Cappelli’s insights provoke mirth among the HR practitioners, but he also has more serious suggestions about how they can increase their standing with their superiors.
“Here’s the big punchline: every function in business is in competition for the limited time and attention of the folks at the very top,” he says.
“HR should be putting up its hand to get involved, for instance, in mergers and acquisitions, offering to examine the culture of a potential partner to assess whether it is a good fit. If a company is outsourcing to a call centre, HR should be looking at the centre’s turnover to assess whether it retains staff and its culture is compatible.”
Welcome to the modern world of HR where annual performance reviews are passé, managers are “performance coaches” and companies are using sophisticated data and analytics to drive real-time employee engagement and lift productivity.
The death of traditional HR
The Chicago event in April is hosted by Oracle, the business technology giant that employs 143,000 people globally, including 2000 in Australia.
“The really bold view is the traditional performance management process is in its final days,” says Aaron Green, vice president of human capital management at Oracle’s Asia Pacific division.
“It’s dying, or in its last few breaths, is probably a fair statement. That’s not to say there are not certain industries and certain pockets where it will have a longer shelf life. But if you look at traditional performance management, it’s rigid, it doesn’t leave room for flexibility or agility.
“If you are doing performance management quarterly, or monthly, when you marry that with the data, or predictive data, you will be able to say, ‘It’s time to do pay rises or promotions any time of the year.’
“That will be a big shift for a lot of HR people. The shift is going to be for managers and turning managers into performance coaches.
For instance, managers can use mobile dashboard applications to provide immediate feedback after a meeting with an employee. If a manager has 10 managers working for him, and they each have 10 employees, the real-time feedback to one worker can be instantly shared with 100 colleagues. If a manager gives an instruction to one employee about a specific situation, and that is shared, the group is educated about how to handle the same set of circumstances, and not repeat any mistakes.
The approach carries risk and rewards. The objective is for managers and employees to work collaboratively, not use the technology to shame employees. Organisations will have to invest in training programs to assist managers to make the shift.
“Suddenly, you are coaching a team on a daily basis, you are coaching individuals to be at their absolute level best,” Green says. “You are recognising and remunerating people for work they are doing in real time, and you are addressing challenges you have in the business, not at the end of the cycle but months before they really become issues or problems.”
The role of analytics
Green says analytics will play a significant role in the workforce planning of organisations. “Think about how the retail stores operate,” he says. “They operate with more data than we probably ever deemed imaginable. If you think about Coles or Myer, it’s absolutely shocking. They know what items are most likely to sell to what segment or category of shoppers, in what stores, based on a massive amount of data. They know when people shop, what kind of people shop, at what time, what they are looking for seasonally. They can predict what stores will do well with what products.
“We have never applied that to HR. If we think about how to apply that to an organisation – what are all of those attributes that make a top-performing team, that make a high-performing or highly engaged workforce, and how do we start workforce planning based on that data?
“The reality is we have most of it. We know where people live, we know how much they earn, who they work with, how far they commute to the office. If they are in a customer-facing role, our system knows what their customers say about them. If they are in a sales role, we know what their revenues look like.
“What HR has never been able to do is make sense of that data. I would say that’s a big pivot point for a lot of HR practitioners.”
As well as identifying top performers, the data can be used to retain talent. Recently a large organisation came to Oracle complaining it was haemorrhaging employees – 1000 workers had left the organisation in just 12 months. On average, the cost of hiring a new employee is $15,000. The organisation’s management wanted an explanation for the high attrition rates. The data analysis showed 300 of the employees had quit after unsuccessfully applying for jobs within the organisation.
Yazad Dalal, senior director of human capital management strategy and transformation at Oracle, says the results show companies need to have a system in place that alerts managers when employees apply internally for new jobs.
“We need to have a trigger,” he says. Employees should be told that the organisation recognises they are unhappy but that “we don’t want to lose you”, and formal sit-down discussions should be held within 90 days. If this process, for example, stops 30 employees from leaving, the company has saved a significant amount of money.
Oracle chief executive Mark Hurd told the conference that increasing employee engagement was critical for lifting productivity.
“I don’t think of this totally as a noble exercise,” he says. “Higher engaged employees do more work, they do better work. They care more about the results of the business. They care more about your customers. They perform better and so does the entire entity.
“If we can’t get that thought process ingrained into the leadership that’s where our problems break down. If I look at our employee base as an expense structure, as opposed to a productivity machine that can drive output, then everything else we talk about falls apart.”
Oracle, Hurd says, is a huge hiring machine which regularly researches the views of its 143,000 employees. The company hires 20,000 employees annually, interviews 60,000 applicants and sifts through 250,000 resumes a year. Each year about 60,000 workers are asked their views about employee engagement. The research debunked the perception that Millennials are not very engaged compared to other age groups. In fact, they were slightly more engaged.
Like Cappelli, Hurd is not impressed by the hype around Millennials. “I used to get all this stuff about Millennials, how they are very different, how they’re unique and they’re changing consumer expectations,” he says. “[The perception is] Millennials buy differently, they think differently, they are more entitled. They are not loyal, they want to jump jobs all the time, they want all this flexibility which they care more about than pay.
“The data doesn’t support this. It supports there are differences but all generations adopt the technology available to them at about the same rate. all are looking for respect and recognition at work, all care about career development.”
Regardless of the demographic, Hurd says employee engagement is critical to the success of a business. “We have to integrate [new employees] into our machine and then we have to get them to help the machine perform. We have to engage them to drive them to perform.
“Engagement drives performance. Performance drives expense structures. Expense structures drive revenue and cash flow. If anyone thinks, ‘What a noble process,’ this is not noble. This is about how to drive businesses.
“The team with the best talent for their business model typically wins. If I can get the best people, get them trained, get them performing, get them engaged, we win.”
Ewin Hannan attended the Chicago conference at the invitation of Oracle, which paid for his flights and accommodation.