evidence based approach to hr

Last week I had the pleasure of presenting a workshop based on metrics, evidence-based HR, and change management. The session was a lot of fun, because we were able to tie the three topics together in a variety of ways to help reiterate not only why each of them matters, but how each of them can really build value when used in conjunction with one another. HR is often using anecdotal information (if any at all), conjecture, and pure hope to make decisions, but we can do better. Today I want to go a little deeper than my post last week on “keeping up with the Joneses,” focusing more heavily on the evidence-based HR piece.

If you’re not familiar with evidence-based HR, here’s a primer:

Evidence-based human resources is the practice of identifying solutions and approaches that have a strong empirical basis.

In other words, we don’t just use gut instinct, an interesting anecdote, or anyone’s opinion to make our point. We use data and other solid evidence to support our decisions at every possible turn. But where does that evidence come from?

Sources for Evidence-Based Decisions

Here is a list of sources I offered the audience as credible options for finding research materials:

  • Management journals (scholar.google.com)
  • HBR
  • SHRM Foundation
  • Deloitte/Bersin
  • i4cp
  • CEB
  • ATD
  • CIPD

If you just do a quick Google search for one of these organizations and the topic you need to research, you’ll more often than not find something to help make your case. I actually had participants do this during the session, focusing on areas like recognition’s impact on productivity (definite linkage), using talent pools for faster hiring (no data we could find), and other relevant HR activities.

Be careful not to just grab a story of a company that is doing neat things and grabbing headlines, because that’s not enough to warrant good evidence. You want to find information from a study or some other data-backed approach that helps to lend credibility to your eventual decision. If it’s just a neat anecdote, then you’re really not improving the process any more than just making a decision based on gut instinct.

Making an Evidence-Based HR Decision

There are six key steps to making an evidence-based decision in the workplace.

  1. Asking: translating a practical issue or problem into an answerable question
  2. Acquiring: systematically searching for and retrieving the evidence
  3. Appraising: critically judging the trustworthiness and relevance of the evidence
  4. Aggregating: weighing and pulling together the evidence
  5. Applying: incorporating the evidence into the decision-making process
  6. Assessing: evaluating the outcome of the decision taken

Using this approach can help you to not only leverage evidence, but think critically about how valuable the evidence might be relative to other sources of data and information about your problem. Instead of going with the normal approach of “Bob said this worked at his last company,” we can use more credible sources of information to frame and resolve the issue.

Examples of Evidence-Based HR

Seeing this practice in action is the most powerful way to really “get” the value it can offer. I originally was turned off by the idea of having to research everything HR does on a daily basis, but in reality we make relatively few key decisions like those an evidence-based approach to HR would help with. For instance, New York spent more than $75 million on teachers to help increase student performance and teacher satisfaction. The result? No improvement. There is already data available that could have shown that this kind of approach has not yet been proven to deliver strong results (this examination of multiple studies still came away inconclusive, or “cautiously optimistic,” calling for additional research). Despite the lack of evidence, someone went ahead with the program anyway.

Here are a few examples of how it works in practice.

  • Selection Techniques-Your hiring managers are often used to creating high pressure interview situations to “see how candidates will respond.” They also like using tools like application data and GPA to filter out candidates. You find research that demonstrates the validity of their methods is in some cases no better than performing a coin flip to make a hiring decision, helping to sway them into using more structured methods and assessments for hiring decisions.
  • Employee Recognition-One of your managers is resistant to using recognition because “everyone can’t get a trophy” and she doesn’t want to “coddle” her workers. You find some existing research that points to the value of recognition not just in increasing worker satisfaction, but in increasing productivity as well, helping the manager to see the benefit to her and the team by improving her recognition skills and practices.
  • Performance Management-One of the trends in the US is “disposing” of the traditional approach and taking a different avenue for rating and assessing performance. You want to make this move with your company because you feel like your existing process is not adding organizational value. There isn’t much data, if any, available to support the different approach, but there is some data showing that collaborative environments support better teamwork and cultures than those focused on forced ranking and distribution of employees.

Leveraging research can drive immense value across the board, even for organizations outside the private sector. For instance, the Warner Robins Air Logistics Center, which repairs military aircraft for the US Air Force, used new research methods to speed repair processes for C-5 aircraft, allowing reductions in working capital of approximately $50 million (source: Deloitte).

While many of us aren’t working hands-on with aircraft, we still have the company’s largest budget item, its people, under our purview. Isn’t it time we started treating them like the valuable assets they are, managing them to the best of our abilities with the most relevant research and information available?

In every company, there comes a time when someone makes an offer to a candidate to come and work for them. What is interesting is the wide variety of advice in the marketplace that advises candidates on how to handle that critical negotiation.

