March 2011
Original insight
Beyond best practice: enhancing results with bespoke HR
HR professionals can be even more effective if they shape and deploy HR practices and technology that are the best fit for their organisations - so-called ‘bespoke HR’. This approach is far more effective than following ‘best practice’. Applying bespoke HR will result in HR departments getting more value from every initiative.
Executive summary “I hope in 10 years’ time the whole notion of ‘best practice’ will be replaced by ‘best fit’, with HR professionals crafting differentiated approaches that suit their circumstances and their culture.” – Duncan Brown, Director, The Institute for Employment Studies, 2010.
There is good evidence that human resources (HR) departments contribute to the bottom line.1 This paper describes how HR professionals can perform even better by being more discerning – and creative – in our response to business opportunities and challenges. Furthermore, HR professionals can extend their employer’s competitive advantage by thinking differently when planning new initiatives. And it all begins by understanding why ‘best practice’ may be worst for your company. When charged with a new programme, most HR professionals will normally seek to identify and then employ ‘best practice’. Best practice may not be the best way to achieve the business aim, however, and may actually make the issue worse or lead to lost opportunity. We argue that HR professionals should shape and deploy HR practices and technology that are the best fit for their organisations. This is preferable to strictly following ‘best practice’ guidelines and failing to account for our organisation’s needs. Best fit solutions create competitive advantage by creating new solutions, building as needed on what’s worked elsewhere. They take more account of the unique nature of their organisation’s culture, practices and processes. So-called ‘bespoke HR’ will, we believe, cause HR professionals to lead other departments in the number and range of successful projects. We present some examples of HR practice and technology that employ ‘bespoke HR’ principles and conclude with a model for applying the approach. This Business insight report was written by Hannah Stratford, the Head of Business Psychology at ETS. Hannah works with high-profile clients to help them leverage strategic value from performance and talent management, employee research and multi-rater feedback programmes.
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‘Best practice’ and HR process “There is no silver bullet that will deliver high levels of employee engagement overnight and certainly there is no one size fits all solution.” – Macleod Review, 2009.
We should ask ourselves two questions about best practice: What is it? Why do we put so much emphasis on it? Best practice has normally either been tested in academic research and/or is drawn from successful case studies. Adopting best practice is alluring because it seems to guarantee success. Stepping outside of best practice is perceived as risky. HR Directors report that senior decision makers resist buying into new initiatives unless another company has done them first – and successfully. The concept of ‘best practice’ assumes that one practice that is better than all the others. The truth is that there are a range of good practices, some of which will help an organisation and some of which will hinder its growth. In our experience, it really is the organisational context that determines this success rather than the implemented practice or process itself. So why don’t HR professionals pay more attention to this?
An example: best practice in performance management The ‘forced ranking’ approach to performance and reward is a case in point. Managers rank individuals’ performance until employees are part of the ‘top 20’ percent of the most productive and best paid workers, the ‘vital 70’ percent, or the ‘bottom 10 percent’ who are at risk of being fired. The approach has been very successful in competitive, team-based corporate communities. But it’s not hard to see why this process has been confusing, de-motivating and destructive when applied to enterprises where collaboration and teamwork are essential. Some managers report feeling pressured into ‘almost falsely’ identifying people as under-performing in order to fill their poor performer ‘quota’. There are ways to succeed with forced ranking, but HR professionals should have a deep understanding of their culture and a conviction that it will meet their business goals before implementing such a process. Forced ranking is fairly controversial and rare in performance management, but I’m sure you or your colleagues will have spent some considerable time discussing the relative merits of different odd and even-numbered scales for rating performance, the role of rating scale labels, descriptive behaviours and shared concerns about rating inflation and consistency. The answers to these dilemmas are the ones that best fit your organisation, its goals and capabilities, with the added perspective of best practice and historical experience.
