Culture TrendWatchers

New Year’s Evolutions

Wed, 04 Jan 2012 09:37:00 GMT

So here we are at the start of a new year, slogging through the inevitable (and often tedious) year-in-review retrospectives and forecasts for 2012. But, let's be honest - how much do those forecasts really affect your life?

We get it - looking ahead requires perspective in terms of where we've been and what we've learned so far, and too often forecasters merely jump on the most recent bandwagon. We know from experience that sustained high performance is synonymous with, among other things, being ready for change - but having a degree of insight into what's around the corner doesn't hurt.

It's easy to predict that new challenges await all of us - but research and experience clearly shows that organizations best positioned to seize upon and leverage the strategic advantage of the next best practice, and that continue to foster a culture of innovation, are the successful organizations. So what does all that really mean - what should we in HR be thinking about and how can we support innovation and growth that will help kick our organizations into high gear in 2012?

Start by making a commitment to embracing the sometimes complex, but high-value strategic work recent human capital research has demonstrated is critical for success. Here's a rundown based on i4cp's 2011 research of just a few of the issues we think are important for organizational success in 2012 and beyond:

EBHR

One of our favorite quotes of 2011 came from the SVP of HR at one of our member companies. To paraphrase, he said "Historically, HR has done a horrible job of leveraging data to its advantage, certainly when compared with sales, marketing or other strategic functions." This sentiment sums up why the subject of Evidenced Based Human Resources (EBHR) has risen so dramatically in popularity.

John Gibbons, i4cp's VP of Research, defines EBHR as "Simply, the use of human capital analytics and scientific standards of causation to build a case for how people management practices drive operational and financial performance of the business." Many seasoned HR professionals are embracing evidenced-based decision-making and resisting the urge to avoid it because it's perceived to be too complicated, too costly, too critical or just another fad. More organizations are using evidenced-based approaches to measure and manage talent, and this practice is serving as a competitive advantage - not only in terms of how they compete for, engage and retain talent, but as a competitive lever for the organization as a whole. Employees are the most important asset in most organizations, and EBHR increases the financial contributions HR makes to business by effectively leveraging that asset.

Gibbons recommends two initial and simple steps for implementing EBHR: ensure the HR team understands the most important measures used in the enterprise and keep the first project(s) small. Bottom line, you don't need to tackle everything at once, but ignoring EBHR could be a fatal management mistake. If you missed it, check out John's webinar on EBHR for more information.

Performance management

It became somewhat popular in 2011 to suggest that eradicating the performance appraisal process is what should happen in order to improve the culture. Our research suggests something far different - top organizations more often perfect and leverage the PM process to gain a strategic advantage.

If that's the case, why does the term performance management evoke so much criticism? Why do so many of us, even the owners of PM, dread it as something to be tolerated at best? If your organization's approach to PM needs to be re-tooled, familiarize yourself with i4cp's Performance Management Playbook: Tools and Techniques for Managing Performance. This playbook addresses the fundamental programs and philosophies used by top companies, and expounds on the ideas organizations should consider in building a best-in-class PM program that is strategic, well-understood and expertly executed. It also examines some of the key findings from two i4cp surveys on the topic, and features real world strategies and approaches currently in practice in leading organizations worldwide.

For example, forced ranking and forced distribution has seen a significant decline in high-performing organizations. Why? Mainly because these systems are often "gamed" by managers rather than being applied properly and producing real results. That doesn't mean it isn't appropriate for some corporate cultures, but understanding what types of culture are right for these practices is critical to ensuring performance management success.

Contingent workers

The four-year, stomach churning roller coaster that has been the global economy has brought about a great deal of change in approaches to staffing and as a result, the demand for contingent workers has increased. Our research on the use of contingent workers found that now more than ever, there is a demand for agility as well as acumen on several fronts - workers and executives must be equipped with core competencies such as critical thinking, effective communication, creativity and innovation.

Organizations must be able to expand and contract the workforce as needed and knowing how to do that without losing efficiency and effectiveness is critical. This means striking that critical balance of deploying and managing contingent workers strategically while also keeping permanent employees engaged. This is much easier said than done, but our report, The State of the Contingent Workforce, which was featured in the Wall Street Journal, offers insights into road-tested strategies being employed by some of our members.

Embracing technology (when it makes sense)

Like the fallacy that humans use just a small percentage of our brain capacity (so not true!) leaving our full potential untapped, we seem to easily fall into the same line of erroneous thinking regarding new, innovative technology. Take the ubiquitous smartphone for example. In i4cp 's research in partnership with ASTD we found that just-in-time, always-in-context learning can save a company a tremendous amount of money while improving productivity.

But questions arose too - do content owners need to develop a mobile application for every piece of content they create? If so, does there need to be versions that run on iPhones®, Android®, BlackBerrys® and Windows® phones (among others)? What about tablets? Are there authoring or content creation tools that make this easy? How do we manage all of this - through our existing Learning Management System (LMS)? These and other issues are tackled in our research, and as is often the case, high-performing organizations take a different path than their low-performing counterparts.

Speaking up, even when the news isn't great

The very basic foundation of an effective HR strategy is a culture that supports all levels of employees in an organization. This is often achieved through effective, coherent internal communication. i4cp's research on communication, highlighted in our Effective Internal Communications Report, found that high-performing organizations know that internal communications must be strategic in addition to being tactical - they use internal communications to deliver higher level information, including policy changes, company successes, company financials and even pay-for-performance information, while lower performers view it as a vehicle for delivering emergency, crisis and safety information.

There are, of course, myriad issues and concerns beyond these that keep all of us up at night. While the uncertainty of what lies ahead is the one thing we all have in common, the ability to deal with our constantly evolving roles with confidence based on evidence, facts and research will help us sleep a little more soundly.

To all of our i4cp member organizations, thanks for a productive and profitable 2011 - we're looking forward to even higher performance in 2012.

Lorrie Lykins is i4cp's Managing Editor and Director of Research Services. She has been engaged in the study of human capital management since 2002 and has published widely to include authoring a chapter in the ASTD Leadership Handbook (2010) and publishing feature articles and editorials in various journals and magazines. Her work at i4cp has been featured in both the New York Times and the Wall Street Journal. She is an adjunct professor at Eckerd College in St. Petersburg, FL.

Barbarians Occupying the Gate

Wed, 02 Nov 2011 16:00:00 GMT

There hasn't exactly been a run on pitchforks and torches (yet), but there is obviously unrest among some citizens of countries around the world. And while some may find the motivations and agenda behind the Occupy Wall Street movement nebulous at best, it is clear that people are upset about something; hordes of people do not camp out in wintry weather for weeks on end to protest nothing. Or do they?

So while the explanations for the protests are as varied as the people attending them, there do seem to be some recurring themes, not the least of which is the widening gap between the have and have-nots. While CEO pay and executive bonuses have continued to climb, average U.S. wages have fallen. According to the U.S. Census Bureau, median household income fell from about $53,000 to $49,000 between 2007 and 2010. AFL-CIO calculations put the average CEO pay at 343 times that of the average U.S. worker.

So once again, the issue of executive pay is top-of-mind. Back in the mid-nineties, when most everyone's boat was being lifted by positive economic seas, there didn't seem to be as much noise around the topic of how much executives are paid. But as millions of Americans limp along in a persistently lame economy, the fact that many executives are not only not hurting but indeed flourishing seems to have contributed to a rising tide of anger that's hitting a breaking point.

When the economy went south, most people were not quick to condemn business - most organizations were taking big losses as well, and few will argue that we don't need corporations to stay healthy and keep the economy moving. What really turned the tide was the sweetheart deal the banks were handed to get themselves out of the mess they created with the expectation that once the banks were out of trouble, they would bring everybody else with them. But once they made it, the banks slammed the door behind them. And gave themselves bonuses.

Corporations slowly began to recover, but instead of pushing the economy along, they hunkered down and hoarded cash as if they were waiting for the zombie apocalypse. Well, in a sense, it came. The walking dead are millions of people who would pull themselves up by their bootstraps - if they had any. The Occupy protesters aren't necessarily sore losers who want millions of dollars for doing nothing; the overarching theme seems to be that the way we got to where we are simply wasn't fair.

In the end, will these protests affect how companies do business? It's hard to say, but even the financial meltdown didn't create a lot of wholesale change, nor any reform. If the protests do continue and perhaps pick up steam, especially heading into a presidential election year, it will not be surprising to see the emergence of some government initiatives to address the concerns.

So what does this all mean for those of us who headed into the office this morning rather than an encampment downtown? Well, now might be a good time to evaluate your organization's executive compensation strategy. A movement like Occupy Wall Street could easily influence a series of new regulations around how executives get paid, and knowing exactly where your organization stands could place you ahead of the curve.

Take a look back at the plan and the payouts in good and bad times over the past few years. Is there anything that immediately raises a red flag? Does the variability of executive compensation match everyone else's or is the "retention" trump card more powerful for executives? Do executives get paid no matter what the results? We are still seeing examples of CEOs with severance clauses that have absolutely no connection to performance. Case in point: Jon Corzine's $11 million in stock options that will immediately vest if he manages to sell his financial firm MF Global Holdings. It does not matter that his 18-month tenure has seen the company's stock drop from $7 to $1.20.