Years ago I got my start in blogging by sharing career advice with job seekers looking for an edge in the hiring process. My peers constantly told people that for the strongest negotiating position, they should hold out as long as possible. In other words, it followed the old adage “the first one to speak in the negotiation loses.”

But that’s not necessarily true.

salary negotiationWhen I was recruiting, I wanted to find out from the candidate early on, whether through a job application question or through an informal conversation, what sort of salary range they were looking for. If it wasn’t offered, I would share the range of the opening early in the process. Was I showing my cards? Yes. But I was also attempting to conserve a valuable resource: time. Continue reading

One of the benefits that has received growing attention in the last year is unlimited vacation time. It is positioned as the “ultimate” in paid time away from work, and many of the people who have read the news articles about the plans have wondered what it would be like to implement such a plan. I’m here to tell you: avoid the hype. It’s not all it has been touted to be, and like with all decisions, there are unintended consequences to consider.

The Prevalence of Unlimited PTO Plans

The 2015 SHRM Benefits Study, an annual report examining the nitty gritty details of benefit plans, pointed out that between >1% and 2% of employers are offering unlimited paid leave plans. So while we get bombarded by the media talking about these revolutionary companies, in reality less than two out of a hundred organizations are even in the discussion.

What that means for me as a researcher is that there is too small of a sample size to accurately judge the efficacy of these kinds of plans. Who knows if they really work to help employees manage their lives better? We simply need more data on adoption to make that call.

What Companies Know About Offering Unlimited Vacation Time

Often the first thought, especially for HR folks, is something like, “I know who would take advantage of that. Their PTO balance is already in the red…” But the companies putting these systems in place aren’t worried about that. Often times they have generous leave policies already.

But people aren’t taking advantage of the existing benefits.

I wrote last year about a nonprofit organization that was created to help people take more vacation time, because they aren’t even using everything that is available.

In case you weren’t aware, March 31st 2015 is being cast as Vacation Commitment Day, brought to you by the Take Back Your Time nonprofit. The organization is devoted to helping workers across America focus on taking more of the vacation that they have available, because we are notorious for accruing, but not using, our leave.

This sounds like a great idea, but the timing is interesting.

This is an intriguing coincidence because just last week I was reading a new study from Accountemps about the top benefits employees are asking for in 2015. Want to know what topped the list?

More vacation time.

So what gives? We want more vacation time, but we also don’t use all of the time that we accrue.

As if that wasn’t enough, the federal government is now attempting to introduce legislation that will force small companies to offer paid leave to employees.

The Big Picture

With all of these pieces in play, it’s an interesting time to be working in the benefits side of the human resources profession. I would use this reminder as an opportunity to review your company’s offerings in terms of paid leave. More importantly, look into the usage of the benefits.

The first thing we do when benchmarking benefit offerings is to consider what we’re doing relative to the market. However, smart HR leaders also look at the benefits adoption and usage to determine how employees are utilizing the offerings. For instance, if you offer a health reimbursement arrangement but only two employees sign up, it probably wasn’t worth the effort to establish and market the program.

That also applies to vacation time. The reality is while many workers accrue paid time off, there may be circumstances that prevent them from using the leave. For instance, they may have work projects that necessitate their presence or there might even be a cultural norm of foregoing vacation days to demonstrate “dedication” in some organizations.

Analyze the accruals against the usage of the benefit. If you have a substantial amount of accrued time, consider what implications that has for your organization and why your people might be saving that time. Also keep in mind that this could be seasonal: employees may save up time for summer trips or winter breaks. It’s important to dig into the “why” behind the numbers, because it could signify underlying issues or opportunities.

Source: Do we really need more vacation time?

http://www.brandonhall.com/blogs/do-people-really-need-more-vacation-time/

The Other Problem with “Unlimited” Leave

There’s a famous study on choice that helps to illustrate this point. People were given options from a large set of choices, and few made purchases (analysis paralysis). Other people were given options from a small set of choices, and more of them made purchases because it was easier to evaluate the few choices against one another.

It all began with jam. In 2000, psychologists Sheena Iyengar and Mark Lepper published a remarkable study. On one day, shoppers at an upscale food market saw a display table with 24 varieties of gourmet jam. Those who sampled the spreads received a coupon for $1 off any jam. On another day, shoppers saw a similar table, except that only six varieties of the jam were on display. The large display attracted more interest than the small one. But when the time came to purchase, people who saw the large display were one-tenth as likely to buy as people who saw the small display. (Source)

What this means for leave is that without some sort of reference, people will often use less of a good. Here’s an example: if I handed you a plate of cookies and told you to take what you wanted, you might take one, two, or three (hey, I’m hungry and like cookies). But if I handed it to you and said, “Take a cookie,” then you would probably get just one. Hopefully you’re starting to see what this means for paid leave.

