The last decade has brought a lot of changes to what is expected from the Human Resources function and an accelerated evolution to what is called the “new generation” HR. Few companies today remain unaware that HR can no longer exist as a support function and even the much-cited “earning a seat at the (executive) table” is getting history, as it becomes clearer every day that excellent HR is more about “owning” that table.Both HR professionals and business leaders need to understand that HR is about a set of results, not about HR. What the business requires from HR is to build a set of integrated solutions, move away from the traditional role of executing HR processes, and use these processes and solutions to accelerate business and create a competitive advantage.To achieve this shift from activities to business-relevant outcomesandcreate a more agile organization in the process, the HR organization needs to:
encourage new ways of working,
learn to collaborate cross-functionally and respond faster to changing business priorities,
tap the potential of new technologies and
leverage advanced data analytics to give relevant insight and inform business decisions.
Getting data-driven starts with getting data ready. With an enlarged focus on driving higher productivity, as well as engagement, the HR new function must look beyond basic employee metrics to harness nuanced insights on individual working preferences, career goals, and turnover risk. With latent talent shortages and highly dynamic markets, the HR organization must also focus on continuous reconfiguration to stay current with the marketplace. In the HR professional’s new role, business literacy and quantitative acumen will become even more important. They will need to collaborate closer and more frequently with Operations and Finance peers, interpret the HR data analytics side-by-side with data from these groups, and contribute with data-driven insights. A data-driven HR function that can make fact-based decisions, predict workforce trends, and flag areas of concern is critical to creating a people-first organization that aligns with employee needs. Thus become not only another stakeholder at “the table”, but provide leaders that are key strategists and decision-makersin a world of work that truly demands their knowledge and insights.
What is the problem then?
The people analytics revolution has been discussed for a decade now, expecting it to bring us in a new era for HR. But so far, the revolution is for an elite few, not for the masses. Too many companies say they still need help with putting basic people analytics into practice while too many HR departments are still stuck struggling with the basics. The most cited reasons for this situation include:
HR has more data than ever before but lacks knowledge on what to measure or what to do with the data
Poor data governance entails dealing with excessive, unintegrated, unreliable data
Analytic capability to turn data into insight is insufficiently developed within the HR teams
Cloud solutions and cutting-edge technology to enable streamlined and automated HR processes are expensive
Hopefully, this is about to change as 73% of companies declare that improving people analytics will be a major priority for the next five years. Some changes are already in sight, including:
A new profile of the HR professional is emerging and a brand new set of competencies are required, as shown by research led by LinkedIn that indicates a significant increase in HR professionals with data analysis competencies.
Over the last five years, the research showed a 242% increase in HR professionals with data analysis skills.
Companies have realized that starting small is ok. Value is added right away by combining reliable data with metrics that matter, while also preparing HR for advanced analytics in the future. The experience of these companies give us some insight on where to start:
a data plan should start with identifying metrics that matter to produce a report or dashboard that actually fits the intended purpose of tracking progress toward an objective, a critical workforce trend, or to inform a specific workforce decision.
reports and dashboards should be less ambitious and more focused on the most important talent issues, so the number of metrics should be limited to 20 wherever possible. Small, easy to understand dashboards that drive action can produce a big impact.
Fulfilling the promise of the Data Driven HR is not easy and the challenges are real. Embrace it as being the unavoidable future and accept that more often than not the biggest obstacles are not of a technical nature, but cultural. And the main one is the way HR still regards itself as being a non-business function, while all success stories prove that HR excellence starts and ends with a deep understanding of business.
The COVID-19 pandemic has left a strong mark in all aspects of our lives. It has impacted society – our habits, routines, and the way we interact. It has pressured the economy, its financial stability, and the way we do business.
Thus, what has changed in the way managers are doing performance management in these volatile times?
1. The way we do strategic planning
Before the pandemic, risk management, scenario planning, and business continuity plans were specific to large corporations. Nowadays, even small organizations will have a plan B ready for different scenarios of the COVID-19 evolution. There are industries, like retail, where all planning revolves around foresting based on historical data. Nowadays, using data from the past to plan the future seems a futile attempt to regain the feeling of control.
Moreover, most organizations, regardless of their industry, rely on annual if not 3 to 5 years planning. It is obvious that in the present circumstances and given the complexity of managing a business nowadays, these strategic planning practices seem useless.
2. The importance given to performance measurement
More than ever before, real-time data is a vital management tool. Access to data is critical in managing a crisis. One of the positive side effects of the pandemic was the pressure to digitize operations that create opportunities for data collection and better measurement of operations.
3. The way employees can be evaluated
Remote work and hybrid systems (combining work from home with office time) are no novelty, but in the COVID-19 circumstances, they gained significant recognition and became the norm rather than the exception for many organizations.
