turning human capital upside down: a surprising new paradigm for engaging workers
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Turning Human Capital Upside DownA Surprising New Paradigm for Engaging Workers
Tom DavenportMay 28, 2014
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Today’s agenda
Human capital – what is it? How human capital contributes to business success How to build it How to engage it The role of the manager Action items
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Human capital – what is it?
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Question – Which picture doesn’t fit?
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People are investors, NOT assets
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It’s time for a new metaphor – employees are:
Human capital investors
What is the organization worth to the people?
Assets
CostsFactors of production
Buildings, machines people – no difference
What are people costing the organization?
What are people worth to the organization?
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What the employee invests:
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Knowledge
Skill
Talent
Human Capital
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How human capital contributes to business performance
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The multiplier effect
Human Capital Engagement Productivityx =Energy andEnablement+
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Sustaining engagement
Human Capital Engagement Productivityx =Energy andEnablement+
Sustainable Engagement
Belief in company goals and objectives
Emotional connection
Willingness to give extra effort
Freedom from obstacles
Available resources
Support to meet work challenges effectively
Well-being Social supports in the
work environment
Sense of enthusiasm and accomplishment
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The top drivers of sustainable engagement involve leadership (executive and local) and workplace factors
Leadership1
Stress, Balance and Workload2
Goals and Objectives3
Supervision4
Image5
Source: Towers Watson 2012 Global Workforce Study.11
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Companies in the top quartile of sustainable engagement outperform others
0.1%
-16.2%
0.0%
-4.4%
4.5%
-20.6%
-1.2%
13.7%
2.9%
30.7%
7.2%
16.9% 19.1%
10.2%
-40%
-20%
0%
20%
40%
Earnings(EBIT)
Gross Profit Net Income Total Assets Earnings(EBIT)
CapitalExpenditures
Total Assets
High Sustainable Engagement Low Sustainable Engagement
1-Year Performance: Growth over Prior Year versus Sector Average
1-Year Performance: Growth over Prior Year
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Building human capital
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Organizations broadly, and managers specifically, must focus on both short-term and long-term human capital growth and performance
Knowledge Skills Talent Behaviors
Setting Directions and Goals
PerformanceGrowthCareer “path”
Manager Direct Development
CoachingTeachingInformingMentoringModeling
Other Learning Sources
On-the-job trainingTargeted projectsLearning-rich jobsMobilityCommunities of practiceLearning constellation
Giving Feedback
Informal – Frequent conversations
Giving Feedback
Formal – performance management system
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The preferred method of learning is to be shown how to do things and then to practice them
Percentage of respondents
Source: Who Learns at Work? Employees’ Experiences of Workplace Learning. Chartered Institute of Personnel and Development, 2008.
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Which states yield insightful solutions – and which don’t?
Positive mood Mindful, objective
reflection Non-directional
conversation Intrinsic motivation
Anxiety Problem focus Directive answers Extrinsic pressure
vs.
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The process, from Mindfulness to Action
MindfulnessIncrease
AwarenessWhat are the facts of the situation – objective, not problem-focused?What unfolded – viewed without judgment?
ReflectionIdentify Issues
What is the real issue (vs. the symptom)?What are the root causes of the problem?
InsightIdentify Solutions
What solutions are most feasible?Are the solutions obvious, or is there a creative way to respond?
ActionPlan and
Take ActionWhat actions are required?How can action begin quickly?What support is needed?
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Manager’s coaching roleDon’t Do
Provide answers Ask open-ended questions
Focus on problems, emphasize corrective feedback
Concentrate on facts (Mindfulness) and solutions (Reflection, Insights)
Provide neutral and positive feedback (accentuate the positive)
Reframe where appropriate
Ignore anxiety Acknowledge concerns but encourage solution focus
Stop at the obvious solution Continue brainstorming for insightful, innovative answers
Emphasize the bonus that’s at stake Emphasize the intrinsic rewards from success
Own the solution Require associate to own the solution
Leave the next steps unstated Seek commitment, near-term action
“It is a pleasure to give advice, humiliating to need it, normal to ignore it.” Anonymous
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Question: Name that statue
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When managers convey belief in people’s ability to learn…they do
Pygmalion et Galatee
Sculpture by Étienne Maurice Falconet -1763
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Engaging human capital investors
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Financial and non-financial compensation – what works?
High
Moderate
Low
Rel
ativ
e im
pact
on
indi
vidu
al p
erfo
rman
ce
Type of reward
Financial PositiveFeedback
Recognition Financial +
PositiveFeedback
Positive Feedback
+Recognition
Financial +
Positive Feedback
+Recognition
Stajkovic, A. and Luthans, F., “A Meta-Analysis of the Effects of Organizational Behavior Modification on Task Performance, 1975 – 95,” The Academy of Management Journal, Vol. 40, No. 5 (Oct. 1997), pp. 1122-1149. 22
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Case studiesCase 1Two groups of university students. One was paid for completing puzzles, the other wasn’t. Which group spent more time working on puzzles?
