’s proposing is a more individual approach than a one-size-fits-all. And one of the key messages, writ loud and clear, is that ratings systems in their current form do not work.