A second example: best practice in employee engagement Employee engagement is another area that has attracted best practice myths about how to encourage employees to go the extra mile. HR professionals are offered competing sets of best practice by various advocates, who are convinced that their methods will increase engagement. The Macleod Review, which sets out the case for employee engagement, is an excellent primer for anyone interested in the evidence showing that an organisation that has engaged employees is likely to be a successful organisation. However, the authors are at pains to say that the accumulated wisdom is not a prescription for success. Instead, they state that: “there is no silver bullet that will deliver high levels of employee engagement overnight and certainly there is no one size fits all solution”.2
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‘Best practice’ and HR software HR software solutions have transformed the role of HR, allowing employees and managers to take ownership of and gain access to resources that an HR officer would previously have provided. They also enable HR to demonstrate their strategic value to businesses through sophisticated reporting which informs critical people-based decisions. Modern HR solutions are rich in functionality for the individual user, manager and administrator. Their weak spot is that each one is based on a set of ‘best practices’ which the manufacturer believes all its customers will need. This can, combined with the lack of flexibility in most ‘offthe-shelf’ HR software solutions, give rise to several problems:
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Users have to learn a new set of ‘best practice’ processes, when the original processes were well understood and compliance was high.
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Users are faced with too much new ‘functionality’ meaning that essential tasks are not clearly sign posted. This increases the time taken to use the new system, which can make it time-consuming and more likely not to be used.
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Users and administrators don’t have a voice in the system development. Counter-cultural processes and language are introduced, which can lead to confusion and resentment lack of understanding and engagement. Additionally, while there are lots of reports available, often they do not provide the data required by managers and administrators or the business.
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The company and employer brand are poorly applied making the user experience unrewarding and reducing pride in the organisation. In contrast, by employing the bespoke HR approach, even the most challenging audience can be brought on board with HR initiatives. ETS worked with a leading mining company that had found an off-the-shelf system difficult to implement. The company wanted to deploy a 360-degree feedback programme for their on-site employees, including miners working shifts underground. In their experience, the rich functionality of the off-the-shelf system was a barrier to usage. Instead, ETS designed a streamlined and simple solution with only the essential information and a short and clearly sign-posted process. ETS worked with the client to find the ‘sweet spot’ between the business aims, a range of best practices and a deep understanding of the company culture and processes. The result was great take-up of 360-degree feedback, which was combined with an emotional intelligence tool and led to a positive cultural and business outcome.
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Bespoke HR: the antidote to ‘best practice’ Addressing the unique needs of your business requires careful consideration of all the options in light of your business context.
HR professionals who adhere to ‘best practice’ may feel they are implementing tried and tested, proven approaches. But copying other companies without consideration of the needs and requirements of your own organisation may in fact lead to failure. Are we perhaps tempted to adopt best practice without questioning whether it’s appropriate to our specific set of circumstances? That’s the conclusion reached by Duncan Brown from the Institute for Employment studies. “I hope in 10 years’ time the whole notion of ‘best practice’ – in other words, copying what everyone else has done – will be dead and buried, replaced by ‘best fit’, with HR professionals crafting differentiated approaches to people management in their organisations that suit their circumstances and their culture, as the best HR directors do already.”3 I have asserted that companies should not slavishly mould their practices to match the latest academic research or technological innovation. But I don’t want to understate the challenge: addressing the unique needs of your business requires careful consideration of all the options in the light of your business context. I suggest that finding the HR answers that best fit the business question is even more successful if HR professionals build on and extend the essence of what makes each company successful. Lynda Gratton of the London Business School describes ‘signature processes’ “which are idiosyncratic and unique to individual organisations [and] are the secret to sustainable competitive advantage”. 4 These can be seeming small things: the top management at one bank talk every morning (a practice that has survived globalisation), which ensures that they company’s core values of respect and accountability are maintained. Each company will have elements of its culture and processes which, if understood and built upon, will help each goal to be met more successfully and potentially lead to sustained competitive advantage. Bespoke HR leads to HR processes and solutions that are designed specifically to meet companies’ needs. Below are some examples.