The Unpaid Group
Case 2Three groups of women interested in giving blood:
Group A – Asked to give voluntarily, no payment
Group B – Offered $7 to donate
Group C – Offered $7 to donate, with option to give the payment to a children’s cancer charity
Which group had the most donors? Which had the fewest?
52%
50%
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Case studiesCase 4Of the many species tested by scientists, which one most consistently declines to work for its food?
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Humans are contrafreeloaders – and nobody wants to be just part of the herd
Trudie
Cow # 4277,938 liters
7,680 liters
Source: Study by Catherine Douglas and Peter Rowlinson of Newcastle University
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The role of the manager
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The Manager Redefined performance model
Authenticity and TrustAuthenticity and Trust
Developing People
Crafting Jobs
Delivering the Deal
Energizing Change
High-Performing Managers Excel in Five Categories:
Source: Manager Redefined: The Competitive Advantage in the Middle of Your Organization, Jossey-Bass, A Wiley Imprint, 2010.
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Manager performance typology
Delivering the Deal + Crafting
Jobs
Authenticity and Trust + Developing People
LowLow
High
High
Growth Environment
Performance Environment
Balanced Strengths
Strong on Energizing
ChangeStrongest managers help drive competitive advantage:Higher sustainable engagementGreater retentionBetter employee health
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Having great managers is associated with excellent results
Source: Towers Watson Global Workforce Study 2012 – Global Data Set.
Per
cent
Fav
orab
le
Sustainable Engagement I would prefer to remain
with my company even if a comparable job were available in another company
How would you describe your health: Very Good or Exceptional
Pointy-Haired Boss Good Boss Great Boss
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The manager must craft a job and a work environment that build and sustain employee engagement
Autonomy Energizing goals Development Rewards and
recognition
Job Resources
Job Challenges Range of
responsibility Workload Urgency
Hindrances Resource shortfalls
(including staffing) Role conflict and
overload Workplace risk Politics
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When they succeed, they create…
Job Challenges and Demands
Job Support and Control
HighLowLow
High
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…fulfilling jobs
Job Challenges and Demands
Job Support and Control
HighLowLow
High
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When they fail, they create stress…
Headline on a tech blog:“First, Kill All the Managers.”
On a blog entitled “I Don’t Want to Be a Manager”: “Middle management has become a euphemism for meddling, ineffectual supervision and frustrating career coma.”
An article on Business Insider begins, “To many people, middle management is a punch line — the physical embodiment of bureaucracy.”
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…that increases the odds employees will suffer symptoms of physical ill health
Job Challenges and Demands
Job Support and Control
HighLowLow
High
1.3
1 1.8
2.9
Source: de Jonge, J., Bosma, H., Peter, R and Siegrist, J. “Job Strain, Effort-Reward Imbalance and Employee Well-being: A Large-scale Cross-sectional Study.” � Social Science & Medicine, 50 (2000), 1317 – 1327.
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Odds of physical symptoms from demand-control imbalance
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Knowledge
Manager
SkillsTalen
t
BehaviorsEnergy
Employee Contributes
Transactional Rewards
Relational
Rewards
Employer Reciprocates
Managers also play a key role in the reciprocal relationship between individual and organization
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When they succeed, they deliver a fair deal
Effort
Reward
HighLowLow
High
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When they fail, the result is another source of stress, again increasing the odds of physical ill health
Effort
Reward
HighLowLow
High
1 2.0
2.1 3.2
Source: de Jonge, J., Bosma, H., Peter, R and Siegrist, J. “Job Strain, Effort-Reward Imbalance and Employee Well-being: A Large-scale Cross-sectional Study.” � Social Science & Medicine, 50 (2000), 1317 – 1327.
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Hanging out at the corners
Job Challenges and Demands
Job Support and Control
HighLow
Low
High
HighLow
High
Low
Effort
Reward
Exploita
tion
Fairness
Higher engagement, health, productivity
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Financial rewards are at the tail of the dog, not the nose
Job design balancing challenge
and support
Work that
matters
Autonomy – influence,
being heard
Developmentopportunity
Intrinsic rewards,effort-reward
balance
Financialrewards
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So what’s the problem?
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Overstressed managers, frustrated
employees, higher
turnover, lower productivity
Many companies have allowed the manager’s job to become a death spiral
You’re our best producer, sowe’re promoting you to manager
But keep producing — after all, you’re the best
And we’re expanding your span of control,
to save money
We’re focusing your pay chiefly on your personal
production
Unfortunately, we can’t offer training for new
managers
And don’t forget to master manager self-service so you can reduce HR’s burden
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One more time — what’s the right metaphor?
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If employees are assets, we will:
If employees are investors, we will:
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Questions?
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Contact information
Thomas O. DavenportSenior Consultant
345 California Street, Suite 2000San Francisco, CA 93104
T +1 415 733 4280
tom.davenport@towerswatson.com
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