Managers and team leaders can no longer directly observe employees. There is a series of soft competencies, like communication, collaboration, proactivity, and creativity that are very difficult to evaluate in an online working environment, and yet they are essential skills for many jobs.
What is the way forward?
1. A different way of planning
Risk management must be an inherent part of organizational strategy, regardless of the company size. You don’t need a risk management office to have a proactive management approach and handle risks well. Small organizations can use their performance scorecard and populate it with leading KPIs or Key Risk Indicators.
For example, setting a red line level for # Days in accounts receivable can help you manage better cash flow, monitoring # Safety non-compliances can provide insights into the risk exposure to # Work accidents resulting in mortality. Identifying different scenarios in key areas of business and having contingency plans can give any organization a heads-up in case of a crisis.
Strategic planning must concentrate on shorter time horizons and reassess a series of factors that organizations may not have considered on a quarterly basis.
Government interventions, international economic context, competitors’ reactions, customers’ preferences, customers buying power, suppliers’ situations, internal capabilities and optimization potential, and employees morale and productivity are factors that have changed post-pandemic and need to be investigated. Moreover, agile strategic planning processes must be set in place to enable the organizations to react fast to changes.
In the face of chaos, the most effective tool to put everyone on the same page is to use clear objectives, KPIs, and initiatives, even short-term ones. The challenge is to adapt the measuring and reporting of performance to respond to tight deadlines. Data must be available fast, preferably in real time.
Thus, identify five to 10 KPIs that are easy to use, concise (tackle the problem directly), and can be collected with high frequency (weekly, monthly). These will be the ones that help you navigate a crisis. Now is the time to replace complex measurements and reports with simple yet relevant tools.
In the medium term, most likely for many organizations, the entire strategy must be reconsidered and linked to relevant performance scorecards in which simple measurements can be combined with more complex KPIs to provide a holistic overview of performance.
3. Focus on building the right mindset for each job than defining the specific job outputs
Many organizations invest a significant amount of time in identifying the right KPIs and targets to capture as precisely as possible the employee’s performance or productivity. Moreover, the more complex the job is, the more difficult it is to capture all contributions in relevant KPIs. In a volatile business environment, such an approach makes targets and KPIs obsolete the moment they are communicated.
The performance criteria used for employee evaluations should be flexible, easy to adapt and more focused on the extent to which the role is successfully achieved, as compared to looking at operational details. For example, it should be less important if the employee delivered one or three safety awareness sessions to factory workers if their awareness level is at the desired level.
One methodology that can be used at the employee level is the Objectives and Key Results Framework. OKRs are set and reviewed quarterly, but they can be changed even more often if the result set is no longer of interest. They emphasize on the importance of personalizing the objectives and key results and making the employee accountable for setting and monitoring them. Not all key results have to be KPIs; some of them can be reflected by completing an initiative or other types of results.
The end purpose of an OKRs system is not to compare employees or indicate what percentage of your staff are high performers. This methodology aims to facilitate communication, clarify expectations, align work activities to corporate strategy, and to provide a tool for managers and employees for discussing individual performance and improvement opportunities.
If you can name one thing, what is the most important driving factor of your business? The answer might be varied depending on your line of work or industry, but there is one answer that would most likely resonate with all: the customer. People who work in customer engagement, sales, and other customer-facing jobs know it best. Yet it might help to take a better look at your customers and their behaviors, regardless of what your market is.
Customer service is an experience
Often overlooked as a complementary part of a business, many failed to consider how important it is to maintain a good relationship with the customers. Looking at it from the customer’s point of view, the service they experience can be a critical aspect that can help decide how certain products or services are valued in a company. A study published by Harvard Business Review concluded that customers do remember good and bad customer service experiences and are willing to reward companies that give them good services.
A similar survey conducted by American Express showed that seven out of 10 consumers in the United States decided to spend more money with a company that offered great customer service. Understanding what a good customer experience seems like a simple job. After all, almost all of us were customers for another’s business at some point. Even so, it is also a fact that bad customer experience has been the downfall of a lot of businesses.
An article written by Amy Gallo pointed out several things that helped determine what a good customer experience is. First, customers value your active presence in any online platform, including social media. The second is that customers value a fast and reliable response; some studies even show that a fast response is directly linked to sales performance.
Third, customers will feel more engaged with the business if they can get a response, regardless if it will be received with a bad, good, or neutral tone. Responding to both positive and negative comments is proven to give a better impact on the customer rather than ignoring them. Finally, it is important to build a personal connection with the customer; remember that customers are human beings too, thus it is important to treat them as a person. It is always helpful to try understanding them by reflecting on how you want to be treated if you were in their position.