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A bespoke survey measures engagement Many companies use the same questionnaire, which has benefits in terms of being able to compare to others. However, the questions may not address what drives engagement in each organisation. The Macleod Review avoids a one-size-fits-all approach, suggesting that engaging employees is a multi-layered process: “The way employee engagement operates can take many forms – that is one of the most fascinating aspects of the topic – and the best models are those which have been custom-developed for the institution.” 4 It’s our experience that the measurable characteristics and actions of an engaged employee differ considerably across separate organisational sectors, contexts and cultures. As such, we work with each organisation we work with to define a unique questionnaire based on an understanding how engaged employees feel, think and act in their specific organisation. Once validated across the business and implemented as part of an engagement survey, the Engagement Index is able to identify what drives engagement within that organisation specifically. Such an understanding provides great insight for companies alongside some robust data to inform organisational wide action planning to improve employee engagement and ultimately business performance.
Figure 1: Measuring employee engagement for a specific organisation is a threestep process: 1. Create an Engagement Index by
Define
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finding out how employees feel about the organisation and then interpret this information with reference to the engagement literature and industry experience.
* Define an engaged employee within the Measure other aspects of the organisation. How they think, feel and do organisation such as perceptions forms the Engagement Index.
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of leadership, communications and facilities people have to do their job.
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Measure * Measure other aspects of the organisation.
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Conduct statistical analysis to understand which of those aspects of work enable or inhibit engagement among employees.
Analyse * Conduct statisfical analysis to understand which of those aspects of work enable/inhibit engagement levels in employees.
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Brand-driven processes and solution A major, high-street retailer approached ETS with a unique challenge: to create a performance appraisal solution that incorporates their vibrant brand and novel HR processes. The retailer communicates with its dynamic, trendy workforce with reference to popular culture. The company wanted to reduce the positive skew they were currently experiencing in performance ratings and encourage the use of the full range of the scale. Working closely with the client, ETS created a user interface that was wholly client-branded and with strong visual links to music and film. The five-point rating scale was represented as five stars, which is a common device for users rating music or movie downloads (Figure 2). The brand is so strong and the values so embedded that we used stars as the foundation of assessment, which also drives the brand. By tapping into this well-understood device, employees were encouraged to employ the full length of the scale as they are used to scoring music or movies less favourably with one or two stars. Since the middle score of three stars was not stigmatised as a poor rating, this proved extremely effective in reducing the positive skew in the data during performance ratings. This bespoke HR solution makes the process individuals need to adopt clear and easy to follow. This solution makes it simpler to rate colleagues, and engages the user through the branded interface. The easy-to-use and effective solution was effortlessly adopted by employees, with 98% uptake in its launch year.
Figure 2: Example of a strong brand and five-point scale using stars
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Advanced reporting aids decision making ETS designed a bespoke 360-degree feedback solution for a major financial services sector client, based on a unique process and assessment criteria that we developed specifically for their business needs. Central to the success of the work was a comprehensive reporting suite that enabled data interpretation at the organisational as well as individual level. ETS delivered a solution that links three employee-based evaluations and compiles the results into a single individual development report helping individuals to drive forward their behaviour, technical skills and ability to contribute strategically to be business. The solution includes aggregate group reporting, which provides insight data regarding the capability of the workforce at a macro level. This solution includes a user-generated ‘Heat map’ that provides an organisational view of data that maps trends in employee performance (based pre-determined criteria) and identifies trends or pressure points (Figure 3).
Figure 3: Heat map sample
Heat maps Please select from the following drop downs to view the type of heat map you require
Data type
Competencies
Selection criteria
Demographic
Demographic option
Business area Run report
Demographic type
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Business function
HR
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Marketing
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Sales
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It is clear from the red and amber squares that the HR business function is weak across a range of competencies. What is this telling us?
Based on the summary provided by the red and amber squares, this organisation may need to address poor influencing skills across the business. The poor scores across the board may indicate that this is an organisational-wide issue.
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Bespoke HR to find ‘best fit’ HR solutions HR professionals interested in finding ‘best fit’ solutions to their HR challenges and opportunities should balance the business and HR goals, best practice and the company culture and processes (Figure 4):
Business and HR goals: •
Be clear on what the business wants to achieve and how the HR initiative is going to help achieve the solution.
• Ideally, identify business-relevant metrics that will show how HR contributed to the company’s success.
Best practice •
Review all the best practices relevant to the business / HR aim. This activity includes HR best practices but also tangential areas such as technology, change management and communication. Include academic literature and industrial case studies.