The Typical Work Environment of Unlimited PTO Adopters

There’s one other thing that people often forget as well about these high-profile companies. If you’re working somewhere like Netflix or LinkedIn, two of the organizations offering this paid leave benefit, you are working many hours. Many, many hours. And the work itself doesn’t lend itself to a three-month vacation at the employee’s whim.

Which is why offering unlimited paid time is a great idea for the employer, and not the other way around..

What competitive, driven, career-minded employee is going to take advantage of this? Do you mean to tell me that the guy who just became a father is going to tell the rest of the team working on that big project that he’s going to take the next 11 months off to “stay at home and spend time with my baby.” Really? Sure, he now has that option. But who’s going to pull that trigger? And who’s going to risk suddenly disappearing from the office for months on end, travelling to Australia or kicking back with a cold one on the beach while the rest of his co-workers are working away on deadline? And what happens a year later when evaluation time comes? Who gets that promotion, that salary increase, that corner office–the guy who’s been working day and night on that product launch or the other guy who’s been taking full advantage of the company’s “paid time off” policy and working on his golf swing. (Source)

So, I encourage you to avoid the hype. Unlimited paid time off is a publicity stunt for these larger organizations, and they have cultures that can force/coerce people to work even though the carrot of unlimited PTO is hanging right out there in front of them. What you should do instead is make sure your work environment is supportive of people that take any vacation that you do offer. Too often I’ve heard snide remarks and rude comments about an employee using vacation time, a benefit the company freely makes available to all employees! That is the battle we should be fighting, not one to request this latest fad in employee leave benefits.

 

Recently I asked for some help in preparing for a local session on HR compensation challenges. I had some good responses and wanted to share some of the insights and advice with everyone. I’ll be sharing two blogs on the topic: determining what to offer employees and how to get managers on board. 

The second most cited HR compensation challenge faced is how to keep managers in line and/or get managers on board with decisions. In the video below I discuss some of the ways to accomplish that. A few ideas:

  • Do you have a written compensation policy or process? When I started putting things in writing with clear instructions it helped to reduce issues.
  • Also, it helps to explain the structure/process because not all managers understand how compensation “works.”
  • Give them a sense of the budget, what decisions are made, how a single change affects others, and what your responsibilities are to ensure accurate information across the company.
  • Above all else, be a partner, not just a gatekeeper. Explain how the guidelines aren’t there to give them a hard time–they’re there to protect them, the budget, and the company.

Continue reading

Recently I asked for some help in preparing for a local session on employee compensation challenges. I had some good responses and wanted to share some of the insights and advice with everyone. I’ll be sharing two blogs on the topic: determining what to offer employees and how to get managers on board

The number one response that HR professionals said was most difficult was figuring out what to offer. In the video I talk about some of the key ways to determine that information, including using local salary surveys for the cheapest and most accurate information. I would encourage companies to avoid using free, unverified tools like salary.com for building compensation structures. In addition, I discuss the importance of having an overarching compensation strategy to drive decisions from a high level. Check it out!

Employee compensation challenges video

(email subscribers click through to view) Continue reading

monetary rewardsLast week I was talking with some folks about using compensation to drive employee behavior, and it occurred to me that I have never shared anything about that topic here. While I might not be the world’s foremost expert on the topic, I do have a few basic principles that I have relied on over time. The thing that I would like to note is that these apply to organizations of virtually any size. Even small companies (I’m looking at you, Mr/Ms HR Manager of a company with less than 250 employees) can incorporate these elements into their compensation planning without too much stress.

The other caveat I want to mention up front: money is not always a motivator for everyone. We want to instantly think that we can drive performance or discourage behaviors through monetary incentives. While that may be the case at times, it’s also worth noting that we humans are unpredictable creatures. That’s why motivation discussions are based on theory, not law. We have laws of physics. We have theories of motivation. Keep that in mind. If you implement something we talk about today and it doesn’t work, feel free to change it. It’s about finding what works for your organization and your people.

Everyone Needs a Variable Element

When it comes to compensation we have two basic elements: base pay and variable pay. Base pay is what someone earns as a condition of their employment. The fun comes when we start talking about variable pay, its elements, and how to use those pieces to really drive the behaviors we’re looking for in the workplace.

The most common area we see this in is for sales professionals. Base+Commission is the longstanding model, and it’s fairly easy to understand. What’s more difficult is figuring out how that sort of structure applies to other professionals, such as engineers, accountants, clerical staff, or even HR. How can you implement that?

A Few Types of Variable Pay

So, what types of variable pay might you commonly see? Here are a few:

  • Bonuses
  • Profit sharing
  • Deferred compensation
  • Group incentives

Each of these types can be combined and/or configured in a wide variety of ways to target specific jobs, types of workers, and even company culture. Test, measure, and revise as necessary.

How to Afford It

One of the first hurdles I always face when it comes to getting management on board with a compensation change is pretty obvious:

Can we afford it?

