Human Capital Development

Ways Next-Generation Performance Management is Evolving for High Impact

High-impact HR has caused a radical shift in the way performance is being measured and managed in order for companies to be able to attract, engage, and develop their top performers. Organizations are overhauling their performance management programs and focusing on developing the right mix of total rewards and development opportunities to help keep high-performing talent engaged. According to Deloitte’s 2017 Global Human Capital Trends research, 79 percent of surveyed executives consider redesigning performance management a high priority, and organizational capabilities to implement performance management have greatly improved. This “next-generation” performance management addresses today’s workforce issues through three shifts in approach to more strategic performance management.


Next-generation performance management shifts the process from a fixed-cadence annual cycle to a more flexible cadence with intermittent check-ins.
 

More frequent.

Historically, many organizations have used a performance management approach where goal setting takes place once a year. This antiquated, ineffective approach occurring over the course of the year does not account for changing employee development goals, evolving business strategies, and employees moving to various roles and/or teams within the organization. Goals set annually are inflexible by nature and do not accurately reflect the change in business needs nor development in employee skill sets.

Additionally, the traditional annual review process typically does not meet the needs or expectations of today’s more dynamic workforce. Today, over 70 percent of employees work in service or knowledge-related jobs, where performance is driven by an employee’s evolving skill set, innovation, and ability to work in teams. Since these abilities and skills should be gradually cultivated over time, successful performance management focuses on continually developing these capabilities rather than measuring year-over-year improvement during annual evaluations.

Research has shown that managers who provide more regular feedback are far more likely to have high-performing teams than those who retain once-a-year rankings. Also, companies that revisit goals quarterly can see an increase in productivity of 30 percent compared to those that set goals annually.

2. More data driven.

Next-generation performance management involves moving away from rankings and ratings to focusing on truly developing talent.

An output of the rigid, old-world performance management process is the concise rating, or an ordinal ranking of an employee against their peers. Such rankings and comparisons often fail to fully consider the various work and career paths of employees. About 36 percent of companies still use a competitive assessment model designed to award high performers and weed out poor ones.

Ordinal and normal distribution (or bell-curve) rankings can also contain implicit assumptions about performance distributions that are not actually expressed in many typical working populations. These approaches are inflexible and often cause too many employees to be forced toward the middle of the distribution and labelled as “average” performers. Symmetrical models such as a bell curve can also tend to “yank” employees on the lower end of the spectrum, contributing to an overly competitive work environment among employees who know they are contending against one another for performance rankings and incentives.

In response to these issues with the “rank and yank” and bell-curve performance models, various research has been conducted to help determine a more accurate representation of the true distribution of performance among employees. One of these emerging models is the Power Distribution model, which accounts for a small number of “ultra-high” performers, and is also skewed to the right to account for a larger number of average performers.

Another approach to delivering effective performance management to employees is gathering far more (and more accurate) data points about performance via multiple documented performance conversations throughout the year. This method does not necessarily do away with nominal ratings, but rather moves away from an annual, all-inclusive rating in the form of one number, which could inaccurately reflect a person’s overall performance. Here at Deloitte, we are shifting to using a much richer and likely more accurate data set collected throughout the year to tell the entire performance story. While there is no one-size-fits-all model that will accurately capture the distribution of performance among employees, this new attention given to rethinking the traditional performance distribution models is a step in the right direction.

3. More development focused.

By moving from evaluating historical data to evaluating an employee’s future potential, next-generation performance management is changing the type of data used in evaluations and how it is assessed.

Traditional performance reviews often result in a catalog of an employee’s past performance, without a focus on proactively improving future performance (counter to the primary goal of employee development). Social/Informal learning activities that enable experiential development through access to coaches, mentors and experts should be a critical part of development plans.

With employee retention and workforce capability now in the spotlight, the performance process has evolved to focus on continuous coaching. Managers are encouraged to coach individuals for success and to focus on managing to strengths by giving employees work that draws on their unique skill set and professional interests. Increasingly, creative performance management schemes and emphases on employee development are viewed as key recruiting tools for attracting top talent, opportunities absent from traditionally backward-looking appraisal.

This forward-looking feedback lends itself well to today’s dynamic and transparent job market, where young employees expect ongoing career coaching. Research shows that companies that revisit goals quarterly drive more than 30 percent more productivity than those that set goals annually.

Evolution of a new performance model is a process of continuous innovation. The goal is not to reach a design, then implement it and simply walk away. Organizations should constantly re-evaluate their approach, determine what is working and what can be improved, and adjust the programs or processes to adapt to ever-changing needs of the workplace. The 2017 Global Human Capital Trends report chapter, Performance management: Play a winning hand, gives examples from companies on the front lines of evolving performance management and ideas for where to start (or continue) your own initiatives.