It's not just executive compensation, either. Incentive plans need to be scrutinized as well. Are there safeguards against excessive risk-taking? Are short-term incentives balanced with long-term rewards? Is there alignment with shareholders through equity grants? Do the grants have adequate performance or other restrictions on them? Anything that even looks improper should be vetted. It can even be helpful to run the simple calculation of average employee salary against that of the average executive. Does it seem grossly out of synch?

Even if there are no changes to be made, being intimately familiar with your organization's executive compensation strategy can be immensely helpful, especially with the prospect of having to provide details to either the government or the public at large. You never know - stranger things have happened.

David Wentworth has been a senior research analyst for the Institute for Corporate Productivity (i4cp) since 2005. He has published several reports and articles on various human capital subjects with an emphasis on workforce technology. The views (if any) represented in this article are his and his alone, and do not necessarily reflect the views of i4cp or any of its employees. Mr. Wentworth is currently building his zombie-proof fallout shelter and hoarding Halloween candy.

Making Innovation HR's Avocation

Wed, 13 Jul 2011 16:59:00 GMT

The news is full of heady stories these days about corporations focusing with razor-sharp acuity on innovation. From the Wall Street Journal to stories on NPR, innovation is being touted as a key factor in resuscitating the economy and keeping the U.S. in the game in terms of global competition. As we have noted in recent TrendWatchers, the ubiquitous "I-word" indeed seems to be everywhere. Before you dismiss this as the latest fad du jour, consider the very real investment organizations are making in innovation.

Just this past week, Verizon Wireless opened the doors of its new Innovation Center in suburban Boston, where 300 engineers and developers will focus their efforts solely on the pursuit of creativity and innovation. Also this week, Cisco Systems announced a major reorganization that will streamline operations, with the goal of facilitating innovation and faster cycles of getting new products to market. And Campbell Soup Company announced plans to pour $30 million into building a new innovation center at its Pepperidge Farm facilities in Norwalk, Conn. "This investment is the latest step in our effort to drive increased innovation and create new products to delight consumers," a press release noted.

Indeed, research conducted by the Institute for Corporate Productivity (i4cp) in partnership with 3M Corporation has found that 70% of companies believe that innovation is more important today than it was just two years ago. Leaders in business - high-performance organizations - are more than twice as likely (44%) as lower-performers (20%) to embrace innovation. And these companies have cultures that lead to greater innovation through reward and leadership practices, as well as approaches to processes and metric tracking that make their efforts more effective.

So why do some organizations (maybe yours) seem to be standing on the sidelines when innovation holds so much promise? Probably because innovation at its core is about effecting change, which we all know involves risk-taking, sometimes to the degree that it may feel like crawling out on a limb and then sawing the limb off the tree behind us - it's not for the faint of heart.

The i4cp/3M study found that most organizations admit that they are not doing a good job of managing innovation internally - and only 31% of companies say a culture of innovation permeates their culture to a high extent. Part of this is probably because we struggle individually and as organizations with the dilemmas that innovation presents: Throw your support behind the wrong idea and you risk your credibility - fail to recognize the true potential in an idea that catches fire somewhere else and you may wind up looking for a new job.

Research highlighted in i4cp's new report, Innovate or Perish: Building a Culture of Innovation, shows that most companies are missing opportunities to drive innovation, most notably during the hiring process.

So how can HR help to balance all these issues and make meaningful contributions to innovation in their organizations? It starts with becoming an advocate for innovation.

Karen B. Paul, Ph.D., Manager, Talent Assessment, 3M thinks of innovation broadly, not as a feature of product development but as a very human endeavor. Paul says that innovation must permeate through every facet of a company, from customer service to human resources.

"Human capital functions such as HR play a significant role in making innovation systemic, but how often do you hear about their involvement? This study [Innovate or Perish: Building a Culture of Innovation] helps to tell the story of both critical aspects of an innovative culture and the role Human Resources plays in facilitating culture development," Paul says.

While selecting the right people to spark innovation is widely acknowledged to be critical, the top methods for recruiting and selecting creative people are not being utilized by most companies. How can HR step up its game in the hiring process and find the talent that will be key to fueling innovation? How do we recognize that talent? Start with trusting your intuition and providing guidance in the C-suite. Remind your colleagues that innovation is about pioneering and discovery and that it may get scary sometimes. Think like a football coach - open collaboration is key to innovation, so consider the dynamics of teams as you add new players and build internal franchises that everyone wants to be a part of.

Keep in mind that innovative and creative types have an affinity for one another and tend to hang out (and want to work with) people of like mind. Internal referral programs that emphasize innovation have the highest correlation to market performance (.19), meaning companies who do this typically have higher revenue, profitability, market share and customer satisfaction than their competitors. Take a look at the key talent you have in place and ask them if they have friends who may be looking to make a change. Also, searching for and tracking innovative people in graduate school and in other organizations has a high correlation with market performance, but less than 15% of high-performance organizations employ this strategy.

Above all, make it your mission to keep innovation top of mind in your organization. Be the conduit for change and remind your colleagues that if you're standing still you're going nowhere. And although it likely will not be the end-all, be-all silver bullet some may be hoping for, no doubt innovation will be critical to the future of all of our organizations.

Lorrie Lykins is i4cp's Managing Editor and Director of Research Services. She has been engaged in the study of human capital management since 2002 and has published widely to include authoring a chapter in the ASTD Leadership Handbook (2010) and publishing feature articles and editorials in various journals and magazines. Her work at i4cp has been featured in both the New York Times and the Wall Street Journal this year. She is an adjunct professor at Eckerd College in St. Petersburg, FL.

Is there an "I" in Recovery?

Wed, 15 Jun 2011 16:56:00 GMT

Is it me or is the I-word everywhere lately? Innovation seems to be on everyone's minds these days and the topic is very much in the news. The Economic Times reported this week that corporate leaders worldwide view innovation in products and services as the clear path to growth. Innovation is considered to be more critical than other approaches to increasing revenue - more so than mergers and acquisitions and joint ventures in the race to increase market share. In short, innovation is thought of as the thing that allows organizations to differentiate themselves from the competition and ultimately will determine who thrives and who fades away.

A simplistic view of innovation is that the right people with the right skills and resources drive it. But with more than eight million jobs evaporating since the recession began in 2007, it's a bit overwhelming to consider the consequences of that unprecedented talent displacement and what it means in terms of lost innovation. We'll probably never know. And as the painstakingly slow pace of recovery plods on, I'm thinking that innovation may not prove to be everyone's favorite word - at least not in the short-term.

The New York Times reported a few days ago that capital spending by corporations on things is surpassing spending on people, a result of tax breaks for business and plummeting prices for equipment, among other factors. This isn't necessarily news - an April blog post written by an i4cp colleague of mine bemoaned the current situation in which tax incentives offered to businesses don't support job creation, but are instead promoting investment in capital spending for equipment upgrades. That post was sparked by a very similar story published by Bloomberg Businessweek that - not unlike the New York Times - detailed the political and economic realities driving the trend that's kept employment numbers lackluster at best.

My colleague's blog ("Rise of the Machines") garnered this response from a reader: "When the policy disincentives to growth and hiring are curbed, businesses will 'amazingly' find their heart & soul to improve humanity by hiring more and more even in the face of continued advancements of the machine."

Is this really what will happen? I don't think so. Innovation means that some jobs will be permanently replaced by - well - innovation. To be crass: the road to recovery will leave some jobless folks waiting in vain next to the on-ramp.

Consider department-store retailer Kohl's, which is contracting its labor needs by expanding capital spending on equipment - up from $761 million in 2010 to $1 billion this year. The investment? The installation of electronic signage in 500 locations, which will be completed across the chain by the 2012 holiday season. Kohl's CEO Kevin Mansell told Bloomberg Businessweek that the signs represent payroll savings "because we don't have to change several thousand signs in each of our stores anytime we run a new promotional event."

So the good news is that many corporations have liquid assets and can finally spend money on upgrades that, in many cases, we have gone without by simply making due through the recession. Don't get me wrong, these are worthwhile investments - in some cases sparking growth and positioning companies to expand on their workforces.

Upgrades are fine ... wonderful in fact. But innovation doesn't necessarily come from material and equipment - it comes from people. So I have to wonder who's benefiting from the equipment upgrades while tumbleweeds skitter along empty office corridors. And who's going to manage all this great new equipment, and more importantly, improve it or best it completely with something new and super-cool? Upgrades usually mean increased productivity but if there are too few employees on hand to leverage the expanded inventory, upgraded technology and improved equipment, what's the point? Are we risking an imbalance that will cost us more down the road?

The other factor in all of this, of course, is the watchful waiting we are all doing on the issue of U.S. health care reform. We still aren't hiring at the rates we know we should be because we aren't sure what it will cost us down the road. And meanwhile, as the Bloomberg Businessweek story points out, companies are increasingly opting for "flexibility in employment," (contingent workers), especially in the fields of information-technology and engineering. What will this mean for innovation? Will contingent workers be less likely to be driven to innovate for temporary gigs?

