Welcome
Welcome to the latest issue of Bringing Work to Life. In the last four
issues we explored:
·
How to decide if an organization will be a good fit for you in “Worklife
Survival: Finding a Fit” (
http://www.elsdon.com/oct__nov__2004.htm)
·
Confronting one of our fears as leaders in “Facing Our Greatest Fears:
Public Speaking”
(http://www.elsdon.com/sept__oct__2004.htm)
·
Bringing meaning to our work lives, the benefits to each of us and to
our organizations, in “May You Live All the Days of Your Life” (http://www.elsdon.com/august_2004.htm)
·
Seven key aspects of the organizational and business drivers for
workforce development in “Opening the Door for Workforce Development” (http://www.elsdon.com/july_2004.htm)
This month we examine the messy subject of knowing how we are
influencing workforce effectiveness in “Measuring Our Progress.”
Measuring Our Progress
“That must have been an exciting conversation” was
the caustic observation from a fellow participant, Dan, at a recent
fundraiser to two of us who had just been talking about metrics. While
his comment could be dismissed as the wine talking (or listening), it
also speaks to a broader concern, since Dan was a senior human resources
practitioner. Workforce metrics are often viewed as an afterthought, at
best boring, at worst a mystery of Sherlock Holmsean proportions. Why
is this? After all can’t we just boil everything down to return on
investment (ROI) and be done with it?
Certainly ROI, which is simply the economic benefit
from an investment divided by the investment itself, expressed as a
percentage, has the virtues of simplicity, consistency in different
settings and linkage of outcomes to costs. However, it misses much:
·
The influence of spending or benefits spread over several
years
·
The importance of scale, for example the ROI for a pencil
sharpener may be large but the investment is inconsequential in
influencing the fortunes of the organization
·
The time value of money; a dollar in the future is worth
less than today
·
A primary focus on the past rather than the future
·
Misses non-financial factors
·
Does not consider the impact on different stakeholders
As with many simple statements
it is incomplete. So with this uncertainty it is not surprising that
Dan steers clear of this messy metrics stuff. What help can we offer
him? Let’s clear up why this is more than an academic question.
Measuring what happens when we invest in the workforce allows us to:
·
Be objective and prudent in
committing resources
·
Know how effective our solutions
are
·
Know where to invest in the
future
This is just what the CEO (and
the CFO) ordered. But how do we go about structuring measurement? We
first recognize that there are two primary operational aspects of
financial performance that we can influence (as shown on the profit and
loss statement); they are revenue growth and profitability. They in
turn influence asset utilization (this shows on the balance sheet). Our
metrics need to address one or both of the primary items. The following
core questions can help guide the measurement process and provide this
focus:
·
How is workforce capability
linked to organizational performance?
4
For example
4
For a sales organization we could define the characteristics of the most
effective salespeople, translate these characteristics into a more
effective hiring process, then measure the effect of this enhanced
hiring process on sales force contribution.
4
For a manufacturing organization we could define the link between the
depth of knowledge of processes and equipment and manufacturing cost
reduction. We could also measure how investing in a comprehensive
training curriculum affects the rate of cost reduction.
4
For a leadership team, we could measure the influence of investing in
interpersonal skill training on reduced attrition.
·
How can this be quantified?
4
Our examples
4
In the case of the sales force we could focus on revenue itself or the
rate of increase of revenue, market share or market penetration.
4
For the manufacturing organization we could examine absolute costs or
the rate of cost decrease (for example an experience curve showing costs
falling as cumulative output grows), or how more sophisticated
manufacturing equipment improves yields.
4
For the leadership team we could examine reductions in the losses of key
personnel and the influence on the organization.
·
How can this be translated into
financial terms?
4
In each example we identified specific changes causing either an
increase in revenue or a decrease in costs.
·
What resources are needed?
4
In the case of the sales force we could define the resources needed to
gather data about sales competencies; for the manufacturing organization
we could identify which skilled personnel would be needed to conduct
effective training; for the leadership team we could identify the time
required for interpersonal skills training and the resources needed to
do it.
·
What costs are associated with
those resources?
4
We can show both the direct and indirect costs (such as the opportunity
cost of time) that we incur.
·
What is the relationship between
projected gain and costs?