Reasons to get an ITIL Certification

ITIL is the most widely accepted foundation framework, a set of practices, used by companies to manage IT services. It provides the structure to manage and deliver different services so that users have a consistent experience. The ITIL practices help achieve good quality service and also helps overcome difficulties that may crop up in the development of IT systems.  Many international companies like the Microsoft, IBM, Caterpillar and Boeing among others, have benefited from the successful implementation of ITIL in their IT service management.
Through the use of the ITIL Service Lifecycle, the framework helps organizations transform and adapt to the changing economic climate and the market place. This helps with implementation of further improvements to practices that are oriented at achieving high levels of business performance.
A good knowledge of the ITIL basics is therefore going to help the entire team working with ITIL. The need is so much so that more organizations are providing on-site training on implementing the ITIL framework and in some cases also sponsor employees’ ITIL certification journey.
 
The ITIL Certification Path
There are four levels to the ITIL certification:
  • ITIL Foundation – offers a basic look at the fundamentals of ITIL and gives those new to the concept, the information they need to understand everything the ITIL entails
  • ITIL Intermediate – details the five primary ITIL framework phases
  • ITIL Expert – gives more advanced students a look into the finer details of the ITIL structure
  • ITIL Master – shows that the certified person is able to take the ITIL phases and implement them into a real-world framework

 

Organizational Benefits
With ITIL, organizations are assured of the following benefits, resulting in heavy demand for certificed ITIL professionals:
  • Increased productivity
  • Greater customer satisfaction through a professional approach to
  • Right use of skills and experience
  • Improved Return over Investment (ROI) in IT
  • Reduced service cost by better and efficient utilization of resources
  • Prevents redundancy of the work conducted
  • Provides better third party services by improvising on the uses of available skills and expertise
  • Identifies weak areas and further offers solutions to strengthen it
  • With an increasing number of IT professionals getting an ITIL certification, organizations are able to save on training and L&D costs
  • Increased staff retention
  • Greater visibility of IT costs and assets
  • Why You Should Consider Certification
ITIL is a globally recognized set of best practices that finds implementation in the IT Services Management, in many organizations. And as is, there isn’t a dearth of ITIL qualified professionals in the IT arena. This adds on as a benefit for organizations as increased availability in ITIL qualified professionals translates to cost reduction on training and successful implementation of the framework.
Thus, getting certified in the different levels of ITIL gives you the edge over the rest of the competitors seeking the same role as you are, or rather as Neil Wilson, an ITIL expert states: it’s a foot in the door, and it gets you on the shortlist!
 
Benefits of being ITIL Certified
#1: Better Pay
As with other certifications, a certification facilitates a pay-rise and promotion to higher tier roles and positions. Payscale.com’s report on ITIL-skilled professionals in the US states that certified ITIL program managers earn an average salary of $119,248 a year, which makes ITIL experts among the highest-paid professionals in the IT industry. As per the report, certified IT architects can earn anywhere between $86,062 and $131,247.
#2: Skills Honed
Three main features of ITIL contribute to the growing demand and popularity of this framework across international organizations. They are:
a stable foundation or IT environment that the set of practices help achieve
keeping up with changing technological demands by constantly evolving and
yet being able to provide the reliability through maximizing the value of  new technological strategies.
With that said, it is evident that IT departments will need implementation of this framework at a greater scale. Furthermore, ITIL framework is simply a set of techniques and procedures that have been proven successful and effective than others. Gaining knowledge in the framework, will make the professional makes work easier and helps you accomplish tasks in cheaper, faster and easier ways; and also produce better results. This in turn makes employees as strong assets to organizations and professionals to be sought-after in the job market.
#3: Familiarity with ITSM’s Common Language
While getting onto the certification training, professionals tend to get familiarized with the terms, phrases and methods of conveying information that are common norms among IT professionals. This acts as a strong differentiator that identifies certified professionals from the non-certified. Using the right terms not only means that you can communicate the right idea to your team, but also saves up a lot of time and on wrongly directed functions/processes.
While on the preparation journey to the ITIL certification examinations, candidates will also find that access to preparatory materials is quite easy – there is a wealth of online study guides, practice books, and mobile apps that can help you with every level of the certification process. This eases their path to being certified.
#4: Growing Demand for ITIL Certified Professionals
ITIL is closely tied to the ISO/IEC 20000 standards, suggesting the framework’s popularity isn’t going to drop any time soon. Also, with a little over 800 organizations being ISO/IEC 20000 certified, demand for ITIL professionals continues to remain very high.
Professionals with the certification stand a good chance as being recognized as potential employees to roles that demand ITIL knowledge. The demand is especially high in the field of incident management, process management, service management, release management and ITSM related project management roles. Underlining the certification’s importance, ITIL has also been ranked among the top 15 highest-paying certifications for 2015 by a number of researchers on the web.
#5: Paves the Road to Better Roles and Organizations
With the number of acclaimed organizations implementing ITIL being large, the certification gives that edge to candidates to be chosen for the best jobs in the job market in ITSM arena. Also, certified candidates can make their choice of organizations and roles, rather than waste precious years of their career on roles that are a poor fit to their profiles. It is to be noted in relation to the previous statement that certified professionals no longer have to wait for recruiters to short-list them for a prospective role, but instead choose their desired role and organization.
#6: Global Implementation
As a certified ITIL, if you decide you want to move abroad, you won’t have to change jobs. There are over 10,000 companies and organizations world-wide that have adopted the ITIL framework. If you prefer to stay in the country, you can check to see if the companies you want to work for have adopted the framework. Even companies that would traditionally not be pegged as ITIL-implementers, such as Disney, utilize the framework.
In concrete terms, what this translates to is – no shortage of job opportunities for a certified ITIL professional!
The benefits that come with this demanded certification are thus plenty and with the growing demand of the framework itself, the certification is setting that essential requirement factor among employers and recruiters, to primarily filter-out certified professionals who get translated as candidates of assured potential. Being certified in the different levels of the ITIL certification, helps professionals in all levels of the IT sphere – from help desk workers to IT Directors. Hence, being certified helps fast-tracking your progress in the IT career-ladder. With a couple of years laden in professional experience and a couple of ITIL certifications in hand, one is bound for higher altitudes in their IT career.