How wide will the gap between capital spending on stuff and resuscitation of the wheezing labor market continue to grow? As long as the employment market is bereft of the same drivers as capital spending on equipment in terms of tax incentives, I'd say pretty darn wide. And this current predicament, of course, will continue to impact consumer spending.

So while I agree that innovation is indeed the way to go, the basket in which most of our collective eggs should nestle, it is not without awareness that innovation means that more seismic shifts are ahead for business.

Perhaps the "I" - the innovation - that will indeed be the driver of the recovery won't come from gadgets but by finding innovative ways to get the "we" in the workforce back to work. Henry Ford was considered an early master of innovation not just for his product and assembly line vision, but for paying employees living wages, which also expanded and solidified his own customer base. Innovating with people is nothing new, but it does take vision, a little courage and a deeper understanding of what constitutes human capital.

Lorrie Lykins is i4cp's Managing Editor and Director of Research Services. She has been engaged in the study of human capital management since 2002 and has published widely to include authoring a chapter in the ASTD Leadership Handbook (2010) and publishing feature articles and editorials in various journals and magazines. Her work at i4cp has been featured in both the New York Times and the Wall Street Journal this year. She is an adjunct professor at Eckerd College in St. Petersburg, FL.

The Ironies of High Performance

Wed, 01 Jun 2011 21:13:00 GMT

For much of the past month, my workdays have focused on assessing the results of i4cp's 2011 High-Performance Organizations Survey. I think about performance while I'm jogging, cooking and watering flowerbeds. I even dream about it at night. I've had input from several of my colleagues about the survey and what they find interesting or compelling about it. Everyone has their own ideas. Here's mine: we're good at identifying what we do well and what we aspire to do well but we don't necessarily have the mechanisms in place to connect the two.

Most of our discussions revolve around the top findings across what i4cp has identified as the five domains of organizational performance: strategy, leadership, talent, culture and market focus. Our analysis of survey responses revealed the practices within each of those domains that tie directly to performance improvement. I think what is equally interesting are the things in each of those areas that companies aren't doing well - or at least not as well as they could ... even the high-performing organizations ... and how those practices contrast with the best efforts.

Look at the strategy domain, for instance. High performers expressed strongest agreement with the statement, "Our organization's publicly stated philosophy is consistent with its strategy." That belief on the part of respondents that their organizations are walking their talk also proved to be the strongest driver of improvement in performance within the strategy domain. But at the other end of the scale, high performers agreed leastthat behavior of their non-managerial employees is consistent with actions needed to successfully execute the strategic plan. In other words, the rank-and-file aren't doing what they should be doing to achieve the desired business results. Hmm.

What about leadership? In that domain, high performers agreed most strongly that their management encourages employees to become more productive. That's great. But at the same time, they agreed least with the notion that their leaders are good at coaching and mentoring. So if management is good at encouraging productivity, why aren't they good at following that with hands-on ways to encourage better performance? But maybe it's not that simple, and as John Gibbons, i4cp's VP of Research & Development points out: "Willingness to apply discretionary effort does not equate to greater productivity ... especially only expressions of intent to apply discretionary effort."

The talent domain indicated greatest agreement that workers are willing to contribute extra effort beyond their job parameters. But lowest marks went to organizations' measuring the return on investment of talent management programs. Wouldn't the above-and-beyond behavior of employees be a major indicator that talent programs are doing something right?

When it comes to culture, both high and low performers agreed most emphatically that they have an ethical code that helps to guide their actions. Both groups also agreed least with the statement that "bureaucracy does not impede performance in our organization ..." meaning that it does. In market focus, high performers say they try to exceed customers' expectations. However, they agreed least that they use highly-developed strategies to find out what those expectations are.

Doesn't it seem that there are some ironies in those contrasts, or at least some valuable lessons? Our philosophies and our strategies are consistent. But our employees aren't performing in ways that accomplish those strategies. Why wouldn't they? Short of outright mutiny, the only viable explanation is our failure to make workers understand what the strategies are and what needs to be done to execute them. What we should get consistent about is providing clearer communication and guidance. Those aims might also apply in designing leadership development programming that does a better job of helping leaders refine their coaching and mentoring skills so they can effectively model and participate in these practices that encourage performance.

Finally, if everyone at i4cp had a dollar for each time senior VP of research Jay Jamrog declared, "What gets measured gets done," then I'd be writing this from a lounge chair on an island beach. But he's right. We need to find the antidote to metrics phobia and get better at measurement - all kinds of measurement. In the talent domain, we say our people are doing great work, but do we look on their discretionary effort as a valid indicator? And in our zeal to exceed customer expectations, why don't we use the best and brightest means to find out what those expectations are? Maybe the trick is indeed, as John Gibbons says, to "find reasonable measures for squishy things, like employees' willingness to work hard."

The 2011 High-Performance Organizations Survey has many valuable insights (and a few ironies) to offer, and maybe each of us takes away something a little different when it comes to lessons learned. Among the many takeaways for me were these ideas about improving communication, leadership development, recognizing and removing internal obstacles to performance, and learning how to pursue more effective measurement strategies. You may find completely different points that ring true for your organization. In fact, you probably should. We don't do business in a cookie-cutter world. High-performance organizations know that. That's why they opt to learn from the full range of research, but then use it to pick and choose the solutions that will best serve their unique needs and further help to differentiate them. That capability to customize insights is among the most powerful and enduring values good research offers. Vive la différence!

Senior Research Analyst Carol Morrison has authored white papers, playbooks, reports, analyses and other publications on a variety of topics related to human capital, leadership, and talent management. Feature articles by Carol can be found in Talent Management Magazine, Chief Learning Officer, HR Executive and in other leading print and online media.

Manage Performance, Don't Mangle It

Wed, 06 Apr 2011 10:33:00 GMT

How did we get to a point where the term performance management instills fear and dread at its mere utterance? Employees tend to loathe the process, which is commonly perceived to be little more than a vapid popularity contest that does nothing to recognize their work, yet determines their pay for the next year. Managers see it as a huge time suck that culminates in a series of uncomfortable conversations and confrontations they would rather not endure.

At its core, the concept of managing performance makes complete sense. Any organization worth working for wants to ensure that its employees are focusing on the right things, achieving strategic goals and improving their performance. All of these factors directly affect organizational performance. Giving employees feedback on how they are doing helps them improve, offers managers insight into their teams and provides leadership with an overview of the talent they have at their disposal.

So what happened?

Somewhere along the way, the idea of managing performance was twisted and contorted into the process of performance management. The desire for measurable data and practical efficiencies squeezed most of the human element out of the process. Instead of understanding why a person is performing the way they are, it became much more important to assign them a number or a label that satisfied a reporting requirement.

Part of the blame can be laid at the feet of the pay-for-performance culture. Don't misunderstand me - pay-for-performance is a powerful tool, and our own research points to the fact that adequately rewarding top performers is a good strategy. However, once merit increases became tied to the appraisal process, it created a bond that seemingly cannot be broken.

At the recent kick-off meeting for i4cp's Performance Management Exchange, members of the group were asked about the primary drivers for performance management at their organizations. The members cited many aspirational goals for PM, including improving performance, identifying development opportunities and aligning individual goals with organizational goals.

One thing that was not included, however, was determining pay raises. Yet, if you ask the employees at these or any other organization the same question, the majority will tell you that the appraisal process is for determining merit increases. Period.

Something needs to be done to fix that disconnect and ensure that employees understand the true nature and intent of managing performance. Employees need to have a clear vision as to the role performance management plays in the organization and this clarity needs to become ingrained in the culture. Once this happens, employees can become willing participants in the performance management process rather than reluctant victims who perceive themselves as being forced to participate in something that's being done to them.

Are you facilitating this understanding? Does your company have some type of mission statement for performance management? Do your employees know what it is? It seems as though performance management may suffer from an image problem, and desperately needs a marketing makeover. If your organization doesn't have a communication strategy in place regarding performance management, it's well worth considering putting one together.

As part of an effort to redefine performance management, i4cp has released the first in a series of Performance Management Playbooks. The playbook was developed using an analysis of two separate surveys on performance management with an eye on strategies and policies that are correlated with high market performance. We also spoke with several organizations, including i4cp members, and got their perspectives on what does and doesn't work. Those perspectives and insights are included in the playbook and we hope you find it both inspiring and instructive.

i4cp's 4-Part Recommendation:

Encourage continual, year-round feedback. This can help keep the appraisal process from becoming a one-time, year-end burden. Continuous feedback keeps employees engaged in the process and preempts difficult - and perhaps confrontational - discussions at appraisal time.
Focus on what matters. Don't expend all of your precious time and resources determining whether to use a five- or seven-point scale. Don't look at high completion rates as the hallmark of a world-class PM process. These things aren't correlated with high market performance. Some of the things that are correlated include providing ongoing feedback, creating developmental plans and goal-setting.
Calibration is your friend. Use calibration sessions to demystify the process. One of the most common employee complaints is that PM seems like a mysterious magical black box and what comes out is senseless and arbitrary. A transparent calibration session can ensure that managers are being honest and fair.
Address and resolve poor performance. Simply rewarding high performers and ignoring low performers will not suffice. Similarly, culling the bottom 20% and replacing them would be a costly endeavor. Instead, identify the factors leading to the poor performance. Perhaps there are development opportunities that could help or conflict issues that can be resolved. Given the proper direction, a low performer can often become a high performer. If termination or similar actions are necessary, those decisions are made easier by examining all of the possibilities first.

