Are HR chiefs using "people data" to create value..!!!

Human-resources executives have aspired to be strategic advisers to business leaders for at least a generation. But it’s been a struggle for many because it’s so difficult to measure the business value of HR approaches. Questions such as “What is the ROI of training?” and “Which screening techniques yield the best performing recruits?” or “What target-setting approach will best motivate performance?” have been met with imprecise answers.

Today, however, new tools and methods for analyzing data enable HR to define the link between “people practices” and performance more effectively. This couldn’t have happened at a better time, since CEOs are hunting for value anywhere they can find it.

For starters, the widespread adoption of enterprise resource planning and HR information systems has made data on business operations, performance, and personnel more accessible and standardized. Furthermore, the rise of HR information systems has generated a community of software and technology intermediaries that can help HR and business executives use data to find links between talent management and labor productivity. Finally, the consolidation and outsourcing of transactional HR work has compelled many leaders of the function to take a first step toward quantifying and reporting HR costs and performance.

These trends, coupled with the universal imperative to get more for less, have led some companies to discover new ways of using HR analytics to create value.

Pioneers are emerging, particularly in industries where people are central to value creation (notably banking, health care, and retailing) and where scarce technical expertise governs growth (such as technology and upstream oil exploration). While the specific people-related practices that add value will differ by company—industry dynamics, talent scarcity, growth rates, and corporate cultures all influence the answers—the organizations that we’ve seen get the most value from investing in HR analytics all use some variation of these four steps:

1. Focus HR on business priorities.

Most HR teams view, organize, and measure their activities through the traditional employee life cycle: starting with recruiting, hiring, and “on-boarding” and proceeding to evaluation, training, and development. For HR analytics efforts to work, however, the function’s leaders must view problems—and value creation opportunities—as business leaders do.

Google is a company with an HR team that partners with business leaders seeking analytic insights. According to Prasad Setty, head of Google’s people analytics group, “We are looking to inform decision makers with data so they can be as objective and bias free as possible.” Setty’s team has, for example, provided business executives with a systematic approach to reassessing provisionally rejected candidates. The team’s analysis of profiles that lead to success at Google helps it identify potential false negatives and to revisit these candidates. This technique has helped the company “save” many hires it would otherwise have missed.

2. Start with what you have

Quantitative problem-solving skills may be hard to come by in the HR department. Therefore, senior executives who are eager to begin should push their HR leaders to draw in analytical resources wherever they exist. All that’s required is the ability to engage business leaders in efforts to identify issues and structure problems in a nuanced way and then to follow through with advanced data gathering and statistical analysis.

3. Go beyond traditional HR solutions

New insights often require additional problem solving to go from theory to practical solutions. HR analytics succeeds when human-resources and business leaders work together to address the root causes of problems and to pilot new ways of solving them.

Google, for example, did a study to examine whether good managers matter—and, if so, how—within Google’s specific culture. Setty explains that “through various methods, we found positive relationships between good management and retention and the performance of teams. We then conducted double-blind interviews to identify the key behaviors exhibited by our best managers. We found eight behaviors that make a good manager and five pitfalls to avoid. These are now incorporated into our manager-training programs and coaching sessions, and teams provide feedback to managers on these behaviors to help them understand where they’re doing well and where they can get better. The vast majority of our lower-rated managers have improved as a result.”

4. Make it stick

Once a company has a few successes with HR analytics, it can build a lasting source of value creation by integrating analytics practitioners into its day-to-day business and HR rhythms. Several companies, for example, have established a routine of having HR or other “people strategy” staff join business reviews to identify priorities for analysis. This practice helps senior line executives conduct problem-solving discussions around HR-related issues and to plan for action as findings emerge.

HR analytics practitioners must also commit themselves to the habit of measuring and reporting on success. At financial-services giant ING, for example, business units and HR share a comprehensive dashboard, supplemented by regular reports, to show progress on key metrics. Similarly, a global oil giant’s people-strategy group reports progress at four stages of a project’s development: data gathering, analysis, developing solutions, and piloting. This approach helps HR and business leaders understand that progress is happening even when stages may take weeks or months to complete. It also provides a clearer understanding, in both directions, of changing priorities and emerging findings from the work.

Advances in technology are creating opportunities for senior business and HR leaders to start a new kind of dialogue about the link between people and performance. That dialogue will help HR executives demonstrate the impact of their work and achieve their goal of strategic partnership with other members of the senior-management team—and, of course, it will create value for the enterprise.

