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Equity Skills News & Views
Volume 5, Issue 9, 16 May 2006
Registered as an electronic newspaper: ISSN 1684-5722
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In This edition:

1. Scrapping The Annual Budget Makes For A Better Business    
2. Understanding Goal Alignment Models
3. Talent Management Initiatives Top Priority for HR Professionals, Study Shows
4. Book Review: Praise For Profit
5. Downloads: Next-Generation Talent Management 
6. Unsubscribe & Moving Soon

NB: If your Internet service provider (ISP) or server administrator filters incoming e-mail, please add Equity Skills News & Views to your list of approved senders to ensure you receive this e-journal to which you are subscribed.

Jeff Sacht: Publisher-editor
www.equityskillsweb.com
jeffs@worldonline.co.za

'A MUST TO PRINT & READ'
>24,000 & still growing!

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Continuing Professional Development (CPD): Become A Professional Member Of The Human Capital Institute Today!!

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The Human Capital Institute (HCI) is the unrivaled leader and supplier in Africa of CPD membership services for the Human Resources Profession. HCI offers over 50,000 web pages of thought leadership content, a complete range of 21 educational programmes on Human Capital & Talent Management, research tools, services, and research reports and much more. Find out more about HCI http://www.workinfo.com/free/downloads/HCI.htm Purchase subscription at: http://shop.workinfo.com.shopdirect.co.za/ProductInfo.aspx?productid=RR0011 

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Download A Sample Of Blueriverstone’s Research Reports: ‘Corporates Undervalue 

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Research conducted by BlueRiverStone for Financial Mail in 2005 shows that only 42% of SA's top 100 corporates are using their websites to recruit candidates with varying degrees of success. A  good e-recruitment strategy can draw high quality candidates at significant cost reductions and greater operational efficiencies. Most companies have not given any consideration to the link between the corporate brand and talent acquisition. The full report of the study is available at www.blueriverstone.com  Contact Ian Kruger of BlueRiverstone.com @ ian@blueriverstone.com 0834083248

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1. Scrapping The Annual Budget Makes For A Better Business   

By Nic Paton who can be contacted at www.management-issues.com 

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Ditching the annual budget makes companies more responsive and dynamic in how they plan their business, allocate resources and control their performance, according to new research.

The study by business research organisation Business Intelligence looked at a range of U.S such as Boston Scientific, Herman Miller, Nordea, Statoil, Tomkins and UBS GWMBBB that had either abandoned the budget altogether or radically altered its role and function.

Companies, it found, were developing a range of solutions to fulfil the roles previously fulfilled by the budget, including quarterly planning cycles, rolling forecasts stretching out five or six quarters, two or three year business plans, top-down target setting and bottom-up planning and balanced scorecard and other performance management frameworks.

Putting in place such changes involved the development of a performance culture where responsibility and accountability was more devolved throughout the organisation, and incentives were de-coupled from budget targets, it said.

"Dissatisfaction with the annual budget is a symptom of a growing crisis in performance management," said report author James Creelman.

"More senior managers acknowledge that the budget, like other methods developed to meet the needs of industrial-age business, is no longer fit for purpose," he added..

"There is still a huge inertia in many organisations to persevere with the budget. But the strain of coping with more demanding operating conditions is forcing them to look for better, more appropriate solutions," he continued.

Among the companies surveyed, Boston Scientific saw a 62 per cent rise in global sales as well as greater predictability in performance after abandoning the annual budget in favour of a 12-month rolling plan, updated quarterly along with other performance management changes, the report added.

*Reprinted by permission of Management-Issues

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2. Understanding Goal Alignment Models 

By James Harvey who can be contacted at www.clomedia.com 

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Alignment: It’s the term that describes the continuous process of mobilizing enterprise resources to execute company objectives. For several years, organizations have grappled with how to align their most critical enterprise resource—the workforce. Thus far, most organizations have charged the human resources department with building an alignment strategy. Although HR is an important stakeholder, the development and execution of optimal workforce alignment will never occur without equal participation of the  corporate strategy and learning organizations.

Understanding Alignment

In an ideal state, all employees understand the company’s strategy and objectives, as well as how their contribution helps the company meet its objectives. Like most theoretical definitions, applying the practice in the real business world is much more complicated and elusive. And the larger the organization, the more complex the problem.