David Wentworth has been a senior research analyst for the Institute for Corporate Productivity (i4cp) since 2005. He has published several reports and articles on various human capital subjects with an emphasis on workforce technology. He has contributed to several reports published by ASTD, including authoring The Value of Evaluation: Making Training Evaluations More Effective, The Rise of Social Media: Enhancing Collaboration and Productivity Across Generations, and Instructional Systems Design Today and in the Future. Wentworth's work has also appeared in Compensation & Benefits Review and T+D Magazine.

The Top 10 Talent Trends of 2010

Wed, 22 Dec 2010 10:48:00 GMT

It's been a long but very good year for i4cp - an enormous amount of research on corporate performance was done and many terrific corporate members joined our network. It's impossible to sum it all up in one TrendWatcher but I'm going to hit on a few of the research highlights and lessons learned as we prepare to embark on a new year:

Get performance management right. We know some performance-management skeptics hate to hear it, but the research shows that PM is the cornerstone of integrated talent management. That is, it is more highly integrated with the other components of integrated talent management than any other components. Moreover, high-market performers are 20% more likely to integrate PM into their talent management systems than are low performers. So, build your business case and deal with any weaknesses in your PM system.
Don't assume your managers know what they're doing. When it comes to performance management, they often don't. In fact, less than a fifth of organizations have leaders who, as a whole, are either highly or very highly skilled at conducting performance reviews. High-performing organizations know this and are much more likely to train their managers in this area.
Stop stalling on social media. A lot of organizations are burying their heads in the sand when it comes to social media because it's so seemingly complex, chaotic and insecure. But social media, especially in the area of learning, can pay dividends and, perhaps even more to the point, the massive demographic cohort known as the Millennials is generally much more likely than other generations to use these technologies, both at home and at work. So, prepare to use these technologies to make them - and other employees - more productive.
Build your diversity business case the right way. There are a lot of good reasons to create a more diverse workforce, but high-performing organizations are more likely than other organizations to base the business case for diversity on the need to reflect their customer base and community demographics. Whereas 26% of high performers identify this as the primary business case for diversity, just 10% of low performers do. High performers are also twice as likely to say they pursue diversity to attract top talent.
Don't throw emotional dimwits into your high-potential pipeline. Higher-performing, larger organizations are more likely than other companies to focus emotional intelligence (EI) initiatives on leadership and high-potential development than on areas such as communication. What's more, about two-thirds of high-performing organizations apply the EI concept to their executive-level leaders, yet fewer than half of low-performing organizations do so.
End the long era of lackluster leadership. The single greatest human capital failure of the last 20 years is the inability of organizations to excel at leadership development. In 2010, three-quarters of respondents to an i4cp study said developing leaders is a highly important issue, but less than a quarter said their company is highly effective in this area. This wildly disproportionate ratio makes leadership development the most critical human-capital issue of the year. And yet, i4cp has been tracking major issues for over two decades and has found that leadership is consistently at or near the top of any such rankings. In other words, it's never adequately addressed. Time to fix it. Look for a major i4cp analysis on leadership competencies in 2011.
Move HR far beyond efficiency. "Efficiency is a given in today's world," says Jay Jamrog, i4cp's Senior VP of Research. HR needs to be able to boost the performance of the whole organization. For example, study respondents from high-market performing organizations were about 30% more likely than their counterparts from low-performing companies to report that HR "drives change management" to a great or very great extent.
Just measure it. Companies that excel at talent management are nearly twice as likely to use workforce metrics strategies to a high or very high extent. Yet, the vast majority of firms are still mediocre or worse at workforce measurement. In fact, a paltry one-fifth of all study participants said that their organizations have such a strategy to a high or very high extent. (Please take a moment to envision the late, great Peter Drucker sadly shaking his head at the state of talent management circa 2010.)
Think global, act global. In 2010, we were all about global talent issues. Everybody repeats, "Think global, act local." There's some wisdom there, but companies also need to act globally, putting into place initiatives that make sense from the perspective of today's worldwide marketplace. For example, when respondents were asked about the degree to which their global leadership development programs change from region to region, about half of larger, high-performing global organization said this occurs to only a slight degree or not at all. None said their programs change from region to region to a very high degree, and 42% said they vary to a moderate degree. Bottom line: when it comes to localizing leadership development, less is more.
Don't just retain knowledge, retain networks. Yes, knowledge retention is critical and will become even more so in 2011 if the economy improves and voluntary turnover rises. It's hard enough to lose the unique knowledge of talented employees, but it can be even harder to lose their internal and external networks of colleagues, clients, experts and innovators. Our new Knowledge Retention Playbook notes, "The value of a single employee's network of internal and external relationships should not be underestimated. Unfortunately, the likelihood of preserving and transferring even a part of the dynamics of those relationships and collaborations often is slim at best." Yet, in today's networked economy - where relationships often equal money and performance - companies should be thinking about ways of capturing and preserving valuable networks.

I wish we had more space here - there are so many more research trends to discuss. But these are a good capstone for 2010 and a nice foundation for 2011. Our excellent i4cp research team is looking forward to more great discoveries in the new year.

Fostering Intrapreneurship: Think Like a VC, Act Like an Entrepreneur

Wed, 03 Nov 2010 08:44:00 GMT

All corporations have the challenge of trying to infuse an entrepreneurial spirit into their workforces. As the theory goes, when employees act like entrepreneurs, they put themselves in the mindset of business owners with a bias for action, which results in good decisions and good outcomes.

The practice, however, is more difficult than the theory. To get employees to act like entrepreneurs, companies have often taken a structural approach. For example, Google and Microsoft organize into small units of 50 to 100 employees to maintain a sense of entrepreneurial spirit and eliminate bureaucracy. The trade-off is that small groups can create silos across units, leading to duplication of efforts and a squelching of synergy. But if a company chooses to organize in large functional groups to achieve maximum efficiency and scale, it risks creating behemoth departments that crush the natural entrepreneurial spirit that exists within its employees.

After a career as both an entrepreneur and a venture capitalist, I have concluded that creating an entrepreneurial spirit within the corporation is only half the battle. I have seen too many situations where acting like an entrepreneur was not a business panacea: unbridled, unfocused entrepreneurial energy can easily be squandered and misdirected. In my last eight years as a VC, I developed an appreciation for the attitude and vantage point that VCs have when sifting through business proposals and allocating scarce capital to the best opportunities.

Through these two career experiences, I have come to realize that the true question corporations need to ask is: How do I get my employees to think like VCs but act like entrepreneurs? In other words: What's the best way to impose the challenge of complex, competing priorities on employees who must, in effect, be adroit at living with split personalities? This new frame of mind requires the corporate manager to extract the best from both worlds - entrepreneurs with a bias for action and VCs with a bias for analysis. Elements of both are required.

The Mind of the Venture Capitalist

The VC industry is a small, arcane field that isn't well known to many outside of the mere hundreds of professionals who practice it every day. So let me explain a bit more what I mean when I promote this way of thinking for the corporate manager.

VCs are trained to survey and network with smart people to find the best ideas out there (what's known in industry parlance as deal flow). Therefore, corporate managers should be encouraged to spend time networking with outside experts who can expose them to a broader range of ideas than what might emerge from within the walls of their corporation. Once they've attracted numerous wacky and credible ideas to transform their business, managers need to follow the VC model of being a cynic, challenging every assumption and having a sensitive "BS" detector that allows them to dismiss the majority of suggestions as unworthy of further consideration.

Lesson One: Be a notorious skeptic who swiftly rejects hundreds of these generated ideas, setting a high bar before something is deemed worthy of attention.

It is tricky to encourage a lot of new ideas without pandering to the sources of the ideas. If the ideas are not worth pursuing, managers need to feel comfortable (and supported by their chain of command) not wasting time on them, even if the most senior executives or most important customers provide ideas.

Lesson Two: Choose situations in which the team or company has a distinct advantage against competitors; where you can leverage your resources, expertise, and relationships to create value.

The Mind of the Entrepreneur

Once the big ideas are chosen, there needs to be a shift in emphasis to the entrepreneurial frame of mind, one that is focused on implementation. This requires you to select people as carefully as you've selected ideas. Great entrepreneurs don't settle for working with whoever is available. Instead, they take the attitude that their mission is to be inspiring enough to attract the best and brightest, and they don't waste time with B teams.

Lesson Three: Attract world-class talent.

There's a pattern of young entrepreneurs achieving greatness in areas where their older, wiser colleagues were scared away because they "knew better." At a time when IBM and Compaq were dominating the emerging PC market, who would have thought to challenge them with a new direct-to-consumer business model but a kid named Michael Dell selling computers out of his dorm room at the University of Texas? Corporations need to allow their managers to be naive enough to not "know better."

Lesson Four: Attack the opportunities and don't be afraid to be wrong - just don't stand still.