4
Depending upon the situation we may use a simple measure such as ROI or
a more complex measure such as the discounted net present value of
future benefits and costs, and the profitability index that equates the
two.
As Dan is looking at investing
in his workforce he should project outcomes before making investments.
The projected outcomes help drive the decision about where and when to
invest and provide a means for comparing actual and anticipated
performance.
Measurements can either focus on
the overall enterprise, a given workforce development project or a
combination of both. For example a reduction in overall attrition
rates, and the corresponding financial influence would be outcome
measures for the overall enterprise. These outcomes are driven by
processes that strengthen employee affiliation such as support for
individual development, and resources to provide this. The following
chart illustrates the links.
An alternative and complementary
approach to measuring at the enterprise level is to examine individual
workforce development projects, such as workshops or coaching, and
measure their influence on the organization. The four level Kirkpatrick
approach, extended to a fifth level by Phillips and a sixth level by
Elsdon and Iyer is a good way to frame this:
·
Level 1: Reaction and Planned Action
o
Measures participant satisfaction and planned action
(sometimes known as a smile sheet)
·
Level 2: Learning
o
Measures changes in knowledge skills and attitude
·
Level 3: Individual Performance/Behavior
o
Measures changes in on-the-job behavior
·
Level 4: Business Results
o
Measures business impact, for example increased sales or
productivity
·
Level 5: Return on Investment
o
Compares program benefits to costs
·
Level 6: Prediction
o
Estimates impact of resources on future performance, for
example taking a given workshop to a broader population
More complex and expensive
projects generally justify measurement at higher levels. Measures of
progress aren’t restricted to the purely financial. For example in the
case of leadership development these are some other measures to
consider:
·
Leading indicators of progress
or concerns (they provide advance notice of issues)
o
360 degree or multi-rater feedback surveys
o
Affiliation and satisfaction surveys
o
Goal alignment throughout the organization
·
Measures of activity
o
Frequency of developmental meetings of individuals and supervisors
o
Number and extent of organizational listening processes such as focus
groups
o
Number of development and affiliation plans in place and used
·
Measures of skill building
processes
o
Extent and nature of tools used to build leadership self understanding
o
Breadth of coaching/mentoring processes
o
Scope of learning activities to strengthen communication skills
Dan is presented with an array
of measures from which to choose. His choice needs to fit the needs of
his leadership audience, some will welcome sophisticated analyses others
prefer it simple. The depth of analysis needs to match likely outcomes
and spending level; more spending generally justifies greater depth of
analysis. By using selected measures Dan can move his organization
forward and show tangible progress. His seat at the table just became a
throne.
Myths about Income
Sometimes we build mental pictures from prevailing
views shaped by fragments of information in the news media. One such
situation is that of income and wealth distribution. To provide more
in-depth information, in the September/October newsletter we looked at
statistics that show growing inequity in U.S. income and wealth
distribution since the early 1980s. Here we will look at one aspect in
more depth, examining income inequality and national prosperity for a
number of countries. In doing this we will explode some myths.
The line on the following chart shows one measure
of income inequality, the Gini coefficient, referencing the right axis.
A Gini coefficient of 0 means complete equality, a value of 1 means one
family owns the entire wealth of a country, in other words complete
inequality. The bars on the chart show Gross National Income (GNI) per
capita in 2002 US$ referencing the axis on the left. The Gini
coefficient and GNI per capita are shown for a range of countries listed
on the horizontal axis at the bottom.
Overall, we see vast differences in income
inequality from the egalitarian Scandinavian countries and Japan at the
left side of the chart with Gini coefficients around 0.25, to some South
and Central American countries and South Africa showing gross income
inequities at the right side of the chart and Gini coefficients above
0.5. The U.S., shown by the tallest bar towards the right side of the
chart, has a Gini coefficient greater than 0.4, and income inequality
that is closer to a South American country. What are some myths
dispelled by this chart?
·
Myth: it is necessary to build a society based on a
Darwinian survival of the fittest approach driven by individual and
corporate greed to achieve prosperity.
o
Reality: Norway, Switzerland and other Scandinavian
countries achieve superior GNI per capita levels in societies that
provide greater support for their poorer and weaker members.
