Let me begin, here, with the end in mind: human resources units should operate based on the principles of strategic management in inquiry. That being said I’ve always found it puzzling—especially in larger organizations—why leaders can’t see much value for the human resources function other than occasional staffing, training, benefits administration, payroll and other transactions. In fact, there are an increasing number of companies that are using business resource outsourcing to shift this cost center to another business whose economies of scale are supposed to drive down costs. Depressingly, when I lead strategic planning sessions, if someone from HR is present, she (and I mean she) is taking notes and managing donuts, coffee and lunch.
The strategic aims of human resources are similar to and should align with the overall strategic vision, mission, goals and objectives of the organization. At the heart of strategic planning is the ability to answer and respond to questions about the competition (Noe, Hollenbech, Gerhart, & Wright, 2010).
Porter suggested five factors in relationship to strategic planning: threat of new entrants into the market, the bargaining power of suppliers, the threat of substitute products, industry rivals and customer bargaining power (Porter, 2008; Porter, 1979). For HR, these factors might be re-imagined as the threat posed by the advent of new types of industries, the bargaining power of candidates (based on market analyses commonly found in online services like Salary.com), the threat of other types of work situations (e.g., virtual work environments, contractor arrangements), same-industry rivals and candidate bargaining power.
Balance scorecard planning, once the province of corporate planning and change management (Kaplan & Norton, 1992; Kaplan & Norton, 2001) now includes human resources and workforce scorecards (Huselid, Becker, & Beatty, 2005), detailing additional strategic organizational competencies (see Fig. 1). The workforce scorecard focuses on how employees contribute to the fulfillment of long-term organizational strategy rather than on HR’s short-term, tactical contributions to the organization. The workforce scorecard bridges the gap between the needs of the individual and those of the organization. The HR scorecard, in contrast, focuses on the functions of the HR unit—HR systems, policies and the administration of practices (Huselid, Becker, & Beatty, 2005).
Unfortunately, many HR organizations and the leaders responsible for selecting the HR leader and setting the expectations never allow HR a “seat at the table” with respect to planning. They often don’t-know-that-they-don’t-know that they can even ask their HR unit to perform these other important functions. For example, one company I worked with was experiencing rapid growth and the CEO thought there was something wrong in HR, but couldn’t quite sort out his dis-ease. His growth plans did not include his HR professional nor did she offer any particular expertise. In discussions with the leader, he learned that she could provide and interpret market survey information relative to the potential labor pool base on his expansion plans. As it turned out, there was not a suitable labor pool in the small town he was interested in—they did not have a ready pool of bench chemists and other lab professionals. Instead of letting him vent about what his HR professional should have been doing, I reminded him that 1) he selected her, 2), he gave her her marching orders and 3) he left her at the office to manage the phones while he and the rest of the management team were away on strategic planning retreats.
Huselid, M. A., Becker, B. E., & Beatty, R. W. (2005). The workforce scorecard: Managing human capital to execute strategy. Boston, MA: Harvard Business School Press.
Kaplan, R. S., & Norton, D. R. (1992, July/August). The balanced scorecard: Measures that drive performance. Harvard Business Review(7/8), pp. 172-180. Business Source Complete.
Kaplan, R., & Norton, D. (2001). Leading change with the balanced scorecard. Financial Executive, 17(6), 64-66. Retrieved from Business Source Complete database.
Noe, R. A., Hollenbech, J. R., Gerhart, B., & Wright, P. M. (2010). Human resources management (7th ed.). New York, NY: McGraw-Hill.
Porter, M. E. (1979). How competitive forces shape strategy. Harvard Business Review, 57(2), 137-145.
Porter, M. E. (2008, Jan.). The five competitive forces that shaped strategy. Harvard Business Review, 86(1), 78-93.
Taking the issues of readiness to receive feedback and employee expectations together, I find that organizational culture, relationships and emotional readiness are key elements.
Organizational cultures that are strong and open are more apt to succeed in 360° feedback implementations, which organizations with cultures that are weak or closed don’t fare as well. Organizations with active trade unions have a dizzying number of legal restrictions on employers, preventing some types of feedback systems being implemented. In addition, global organizations must contend with a patchwork of legal systems that restrict employers with respect to performance management systems broadly including the unionization of professional-level employees (go to the EU website for more; http://www.europa.eu). Assessments of organizational culture can help determine the organization’s level of maturity.