The big potential in recurring customers
Acquiring new customers is important, but keeping your existing customer base is also very crucial. Research by Frederick Reichheld showed that a 5% increase in customer retention can boost your profit by 25-95%. It is also important to note that following up with existing customers often costs less than acquiring new ones. Signing up for the Certified Customer Service Performance Professional course can also help in helping your organization perform better with your clients.
It is a given that having a good customer engagement process will definitely help to secure recurring customers. Even so, it may be not enough to build a long-term connection. There are few other things to consider if you want to increase your client retention rate. Regular contact is believed to be the most effective way to maintain relationships and minimizing churn rate.
Keeping them in the loop for new products and taking note of their feedback can also positively impact your relationship with the customers. Similar to any other human relationship, it is always a good thing to feel involved and heard. Other benefits such as discounts or loyalty rewards can also boost sales. In the end, your customers are more than just numbers; they are the driving factors that deserve your attention.
A remuneration strategy is implemented by companies to attract high talent, reward employees for demonstrating the right behavior,and motivate people to achieve the organization’s goals.
The International Labor Organization (ILO) recognizes remunerationnot only as “the ordinary, basic or minimum wage or salary” but also “any additional emoluments whatsoever payable directly or indirectly, whether in cash or in kind, by the employer to the worker and arising out of the worker’s employment.” Wage differentials, benefits in kind, and allowances, such as those for travel and housing, are also considered remuneration.
To be effective, a remuneration strategy should have long-term and short-term incentives and combine monetary and non-monetary compensation.
As they face global competition, tight hiring markets, and the continuing need for performance, companies must develop a remuneration strategy that aligns with the company’s vision, values, and strategy, responds to market conditions, and complies with regulatory requirements.
Establishing specific principles on which the remuneration strategy is based has become a common practice in large organizations not only for recruitment and talent retention but also for promoting a high-performance culture.
Remuneration principles are abstract, affirmative statements that frame how remuneration decisions should be made. Distinct from rules, principles do not prohibit any remuneration practices and processes. Such principles are not tight constraints and are open to interpretation.
Moreover, remuneration principles are intended to guide remuneration committees towards better project pay arrangements and to decide upon rewards that encourage the desired behaviors required to drive long-term strategic success.
Market principle: An executive’s remuneration should be set relative to that of other executives, so that there is a degree of horizontal equity among executives.
Human resources principle: Consider talented executives’ preferences and expectations when negotiating the remuneration packages.
Fairness principle: An executive’s remuneration should be set relative to other employees in the organization, so that there is a degree of vertical equity from the highest to lowest paid employee.
Pay-for-performance principle: An executive’s remuneration should be tied to the firm’s performance.
Strategic pay principle: An executive’s remuneration should be tied to the firm’s strategy.
Motivation principle: Variable remuneration should be used to motivate an executive to maximize his/her effort.
Ability-to-pay principle: The board should take the firm’s financial position into account when deciding on an executive’s potential and actual remuneration.
Conformance principle: The board should take best practice, regulations, and the legitimate interests of stakeholders into account when deciding on executive remuneration.
Independence principle: An executive should not be involved in the setting of his/her own remuneration.
Consultant principle: The board should seek advice from specialist, independent remuneration consultants when making decisions on executive remuneration.
Transparency principle: The board should disclose the firm’s remuneration policies and practices.
Case: Eagers Automotive’s remuneration strategy and principles
Eagers Automotive is one of the companies that attach great importance to the development of a remuneration strategy. However, the company faced many challenges in 2020 mainly because of the COVID-19 pandemic, when the demand for vehicles was drastically reduced.
Eagers Automotive experienced historically low sales figures. In this context, they had to take decisive actions in terms of remuneration to implement a cost reduction initiative. As a result, the overall remuneration for directors and other employees during 2020 was down 23% on the prior year.
As restrictions eased and vehicle demand rebounded, the company was able to deliver exceptional sales during the remainder of 2020.
After the strike it received in 2020, the company had to develop a new remuneration framework for FY21 that is more closely aligned with market practices. Figure 1 shows the company’s remuneration framework for FY20.
The Board has engaged with shareholders, proxy advisors, and other stakeholders to better understand their concerns and has also obtained independent external advice on their remuneration framework.
As a result, several changes have been made to the remuneration framework while maintaining a strong pay-for-performance culture.
Eagers Automotive’s remuneration principles are in accordance with the principles promoted by specialists in the domain. Based on their new strategy and principles, the company implemented several changes to the previous remuneration framework, particularly on short- and long-term incentives.
Based on the company’s annual report 2020, some of them were:
“Short-Term Incentives (STI)
A new remuneration framework is being introduced for FY21.