Regardless, organizations understand the correlations between employee engagement and business results. Successful companies are able to articulate company strategies and objectives to their workforce clearly, and the workforce is able to internalize and operationalize those objectives to deliver results.

Some companies have successfully adopted alignment practices, while many have employed the practice with marginal benefits. As with most new business practices, it’s important to learn from early adopters.

A Look Back at Alignment

During the economic downturn of the early 2000s, businesses rapidly shifted from growth mode into preservation mode. Business leaders focused on identifying mission-critical tactics to meet near-term financial targets as well as ensure enterprise resources were mobilized for execution. During this time, many large organizations looked to their performance management process as a way to mobilize employee work activities around these mission-critical objectives. 

Specifically, some organizations invoked the practice of cascading goals, whereby employees linked their individual goals to higher-level organizational or manager goals. Cascading goals is a somewhat primitive form of making higher-level management goals more operational. However, the practice rarely involved a rigorous and disciplined look at organizational or employee capabilities. For early adopters, the cascading goals practice provided employees with some insight into how they enabled organizational success. However, most early adopters did not recognize the full potential of alignment because their alignment process was rarely transformed from an administrative goal-setting process into a business management tool. Furthermore, the lack of rigorous capabilities analysis and development planning meant organizations were addressing the “what” but not the “how.” Consequently, managers and employees found cascading goals informative, but only visited their goal plans a few times per year.

What these early adopters failed to realize is the critical role of the learning organization. Defining “what” the workforce should be driving toward does not enable the workforce to achieve those goals. Leading organizations today involve the learning organization in the business planning process, develop learning in support of the business plan and cascading goals, and leverage the capabilities of their LMS to assign learning to individuals to ensure they understand “how” to achieve their goals.

Operationalizing the Business Plan

For organizations to operationalize the company business plan through the workforce, employee performance management and developmental planning must incur a shift in perception and practice. The process must be transformed from an administrative goal-setting process into a business management tool.

Getting the lines of business to take ownership of employee performance management, as well as learning and development, requires a business process that is a value-added extension of operations management. The process must be a natural extension of the business planning and budgeting process. Additionally, the practice must not only address the planning of performance, but also must address the critical employee development required to execute the plan. CLOs need to help the business understand how it can enable the business plan through greater ownership of the performance review process. 

Designing this type of business process requires close interaction of three administrative-support functions: corporate strategy, HR and the learning organization. Unfortunately, in most large organizations, the business planning function is not well connected to either HR or the learning organization. In fact, where independent corporate business planning groups exist, they are most closely aligned with the finance department. More surprisingly, HR and learning organizations are often not well coordinated either.

But for organizations to operationalize their business plans, these disparate functions must work together to build a performance management process that is an operations management tool.

Define Process Ownership

Ultimately, each operational business unit must take ownership of employee performance management. To engage operational business units, the performance management process and supporting L&D tools must reflect the existing business planning, operational budgeting and measurement processes already adopted by the business. Each major operational business unit must view employee performance management as an extension of its existing operational management and reporting function.

There are three primary groups that support the lines of business in performance management. First, many large organizations have a corporate strategy or business planning group, which provides expertise in strategy and objective definition, as well as business performance measurement. Corporate strategy should be the paramount partner in standardizing the process of breaking down organizational objectives into more discrete projects, initiatives and tactics. Additionally, the corporate strategy is often critical in defining the reporting metrics that measure progress and predict potential success.

Second, the learning department provides expertise in developing strategies to ensure the right workforce capabilities are in place. The learning department should analyze critical skills required by key job roles, projects or initiatives, and ensure learning strategies are in place to develop the critical skills.

Third, HR provides expertise in the principles of goal-setting as well as feedback, coaching and assessment. Human resources should standardize these practices across major lines of business to ensure fairness and consistent guidelines, as well as design the compensation strategy.

Reconcile Performance Periods

For the most optimal results, organizations should attempt to align their business-planning period (e.g., fiscal year) with their employee performance and developmental planning periods. Reconciling these two periods can be costly, especially if companies use anniversary review cycles. However, aligning these two reporting periods will provide a concentrated focus on executing the new organizational objectives at the beginning of the year. By creating a focused alignment period at the beginning of the year, organizations can shorten the time required to operationalize business objectives, optimize cross-departmental resource planning for projects and initiatives, and increase the time and effort the workforce spends working on those objectives.