·
Myth: the U.S. is the most prosperous country in the
world providing the highest standard of living for its citizens.
o
Reality: while the U.S. has generated remarkable overall
prosperity, our GNI per capita is exceeded by that of Norway and
Switzerland. Indeed, if the much greater degree of income inequity in
the US is considered, along with significantly fewer safeguards against
financial deprivation, the average citizen in the U.S. may be at a
significant disadvantage. The advantage in the U.S. accrues to those
few who amass great wealth.
·
Myth: developing economies always display vast income
inequities.
o
Reality: Egypt and Bangladesh have more equitable income
distributions than the U.S.
As with the information we saw in the
September/October newsletter, this chart is a reminder for those of us
in the U.S. to advocate for those who are disadvantaged and in so doing
build a strong foundation for a society that offers opportunities to
all. This chart calls us to re-examine compensation practices in our
organizations that disproportionately reward those with power, and to
re-examine national policies, such as taxation and healthcare, that
marginalize large segments of our population.
Quote
“Come to the edge” he said. They said, “We are
afraid.” “Come to the edge,” he said. They came. He pushed them … and
they flew.
Guillame Appollinaire, quoted in Leadership from
the Inside Out by Kevin Cashman
Upcoming Elsdon Organizational Renewal (EOR) Events
·
Building Employee Commitment in
a Growing Economy. 56th Annual California Groundwater Association
Convention and Trade Show Concurrent Session
(California
Groundwater Association Events, http://www.groundh2o.org/events/events.html)
o
November 6, 2004, Silver Legacy Resort and Casino, Reno, NV
·
Staying Career Fit. San
Francisco State University
o
November 11, 2004, San Francisco State University
·
Research in Career Development.
Class in John F. Kennedy University MA in Career Development program.
Fall Quarter 2004.
·
Coming in early 2005
o
Presentation for HR Connection
o
Presentation for ASTD Mount Diablo Chapter
o
Presentation for Haas School of Business Alumni
About EOR: Our Value Contribution
We enhance your workforce, leadership and organization by:
·
Using proprietary approaches to understand workforce and leadership
challenges
·
Creating tailored action plans and solutions to strengthen workforce and
leadership practices
·
Building individual capabilities and contributions
We enable you to focus on external results and building value, confident
that your organization and leadership are operating at peak
effectiveness.
Our Mission
To support your organization by enhancing performance, productivity
and effectiveness through revitalized workforce relationships and
leadership practices.
Our Approach and Values
We tailor our engagements
to the needs of each organization with a process designed to surface
critical issues, identify root causes, build effective solutions,
monitor progress and implement.
With a scope that ranges
from system and organizational interventions to work with individuals,
our focus is on the heart of the relationship among the individual, the
organization and the community. We believe that organizational and
community prosperity are built on enabling each person to fulfill his or
her potential.
Our Services
We work with individuals and groups in your organization to drive
performance and development for both the short and long term. As result
people will choose to work in your organization and will prosper there.
We bring solutions when you need to:
·
Reverse declining revenues and performance
·
Revitalize your workforce
·
Stem the loss of key talent
·
Redirect your organization to new areas
·
Stop losing customers or market share
·
Penetrate new markets
·
Combat aggressive competitors
·
Handle major change
·
Break down communication barriers
·
Energize your leadership team
·
Successfully build on an acquisition or merger
Our proprietary services include:
·
State-of-the-art tools to take the pulse of your organization and then
move to action
o
Web enabled systems
o
Experts to gather and analyze information, moving your organization to
action
·
Individual leadership coaching to give you world class leadership
capabilities
o
Leaders who know themselves and their aspirations, build their
capabilities and become catalysts developing others
·
Workshops to build interpersonal skills in your organization so that:
o
Communication is timely, concise, accurate and personal
o
People listen to each other
o
Negotiations are quick and effective
o
Differences create rather than destroy value
o
Teams move forward, get results and quickly commercialize new products
and services
o
People understand and link their motivations to your organizational
needs
o
Your teams understand what it takes to create a committed, energized
workforce
o
People use their time well
·
Systems that make it easy to drive performance and build capabilities
by:
o
Linking objectives throughout the organization
o
Strengthening key competencies
o
Making sure you have the bench strength where and when you need it
o
Giving people tools to take charge of their own careers, development and
have a major long term influence on your organization
·
Proprietary simulation and modeling techniques that let you explore how
to maximize the value of your workforce
o
Move from guessing what might happen to looking in depth at the
financial impact of different approaches