Going to the issue of emotional readiness, relationships must be solid in order to make productive use of 360° feedback systems. Often, employees—particularly those who work in shifts other than their supervisors, those with new supervisors, or those who work in remote locations like sales representatives and expatriates—are deeply concerned that they do not have the kinds of relationships necessary for their supervisors to give good feedback. 360° feedback systems can help address these concerns, especially if the employee and manager come to agreement about how the feedback is to be used. In a report to Workforce magazine, researcher Dana Jarvis suggested that weak workforce relationships can contribute to destructive response patterns designed to—under the veneer of anonymity—attack poor, stellar or minority staffers or settle old scores (Jarvis, 2007). My earlier comment about conducting an organizational culture assessment still stands as one way to help ascertain whether there might be endemic issues that must be addressed before embarking on 360° feedback implementation. It is also important to consider company size. Implementations with companies of less than 250 staffers can lead to reductions in anonymity and confidentiality. Many HR professionals suggest using 360 systems with companies of no less than 500 employees and with teams of no less than 7.
Solid onboarding can aid employees as well as their managers to understand the scope of and uses of feedback, helping to set clear expectations and reduce reluctance to participate. Understanding that unionization has occurred, historically, in part due to the chaos unleashed when employers embark on poorly designed HR/TD actions, one must make sure that this process is thoroughly considered, well-documented and completely explained to employees and their managers.
Costs for 360° feedback—whether created in-house or by an outside firm—include the following:
· Setup and preparation: setup of the administrative portion of the 360° feedback system, customization of the instrument, onboarding employees (preparatory meetings during which the process is explained), and project management.
· Participant costs: costs associated with communication between ratee, rater, supervision and HR/TD (training and development); costs of feedback instrument distribution (online costs, web hosting and technical support vs. paper and pencil instrument printing and delivery); costs of confidential return of data; costs to compile feedback reports for employees (or aggregate feedback for teams, departments or business units).
· Administrative costs: maintenance and license fees.
Reviewing websites of firms that offer 360° feedback services (see STAR 360 Feedback, 2009), I find costs ranging from $75/participant to in excess of $215/employee. Costs, of course, decrease for organizations of greater than 250 employees, although costs associated with project management increase. Therefore, for a company of 500 employees, the costs of a full implementation can run in excess of $62,250 (using the average of three quotes for a company of 250 employees). It is important to note that 360° feedback is still considered a bit of a luxury in most companies. In times of economic upheaval, these are among the first programs that are cut in cost-saving measures.
I’ve often quoted the Fitz-enz book (1995). In it, the author asserts that HR/TD has not done enough to advance an ROI model for their services, instead being related to as simply “overhead.” The matrix of job design, rewards and recognition and appraisal (for development and performance management) go towards aiding organizations win the “war the talent” (Fishman, 1998; Chambers, Foulton, Handfield-Jones, Hankin, & Michaels Ill, 1998). Using the formulae provided by Fitz-enz and others, one can clearly state the value of continuing to use these feedback systems.
Chambers, E., Foulton, M., Handfield-Jones, H., Hankin, S., & Michaels Ill, E. (1998). The war for talent. McKinsey Quarterly , 3, 44-57. Retrieved from Business Source Complete database.
Fishman, C. (1998, July 31). The war for talent. Retrieved August 26, 2010, from Fast Company: http://www.fastcompany.com/magazine/16/mckinsey.html
Fitz-enz, J. (1995). How to measure human resources management (2nd ed.). New York, NY: McGraw-Hill.
Jarvis, D. (2007, January 18). Dear Workforce: When should employers use 360 degree feedback. Retrieved August 26, 2010, from Workforce.com:http://www.workforce.com/archive/feature/27/12/96/index.php?ht=
STAR 360 Feedback. (2009). Compare 360 survey costs. Retrieved August 26, 2010, from STAR 360 Feedback: http://www.star360feedback.com/education-center/true-cost-comparison
In just my lifetime, the field of organizational assessment has undergone radical change. No longer is it legal to take a patriarchal stance on women in the workplace, treating women as “constitutionally delicate” such that pregnancy warranted expulsion from the organization until the company doctor gave his OK for her to return to work. Sex stereotypical roles were assumed and assessment reinforced those roles with mental tests, work requirements and other tests concocted to codify “appropriate work” for women and men (Cook & Cripps, 2005). Racial and ethnic bias in tests is no longer allowable and government agencies are in place to serve as watchdogs against the purposeful or inadvertent introduction of bias in to testing. Still, bias claims continue apace (Hasl-Kelchner, 2009). This has given rise to changes in the field of psychological assessment that includes greater focus on validation and reliability, enhanced use of technology and increased attention to legal exposure on the parts of both the organization and the consulting psychologist.
