HR policy and performance improvement: are systems to blame?

Are people to blame for poor performance or is it more often the system that employs them? Occupational psychologist John Seddon examines the systems in which we work and how they – not the people – are often the culprit for poor performance.

It was W Edwards Deming – the man behind the “Japanese miracle” in manufacturing 50 years ago – who taught that as much as 95% of performance was due to the system of work and a mere 5% to the people. If that’s true then much of HR policy, directed at the 5%, is of little value to performance.

The simplest way to see the truth of this proposition is to go to a service centre, a place where customers call in. Listen to calls. For each call, ask: what makes this call go longer or shorter? Write the causes down.

Your list might comprise: customer behaviour; compliance with processes; getting up to speed with a new development; the IT system; activity targets and incentives; adherence to standard times; worker competence; inspection requirements, and so on.

Then go through your list and ask yourself which of the causes are attributable to the system and which to the worker. You will arrive at an approximation of the 95:5 ratio, the vast bulk of the causes will be in the system.

You may be inclined to allocate any incompetence of the workers to the workers themselves as belonging to the 5%, but isn’t even that the responsibility of the system?

Improving the system

For each call, ask: was this matter resolved, so the customer would not have to call back? Pay attention to how many calls could be what I call “failure demand” – demand caused by a failure to do something or do something right for the customer. If your business includes a conventional command-and-control service centre, failure demand will be high.

Then reflect on the causes, the command-and-control controls, in particular standardisation, specialisation and activity management.

When we think about what’s wrong with command and control, it is not the “command” word – bosses are too bossy – that is the problem, it is the “control” word. (There are times when leaders should be bossy.)

The failure demand is systemic. Command-and-control thinkers blame people and processes but they are wrong, it is the system that is at fault. You won’t get rid of failure demand (and its associated costs) without changing the system. The command-and-control approach is not the right approach; it drives costs up and worsens service. HR’s interventions on the people will have little impact.

Customer demand

Imagine a better system, a service centre that gives customers what they need. To do that you need thorough knowledge of customer demand – the type, frequency and predictability of customer demand in customer terms – a far cry from the usual numbers which hide the volume of failure demand, treating it as just more work to be done.

That knowledge enables you to build the expertise required to serve customers into the front line. Front-line workers are unconstrained by activity targets – only the actual time taken is sent off to resource-planning folk – and instead are focused on solving problems for customers.

The immediate consequences are a rapid fall in failure demand, increasing capacity, a better service for customers and a happier working environment for service personnel. Compare: being constantly measured and evaluated by activity measures which make lottery of succeeding or failing versus going to work every day to solve problems for customers and learning to solve more. The motivation is intrinsic, no need for dysfunctional carrots and sticks.

If you think that fanciful, let me take you further. In the many organisations that have adopted this systems design the controls on work are knowledge of demand, a focus on only doing the value work (the thing that matters to the customer) and achievement of purpose in customer terms. As improvement is rapidly achieved on these “leading” measures, “lagging” measures (no longer used to manage performance) improve: costs fall dramatically, revenue increases.

Following this profound transformation the question becomes how can HR policy support the systems design? It requires a re-think away from policies based on people to policies based on the requirements of the system. The starting-point is the work. Using knowledge of demand to train front-line workers and ensure relevant expertise is on hand to increase their competence day by day; switching first-level management’s attention away from activity statistics and in to solving more problems for customers at the point of transaction. Management’s focus is on improving the relationship between demand, training and first-time resolution.

A systems design turns HR policy on its head. Intrinsic motivation over extrinsic, prevention over inspection, sharing in success over individual incentives, development over appraisal and culture change comes for free. Get ready.