For managers to truly foster innovation within the corporation, they need to take the best of both of these perspectives - the VC and the entrepreneur - and apply them in their own environment.

Jack Welch had a similar mindset when it came to balancing competing priorities. "You can't grow long-term if you can't eat short-term," he states flatly. "Anybody can manage short. Anybody can manage long. Balancing those two things is what management is."

I argue the same is true for instilling a similar entrepreneurial/analytical approach in the minds of corporate managers. There are those that are able to sit back and analyze what idea is the best one, while others who are good at acting with the raw, unbridled enthusiasm of an entrepreneur. The best managers will do both. And the best corporations will help them figure out how.

Jeffrey Bussgang is a board member of i4cp and general partner with Flybridge Capital Partners, a venture capital firm in Boston. He was previously co-founder and president of Upromise. He is author of Mastering the VC Game and can be followed on Twitter at www.twitter.com/bussgang.

Inclusion Measurement - Tracking the Intangible

Wed, 14 Jul 2010 12:49:00 GMT

Diversity and inclusion are, in some ways, like peanut butter and jelly. They're not the same but are often combined, making up a whole that's more than the sum of its parts. So when i4cp - on behalf of its members-only Diversity Accelerator group - decided to look at inclusion metrics, we first had to carefully define, identify, and separate the two concepts.

In our Inclusion Measurement Survey, we started by finding out whether or not companies had inclusion initiatives and if initiatives were considered separately or in combination with diversity. Two-thirds of study participants reported inclusion as part of their people-management strategy, either in combination with diversity (47%) or as a separate talent-management initiative (19%). These numbers crept up only slightly among higher market performers. With this established, we asked them to focus specifically on inclusion, the more difficult to measure of the two.

Diversity is about variations and differences and, more often than not, refers to traits that are measurable. Sometimes diversity refers to a traditional compliance point-of-view that looks primarily at EEOC protected classes. Other times, it incorporates a broader definition that accounts for factors such as diverse experience, education and backgrounds. Either way, seeing how one individual differs from another and tracking those differences is, while challenging in practice, intellectually clear cut. Inclusion, however, is a much more amorphous affair.

Inclusion is what ties varied individuals together into a cohesive and productive whole. By far the most commonly cited definition for inclusion among our study participants was from the 2002 Frederick Miller and Judith Katz book, The Inclusion Breakthrough. This definition - "Inclusion is about creating an environment in which employees share a sense of belonging, mutual respect, being valued for who they are, and supportive energy and commitment from others so that they can do their best work" - was selected from among six possibilities by over half of our study group.

But does anything about that definition lend itself to measurement? Can one say that a company produced 5% more "supportive energy" this year than last? While other definitions had more concrete wording, such as "avoiding tokenism," organizations seem inclined toward a definition that is more aspirational and values-based. This kind of definition may explain why only a fifth of respondents say their organizations attempt to quantify the effects of inclusion strategies to a high or very high extent.

Corporate Practices

Through a series of interviews tied to our Diversity Accelerator, we investigated how some organizations incorporate inclusion as a key value. These companies are both more successful at inclusion and more capable at measuring the success of their efforts. The key factors that make this possible are a definition that includes measurables and driving goals that are strategically aligned and quantifiable.

With inclusion ingrained as a core corporate value, organizations can measure success in this area through several channels, including indirect routes such as quality assurance reports that provide a view of inclusion from the customer perspective. These organizations can also directly tap their employees for guidance to provide feedback and ensure that they are truly living their corporate values.

Other practices that boost inclusion proficiency include inclusion-specific competencies as part of the managerial review process. Linking those competencies to both salary and promotability further emphasize the company's commitment to inclusion as a core value. It's an important step for inclusion to be seen as a competency that is closely tied to success in those managerial positions.

One top company we talked with, WellPoint Inc. - the largest health plan company in the Blue Cross and Blue Shield Association - uses their definition of inclusion to help define the metrics they track to determine success.

"Our definition of inclusion is really all about engagement, be it associate (employee) engagement or member (customer) engagement," said Linda Jimenez, Chief Diversity Officer and Staff VP - Diversity & Inclusion for WellPoint. "Inclusion is the important component that weaves that thread of diversity throughout our organization. One level of inclusion is how individuals feel connected, respected, valued, but - most importantly - engaged in working alongside one another."

WellPoint's use of annual employee engagement surveys to track inclusion is therefore a clear, if indirect, metric. In fact, employee engagement surveys were the most utilized measurement method cited in our inclusion study (47%), followed by analysis of new hire data (36%) and promotion/movement data (33%). WellPoint also closely tracks diversity representation metrics and movement among varied groups at multiple tiers of the organization. Inclusive of about a quarter of our survey respondents, WellPoint includes diversity-specific questions in its engagement surveys.

In addition, WellPoint looks at manager evaluations, which have questions specifically geared toward inclusion competencies, and they participate in various third-party evaluations from employer-of-choice awards that provide an external standard to measure progress. Such awards were a less frequently used metric overall (used by about a fifth of i4cp respondent organizations) but, along with productivity data, were the metrics with the largest usage gap between high and low performers.

WellPoint was included on The DiversityInc 2010 Top 50 List, and also participate in a select group of other employer-of-choice recognition awards. According to Jimenez, "There's a wealth of information in terms of benchmarking that we've received and the opportunity to listen to and share best practices with similar organizations that are considered leaders in diversity management. They're definitely an internal motivation and I think it's a great metric for us to be able to see where we stand against ourselves and where we stand against our peers."

In a similar vein, through our Diversity Accelerator program, i4cp has found that group discussions - in which practitioners are able to describe challenges, share best practices, and brainstorm on future-looking strategies - are useful ways of improving performance in the areas of diversity and inclusion.

The Bottom Line

Inclusion is, as we've shown, a hard nut to crack from a metrics perspective. It's simply easier for an organization to tell if diversity representation has increased at certain tiers of the organization, if the employee base has reached parity with the customer base, or if complaints against management have gone down. These metrics don't tell you how inclusive the culture of the organization is, but, much like gravity shifts indicating the presence of otherwise imperceptible astronomical objects, they do show the presence of something and give us an indication of size and movement.

Our study shows that these indirect measurements - paired with accountability, top-down support for inclusion-related values and employee surveys - are how many organizations are gauging inclusion success.

i4cp's 4-Part Recommendation:

Review your organization's definition of inclusion, if it has one, to determine if it lends itself to measurement. A definition that is more utilitarian - that is more prescriptive rather than aspirational - is more useful in guiding measurement and goal setting. Debate the content of your definition. A definition that lacks debatable content probably lacks the significance or concreteness that will make it measurable.
Ensure a common understanding of what inclusion means to your organization and make certain it aligns to the organization's mission. A good definition will go beyond employees to include suppliers, customers and the community at large. To form a common understanding of what inclusion means, consider what is driving your organization toward this goal. The i4cp study found that high-performing organizations are more likely to be driven by factors such as talent acquisition, retention, employment brand, and increased productivity and engagement.
To measure inclusion, start by identifying the business area where you expect to see movement. For WellPoint, that metric is engagement. For other organizations, it may be profit per store, better customer ratings, reduction in shrinkage (theft), improved company reputation or brand, etc. Again, the measurement should align with the organization mission.
Create accountability at the executive, manager and employee level. Creating an inclusive work environment starts at the top of the organization, but it must be practiced at every level to permeate a culture. Accountability at the employee level means articulating expected behavior and rewarding employees that exemplify that conduct. It also means working to change behaviors of employees who do not. At the manager level, accountability should be part of the performance management process and is most effective when linked to performance appraisal competencies and promotional opportunities.

Sharpening Customer Focus: The Power of a Market-Oriented Culture

Wed, 07 Apr 2010 11:37:00 GMT

What's the key to creating a customer-focused organization? Here's one of the answers from the trenches of a high-performance company: "A culture of accountability makes a good organization great and a great organization unstoppable."

That nugget of wisdom is part of i4cp's new major study on customer focus, conducted in partnership with the American Management Association. We found that accountability that starts at the top is critical to customer focus. Sixty-seven percent of respondents from high- market-performing companies that are good at focusing on customers say their organizations hold at least one corporate officer responsible for the customer experience. By contrast, a tiny 3% of lower-market-performing firms that are poor in this area hold an officer accountable.

Companies that excel in overall performance do something else about customer focus differently, too. They make sure that a commitment to customer service doesn't stop with senior leaders - or even with customer-facing employees. Leaders of top-notch firms create customer-focused cultures that suffuse their organizations, reaching from sales professionals with daily customer contact to production-line employees who may never have a conversation with a consumer but whose efforts are just as vital to company success. Nearly seven out of 10 high-performing organizations say they work to build such a power culture. Lower performers? Fewer than half.

"Alignment of the corporate mission, vision and goals with customer satisfaction" is viewed as a critical practice, according to one study participant from a high-performing company. "Bringing these concepts to the employee level and creating secondary visions that align their actions with the overall vision has increased [our] focus on exceeding customer expectations."