The Value of Organizational Values

What's the value in values?
Organizational values define the acceptable standards which govern the behaviour of individuals within the organization. Without such values, individuals will pursue behaviours that are in line with their own individual value systems, which may lead to behaviours that the organization doesn't wish to encourage.

In a smaller, co-located organization, the behaviour of individuals is much more visible than in larger, disparate ones. In these smaller groups, the need for articulated values is reduced, since unacceptable behaviours can be challenged openly. However, for the larger organization, where desired behaviour is being encouraged by different individuals in different places with different sub-groups, an articulated statement of values can draw an organization together.

Clearly, the organization's values must be in line with its purpose or mission, and the vision that it is trying to achieve. So to summarize, articulated values of an organization can provide a framework for the collective leadership of an organization to encourage common norms of behaviour which will support the achievement of the organization's goals and mission.

Five ways to live out values
However, just as with a mission or vision statement, it is one thing to have a written guide to an organization's values that remains on the wall, or in a folder, but it is quite another thing to have living values which shape the culture - the way that things get done. So here are five suggestions to ensure you have living values…

1. Communicate the Values Constantly: Values should fit with the organizations' communication, both internally and externally. If we say that we're fun, team-oriented where everyone counts, then having a traditional style with a photo of the CEO may challenge this. Refer frequently to the values in talks and sermons, in articles in internal/parish magazines. Acknowledge and thank those people who have achieved something which particularly emphasizes the values.

2. Enroll New Folk: The values should be explicitly available as new members join an organization. If your organization is a business, this can be a part of the selection process, if a church, then explicitly stating the values of the church creates an expectation in the minds of newcomers. The church then needs to deliver on that!

3. Revisit and Refresh the Values: Revisit your values periodically - allowing members to update them. This has the power of enrolling those who have joined the organization recently, and avoids the stated values no longer reflecting the business culture.

4. Confront Contradictory Behaviour: Ensuring that we give feedback to those who don't live out the values of the organization. If people are allowed to live out contradictory values, then over time there is a clear danger that these will usurp the desired values, particularly if it is the more dynamic, dominant individuals who are espousing the contradictory values.

5. Periodically Check out with Feedback: Ask people what they think are the values of the organization - not only members, who may be influenced by the stated values, but outsiders - observers, customers, former members.

Cont'd.. -- The 5 types of Successful Acquisitions...!!!

Harder strategies

Beyond the five main acquisition strategies, a handful of others can create value, though they do so relatively rarely. This strategy works when businesses as a group can realize substantial cost savings or achieve higher revenues than individual businesses can. Roll-up strategies are hard to disguise, so they invite copycats.

Consolidate to improve competitive behaviour

Many executives in highly competitive industries hope consolidation will lead competitors to focus less on price competition, thereby improving the ROIC of the industry. The evidence shows, however, that unless it consolidates to just three or four companies and can keep out new entrants, pricing behaviour doesn’t change: smaller businesses or new entrants often have an incentive to gain share through lower prices. So in an industry with, say, ten companies, lots of deals must be done before the basis of competition changes.

Enter into a transformational merger

A commonly mentioned reason for an acquisition or merger is the desire to transform one or both companies. Transformational mergers are rare, however, because the circumstances have to be just right, and the management team needs to execute the strategy well.

Buy cheap

The final way to create value from an acquisition is to buy cheap—in other words, at a price below a company’s intrinsic value. In our experience, however, such opportunities are rare and relatively small. Nonetheless, though market values revert to intrinsic values over longer periods, there can be brief moments when the two fall out of alignment. Markets, for example, sometimes overreact to negative news, such as a criminal investigation of an executive or the failure of a single product in a portfolio with many strong ones.

Such moments are less rare in cyclical industries, where assets are often undervalued at the bottom of a cycle. Comparing actual market valuations with intrinsic values based on a “perfect foresight” model, we found that companies in cyclical industries could more than double their shareholder returns (relative to actual returns) if they acquired assets at the bottom of a cycle and sold at the top.

While markets do throw up occasional opportunities for companies to buy targets at levels below their intrinsic value, we haven’t seen many cases. To gain control of a target, acquirers must pay its shareholders a premium over the current market value. Although premiums can vary widely, the average ones for corporate control have been fairly stable: almost 30 percent of the preannouncement price of the target’s equity. For targets pursued by multiple acquirers, the premium rises dramatically, creating the so-called winner’s curse. If several companies evaluate a given target and all identify roughly the same potential synergies, the pursuer that overestimates them most will offer the highest price. Since it is based on an overestimation of the value to be created, the winner pays too much—and is ultimately a loser.

