Big ideas debunked

While HR was once considered an easy sell for the next big idea,
increasingly they have to stand up to scrutiny.  Jane Lewis highlights what’s wrong with stress, flexible working
and work-life balance, competencies, 360 degree appraisals, best practice and
intellectual/human capital

The best thing about big ideas is the genesis moment. Think Archimedes in
his bath, or Jack Welch stumbling across the Six Sigma one day on the beach.
Trevor Baylis, British inventor extraordinaire (nutty persona, messy workshop),
usually has his watching television. But my favourite at the moment
immortalises that historic moment in 1998 when four members of KPMG’s Amsterdam
team completed their theory on Value-based Knowledge Management.

"You know, I do believe we’ve done it," said René Tissen.
"Together we’ve done it." Outside a soft flurry of snow was turning
the patio a whitish grey. It softened the austerity of the consultancy’s tranquil
Japanese-styled garden… They raised their glasses of mineral water in a sober
toast.

OK, so it’s easy to scoff. But we all know we would be lost without big
ideas. They are the main reason why the global management consulting industry
is now worth around £100bn a year and they’ve been responsible for pretty much
every wave of corporate software that has been enthusiastically embraced (and
quietly shelved) over the past 20 years.

In recent years, HR has become a favoured target for the ideas merchants.
This may be because the profession has finally come of age. But it is just as
likely down to HR’s reputation as the last ‘unreformed’ bastion of the old
corporate regime. In his very pessimistic report, Britain’s World of Work –
Myths and Realities, Robert Taylor shoves in the knife big time. In most
enterprises, he says, it is hard to discern the advance of any "coherent
human resource management agenda".

This, of course, makes HR a comparatively easy sell. Vendors are well aware
that the majority of people managers are keen as mustard to appear progressive
because they believe it will boost their wider credibility.

Old wine, new bottles

Be honest: did you really sign up for that 360-degree management appraisal
scheme because you had concrete proof it would improve the fortunes of your
company, or was it: a) because everyone else was doing it, b) because it made a
nice standalone project, or c) because you knew it would look good on the CV?

By the time you reach 35 years of age (and have thus experienced most stages
of the economic cycle first-hand), you are rarely surprised by a big idea. As
Robin Davies, managing director of Penna Change Consulting, points out, most
‘new’ concepts have been around for years – it is frequently a case of putting
‘old wine in new bottles’.

His contention, however, is that many of these ideas are intrinsically
worthwhile. If they fail, it is largely down to poor management rather than the
concept itself. "A sledgehammer can be a crafting tool, or it can just be
a sledgehammer," he says.

Others take an altogether more cynical view about the real worth of a lot of
these theories. But as you weigh up your own position, remember that one thing
is certain: you are going to be encountering them, in all their various guises,
time and again throughout your career. You may as well get thoroughly
acquainted with some of the pros and cons now.

Stress

The big idea

Not so much a big idea as the recognition of a growing malaise that needs to
be tackled. The causes of stress have been scientifically proved, says Cary
Cooper, professor of organisational psychology at the University of Manchester
Management School. Stress is not the catch-all term that some critics claim.
"We know precisely what it is and what damage it can do. It’s not
airy-fairy, it’s precise. Stress is not pressure – that’s fine in itself.
Stress occurs when you exceed your ability to cope with pressure."

Professor Cooper contends that the causes of stress in the workplace have
also been scientifically identified. "We know that lack of control and
autonomy, long hours, lack of job satisfaction and bullying can all cause
stress". What we can’t yet identify, he adds, is how resilient an
individual may be at coping with pressure. At present we can’t predict the
impact that exposure to a stressful environment will have on a person. "It
depends on genetic make-up. You could suffer mental failure, I could get heart
disease.

"We don’t need to study whether stress exists," he concludes.
"It does. What we do need to study is how to prevent it."

The common reality

"Personnel managers may not realise the harm that stress management
ideology is doing in the UK," says Angela Patmore, managing consultant at
the Nerve Centre. "People are being misled by their own perfectly normal
mechanisms. They believe they are mentally ill when they are not and believe
they are being driven beyond their capacity to cope when they are not. There
are now more stress management people in the UK than members of the armed
forces, yet the stress statistics are skyrocketing. The industry tells us that
stress is caused by overwork, but there are many robust studies showing it is
also caused by underwork and by no work at all, so vague and meaningless is the
controlling term.