Management Insight & Control

Too often, alignment benefits are described as for employees only. Although improving employee engagement has its benefits, the business value is often not apparent to executives and business leaders. Therefore, the alignment process should provide business leaders with clear benefits. Executive benefits often focus on insights and reports to understand how the workforce is operationalizing business strategies and objectives. Additionally, managers should have the ability to distribute performance and development goals quickly, as well as correct misaligned work activities. For large organizations, this usually requires automated learning and performance management systems.

As an example of executive insight, one major auto manufacturer recently implemented an automated objectives alignment process. Shortly after the initial employee goal-setting period, the CIO found that one organizational objective had few employee goals aligned to it, while all other organizational objectives had high numbers of employee goals aligned to them. The CIO quickly realized that without correction, his organization was unlikely to accomplish the organizational objective.

Employee Insights

Imagine being given the goal of driving a large commercial truck from Austin, Texas, to Portland, Maine, within three days. However, you don’t have a speedometer, gas gauge or navigational tool. Furthermore, you have never driven a large commercial truck. You understand that the destination is Portland, Maine and not Portland,Ore., but do you really have the information and tools to be successful?

This is analogous to simple forms of alignment that only communicate organizational objectives but do not provide critical supporting information or tools, such as progress metrics or learning and development strategies. Alignment strategies should look beyond simply providing descriptions of organizational objectives. They should also analyze the information that is necessary for the workforce to meet those objectives.

For example, one financial services company provides television screens in the employee cafeteria that display critical information on company and business unit objectives, industry news and competitor news. This type of practice disseminates important information about company progress and provokes discussions among employees regarding the state of the business.

Understanding Alignment Models

With increasing market adoption of objective alignment, two alignment-models have emerged: people-centric and organization-centric.

The people-centric alignment model was the first to emerge, often promoted by performance management software vendors. In this top-down model, goals are set first by the CEO. Subsequently, the CEO’s direct reports set their own performance goals, each of which is linked to one or more goals on the CEO’s plan. This process repeats itself (cascades) down the entire management hierarchy until each individual contributor defines goals that are linked to his or her supervisor’s goals.

For large organizations, the people-centric model poses multiple limitations. First, the people-centric model is a top-down approach and often takes too long to achieve alignment. Direct reports are often dependent on the completion of their supervisor’s goals before they can begin building their own goal plan. In the case of executives who often have quantitative goals and metrics, their goal plans are often delayed until the completion of the operational budgeting process, which can often last well into the first quarter of the new fiscal year. The second problem with the people-centric model is workforce mobility. In large organizations, employee transition occurs with high frequency, leading to higher administrative efforts to de-link and re-link goal plans. Finally, the people-centric model builds success orientation toward people, who can often leave the organization, instead of more permanent teams or organizations.

Alternatively, under the organization-centric model, objectives are defined first for the company. Subsequently, the company objectives are broken down across the organizational hierarchy. Cascading is only required until employees understand how their contribution can support their organization’s objectives, and in turn their company’s broader mission. For most organizations, cascading down three to four levels sufficiently describes objectives and tactics. Once organizational objectives are cascaded, employees build goal plans that are linked to their organization’s objectives.

The organization-centric model has some advantages for large organizations. First, the model parallels the business-planning and budgeting processes that most organizations already practice. Second, organizations are less fluid and mobile than people, thereby reducing the administrative effort required to de-link and re-link goals resulting from employee mobility. Third, success orientation is toward the organization, not individuals who might leave the company or change roles within it. Finally, measurement systems are usually designed around organizations, which facilitates tracking and communicating objective progress and results back to the workforce.

Introducing Alignment Practices 

Most organizations do not need to start from scratch, because they often have tools and processes upon which to build. Though it might not be standardized across the company, most organizations employ some form of business planning and operational budgeting. Additionally, goal setting, learning and development plans and periodic reviews are not foreign concepts to most employees and managers.

Once the organization begins to define its alignment strategy, it’s important to consider a multi-year road map. Organizations should pilot new alignment practices, rather than implement them at once throughout the enterprise. When looking for an ideal pilot group, it’s important to consider both organizational culture and worker segments. Some organizations are more accustomed to rigorous goal-setting processes than others. Additionally, some worker segments are more accustomed to formal goal-setting practices, as well as quantitative goals and measurement. Often, it’s easier to implement the practice within a group that requires less change management.