Since market values can sometimes deviate from intrinsic ones, management must also beware the possibility that markets may be overvaluing a potential acquisition. Consider the stock market bubble during the late 1990s. Companies that merged with or acquired technology, media, or telecommunications businesses saw their share prices plummet when the market reverted to earlier levels. The possibility that a company might pay too much when the market is inflated deserves serious consideration, because M&A activity seems to rise following periods of strong market performance. If (and when) prices are artificially high, large improvements are necessary to justify an acquisition, even when the target can be purchased at no premium to market value. Premiums for private deals tend to be smaller, although comprehensive evidence is difficult to collect because publicly available data are scarce. Private acquisitions often stem from the seller’s desire to get out rather than the buyer’s desire for a purchase.

The 5 types of Successful Acquisitions...!!!

There is no magic formula to make acquisitions successful. Each deal must have its own strategic logic. What’s more, the stated strategy may not even be the real one: Companies typically talk up all kinds of strategic benefits from acquisitions that are really entirely about cost cutting.  

The strategic rationale for an acquisition that creates value typically conforms to at least one of the following five archetypes: improving the performance of the target company, removing excess capacity from an industry, creating market access for products, acquiring skills or technologies more quickly or at lower cost than they could be built in-house, and picking winners early and helping them develop their businesses. If an acquisition does not fit one or more of these archetypes, it’s unlikely to create value.

Improve the target company’s performance

Improving the performance of the target company is one of the most common value-creating acquisition strategies. It is easier to improve the performance of a company with low margins and low returns on invested capital (ROIC) than that of a high-margin, high-ROIC company.

Consolidate to remove excess capacity from industry

As industries mature, they typically develop excess capacity. The combination of higher production from existing capacity and new capacity from recent entrants often generates more supply than demand. Reducing excess in an industry can also extend to less tangible forms of capacity.

Accelerate market access for the target’s (or buyer’s) products

Often, relatively small companies with innovative products have difficulty reaching the entire potential market for their products.

IBM, for instance, has pursued this strategy in its software business. From 2002 to 2009, it acquired 70 companies for about $14 billion. By pushing their products through a global sales force, IBM estimates it increased their revenues by almost 50 percent in the first two years after each acquisition and an average of more than 10 percent in the next three years.

In some cases, the target can also help accelerate the acquirer’s revenue growth. In Procter & Gamble’s acquisition of Gillette, the combined company benefited because P&G had stronger sales in some emerging markets, Gillette in others. Working together, they introduced their products into new markets much more quickly.

Get skills or technologies faster or at lower cost than they can be built

Cisco Systems has used acquisitions to close gaps in its technologies, allowing it to assemble a broad line of networking products and to grow very quickly from a company with a single product line into the key player in Internet equipment. From 1993 to 2001, Cisco acquired 71 companies, at an average price of approximately $350 million. Cisco’s sales increased from $650 million in 1993 to $22 billion in 2001, with nearly 40 percent of its 2001 revenue coming directly from these acquisitions.

Pick winners early and help them develop their businesses

The final winning strategy involves making acquisitions early in the life cycle of a new industry or product line, long before most others recognize that it will grow significantly. Johnson & Johnson pursued this strategy in its early acquisitions of medical-device businesses. When J&J bought device manufacturer Cordis, in 1996, Cordis had $500 million in revenues. By 2007, its revenues had increased to $3.8 billion, reflecting a 20 percent annual growth rate. 

This acquisition strategy requires a disciplined approach by management in three dimensions. First, you must be willing to make investments early, long before your competitors and the market see the industry’s or company’s potential. Second, you need to make multiple bets and to expect that some will fail. Third, you need the skills and patience to nurture the acquired businesses.

CREATIVITY...

Although creativity is often considered as trait of the privileged few, any individual or team can become more creative—better able to generate the breakthroughs that stimulate growth and performance. To perceive things differently, we must bombard our brains with things it has never encountered. Only by forcing our brains to re-categorize information and move beyond our habitual thinking patterns can we begin to imagine truly novel alternatives. Four practical ways for executives to shake up ingrained perceptions and enhance creativity—both personally and with their direct reports and broader work teams:

Immerse yourself

Would-be innovators need to break free of pre-existing views. Unfortunately, the human mind is surprisingly adroit at supporting its deep-seated ways of viewing the world while shifting out evidence to the contrary.