Four out of five respondents from high-performing companies say that financial growth is the key driving force behind their focus on customers. Certainly, i4cp research has shown that market focus - which revolves around a focus on customers - is one of the five core attributes of high market performance. So it makes sense that a corporate culture centered on customers is likely to yield positive bottom-line results. But how does an organization seeking better performance bring about that kind of culture shift?

Along with accountability, communication and training are among the most vital components in culture-building approaches, the study found. "We are more actively sharing competitive data with lower levels of the organization," one business leader revealed. In addition, the company is "instilling a culture of innovation and customer obsession to drive behavior focused on the customer."

Multiple respondents from high-performing companies described their firms' educational efforts. Customer-focused training "is part of our onboarding and new employee orientation," said one. Another cited "continuous training on customer care practices" and a third explained, "We run training on a different customer service topic every month."

Companies that achieve high levels of performance in today's volatile marketplace demonstrate not only a dedication to customer service but also a commitment to anticipating customer needs and being proactive in meeting those needs. This type of forward-thinking mindset is one of the hallmarks of a culture that is truly customer focused.

i4cp's 4-Part Recommendation:

Include accountability for customer service and satisfaction in performance reviews for managers and employees alike. Forty percent of i4cp respondents say they hold their entire executive teams responsible for customer focus. Reinforce accountability by aligning rewards and recognition with customer-focus goals.
Build a powerful corporate culture that supports an organization-wide commitment to customer service. One study participant explains how: "We developed a new, customer-focused mission statement and had a bottom-up planning session to gain buy-in and establish critical success factors and SMART objectives. We will align our HR, organizational, management and communication practices to align with these objectives."
Retool internal communications to ensure support for a customer-focused culture. Share customer stories, feedback and insights with all employees. Involve senior leaders in modeling customer-focused behavior and in communicating the company's customer-centric values and mission.
Make customer-service training an ongoing commitment. Begin during employee onboarding and follow through with more training on a continuing basis. One company participating in the study demonstrates how to make the process enjoyable by offering a "Lunch'n Learn Customer Appreciation Program."

Achieving High Performance with Leader Athletes

Fri, 12 Mar 2010 11:55:00 GMT

Today's elite athletes are performing at levels few can hope to achieve, yet with each race, each competition, they consistently demonstrate the capacity to push themselves and reach heights once thought unobtainable. In the business world, it should be the goal of every leader to emulate world-class athletes. This is a reachable objective and we see examples of exceptional adaptability and agility as chief among common traits shared by leaders of high performing organizations.

Outstanding leaders have traditionally been associated with coaches rather than athletes. They guide, teach, motivate and inspire. But they are not usually thought of as demonstrating the dynamic, heroic effort of sports figures in the course of leading companies. But that's changing quickly.

The ability to recognize and anticipate the next challenge is the hallmark of many great athletes. And there's a certain attitude that goes with agile athletes. They thrive on change because that's where they excel. "Agile leaders aren't afraid of change - they embrace it rather than try to manage it and they encourage those around them to do the same," states i4cp's CEO Kevin Oakes. "It really is about being fearless, and some leaders are better at this than others."

i4cp's research indicates that the agile athlete is an apt metaphor for what it takes to execute strategy that results in success. In partnership with Prof. Bill Joiner, co-author of the book Leadership Agility, i4cp conducted the Organizational and Leadership Agility survey in February 2010, finding that the agility of leaders seems to be strongly linked to organizational performance.

In his recent i4cp webinar, Joiner notes, "Accelerating change and growing inter-dependence are continually raising the bar for the level of agility needed for sustained competitive advantage." And yet, fewer than a third of respondents in the study ranked their company as being largely proactive in anticipating and initiating changes needed for sustained high performance. Nearly half of companies that have already achieved a level of high performance say the same, however.

Respondents from these high-performance organizations are about twice as likely as those from low-performance companies to report that their top executives set clear expectations for agile executive leadership behavior to a high or very high extent. The same pattern holds true for the statement, "Our top executives model agile leadership behavior" (36% vs. 18%).

The performance disparity is even greater when looking at leadership selection. Study participants from high-performing organizations were nearly three times as likely to say their selection and/or promotion criteria include leadership agility to a high or very high extent. Similarly, those from high performing organizations were over three times as likely to report that their reward systems include leadership agility measures.

In short, high-performance organizations are considerably more likely to model, clarify, select for and reward agile leadership behaviors among executives. Yet, a scant 40% of respondents said their organizations are adept at recognizing and responding to strategic challenges in a timely manner, and just 32% said they are proactive in anticipating and initiating the changes needed for sustained high performance beyond their immediate strategic challenges.

Another driving factor behind the need for leadership agility and ability is the increasingly interconnected nature of the business world. We asked participants about the extent to which their corporate success depends on the collective ability of their executives to work effectively with customers, suppliers, business partners and other stakeholder groups. Four out of five respondents said it was important to a high or very high extent.

To work effectively in a dynamic and interconnected business environment, organizations are trying to develop the equivalent of executive athletes, people who are - organizationally speaking - nimble, strong, quick and smart. These people should be able to cope in a complex work environment filled with many different players, and they should be able to recognize and respond to strategic challenges, largely because of their ability to see patterns and anticipate changes and equip others to do the same.

"Leadership in this new era of rapid change is about empowering others to decide for their selves and empowering others to reach their full potential. Leaders can no longer view strategy and execution as abstract concepts, but must realize that both elements are ultimately about people (transformational leadership)," says Col. Dann Pettit, Director of Operations at the Oklahoma Air National Guard.

Being agile is also about getting the best out of team members, knowing when to "pass the ball," set the tone and provide good direction. In fact, our study shows that participants from high-performing organizations are over three times more likely to say that they "create highly participative, accountable teams where candid dialog and creative problem solving is the norm."

i4cp's 4-Part Recommendation:

Ensure that your executives set clear expectations for agile leadership behavior. Such behaviors should be clearly communicated and woven into the leadership development process. Organizations should also require executives to model such leadership behaviors, and this should be part of the performance assessment process.
Select and promote based on leadership agility criteria. That is, promotion and succession planning decisions should be based, at least in part, on candidates' display of leadership agility behaviors.
Ensure that your executives do not send mixed messages about the desirability of candid conversation and feedback. Our study finds that such "mixed messages" are the single most widely cited barrier to a leadership agility culture.
Use benchmarking and networking practices to discover what other high-performance organizations are doing to lead change in today's complex environment. For those practices that mesh with your organization's business plan, inquire about executive development programs. Ask questions such as:
- What are your most effective tactics for developing agile leaders?
- How do you implement those tactics?
- How do you encourage and reward agile behaviors?
- What are the most important lessons you've learned in term of acquiring and developing agile leaders?

Serious About Sustainability in 2010

Fri, 26 Feb 2010 12:03:00 GMT

A funny thing happened on the way to 2010. Amid blistering debates over health care, arguments over how to deal with double digit unemployment, and a general sense of conflict and gridlock on many other socioeconomic issues, one area of virtual consensus has emerged in the business world: the rise of "green" initiatives.

That's one finding from i4cp's 2010 Major Issues Study conducted in December 2009. Over three quarters (78%) of 515 responding business professionals projected there would be more "green" business initiatives in companies this year. Among many future-looking statements about what would happen in 2010, this one showed the greatest amount of agreement.

Okay, so this probably isn't a surprise to anyone who watches even a modicum of television these days. Commercial after commercial plays up the environmentally friendly missions and programs at many of today's major corporations. No company wants to be tarred with the ugly brush of environmental irresponsibility.

But just how serious are companies about this? Is it mostly public relations or is there something truly significant going on?

Every organization is different, of course, and there's definitely a PR angle to "going green," but the data suggests that many business professionals view this issue as vital to business success. Our forecast study shows, for example, that 70% of respondents said that sustainability (that is, social and environmental responsibility) would be of high or very high importance to their organizations in 2010.

Karen B. Paul, Ph.D., who is the Head of HR Measurement at 3M, an i4cp member company, notes that 3M has a long history of what are today called sustainability practices. She notes that Dr. Joseph Ling, 3M's former Staff Vice President, Environmental Engineering and Pollution Control, was a pioneer in the field of environmental and air quality management and is today recognized as the father of pollution prevention.

Dr. Paul states, "At 3M, sustainability is now embedded in the culture." She believes that there are strong interconnections among sustainability, employee engagement and innovation. "Sustainability is a wonderful lever to really challenge and engage employees in the areas of innovation." In one example, 3M offers its Pollution Prevention Pays (3P) award to employees on an annual basis. The 3P program has been around for 35 years and has prevented more than 2.9 billion pounds of pollutants and saved nearly $1.2 billion since the first year of the program. It's become a key element in moving toward sustainability for 3M. Dr. Paul states, "People all over the world at 3M compete for the award."

In addition to providing this award, 3M communicates about sustainability on a regular basis, includes sustainability-related questions in its climate survey (such as, "3M makes business choices that support the environment such as waste reduction & disposal, energy conservation and vendor selection") and reports out many metrics related to sustainability.

Still, just because 70% of respondents said that sustainability would be important this year doesn't mean that most companies are especially good at implementing sustainability practices. Another large study, which i4cp did in partnership with the Institute for Sustainable Enterprise at Fairleigh Dickinson University (FDU), specifically looked at trends related to sustainability and puts the details into better perspective.