As they begin to understand the importance of focusing on both the “how” and the “what” of workforce alignment, more organizations are beginning to put the performance review and learning business processes under a single leader. Expect to see the concept of “goals” or “objectives” introduced into LMSs over the coming years. LMSs of the future will allow organizations to link learning to business, departmental or employee goals.

Additionally, the organizations most successfully adopting alignment practices have leveraged pilots to iron out process issues as well as to introduce change that is sensitive to the needs of each major business unit. When done well, effective change is introduced in a way that is not intrusive to business operations.

Effectively leveraging the workforce to operationalize and execute the company business plan is not an easy undertaking. However, there are key principles that define successful adoption of alignment practices. Corporate strategy, learning and HR must work closely with the lines of business to design a process that is an extension of existing operations-management practices. Organizations that bring these various functions together will be able to transform the performance management practice into a business management tool. 

*Reprinted by permission of the editor of Management Issues

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3. Talent Management Initiatives Top Priority for HR Professionals, Study Shows 

By Cari McLean who can be contacted at www.knowledgeinfusion.com 

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A survey of 3,000 International Association for Human Resource Information Management (IHRIM) members and Knowledge Infusion clients’ in HR management revealed an explosive growth in talent management initiatives in their organizations. The 2006 Talent Management Survey, conducted jointly by IHRIM and Knowledge Infusion, found that 77 percent of survey respondents see talent management increasing in importance during the next three years. According to Jason Averbook, CEO of Knowledge Infusion, the looming talent shortage, the increased focus on redeploying internal employees rather than recruiting and the realization that organizations must link training, knowledge and performance are the key drivers for talent management initiatives over the next three years.

“The issues that organizations are now focusing on are much more macro, and clearly people are waking up to the fact that these are critical issues,” Averbook said. “Organizations know that they need to do a better job of linking training, knowledge and performance together. They see that it has been done in silos in their organization and realize that they need to do a better job of linking them together. Also, for the first time during my 15 years in this business I am actually hearing people say and admit to there being a talent shortage. This is also the first time that we have seen organizations shift their focus from recruiting people to redeploying people.”

The survey cited talent acquisition, leadership development, aligning people and goals, performance management and talent management metrics as the top initiatives for 2006, which directly reflects the key drivers for these initiatives in the coming years. However, when it comes to satisfaction and dissatisfaction with the vast umbrella of initiatives that fall under talent management, the survey found that respondents were most dissatisfied with their current competency management, workforce analytics, performance management and succession-planning solutions. According to Averbook, the leading reason for this dissatisfaction is that organizations have generally been unsuccessful deploying these solutions enterprise-wide.

“Most organizations have deployed these initiatives for a small population, but they haven’t been successful in a global deployment of those products and those practices,” Averbook explained. “Organizations haven’t optimized their talent management processes to go to an automated solution, so when they tried to take their manual broken process and automate it, they ran into some issues, which made them dissatisfied with their software, which isn’t really the software’s fault. It is the organization’s fault. This just shows that when organizations want to take their manual processes and automate them, they have to revamp their business processes as well.”

Averbook said that in order for organizations to improve processes such as competency management, workforce analytics, performance management and succession planning, they need to take time to review and modify their business processes first as well as market them internally. “Many organizations roll out a performance management system or workforce analytics system and simply just put it out there. They don’t do a good job of making sure that people know why these systems are implemented, show people the value of the systems, etc.,” he said. “So if organizations don’t market these systems to their employees, the employees will just think of them as another online tool and won’t actually use them to their full advantage.”

The survey found that respondents were most satisfied with their portal solution implementations. Averbook said that because portal solutions are pervasive in nature—meaning they can easily reach all employees—organizations are generally more satisfied with these implementations.

Perhaps one of the most significant survey findings was that 42 percent of respondents report little to no effectiveness in the relationship between HR and training in creating and executing joint human capital initiatives. However, the good news is that 78 percent of survey respondents say the collaboration between training and HR will be greater over the next two years. “Many people are realizing that there is a gap between learning and HR, that they either need to get together in the same organization or play nice together, make sure that each understands what each other’s goals and objectives are, and make sure that they are driving in the same direction,” Averbook said. “If you think about it, the core of talent management is generally made up of three things: build, buy or outsource. If the HR department is in buy mode—meaning they are doing a lot of recruiting—and the learning department is in a build mode—meaning they are trying to develop people internally—that is a big conflict. And those organizations have to be synchronized, especially as the talent-management crisis becomes more and more apparent in the economy.” 