The STI Plan for FY21 will be assessed against both financial and non-financial performance hurdles and will be awarded in a mix of cash and equity.
Long-Term Incentives (LTI)
A new LTI plan for FY21 will be introduced with a performance period of 4 years and awarded wholly in equity.
The new LTI plan will include appropriate change-in-control and claw-back provisions in line with market practice.
Other:
Improved transparency and disclosure in relation to the remuneration framework and structure”
With the changes they implemented, the company took into consideration the principles and the strategy they developed. They promote equity, transparency, pay for performance principle, and flexibility.
In addition, they intend to remain competitive by attracting and retaining quality talent and remaining aligned with shareholder interests.
Eagers Automotive based their change decisions on the remuneration principles they developed, so that it would be able to deliver remarkable results in the future while maintaining a strong pay-for-performance culture.
Time is becoming a scarcity due to the rapid developments in technology. Information overflow, the need for change, and a shift in priorities are often a response to the increasing demand for products and services accelerated by the expanding global competition. Therefore, the ability to optimize one’s time to improve performance and increase productivity is a skill that is highly valued in today’s workplaces.
However, to grow such a skill, one must also deal with procrastination which includes the tendency to avoid starting and finishing tasks, as well as poor time management. As such, this problem of procrastination is becoming frequent and costly, especially for businesses. Some studies found that 30-65% of this wasted time is suggested to contribute 30-40% of productivity loss. This, in turn, was found to incur annual losses amounting to $8,875 per employee, adding up to $85 billion per year in the US only.
Therefore, it’s crucial to understand the act of procrastination. This includes defining what it is, why people do it, who does it more, how it is done, and what happens as a result of it. From there, one can understand ways to reduce it and decrease its impact.
Defining procrastination
Procrastination is a trait that has been defined as the tendency to “voluntarily delay an intended course of action, despite expecting to be worse off for the delay”. Organizational researchers studied irrational delay of work but referred to aspects such as time management at work, cyberslacking, and presenteeism. In terms of the workplace, employees procrastinate in two ways: soldiering and cyberslacking.
Soldiering is the act of avoiding work without passing it on to their colleagues. Examples of this include daydreaming and having extended coffee breaks. Meanwhile, cyberslacking is spending time in digital media which includes online shopping, gaming, or engaging in instant messaging. This is more detrimental as it has seen reduced performance and lower network security, incurring costs of around $130,000 per organization in the US alone.
Different conditions can explain why procrastination happens. For example, employees with high education, income, and job autonomy levels are more likely to procrastinate. These employees experience what researchers call “time famine” wherein the pressure to meet multiple deadlines is unequal to the time they have to complete them. Meanwhile, lower-level employees tasked with work requiring less cognitive complexity can perceive the work as boring and can often engage in procrastination.
Impact at work
Employees often take breaks to re-energize. However, excessive breaks may result in procrastination that leads to costly delays. Furthermore, employees commonly face interruptions like procrastination that lead to work disorganization and can affect the completion of a task.
Procrastinators may choose to work on achieving easy and short-term goals instead of striving for hard and long-term goals. Even if they choose to go for easier work, their goals are vaguely set without deadlines or evaluation of progress. Due to this, they are more likely to be behind schedule on their projects and have lower scores on aspects such as time management. They also make more errors and work slower than non-procrastinators when performing time-limited tasks.
As a result of procrastination, an employee would be likely to experience low self-esteem and a lack of impulse control. They would also have higher levels of anxiety compared to non-procrastinators. This creates a vicious circle of procrastination to make up for their anxiety and improve their mood. They are also found to be relatively more agitated, dejected, anxious, and miserable in the long run.
Solving the problem
Procrastination is the silent killer for any organization today. It is also an underestimated problem that can end up incurring massive financial and productivity losses. Organizations should give more attention to solve this issue and maintain effectiveness. To do that, here are some ways that organizations can tackle employee procrastination.
First, organizations should provide training employees on time management to reduce the tendency of their employees to procrastinate. Some studies showed that a one-month training course on time management reported a significant decrease in avoidance behavior and worry. Research also showed that this can reduce procrastination by increasing the ability of employees to manage their time better.
Second, providing training on self-regulation skills which can relate to sales performance and prove to be important in time management. As self-regulation can help improve one’s self-control, it also instills the practice to achieve goals that have long-term gains instead of short-term gratification. Additionally, developing this skill helps foster high job performance amongst their employees and curb counterproductive behaviors.
Finally, organizations can make use of job crafting to motivate their employees to be more involved in their jobs. This includes deciding over different aspects in how they want to work on tasks to match their preferences, skills, and competencies. This can be a useful strategy to make the job more interesting for employees and limit procrastination.
