Saturday, 1 October 2016

What I've been reading - May 2016

Got through a few more books this month - combination of complete books read at home and others where I have read portions of them in the library.

Starting with the ones I read completely...

Hard Facts, Dangerous Half Truths, and Total Nonsense - Pfeffer and Sutton

Terrific book which makes the argument for Evidence Based management.  Often times we operate based on false assumptions and beliefs about what works - this could be from perceived wisdom or anecdote.   Authors argue for basing decisions in fact, inspired by evidence-based medicine.  They include a range of areas of management and consider how conventional thinking may not be helping.

Well worth a read but be ready to have your assumptions challenged.

Creating a Strategic Human Resources Organization: An Assessment of Trends and New Directions by Edward Lawler and Susan Mohrman

This book is a report on the Center for Effective Organisation's thirs study of the HR function in large corporations.   It dates from 2001 so not current but interesting to see what trends they were starting to see then.

They focus in particular on whether the HR function was changing to become more of a strategic business partner in the organization and the extent to which is was becoming a "value-added contributor to organiizational performance".

The book introduces the study and provides some high level observations before diving into the detail of analysis of the responses they got to the study.  Having performed similar surveys previously they can do some interesting comparisons and trend identification.

Transformative HR by Boudreaux and Jesuthasan

The book looks at how an evidence based approach to change can be taken in HR.  They look at examples where the seemingly obvious answer is not the best one as it is based on partial information and a lack of understanding of context.

They propose that there are 5 principles of Evidence based change.
  1. Logic-driven analytics - understanding that one set of measures does not apply universally.  
  2. Segmentation - Arising from the logic driven analytics we may find that one group of employees is very different from another.  This then leads to the principle of segmentations.  “HR must understand where segmentation is vital to the organisation and where it is less necessary.”  However need also to avoid over segmentation.
  3. Risk Leverage - interesting dimension this one as it focusses on not simply reducing the risk but rather knowing when to take the risk and when not.  If we focus just on the risk of someone leaving the organisation then we may decide not to train them or grow their skills as this could lead to them leaving.   That may be the right approach but we need to think also about the risk that if they are not trained we loose out on the possibility to move them to other roles in our own organisation.
  4. Integration and synergy - rather than treating parts of the organisation as closed systems we will want to look at broader cross organisational concerns as well.  
  5. Optimisation - this is around making the right investments in the right places to maximise our return.  Hiring the best qualified person for the job may make sense in some roles where we require instant high performance but in others areas there may be more scope for a different approach that brings people in and then grows them in the role.
They also introduce the concept of ROIP - return on improved performance.   This starts by thinking about what the impact would be if the performance of employees in a particular group was improved.  This is a different approach to thinking about who the most important people are in the organisation or indeed those who deliver the greatest value - what we are looking for here is the incremental return potential of improved performance that we could invest in generating.

... and now the ones in the library ( 2 online in the Bodleian and 3 in the Sainsbury Library at the Oxford Business School ) ....

Online first

Fitz-Enz, Jac THE ROI of human capital : measuring the economic value of employee performance - 2000

This author has been writing on measurement in HR for a long time - indeed he is credited as being the first to argue that HR should be measuring the impact it has on the overall business.

Very practical book with lots of details on different metrics that can be used.  Including range of models of human capital eg Human Economic Value Added,  human capital revenue factor,  human capital cost factor etc -  all formulaic metrics based on finance data and HR measures such as absenteeism rates, salary, benefits etc.

He notes that "Measurement of the effectiveness of human capital has been conspicuous by its absence in corporate financial reports.  Only with the advent of the balanced scorecard has there been any attention paid to this most important of resources.  the single typical measure, revenue per employee, is simplistic and out of date. " (p58)

Predictive analytics for human resources 2014 Fitz-Enz & Mattox

As noted above Fitz-Enz has written a lot in this topic area and this book builds on that previous writing but moves beyond descriptive analytics, that tell us about what has happened in the past, to predictive analytics which show us clues of likely future outcomes.  Suggests the Lorenz waterwheel as a metaphor for employees joining a company, moving around inside and then exiting at some point.  Recommendation of James Gleick's book Chaos... watch out for that in a future blog post.

... and finally 3 other books I reviewed in their physical form...

Human Capital Analytics - Pease, Byerly & Fitz-enz

The book focusses on predictive analytics which will not only measure impact but also help to optimize and prescribe future investments.  They suggest that " The human resources industry is just beginning to grasp the value of understanding its human capital and evolving from a shepherd's role to one that can bring change and add significant strategic value."  (p xi)

Mentions how HR has moved from monitoring transactions ( what did it cost to hire someone, train them, pay them etc) to performance monitoring ( how might a change in hiring process affect employee performance) and then to how do we compare with others.

Chapters focus on 
  • alignment - positioning human resources organisation as a strategic partner in support of the business.  Need to get broad range of stakeholders on board and also how you need to agree on the measures of success.
  • the measurement plan - map out the investments ( what are we going to do, training event, recognition program etc), what are the leading indicators that will suggest we are on track ( these are non financial measure - could be employee engagement for example), what are the business results ( KPIs .. these are tied to financial value.) , strategic goals ( desired end results of our initiative/set of initiatives... likely to be expressed in terms of improvements in revenue or costs )
  • data - types of data, linking datasets together to get broader view,  understanding which data you can use will be important part of discussion early on in the project.  Beware issues of people wanting to prove an assertion that they believe to be true - an analysis project that sets out to prove value of some initiative rather than seeking to understand what value it is bringing.  
  • descriptive statistics - these are the start point and ensure we are all talking the same language.  Watch out for commonly help views that are actually no longer correct.
  • causation - just because things are correlated doesn't mean causal link - has great example of number of firefighters called to attend a fire and the amount of damage done.
  • sharing the story - how to communicate what you have found.  
They conclude "We are at a moment in time where theories about human capital, the amount of data available, and the computing power necessary to deal with the data are radically changing how business is done." (p155)

The New HR Analytics  Jac Fitz-Enz

Another book from this author - I told you he wrote a lot on this topic !

Interesting structure to the book with discussion of each topic area by the author followed by a series of essays from other contributors.

The book is about predictive management  or what they term HCM:21 which is the outcome of an 18 month study called the Predictive Initiative.  4 phase process from scanning the marketplace through to an integrated measurement system.  in middle we have addressing workforce and succession planning and optimizing / synchronising the delivery of HR services.

Introduces a five steps approach to analytics

1- recording our work ( ie hiring paying, training, supporting, and retraining) - learnign through measurement about how efficient our processes are 

2 - relating to our orgaization's goals (ie quality, innovation, productivity , service) basically the fundamental goals fothe organization

3 - Comparing our results selves to others ( ie benchmarking) needs knoweldge of the details of who we are comparing to and what we are looking at but can help us to develop

4- understanding past behaviour and outcomes ( ie descriptive analytics )   looking for and describingg relationships that we find in the data but without ascribing meaning to any patterns.

5 - predicting future likelihoods ( ie prescriptive analytics) 

Casccio & Boudreau Investing in People 2nd edition 2015

This book has detailed chapters looking at financial impacts of key areas of HR.  Lots of worked examples and data from companies in a range of industries.   Would probably make a good practical guide if you were starting out to do analysis of your own organisation in one of these areas.

They note that "the current state of the art in HR management is heavily dominated by efficiency measures" and suggest that their book will help instead to look at effectiveness and impact.(p7)

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