When presented with overwhelming facts, many people (including well-educated ones) simply won’t abandon their deeply held opinions. The antidote is personal experience: seeing and experiencing something firsthand can shake people up in ways, that abstract discussions around conference room tables can’t.

Overcome orthodoxies

Exploring deep-rooted company (or even industry) orthodoxies is another way to jolt your brain out of the familiar in an idea generation session, a team meeting, or simply a contemplative moment alone at your desk. All organizations have conventional wisdom about “the way we do things,” unchallenged assumptions about what customers want, or supposedly essential elements of strategy that are rarely if ever questioned.

By identifying and then systematically challenging such core beliefs, companies can not only improve their ability to embrace new ideas but also get a jump on the competition. The rewards for success are big: Best Buy’s $3 million acquisition of Geek Squad in 2002, for example, went against the conventional wisdom that consumers wouldn’t pay extra to have products installed in their homes. Today, Geek Squad generates more than $1 billion in annual revenues.

Executives looking to liberate their creative instincts by exploring company orthodoxies can begin by asking questions about customers, industry norms, and even business models—and then systematically challenging the answers. For example:

• What business are we in?
• What level of customer service do people expect?
• What would customers never be willing to pay for?
• What channel strategy is essential to us?

Use analogies

Five important “discovery” skills for innovators: associating, questioning, observing, experimenting, and networking. The most powerful overall driver of innovation was associating—making connections across “seemingly unrelated questions, problems, or ideas.”

Create constraints

Another simple tactic you can use to encourage creativity is to impose artificial constraints on your business model. This move injects some much-needed “stark necessity” into an otherwise low-risk exercise.

SEVEN STEPS TO BETTER BRAINSTORMING...

Companies run on good ideas. From R&D groups seeking pipelines of innovative new products to ops teams probing for time-saving process improvements to CEOs searching for that next growth opportunity—all senior managers want to generate better and more creative ideas consistently in the teams they form, participate in, and manage.

The most common method of using groups to generate ideas at companies around the world is familiar: a group of people, begins by listening passively as a moderator (often an outsider who knows little about your business) urges you to “Get creative!” and “Think outside the box!” and cheerfully reminds you that “There are no bad ideas!”. The result? Some attendees remain stone-faced throughout the day, others contribute sporadically, and a few loudly dominate the session with their pet ideas.

The trick is to leverage the way people actually think and work in creative problem-solving situations.  Call this approach “brainsteering”, and while it requires more preparation than traditional brainstorming, the results are worthwhile: better ideas in business situations as diverse as inventing new products and services, attracting new customers, designing more efficient business processes, or reducing costs, among others.

1. Know your organization’s decision-making criteria

One reason good ideas hatched in corporate brainstorming sessions often go nowhere is that they are beyond the scope of what the organization would ever be willing to consider. “Think outside the box!” is an unhelpful exhortation if external circumstances or company policies create boxes that the organization truly must live within.

Managers hoping to spark creative thinking in their teams should therefore start by understanding (and in some cases shaping) the real criteria the company will use to make decisions about the resulting ideas.

2. Ask the right questions

Decades of academic research shows that traditional, loosely structured brainstorming techniques (“Go for quantity—the greater the number of ideas, the greater the likelihood of winners!”) are inferior to approaches that provide more structure. Therefore build your workshop around a series of “right questions” that your team will explore in small groups during a series of idea generation sessions (more about these later). The trick is to identify questions with two characteristics. First, they should force your participants to take a new and unfamiliar perspective. The second characteristic of a right question is that it limits the conceptual space your team will explore, without being so restrictive that it forces particular answers or outcomes.

3. Choose the right people

The rule here is simple: pick people who can answer the questions you’re asking. As obvious as this sounds, it’s not what happens in many traditional brainstorming sessions, where participants are often chosen with less regard for their specific knowledge than for their prominence on the org chart.

4. Divide and conquer

Don’t have your participants hold one continuous, rambling discussion among the entire group for several hours. Instead, have them conduct multiple, discrete, highly focused idea generation sessions among subgroups of three to five people—no fewer, no more. When you assign people to subgroups, it’s important to isolate “idea crushers” in their own subgroup. These people are otherwise suitable for the workshop but, intentionally or not, prevent others from suggesting good ideas. They come in three varieties: bosses, “big mouths,” and subject matter experts.