"This constant barrage of misinformation has brought Churchill’s
‘lion-hearted’ nation to its knees. People can’t stand in the supermarket
check-out queue now without imagining themselves to be suffering from a form of
shell-shock. It is deeply demoralising and harmful. The traditional method of
training people to withstand pressure is inurement – graduated exposure to
distressing circumstances. Such character-forming pursuits have been a feature
in education and training across all ages and cultures. They are the precise
opposite of ‘stress management’ which simply overprotects people and makes them
emotionally unstable."

Flexible working and work-life balance

The big idea

Rigidity has no place in the modern world and the logic of offering
employees flexible working patterns that better reflect the lives they lead now
is irrefutable. The movement has been fuelled by a host of wider social,
demographic, economic and technological changes. There is also strong evidence
that flexible working also benefits organisations, giving them access to a
wider talent pool and helping control costs. A common trait shared by
successful businesses, says Bruce Tulgan, author of Managing Generation X, is
that they "staff the work, not the job".

A flexible workforce is also a powerful economic weapon because it helps
safeguard against inflation.

You only need to look at an organisation such as Asda to see the huge effect
that an awareness of work-life balance can have on job satisfaction. "In
all the work we have done, what clearly gives people a sense of empowerment is
choice," says Robin Davies, managing director of Penna Change Consulting.
"The trust element [between an individual and their manager] that comes
through flexible working is in itself beneficial."

Indeed, the freedom to work flexibly if so desired, is an essential tenet in
the new psychological contract between employers and employees. Surveys show it
is one of the most powerful incentives for attracting and retaining staff.

The Government now plans to enshrine the concept in law. Its forthcoming
Employment Bill includes a ‘right to ask’ for more flexibility in working for
parents of small children. But this is likely to prove a much bigger watershed.
To avoid resentment, employers will have to offer such incentives to all staff.
The movement towards offering a new work-life balance is unstoppable, mainly
because it is what everyone wants.

The common reality

"A disturbingly wide gulf exists between the over-familiar rhetoric and
hyperbole [of flexible working] and the realities of the workplace," says
Robert Taylor in Britain’s World of Work – Myths and Realities, a report based
on research by the Economic and Social Research Council (ESRC). "It is
hard to find much evidence for any widespread ‘psychological’ or mutually
acceptable trade-off between the needs of companies and the demands of their
employees". In fact, the research shows that employee satisfaction since
1992 – which arguably marked the onset of the flexible working movement – has
declined. There is a huge gap in take-up between the offer of flexible working
and its actual practice. Employees are often reluctant to step forward and ask
for a better deal for fear of damaging their career prospects.

"My hard-nosed view is to ask why any business leader should be
interested in improving work-life balance", says HR consultant Paul Kearns
of Personnel Works. From a company perspective, flexible working invariably
means disruption and added admin. "Unless it fits a basic business
objective, what is the point?" he asks.

Managers ought to be looking at the business needs," he adds. "If
they agree to anything it is because they are doing a trade-off. They’d rather
have a key person half the time, than not at all. We’re all trying to get as
much as possible out of life, but to expect companies to get involved in our
private lives suggests business has a social responsibility, which it
doesn’t." If you don’t want to work the long hours a particular position
demands, get a new job. Many employers in France, where the government has
legislated for work-life balance by imposing a 35-hour week, claim the move is
crippling them.

In the US, where some 60 per cent of companies claim to offer work-life
services, it is becoming plain that the main economic beneficiary is the
service-provider industry. Bent on increasing their ‘share of the customer’,
many providers have persuaded companies to offer staff such esoteric services
as pet care and concierge. Moreover, as the former Work Foundation employment
expert Richard Reeves suggests in his book Happy Mondays, there is plenty of
evidence that employees enjoy their time at work. Forty-nine per cent of those
surveyed by the ESRC said they worked long hours because they found their job
interesting and/or wanted to spend less time at home.