That study confirms that sustainability is an important issue but one that most employers are still just learning to manage well. Taken as a whole, only a little over a quarter of respondents said their organizations are implementing a sustainability strategy to a great or very great extent.

More specific questions reveal the same pattern. For instance, these business professionals were asked about the extent to which they agreed that their organizations have made sustainability central to their business strategies. It turns out that nearly two-thirds of participants either somewhat or strongly agreed with this. That sounds like sustainability has become very influential, but if we break it down, only 24% strongly agreed with this statement.

What's more, a mere 15% strongly agreed with the statement their companies have an "effective means to coordinate and integrate various functions working in the areas of environmental and/or social responsibility."

Of course, things could be worse in this area and, by some measures, they indeed were just a few years ago. When i4cp conducted a similar study in partnership with the American Management Association back in 2007, the average score for the "centrality to business strategy" question was considerably lower. What makes that finding especially interesting is that the score rose despite the fact that the original i4cp/AMA survey included more responses from European organizations, which tend to score higher on sustainability issues.

The good news for sustainability advocates is that 41% of respondents from higher market performing companies say they believe (to a great or very great extent) that their companies implement a sustainability strategy, but the same can be said for only 18% of lower market performing companies.

In regard to sustainability tactics, some areas need more work than others. While most business professionals said their organizations are good at ensuring the health and safety of their employees, relatively few said their employers do well in terms of improving energy efficiency and reducing waste or using cross-functional teams and/or other groups to coordinate sustainability activities.

The study also inquired about the role of HR professionals in sustainability efforts. It turns out that many HR pros understand the potential impact of environmental and social responsibility on their corporate brand and their ability to attract, retain and engage talent. But they aren't very likely to be strong advocates for making sustainability issues central to their organizations' business strategy or for helping non-HR leaders see the connection between sustainability and talent management.

That's a shame, according to Jeana Wirtenberg, Senior Advisor at the Institute for Sustainable Enterprise and co-author (with FDU Professors Joel Harmon and Kent Fairfield) of an article on this sustainability data in an upcoming Special Issue of People & Strategy Journal on "Transitioning to the Green Economy." She notes, "Sustainability represents a huge opportunity for HR to play a more strategic role in their organizations, something HR has been aiming at for years. In many ways, it falls right into HR's sweet spot. Under the right circumstances, HR professionals can help infuse sustainability into talent management systems in their organizations, but they have to build up their own competencies in this area."

i4cp's 4-Part Recommendation:

Create a steering committee or cross-functional team to evaluate current sustainability trends and determine what, if any, sustainability programs need to be implemented in your organization. This group should track best practices, as things are quickly evolving in this area as new initiatives are developed, implemented and then evaluated.
Conduct sustainability scenario planning. There are many unknowns on the horizon. Among the uncertain factors that will influence sustainability in the future are regulations, pollution levels, climate change research, availability and costs of natural resources, health trends, new technologies, and others. Through scenario planning, organizations can consider the potential ramifications of these factors and how they might influence their businesses in the future.
Encourage the leadership team to study sustainability from a strategic orientation, asking whether it makes sense to take actions such as tying sustainability into core business strategies, aligning performance standards with it, and integrating various functions around the concept.
If sustainability is a priority, ensure that managers and HR professionals have the necessary competencies in this area. They can potentially take advantage of such skills by adopting a variety of actions, such as:
- designing and delivering training programs to support sustainability;
- articulating which leadership knowledge and behaviors align with sustainability;
- facilitating organizational change management programs that take sustainability into consideration;
- formulating and implementing measures and rewards to support sustainability;
- designing sustainability criteria for recruitment and promotion.

Are You Wasting Time and Money on the Wrong Retention Strategies?

Fri, 29 Jan 2010 10:28:00 GMT

Here's a late-breaking bulletin: employees leave their jobs because they're dissatisfied with their compensation. Are you shocked? We weren't either. But when results of i4cp's latest survey on Retention Strategy and Execution confirmed the top reason workers bail, we decided to take a closer look. Mean responses from all participants found non-work-related events/issues (spouse relocation, health, etc.) in second place, with poor work/life balance ranking third among departure drivers across all company sizes and industries.

Because i4cp's mission is to empower organizations to become high performers, we dissect our research results with great care, digging deep to find the strategies and behaviors that separate top firms from the also-rans. And we do this across the five domains that influence organizational performance: strategy, leadership, talent, culture and market. This recent survey points out that key retention questions for leaders within the talent domain are these: Do people leave high-performing and lower-performing organizations for different reasons? Do companies wait until it's too late to ask why workers abandon ship? Are companies' retention strategies accurately targeting the turnover drivers at work in their particular situations?

When it comes to the number-one turnover motivator in high-performing firms, our results revealed that unhappiness with compensation also was the primary culprit. However, respondents indicated that workers depart lower-performing companies because they have poor relationships with their managers: Two very different situations requiring diverse interventions.

If you regularly use i4cp research, you know that we look to our members and other top firms for real-world strategies that enable leaders to act on the issues that challenge their organizations. In the case of retention, we learned that both high market performers and their lower-performing counterparts list learning opportunities as their top strategy for retaining talent. Base salary increases and training in retention skills for managers - strategies that seem more likely to address the turnover drivers we identified - ranked much lower in respondents' arsenals. Does that mean that companies are investing in the activities that are most likely to help them effectively improve retention? Maybe not. The struggling economy has helped keep turnover levels down ... for now. But business leaders can't afford to let retention slip off the radar. Or to invest tight budget dollars unwisely.

Perhaps the best advice on retention strategies comes from the employee resources director of a leading high-tech firm that participated in the i4cp study. He points out that it doesn't cost a lot to "maintain vigilance and awareness," adding that "time and attention should be a day-in and day-out management responsibility." Yet the majority of respondents confirmed that exit interviews are their tool of choice for identifying issues that drive turnover. This is a decidedly late and re-active approach. Moreover, fewer than 20% say they act on the information they discover about the causes of turnover.

Clearly, identifying not only the factors that cause employees to grow dissatisfied and leave but also the elements of a workplace that engage and retain talent provides the kind of accurate information companies need to pro-actively address the real issues that shape their workplaces. Internal surveys provide an ideal means of assessing such issues. Indeed, pinpointing such critical insights, a large utility firm told us, will enable their organization to "come up with an action plan to increase/improve retention and help in our goal of being a great place to work."

i4cp's 4-Part Recommendation:

Build a better understanding of retention, engagement and other crucial, rapidly changing talent issues affecting today's organizations. i4cp members will find a wide range of strategic resources and relevant survey results by accessing the Talent Domain section of the website.
Leverage the power of opinion-sampling tools to gain a true picture of the elements that influence your workforce. i4cp, for example, partners with companies to conduct customized climate surveys designed to reveal the factors affecting employees' work experiences before valuable talent is ready to walk out the door.
Ensure that the strategies your organization chooses to support retention are in alignment with the realities of your workplace. If employees tell you that they're leaving because their compensation isn't satisfactory, it may not be realistic to expect that offering more training opportunities for workers will solve the problem.
When employees provide insights into the reasons they leave, use that information. Taking the time to find out what issues exist and then failing to take action to remedy problems is counterproductive. It wastes the time and money spent to survey or interview employees. Worse, it tells workers you don't care. Soon, they'll simply stop providing feedback altogether. Seize your opportunities to be proactive.

Ten Critical Performance Issues for 2010

Fri, 22 Jan 2010 11:52:00 GMT

Are we really three weeks into the new year already? Time flies when you've got too many things to do and not enough time to do them. That's why both organizations and individuals need to prioritize. Not only can setting priorities make organizations less frenzied, they can make them more effective - assuming, of course, they're focusing on the issues that really improve performance.

Last week, our CEO Kevin Oakes wrote about the five domains of high performance. This week, we're going to break things down to highlight some of the most critical subcomponents of each domain, based on i4cp's new study of the major issues of 2010.

We asked study participants to look ahead and identify the issues that would be most important to their organizations in the coming year. We also asked them to rate their organizations' effectiveness in addressing those issues. Why? Because being highly important doesn't mean something is critical. It's critical only if two things are true: it's important AND the organization is not effective enough in managing it.

Think about it this way. It's a hot day and you're stranded on a boat where there's plenty of drinkable water but no shade. Both water and shade are important, of course, but which is most critical? In that moment, it's the shade. You've already got water. What you need to figure out is a way to protect yourself from the blazing sun. That's your priority.

The same is true in management, and our study helped us pick out the most critical organizational performance issues in each of the five high-performance domains: leadership, talent, strategy, market focus and culture.

Jay Jamrog, i4cp's Senior VP of Research, has been conducting interviews on the findings of this study with our member companies. He notes that, in these conversations, there's a difference from previous years when we've run iterations of this survey. "There's a heightened sense of focus," he says. "I think the recession had a major impact. The people I'm speaking with are taking these issues much more seriously. They know that executing on their most critical issues will give them a competitive advantage that they really need to succeed, but failing on these issues could be a fatal misstep."