5. On your mark, get set, go!

Remember, your team is accustomed to traditional brainstorming, where the flow of ideas is fast, furious, and ultimately shallow. Today, however, each subgroup will thoughtfully consider and discuss a single question for a half hour. No other idea from any source—no matter how good—should be mentioned during a subgroup’s individual session.

One last warning: no matter how clever your participants, no matter how insightful your questions, the first five minutes of any subgroup’s brainsteering session may feel like typical brainstorming as people test their pet ideas or rattle off superficial new ones. Better thinking soon emerges as the subgroups try to improve shallow ideas while sticking to the assigned questions.

6. Wrap it up

One thing not to do is have the full group choose the best ideas from the pile, as is common in traditional brainstorming. The experience of picking winners can also be demotivating, particularly if the real decision makers overrule the group’s favourite choices later. Instead, have each subgroup privately narrow its own list of ideas to a top few and then share all the leading ideas with the full group to motivate and inspire participants.

7. Follow up quickly

Decisions and other follow-up activities should be quick and thorough. The odds that concrete action will result from an idea generation exercise tend to decline quickly as time passes and momentum fades. Participants are often desperate for feedback and eager for indications that they have at least been heard. By respectfully explaining why certain ideas were rejected, you can help team members produce better ideas next time. They will participate next time, often more eagerly than ever.

CHANGING ORGANIZATIONS...

General Motors, IBM, and Sears: Three companies facing a need for dramatic change that have already tried, but failed, at major change efforts. The most important idea of all for companies like GM, IBM, and Sears is that those pushing for organizational improvement--whether they are external members of the board, major investors, or top executives--must deal with cultural and behavioral obstacles to change. Specifically, attempts at organizational change must consider three key features of organizational life: the firm's culture, the leadership of the change effort, and the existing network of power. The key point here is that rather than changing culture directly, management must work with and through the existing culture to transform the organization. Whether the culture itself changes is secondary; the important objective is to improve the company.

One of the discussions of organizational culture to reveal (1) the role of leadership in dealing with culture and (2) the form that leadership needs to take. There is a need to consider organizational power in organizational change efforts. Goals are accomplished in organizations largely through the use of power and politics, so it seems fairly obvious that changing an organization also requires their intelligent use.

Organizational culture was the hot topic of the management literature of the 1980s. New techniques for assessing and changing culture appeared in the organization development (OD) field, and a wide range of consultants on culture appeared almost overnight (some promising to change a firm's culture almost as fast).

A key finding here comes from a study performed by Geert Hofstede and his associates (1990), who examined organizational culture in 20 units of ten organizations in Denmark and the Netherlands. They found that differences among the cultures could be explained by the practices employees of each firm said they shared in common (similar to what Schein called "artifacts"). Hofstede et al. further concluded that differences among organizational cultures can be described by focusing on very few--perhaps only six to eight--dimensions of organizational practice. Two key dimensions they found were the extent to which the culture was employee- versus job-oriented and whether it was process- or results-oriented.

Assessing a firm's culture is not the same as changing it. Furthermore, it cannot be changed by top management. Note that the most recent attempts to change GM and IBM involved pressure from outside board members to replace top management teams. GM's team was from the Roger Smith school, and IBM's had come up through the "mainframe" ranks. It's too early to say, but bringing in new top management teams---with new interactions and relationships--may be what is needed to turn those two companies around. The influence of outsiders--the firm's environment--is further highlighted in a study by George Gordon (1991). He concluded that the basic assumptions and values of business organizations are influenced substantially by three outside factors: customer requirements, the competitive environment, and societal expectations. Organizations facing dynamic and complex competitive environments can be successful with cultures that are flexible and adaptable. U.S. auto makers have known for some time now that they face this type of environment and must change accordingly (note Chrysler's efforts in recent years to downsize). Companies in the high-technology area, facing rapidly changing consumer demands, support cultures that call for risk-taking and individual initiative. Intel's culture has shown recognition of this idea since the company's inception.

Getting Started...

Learning comes with every step we take in life...

Sometimes we realize that we have learnt and sometimes the learning is so small that we fail to recognize it...

I hope... the day we start recognizing each n every (Good) learning (and start practicing them) is the day we would say that, "LEARNING is my PASSION..."

                                                                                    -- Altamash