The good thing about incentive compensation that is tied to performance metrics like sales or profitability is yes, you can afford it. Here’s a good illustration for how that works.

Imagine that your friend has a lemonade stand valued at $5,000 that you want to purchase. You could go out and get a loan for $5,000 to buy it, but that increases your risk (what if you don’t have the cash flow to make the payments?) and jeopardizes the future operation of the business. The smarter, and less risky, way is to negotiate a purchase price that comes from periodic payments of net profits. If your net profit runs $1,000 per year, you’ll pay for the business over five years, but you are not at risk if there is a downturn in the market–it just takes longer for the final payoff. 

Variable compensation tied to business performance is the same thing. You are only on the hook for paying out when the business performance is good enough to cover the increased compensation costs.

This is identical to the fixed/variable cost discussion as it pertains to economics as well. Your fixed costs (base pay) will be there always. The variable costs/compensation will only be applicable if certain conditions are met. That, my friends, is how you afford it. You structure the incentives so that the growth in revenue/sales/profit/productivity/whatever-you-choose is enough to cover the cost of the incentive compensation.

This Hinges on Performance

If you haven’t already figured it out, this setup is going to require something that might not already be in place. We have to be able to properly measure performance for our staff in order to compensate them appropriately. If you’re not willing to measure performance and hold people accountable for it, then you might as well scrap this whole incentive compensation thing before you even start.

But if you are willing, then you need to try to find some objective metrics to tie into the jobs you’re trying to create incentives for. That’s a whole other discussion for another day, but in the initial planning and setup you’ll need to determine those performance objectives, because those are the basis for who earns variable compensation, how much they earn, when they earn it, etc. This is important, because you have to be offering incentives for the right thing.

It’s easy to focus on rewarding people for following the process instead of rewarding them for actually achieving the desired results. Be careful about that common trap.

Check out the free employee performance management guide for more on the whole performance topic, if you’re interested.

Shorten the Distance

There are two things that I have observed with incentive compensation that really help to drive results, and they have to do with control and reaction time.

If you can shorten the distance so employees have more control and a shorter reaction time, the rewards will be more meaningful.

Money Isn’t Everything

As I wrote about a while back, there are some great things that motivate people at work other than money. Sometimes it’s easier to assume money will work in all cases, but it’s often a more complex arrangement of details that ultimately drives people to do (or not do) things at work.

Do you currently use incentive based pay? How is it working for you? What types of positions do you use it for? 

I got a pitch the other day for some new research from the CMO Council. At first glance I started to trash it (I’m into marketing, but I’m willing to bet most of you aren’t!).

Then I took another look. I think the principles in the summary can shed some light on how HR pros can improve their position, make more money, and be seen as more competent overall. Got your attention? Read on!

CMO compensation is directly related to reporting structure. Those making more… are more likely to report directly to the CEO.

driving results

You have to be more innovative if you want more reward.

This one makes sense, but it’s a good reminder. Want to earn more? Work your way up until you’re reporting to the CEO. Or be good enough to become the CEO, but that’s another post for another day.

The highest paid CMOs have developed strong alliances with CIOs and CFOs.

Success in business is driven in part by the key relationships you develop. This applies to the HR function as well. Learn to connect with CFOs and other executives. Speak their language, earn some credibility, and put that network to use.

CMOs earning the highest levels of base compensation tend to be focused on driving business performance (e.g., top-line growth, market share, efficiencies, etc.).

Want to be successful long term in your role? Focus on driving business performance. The rest will take care of itself.

CMO base compensation is correlated with firm size. The larger the company, the more likely that the CMO will make more in base compensation and the more likely they will have bonus compensation.

Want to earn more money? Work for a larger company (and referring back to the first example, work for a larger company in the top tiers of management).

Digital marketing skills are important. CMO salary tends to increase as their firm’s digital marketing performance improves.

This is an easy one. The more value you can prove your function is bringing to the organization, the more you can command in terms of compensation. Have an HR mission statement that describes your aims and then make them happen.

Marketing titles (i.e., CMO, VP of Marketing, SVP of Marketing, etc.) don’t significantly correlate with base compensation.

Titles matter less than what you do. Your value is not in a title–it’s in your performance and the performance of your team.

Key accomplishments of the top earners… are centered on restructuring marketing to drive results, improving the yield/accountability of marketing, and building digital capabilities.

The top earners focus on results, not “the way things have always been done.” Improving capabilities, driving results in areas that are traditionally not seen as value add, and making tough choices are the activities that are rewarded. Keeping up the status quo not only isn’t rewarded–in many of these types of organizations I’d say it is probably weeded out.

So, what are your thoughts? Anything here that particularly rang true for you? Any action items that stepped on your toes to drive you to action? 

Source: http://www.cmocouncil.org/press-detail.php?id=4882