Develop better, more agile leadership

Let's start with leadership. It turns out that the two most important issues in this area are managing change and leadership development. But are they the most critical? As it happens, the answer is yes. Whereas about three quarters of respondents rates these two issues as important to a high or very high extent, only about a quarter said their organizations were effective in these areas to that same extent.

So, these are critically important issues for which few companies have excellent management responses. We'll save the whys and the wherefores for a future TrendWatcher. For now, however, let's just say that in 2010, companies will have their hands full trying to develop exceptional leaders who can help their firms deal with change. Such folks are in scarce supply. If you'd like to answer some questions - and get an early preview of responses, as we reward survey takers with preliminary results - that examine both of these issues, please check out our new survey on Organizational and Leadership Agility from Bill Joiner, Ed.D., coauthor of the book Leadership Agility.

Improve talent management and increase performance

Talent management is both an important AND a critical issue for 2010. This has been corroborated by two other major i4cp studies in the last three years. Relatively few organizations think they manage talent well, and we have plenty of data to show why. For one thing, most talent management systems are not very well integrated. The parts of the system often don't fit together well, like machines cobbled together from spare parts. For another thing, one of the vital components of talent management - performance management - is itself a critical issue. Fully 76% of our study's respondents said performance management is very important this year, but a meager 30% said their companies are very effective at actually doing it.

Bottom line: This year, organizations have their work cut out for them when it comes to making sure their talented folks are working up to their performance potential.

Focus on strategy execution

It isn't enough to formulate great plans. You've got to execute on them, and that requires getting everyone on the same page. Sounds easy, but most managers know it's tough to do well. Four out of five respondents said strategy execution and alignment are important, but less than a third said their firms are very effective at it. That's disturbing, and companies need to get a lot better in 2010 if they want to prosper.

Another critical concern is that less than a quarter of respondents think their firms are good at knowledge retention. If the economy truly recovers in 2010, they'd better buckle their seatbelts because lots of employees that have been constrained by a lousy job market in recent years will be keeping an eye out for new opportunities. Employers don't necessarily have to retain all of their talent, but they at least need to retain a good chunk of their expertise via cross-training, knowledge-management systems, etc. Otherwise, a lot of that intangible capital could, quite tangibly, walk out the door.

Emphasize innovation

Next, let's look at market issues. As we expected, based on our long history of research in these areas, the most important issue in this domain was customer focus. This is a perennial favorite and one of the top four most important issues for the last 20 years. What's interesting, however, is that it's not among the top two most critical issues in this domain today. That's because, although highly important, many companies actually think they're already pretty effective in this area.

Where they're not so effective, however, is in the area of creativity and innovation. Although 72% of study participants said the issue is important to a high or very high extent, just a third said their organizations were very effective in this area. We also found that innovation is the number one most critical issue among all domains for large, high-performing companies. Therefore, even some of the paragon companies in the world view innovation as their single most critical issue, and even companies that are viewed as innovative continue to focus resources in this area in order to maintain their edge.

There are two other critical issues in this domain that our index shows are in a statistical dead heat: emerging markets and sustainability. Not every company thinks emerging markets are important, but there's a clear lack of effectiveness in this up-and-coming global issue. 2010 will be a time to think hard about how to go global. Meanwhile, a surprisingly high percentage of organizations consider sustainability to be highly important, but, as with emerging markets, they don't feel they've got a good grip on the issue yet.

Get some culture in 2010

We're only going to mention one issue in the culture domain because it's so all-encompassing: that is, managing corporate culture. Just 27% of participants said their companies are effective at managing culture to a high or very high extent. But, as a recent report that i4cp partnered on with the American Management Association shows, there are, in fact, various levers organizations can pull to create higher-performance corporate cultures.

i4cp's 4-Part Recommendation:

Combine your efforts in the areas of leadership development and managing change if these are both critical issues in your company. That is, gauge how agile your leaders are and then take steps to improve change-management skills where warranted.
Assess where the barriers to innovation are in your company to make it more innovation-friendly in 2010. For more on this subject, see The Quest for Innovation: A Global Study of Innovation Management.
Work at integrating and aligning the various components of talent management in 2010, with a special focus on performance management. For example, employees are often cynical about performance management, and i4cp research has found that one of the nine keys to success in this area is to ensure that appraisal information has some objective components and isn't strictly limited to the judgment of supervisors.
Create a culture that makes it easier to implement new strategies. That is, the culture needs to be change-friendly, performance-driven and not entangled by conflicting subcultures that compete against one another and slow down strategy execution.

The Five Domains of High Performance

Fri, 15 Jan 2010 12:13:00 GMT

Pick a leader - any successful leader. Then search Amazon and see how many books and other publications come up on that person. Abraham Lincoln? 83,642. Gandhi? 61,923. Even Barack Obama, who was widely introduced to the world just five years ago, has 8,670. People love studying successful people.

In the same way that many people have an insatiable appetite to study successful leaders, we in the business world tend to be fascinated with high-performance organizations. What are they like? What do they do differently? Is there a secret recipe that allows them to outperform their competition?

Of course, many books have been dedicated to this subject. From Tom Peters's and Bob Waterman's early 80's best seller In Search of Excellence to Jim Collins' Built to Last and Good to Great, there has been a succession of books that leaders and managers across the globe have devoured. Programs such as GE's Six Sigma have trained countless people in how to achieve top performance and consultants have built entire practices around elements of high-performing companies.

While business professionals want to learn more about high-performance organizations in the hopes that they can apply some of the secret sauce to their own organization, many of the companies profiled within the pages of the aforementioned books were unable to sustain high performance. In fact, the number is about half. While much has been written on the subject, the truth is that the ingredients to high performance remain something of a mystery.

Part of the reason is the definition - what exactly do we mean by high performance? Is there a difference between simply surviving (which was the fate of some of the companies profiled in Built to Last, for example) and performing well over a long period? Do we mean companies which outperform others in their own industry or across industries? Over how long a time period does an organization need to perform exceptionally well in order to be considered a "high performer"? And which measures, financial or otherwise, are the best ones to use?

Over the last three decades, i4cp researchers have looked at various ways to define high performance and the traits that separate the consistently top organizations from the rest. Through that time, we have come to recognize high-performing organizations as ones that consistently outperform most of their competitors in four primary areas:

Revenue growth
Market share
Profitability
Customer satisfaction

And, over the years, our research team has examined well over 100 different core human capital areas and tried to determine the differences between high-performing and low-performing organizations. The research has clearly shown that no single ingredient guarantees organizational success. Rather, high performance is like a delicate entrée - based on a staple of core ingredients any one of which, if left out or of inferior quality, will ruin the entire item.

The Five Domains of High Performance

Our research has shown that there are five basic ingredients which separate higher performers from their lower-performing counterparts:

Their strategies are more consistent, clearly communicated and well thought out. They are more likely than other companies to say that their philosophies are consistent with their strategies and their performance measurements mirror their strategies.
Leadership is clear, fair and talent-oriented. Those leaders are more likely to promote the best people for the job, to make sure performance expectations are well known and consistent with the strategy, and to be committed to developing their people.
There is a commitment to the right talent within the organization, and while employees are treated as unique individuals, the organization takes a holistic approach to managing and making decisions based on data-driven information. This begins with a strategic approach to workforce planning. It entails looking at the organization from an outside-in perspective that identifies the business model components and areas that drive value and then determines what the organization needs.
The culture is strong in all the right ways, and employees are more likely to think the organization is a good place to work. Employees not only adapt well to change, they embrace it. High performers also emphasize a readiness to meet new challenges and are committed to innovation.
They are more likely to have a strong market focus and go above and beyond for their customers. They are organized internally around what's best for the customer, they think hard about customers' future and long-term needs, and their strategy is based on customer data. And they are more likely to see customer information as the most important factor for developing new products and services.

While these five domains - Strategy, Leadership, Talent, Culture and Market - may seem a bit broad or even obvious, the separation our research has shown between high and low performers in these domains is startling. For example, in a just-released study on high performance by i4cp, the following graph depicts this separation:

These findings, along with previous studies, have convinced us to target our research on discovering the best ways for companies to boost their performance in these five domains and the numerous sub-domains within. We're convinced that companies that focus on excelling in these areas are cooking up a surefire recipe for long-term success.

i4cp's 4-Part Recommendation:

Take stock to determine where your organization stands in these five areas, and be honest - even the best performing companies aren't always superb in each area. To get an objective view, survey the workforce on these domains as well as use other assessment tools.
Once you've determined your areas of strength and weakness, make sure senior management is involved in improving on the weak areas while not taking the eye off of the strengths; in tough economies it can be easy to stop focusing on core areas that the company has excelled in. Don't forget to investigate the practices of other organizations that are excelling in your areas of weakness; it's amazing how some very simple and inexpensive ideas can make a huge difference in closing the gap.
Although companies should focus on the specific tactics for boosting their performance in each of these five areas, it's important to align the five areas as a whole. Each domain feeds off the others, and ignoring one is like leaving a key ingredient out of a culinary masterpiece.
Although these efforts should continue indefinitely to sustain performance over time, organizations should also do regular reevaluations of their progress so they can make course corrections as needed.

View a recording of Thursday's webinar, The Five Domains of High-Performance Organizations.