Other noteworthy results included 88 percent reporting their organization is either somewhat or not successful at all at aligning business goals to measurable business results, and 72 percent of survey respondents have no analytic tools to measure the impact of HR on business results. Averbook said, “Many HR professionals are still tied up in the tactical side of things and don’t actually align themselves to the goals of the company. Therefore, because they don’t align themselves to the goals of the company, they have no way to look at the measurable business results. To me, this is just a huge sign and telling tale for HR departments that they need to get out from behind the walls of HR and get more attached to the line of business.”

This survey validates the fact that organizations worldwide are focusing more and applying more effort on talent-management initiatives today and will continue to do so during the next few years as external factors, such as the looming talent shortage and global expansion, become more and more prevalent.

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4. Book Review: Praise For Profit

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# Praise For Profits

By Jerry Poiunds
Buy this book at www.praiseforprofit.com

What really makes people tick at work? Over the past few decades, the belief that hard work should eventually lead to a reward has been reframed to the conclusion that effort needs to be rewarded, and rewarded constantly. 

According to Jerry Pounds, this simple twist on venerated cultural truths has led to some extreme corporate reward strategies and a change in employees' work ethic that may be irreversible.

As a result of this misconception, a $100 billion a year 'incentive' industry has grown up in the U.S. alone pandering to the belief that T-shirts, golf outings and free trips to Florida will somehow motivate employees and improve their performance. 

Thoughtful and insightful, Praise for Profit draws on Jerry Pounds' 30 years of experience in applying positive recognition and reward strategies, exploring the historical roots of 'Pop Behaviorism' in early 1970s and debunking a whole raft of sacred cows and misconceptions promulgated by the armies of consultants and vendors who stalk corporate corridors today.

It's core message is that gimmicks don't buy engagement or increase motivation. That takes equitable pay, opportunity, and - above all - respect.

It is not enough to offer challenging and rewarding work, reasonable pay, benefits, and safe working conditions, Pounds argues. Employees are looking for employers that treat them as whole people − a company where they feel valued, have control over their work and careers, the flexibility to manage their personal lives, supportive managers, and honest communications.

But while employees want to be valued and have their contributions recognised, confusion about what 'recognition' really means has created a generation of managers who are vulnerable to the sellers of motivational programs, praise management tactics, trivializing gimmicks, gadgets, and prizes. 

With a diminishing talent pool and organisations clamouring to achieve "employee engagement", Praise for Profit offers a vital insight into the effects of motivational strategies and ought to be required reading in any organisation serious about becoming 'an employer of choice', as well as any person in business - manager or employee - who has been subjected to the condescending practices of most behavior-change applications in the workplace.

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5. Downloads: Next-Generation Talent Management

Insights On How Workforce Trends Are Changing The Face Of Talent Management
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This report reveals five trends that are reshaping the workforce and out-lines the unavoidable implications that these workforce changes will have for the practice of talent management. It also highlights examples of organizations already using innovative talent management practices to leverage the next-generation workforce. 

Download a copy of this paper at   http://www.workinfo.com/free/downloads/180.htm 

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Equity-Skills News & Views is a free bi-monthly newsletter for business owners, Line Managers, and Human Resource Practitioners (who support Line Managers) with the implementation of fair and developmental people management systems and practices. The style of this e-Newspaper fits between the traditional email newsletters and printed professional trade journals & magazines. Subscribers will be kept up to date with the latest developments in the world of people management, receive handy people management tips, and feedback about labour court rulings that relate to the implementation of the key Labour Acts. Please add equity skills news & views to your list of approved senders if your Internet provider or server administrator filters incoming e-mail, to make sure you receive periodic e-mail alerts and this newsletter to which you are subscribed.
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Opinions expressed by contributors DO NOT NECESSARILY REPRESENT the standpoint of the publisher-editor of Equity-Skills News & Views. Information published here is for general information, and is not intended as legal advice. The authors, editors, and publishers do not accept responsibility for any act, omission, loss, or damage occasioned by any reliance upon the contents hereof.

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Telephone: +27 011 485 4943
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Publisher-Editor: Equity-Skills News & Views
'A MUST TO PRINT & READ'
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Copyright (c) 2006 Registered electronic newspaper: 1SSN 1684-5714