 

Has Anything Changed? Analyzing The 2016 Human Capital Predictions

I started the new year reading through dozens of lists of New Year’s predictions forecasting trends that will shape the HCM world in 2016 and beyond.

My goal was to identify overall meta-trends and see if any new predictions emerged that are different from things predicted in the past. You can read the full research article here, but here is a summary of the study and findings.

First, I gathered predictions found on more mainstream HR sites such as TLNT, SHRM, HR Technology, and Forbes. I also included forecasts by well-known HR thought leaders such as John Boudreau, Josh Bersin, Marcus Buckingham, Peter Cappelli, and several others.

I ended up with a list of 131 predictions that were as broad as “talent from within will be realized as a true asset” to as specific as “organization charts begin to disappear.”

Similar predictions from 2004

The second step was to categorize the predictions based on general themes.

To assess if new trends were emerging, I decided to see if I could sort the 2016 predictions using a list of HCM predictions made in 2004. The 2004 predictions were from a paper I wrote 12 years ago that analyzed labor market trends at the beginning of the millennium (S. Hunt, Shifts in the Talent Landscape, 2004).

There was remarkable similarity between many 2004 and 2016 predictions. For example, try to pick which of these predictions were NOT included in the 2004 predictions:

  • A) Staffing processes extend past the initial hiring decision and follow employees to the point where they are fully-socialized and committed to the organization.
  • B) Companies embrace the concept of virtual workspaces and provide managers and employees with the necessary training and technology needed to work with people anywhere in the world.
  • C) Employees switch employers based on their support for telecommuting, co-working spaces, globalization and new technology tools.
  • D) Companies pay careful attention to the unique nature of the interests, motives, abilities and constraints frequently found in older workers
  • The answer is “C” The other three predictions were copied directly from the 2004 paper. In 2004, people were also talking a lot about telecommuting and flexible work technology but it wasn’t yet viewed as a key tool for staff retention.

Still relevant 10 years later

It is interesting how many of the 2004 predictions are still relevant 10 years later. As they say, “the more things change, the more they stay the same.”

My general view is that because HCM is fundamentally about people, and people don’t change much over time at a fundamental level, yet the problems of HR tend to remain fairly constant over time. Companies were struggling to attract, develop, engage and retain employees in 2004 and they are still are now.

What does change a lot over time is the methods we use to address these challenges.

Although there has not been massive change in HCM trends since 2004, there has been some noticeable change in the emphasis placed on different HR challenges and tools. The following four (4) trends in particular are far more prevalent now than 10 years ago:

1. HCM Technology Transformation

The focus here is increasing development of professionals and organizational functions that are focused specifically on understanding how technology can be used to increase workforce productivity and efficiency.

This is about creating true cross-discipline HRIT functions where equal understanding and emphasis is given to HR expertise and IT knowledge. Some things to think about relative to this trend:

Who in your company is responsible for identifying and recommending technology to improve your HCM capabilities? How do you ensure these people truly understand both HCM process design and HRIT capabilities and constraints?
How will you use technology to improve your HCM capabilities over the next two years?

2. Business Oriented Human Resources

A focus on increasing the role that HR plays in operational business decision to ensure that company strategies can be achieved given the capabilities of the workforce and that the workforce is being effectively developed to support future business needs and goals.