Competencies

The big idea

Too often, promotions and appointments are made on the basis of "gut
instinct or even likeability", says Umist’s Professor Cooper. "A more
scientific approach yields better results." It stands to reason that if
you can fit the best person to the right job there will be substantial benefits
for all concerned. To do that, you need to be able to evaluate the competencies
a particular role demands and find as good a match as possible with what an
individual has to offer.

"A competency framework should be at the heart of any HR
strategy," adds Davies at Penna Change Consulting. There is overwhelming
evidence that so long as it is properly carried out, it considerably boosts an
organisation’s intellectual capital and thus overall performance. Assessing
competency is also critical to getting the best out of individuals: by
identifying areas of weakness, you can target training and development much
more effectively. And the process has never been easier – there are now any
number of efficient tools and methodologies on the market to speed it along.

Competency assessments can also have a valuable knock-on effect on companies
because it provides the discipline every organisation needs to scrutinise
itself properly. The very process of clarifying roles, and identifying and articulating
key skills, raises useful questions about where a company is going – and
reveals a good deal about whether its aims match up to the reality.

The common reality

"The jury is still out on competencies," says Mike Haffenden of
Strategic Dimensions. "If you’re looking to recruit a hairdresser or
plumber, a competency framework can work well. But at management level it is
much more questionable." Indeed, he suggests that a close scrutiny of many
successful boards would show a decided mismatch between official senior
management competencies and the real thing. "The point is that you can’t
carve people into different packets." Neither can you anticipate how they
will behave in certain circumstances. Human beings are just too complex to be neatly
categorised.

Paul Kearns agrees. "It’s nonsense, it doesn’t make sense," he
says. "I know lots of executives missing these competencies who are really
excellent managers. The best performers often break all the rules. And the
things that really count – judgement, initiative, drive and intellectual
capacity – are very difficult to measure and impossible to instil through
training. Therefore, the development argument doesn’t really work.

Above all, Kearns contends that competency assessment is an incredibly
wasteful exercise, diverting time and resources that would be better spent on
other things. It is all too easy for HR to get bogged down in the academic
intricacies of defining competencies and forget the real point of the project.
"NatWest, for example, identified over 180 different competencies and had
to compile a dictionary to explain them all. The whole thing became a
bureaucratic nightmare". Even the practice’s most ardent defenders, like
Davies at Penna, concede that many projects get lost in ‘Lord of the Rings’ language
and often "run out of steam" because they’re not managed properly.

360-degree appraisal

The big idea

The 360-degree appraisal is the best method yet of gaining an objective view
of how an individual really operates in a given environment. "Assessing
people and gaining insight into their strengths and weaknesses requires a rich
base of information and multiple points of view," write the authors of the
War on Talent, Mckinsey consultants Beth Axelrod, Helen Handfield-Jones and Ed
Michaels. 360-degree appraisal recognises that an individual’s performance has
major ramifications on those below them in the management chain as well as
those above. "Eight per cent of our survey respondents said working for a
low performer prevented them from learning, kept them from making contributions
to the organisation and made them want to leave."

"The great benefit of 360-degree appraisal is that it makes management
honest," adds Davies at Penna Change Consulting. Why settle for 90-degree
feedback, or even 270- degree feedback, when you can get the whole picture
instead? "HR has been very lucky for many years in getting away without
data". Now that it is available, use it.

The common reality

"360-degree feedback is just one of many practices that companies could
do without," says Haffenden at Strategic Dimensions. "It’s the sort
of thing HR people just get on and do without thinking about why they do
it." The real question is what is it supposed to achieve? "If I have
just fired 15 people, it will come as no surprise that most don’t rate me too
highly." And what do you do with the data? "Knowing something is
easy, changing it is much more difficult. And there’s no guarantee that the
input or information is valid."

Haffenden also contends that the process of implementing a 360-degree
feedback scheme is fraught with difficulty and often divisive from the start.
Do you, for instance, insist that the process be open and transparent? The
downside of that is that staff may be afraid to express their real opinions and
the end result is benign banalities. But a closed, anonymous system of
appraisal can have a devastating effect on morale and teamwork, particularly in
the type of company that encourages staff to compete and threatens poor
performers with the boot. This was seen in all its grizzly glory at Enron,
where managers frequently abused the quarterly appraisal system to shaft rivals
and build their own power bases. The upshot was an organisation driven by
political intrigue.