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Critically evaluate the views of specialist ‘gurus’, being careful to identify their commercial interest in having their views accepted.
Company culture and processes: •
Evaluate existing processes and capabilities in terms of what works well and what doesn’t.
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Identify the defining features of the company culture – people, systems, language, brand, use of technology – that you will incorporate in your solution so that people want to engage with the solution.
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Understand what made previous initiatives succeed and fail in your company so that you can boost the enablers and neutralise the barriers.
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Identify signature elements that confer sustainable competitive advantage for your company.
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Following this procedure will lead to the design and implementation of HR processes and solutions that are more likely to achieve their business and HR objectives and more rewarding for employees and managers, a key factor in the success of new programmes.6 In terms of technology, creating a user interface with well-known language and techniques, you will reduce the additional workload required of your initiatives (another key to successful implementation).7
Figure 4: Bespoke HR to find ‘best fit’ HR solutions
Organisational objectives and HR strategy * Mission and goals * Business and people strategy * Programme objectives
Company and culture * Capabilities * Processes * Culture * Signature elements * Technology * Paths to success
Bespoke HR
Best practice * Existing best practices * Case studies * Academic literature * Industry benchmark
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Conclusion We HR professionals have in the past found ‘best practice’ to be a useful way to short-cut decisions when implementing our plans. No more! There are six common myths about best practice that are illustrated in this document. I advise HR professionals to bear them in mind when tempted to exactly implement a best practice solution:
Six best practice myths: 1. There is a single, well known answer to every HR question 2. Using best practice, one can ignore organisational context 3. Best practice is the safe option 4. Best practice creates competitive advantage 5. HR’s knowledge and experience can’t generate solutions better than best practice 6. Contravening best practice should always be avoided HR professionals who see these myths for what they are should adopt the alternative approach: bespoke HR. By taking into account the context and culture of each organisation, HR professionals will create solutions that are more relevant, readily accepted and successful than those based on best practice. This paper has outlined why and how the HR department can create distinctive, successful initiatives. I hope this will give you HR department and your company a distinct competitive advantage.
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About ETS This Business insight report was written by Hannah Stratford, the Head of Business Psychology at ETS. Hannah works with high-profile clients to help them leverage strategic value from performance and talent management, employee research and multi-rater feedback programmes. Dominic Wake and Kelly Dern also contributed to the content of this report. To contact Hannah or Dominic about this report, please send an email to Dominic.wake@ etsplc.com or call +44(0)1932 219949. ETS works with companies such as Allianz, G4S, IKEA, PepsiCo, Tesco, and Thomas Cook. We provide business-focused consultancy and custom-designed technology to meet the performance management, employee research and 360-degree feedback needs of worldleading companies. We combine innovative technology solutions with practical experience to designed a solution that ‘fits’ your business needs. ETS delivers our clients’ ‘ideal world’, which means that our solutions exactly match each client’s corporate culture and processes: we listen to you needs; we do not expect you to bend to our solutions. Where appropriate, we develop the new processes needed to meet your people objectives. Where it is possible, we can integrate with, and automate, any existing HR processes so that new and old work together.
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References 1
Tamlin, P., Cowling, W. and Hunt, W. (2008). People and the Bottom Line. Brighton: Institute for Employment Studies. 2
MacLeod, D. and Clarke, N. (2009). Engaging for Success: Enhancing Performance Through Employee Engagement. London: Department for Business, Innovation and Skills (BIS). 3
Brown, D. (2010). HR’s Transformation Through the Noughties. Personnel Today. Retrieved from http://www.personneltoday.com/articles/2010/01/05/53345hrs-transformation-through-thenoughties.html 4
Gratton, L. and Ghoshal, S. (2006). Signing Up for Competitive Advantage: How Signature Processes Beat Best Practice. London: Advanced Institute of Management Research, 5. 5
MacLeod 33.
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Lawson, E. and Price, C. (2003). The McKinsey Quarterly: The Psychology of Change Management. London: McKinsey, 3. 7
Sirkin, H., L., Keenan, P. and Jackson, A. (2005). The Hard Side of Change Management. The Harvard Business Review, October, 109-118.
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