HR doesn’t just have a seat at the leadership table — it often leads the conversation. Some things to think about relative to this trend:

How do issues related to talent availability impact business planning and operations? What HCM data is used during strategic business planning sessions?
What HCM issues should influence how your company plans to achieve its financial targets over the coming years? How are these issues articulated to operations business leaders?

3. Continuous Coaching

This is about creating work environments that provide employees with ongoing feedback and guidance that maximizes their engagement, development and performance.

Managers are finally held accountable for actually being good managers, coaching their employees, and offering effective behavioral feedback and constructive suggestions to their direct reports. Some things to think about relative to this trend:

What tools and training do you provide managers and employees to support ongoing coaching and career development discussions?
How do you measure whether your managers are actually providing effective coaching to their employees? How do you ensure your managers are being good managers?

4. Technology Enabled HCM/Easier HR

This is about replacing inefficient, cumbersome and overly bureaucratic HR methods with much easier to use technology applications.

Eliminating or transforming inefficient HR methods that negatively impact employee productivity. Some things to think about relative to this trend:

How do you plan to incorporate mobile technology into your HCM processes over the coming years? How are you using it now?
What HCM processes could most benefit from better technology in terms of making them easier to use?
What do you do with these predictions?

So what’s next?

While there is value in planning for the future, I would not change a business strategy solely because some HR thought leader made a prediction about things that might happen. But it may make sense to modify certain HCM practices to reflect what is likely to happen over the next few years.

My suggestion is to discuss these trends with your HR leadership so you ensure actions you take today are setting you up for lasting success in the future.

Human Capital Development….. It has to be done.

Why Improving Leadership Development Is the Organizations Responsibility

Study after study demonstrates that the main reasons employees leave organizations are poor management and lack of leadership. In fact, a 2013 white paper from the Center for Creative Leadership (CCL), “The Challenges Leaders Face Around the World,” notes that 56 percent of organizations indicate a lack of leadership would impede organizational performance, and 31 percent predict that a leadership shortage would impact organizations over the next few years. 

Meanwhile, the CCL white paper also reports that 80 percent of executives cite the ability to develop leaders as one of the most important factors to impact an organization’s competitive advantage. Another bottom-line implication is that organizations with top-tier leadership have up to 10 percent higher three-year total shareholder returns.

To be sure, many books have been written on leadership, and billions of dollars have been spent on leadership development programs. Yet, despite these major investments in leadership development, the majority of people trust a stranger more than their boss. Why? One reason may be that the wrong people are in leadership roles, contends David Rock in the 2013 Fortunearticle, “Why Organizations Fail.” Rock explains that organizations continue to fail because they hire and promote managers with robust analytical skills but poor social skills. 

Clearly, the importance employees place on leadership is significantly different than their organizations—and this disconnect is not new. For example, in the 2005 ASAE article, “The 7 Hidden Reasons Employees Leave,” Leigh Branham reported that 89 percent of managers believe that employees leave organizations for more money, but only 12 percent of employees agree with this analysis. Similarly, a 2013 Gallup study reports that 80 percent of managers believe employees are just glad to have a job, while only 53 percent of employees feel this way. In fact, one estimate claims that 51 percent of employees leave organizations due to their managers. 

The implication of these staggering stats is that employees are just waiting for an opportunity to move on. Worse, in 2005 Branham estimated that this inability to retain workers could cost an organization 150 percent of an employee’s salary. We can only assume that estimate has increased significantly a decade later. Indeed, in recent times, particularly during the economic downturn, there still appears to be a major disconnect between the importance organizations and employees place on leadership. 

The good news: This disconnect provides organizations, and especially human capital professionals, an opportunity to ensure proper development for their leadership cadre. This is particularly imperative with an increasingly diverse workforce, and as Baby Boomers prepare to move on to retirement or another phase of their work lives. 

Also, there are opportunities for improvements as more women take on leadership roles. Just consider the 2013 Inc. article, “Between Mars and Venus: 7 Traits of True Leaders,” which highlights the blend of male/female traits that effective leaders demonstrate. Author Leigh Buchanan, Inc. magazine’s editor-at-large, makes the case that effective leaders demonstrate empathy, inclusiveness, vulnerability, generosity, humility, balance, and patience. And I tend to agree with this assessment. While conducting hundreds of leadership workshops over the last 30 years, I ask participants to describe the characteristics of effective leaders. Not surprisingly, a couple of traits continuously cited are communication and trust.


Bottom line: Current leadership development isn’t working—only 32 percent of organizations are satisfied with their senior leadership team, remarks the 2013 Harvard Business Review article “How Google Sold Its Engineers on Management”—all while leaders face increasing demands to deliver faster results and improve their interactions with others. Perhaps, we are at a point where organizational leaders must transition from transactional and transformational models, as described by the Corporate Leadership Council in Driving Performance and Retention Through Employee Engagement. More importantly, these changing and challenging times are moving the needle to an even newer model: the network leader.