Best practice

The big idea

A key part of HR’s remit is to orientate people towards quality. Best
practice is one of the best ways to achieve this because it provides an
objective yardstick or benchmark. Moreover, in certain industries – especially
those where a customer’s personal safety or financial security are at risk –
adherence to best practice is crucial to confidence. An agreed best practice
policy also has an important role to play in any joint project or contract,
because it focuses the minds of both parties and helps head off subsequent
disputes. It is also a useful glue that helps cement together the many internal
departments of an organisation.

"Best practice is not a fad that comes and goes, it’s a logical
thing," says Penna’s Robin Davies. "It simply asks: what does good
look like?’ " Any company analysing its position in the market always asks
three basic questions: i) how are we doing currently? ii) what should we be
doing? iii) what is ultimately possible? The best way of gaining insight into
the last two questions is to study how other broadly similar companies have
succeeded. Why reinvent the wheel, when you can benefit from their experience?

The common realty

Despite all the talk of sharing, most organisations are keen to keep their
really effective best practices strictly under wraps for competitive reasons.
"Once a company establishes a new best practice, rivals tend to copy it
quickly making it difficult to sustain operational advantages," writes
Michael Porter in the Harvard Business Review. All too often, seeking out best
practice in other companies is an unstructured exercise in ‘industrial tourism’
which achieves very little beyond providing an away-day jolly.

But the chief problem with best practice is the resoundingly familiar one of
the difficulties inherent in attempting to apply a rigid formula to a set of
highly diverse circumstances. "There’s no such thing as best practice:
only different practice or, at a push, good practice, says Haffenden. "The
idea that one size fits all just doesn’t work. What works well in one
organisation may prove disastrous in another".

Internal best practice policies within firms can also have unintended
consequences that do as much harm as good. If enforced too stringently, they
can, ironically, lead to greater complacency. Why strive to improve something
if its best practice has already been set in stone?

Intellectual / human capital

The big idea

When asked to sum up why he was so successful, General Electric’s former CEO
Jack Welch claimed: "My main job was developing talent. I was a gardener
providing water and other nourishment." All the research seems to confirm
his view that nurturing an organisation’s intellectual and human capital is a
prerequisite to commercial success. According to the US-based Aberdeen Group:
"Effectively managed ‘people assets’ have the potential to increase
shareholder value among larger companies by as much as 30 per cent."

Given the importance of people to a company’s long-term success, it is
astonishing that it took companies so long to acknowledge – and attempt to
measure – the value of this asset in a formal way. The intellectual/human
capital movement, which began gaining ground in the early 1990s, attempts to
redress that situation by putting people and their skills on the balance sheet.
In many ways, it has proven the most important breakthrough for the HR
profession yet. "Putting a measurement around what we do is a very
honourable pursuit," says Robin Davies.

The common reality

Identifying and measuring intellectual and human capital may well be the
‘Holy Grail’ of HR, but that doesn’t stop it from being as elusive an exercise
as ever. And although some management tools – Watson Wyatt’s Human Capital
Index, for instance – purport to be able to capture this intangible asset and
translate it onto the balance sheet, most observers remain sceptical.
"No-one’s quite cracked the code on this one," says Robin Davies.

Few organisations have a rigorous and consistent approach for managing their
talent, let alone assessing it properly. This may be because most are fully
aware of the upheaval that implementing a fully-blown human value management
system would involve – and remain unconvinced that the outcome would effect any
real change in their company’s fortunes.

Indeed, some HR experts are convinced the profession has swallowed a red
herring with human capital. "It’s too complex and too difficult to
measure," says Haffenden. "And when it comes to putting a value on
companies, I’m not at all sure there’s anything wrong with using the [traditional]
financial methods".

He believes HR would have a much greater impact if it concentrated on
organisational and structural assets instead. "I’ve worked for great
companies and lousy companies and the people in them all were much the same.
What separated these companies were the systems and processes they’d evolved.
It’s the context in which people work – not the people themselves – that makes
the real difference."

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