Reasonable and Desirable Changes
The practice and science of executive coaching continues to develop in terms of expectations, models for service delivery and impact. However, Peltier, writing about the psychology of executive coaching, remarked that “most executive coaches fly by the seat of their pants when it comes to assessment, and many use an informal 360° process” (Peltier, 2001, p. 2). Therefore, the use of assessments other than the home-made variety is a boon to the profession as well as to employers and the people they hire, place and promote.
Brenkert remarked that the “commercial relationship does not entitle [the employer] to probe the attitudes, motives, and beliefs of the person beyond their own statements, record of past actions and the observations of others” (1993; as cited in Cook & Cripps, 2005, pp. 333-334). Rightly so. However, since he offered that notion, the assessment world has been of “two minds” regarding the use of polygraphs, drug testing, personality inventories and genetic testing. I consider efforts to narowly restrict the use of these tests a good thing: we don’t have the right to probe the minds of potential employees unless we can prove that there is a connection between “poor” or “good” results on these assessments has any meaning when it comes to performance.
Unnecessary and Potentially Harmful Changes
In the broad field of Human Resources, we have been in heated discussions on assessment systems that scour the internet for information about the personal lives and beliefs of candidates. So-called “morals clauses” have been frowned upon in the law as an unnecessary intrusion in the lives of rank and file employees (with the exception of senior executives whose personal and professional reputations jointly impact the fortunes of the organizations they lead; Bennett-Alexander & Hartman, 2008). Still, legal experts, consulting psychologists and HR professionals are at odds with respect to the practice of searching weblogs, CCTV feeds and other electronic social media sites for information about attendance, personal habits, character traits and beliefs. I can’t help but wonder how one can ensure that personal bias on the part of the reviewer of this data will not surface. Also, given the fact that many employers have very lean HR units and these reviews would be costly with respect to time and efforts, I can’t help but be concerned that only “certain people” will face scrutiny—particularly in fast-paced periods of seasonal hiring in which scores of people are potentially hired at once.
DNA testing, which surfaced in discussions of healthcare reform, continues to concern employers and workers alike. Employers are keen to learn which candidates and employees are genetically predisposed to costly illnesses like cancer or which couples in family insurance programs are likely to produce children who may have expensive, congenital maladies like Tay Sachs (Harmon, 2008). Until recently, these discussions have produced little forward momentum. However, with employers’ costs skyrocketing (employers and employees split insurance costs of upwards of $1,000 each) these discussions continue to gain ground (Nixon, 2007).
Bennett-Alexander, D., & Hartman, L. (2008). Employment law for business (6th ed. ed.). New York, NY: McGraw-Hill/Irwin.
Cook, M., & Cripps, B. (2005). Psychological assessment in the workplace: A manager's guide. Hoboken, NJ: John Wiley & Sons.
Harmon, A. (2008, February 24). The DNA age; Fear of insurance trouble leads many to shun or hide DNA tests. Retrieved April 5, 2010, from The New York Times: http://query.nytimes.com/gst/fullpage.html?res=9501E2D81E30F937A15751C0A96E9C8B63&sec=&spon=&pagewanted=2
Hasl-Kelchner, H. (2009, August 13). Combat rising EEOC claims. (Dun & Bradstreet) Retrieved November 8, 2009, from All Business: http://www.allbusiness.com/society-social/aging-age-discrimination/12635397-1.html
Nixon, R. (2007, November 25). DNA tests find branches but few roots. Retrieved March 11, 2010, from New York Times: http://www.nytimes.com/2007/11/25/business/25dna.html
Peltier, B. (2001). The psychology of executive coaching. New York, NY: Brunner-Rutledge.