What do the Spinning Jenny, the optimal shovel, Microsoft Office and a conversation all have in common? Here are some clues:
Using Hargreave’s Spinning Jenny of 1764, spinners could create a weave using eight spindles, rather than the single spindle of a spinning wheel.
A product of Frederick Taylor’s scientific management of the early 20th century, an optimal shovel was one designed to shift 21 pounds (the optimal weight) of any given substance. The approach of using different shovels for different jobs typically increased productivity three to four times.
Since the advent of Microsoft Office in the mid 1990s, I can count the number of times I have heard the word ‘secretary’ on one hand, and cannot imagine ever having to draw a graph by hand again.
I’ll come to the conversation later.
In other words, these are tools which massively increase individual productivity. But there is another possible answer to the question: they are all tools which are readily available. In other words, if you are in the spinning, shovelling or office working game, if you don’t have one of these tools, you can’t compete.
So what does all this have to with training?
Well, these tools are the sort of things that your boss, and your boss’s boss, love. They are tangible, and they have a clear benefit. Neither is true for training, and that’s why your boss doesn’t care about training. He or she cares about getting things done better, faster or cheaper. Your boss cares about operations.
But your boss has a problem.
Many of these tangible, obvious ways to do things better, faster and cheaper are now widely known. Hargreave’s invention came at the beginning of a tidal wave of millions that made up the industrial revolution. In the beginning, ownership of such tools gave you an advantage that might last decades. Today, tools are pretty much all readily available commodities – requirements for entry into a marketplace, not differentiators once you are in one.
The same is also true for scientific management. In other words, these are the collection of processes and rules which characterised mass production and the twentieth century revolution in running an organisation. The ideas that generated Frederick Taylor’s shovel are now knowledge that is available to any MBA student and most middle managers.
And the most recent productivity increasing tool, Information Technology, has also become a must-have commodity, rather than a differentiator. A decade ago you could run an office using typewriters, filing cabinets and reference books. Today it would not be able to operate quickly and responsively enough.
The boss problem
So when the tools and methods of increased productivity are available to all, how do you differentiate? How do you compete? That’s your boss’s problem.
To be fair to your boss, he or she may have tried to tackle the issue, because he or she may be familiar with the idea of intangible assets (or your boss may have read about them in an in-flight magazine, which amounts to in-depth research for most bosses). Since about 1990 there has been a growing divide between the book value of companies (what they would be worth in terms of physical assets, stock and orders) and the price that investors are willing to pay for them. This gap is called intangible assets.
Much has been written on what makes up these intangible assets. A common division, from that of US commentator Thomas Stewart, is to divide it into three parts: Human Capital, Structural Capital and Customer Capital. However you slice the pie, though, there is general agreement that the one component that adds the greatest value to most modern organisations is people.
In the modern, global economy, everything else, from the spinning jenny to the most sophisticated back office systems, are commodities which can be bought on the open market. People are the key differentiators. As the cliché says, they truly are the modern organisation’s greatest asset.
The greatest asset of all
But while ‘people are our greatest asset’ is easy to say, it’s not easy to apply. Faced with the complexity of the task, in reality, many organisations revert to claiming that people are their greatest asset, while continuing to treat them only as their greatest cost.
A boss who has made the effort to understand and improve employee value usually focuses on one or two existing, individual-centric HR processes. The result: a series of initiatives in specific areas, led by enthusiastic internal champions. Often they produce well-developed software applications that treat a particular need in depth, such as tools to boost e-learning and e-recruitment.
While such applications often provide great benefits, they suffer three major drawbacks. First, because of the way they are produced, they come with no links to other systems. In particular, they frequently produce redundancy, as data needs to be entered separately to support each process. In turn, this produces inefficiency, particularly when different data sets fail to match. While the recruiting system might describe an employee as well qualified according to their job description, the appraisal system, which uses a different set of criteria, might disagree. Which system is right? Someone will have to spend time trying to find out.
Second, as well as these individual processes being inefficient individually because they require multiple data entry, they are also less efficient collectively because they fail to exploit the advantages of sharing data. One can only imagine the improvements if an organisation’s various HR processes began to talk with each other. That new employee would be recruited against the same job profile as his line manager would use in the appraisal process. Resulting skills gaps could also feed into the employee’s training plan, and be matched against available classroom and online learning.
No strategic overview no cry
The third, and less obvious drawback, to dealing with HR processes in silos, is that it does not provide a strategic overview of people and what they can do. Yet, if people really are a key asset, this is exactly what board-level decision makers require and should be demanding. Instead, the board is provided with a series of unconnected Key Performance Indicators pulled from various processes, from which they are expected to define the state of their workforce. These might include such measures as the rate of staff turnover, recruitment spend per employee, and number of employees with personal development plans. Typically, however, these indicators are not only unconnected, but tactical, and often output-based, concerned with helping a department meet an administrative objective, not with aiding the organisation in attaining its strategic goals.
The questions that your boss wants answered are rather different. She or he is not interested in knowing recruitment spend per employee, but is very concerned with questions such as;
How will our recruitment intake need to change in the future to deal with the combined demands of what we plan to sell? What can our people actually do right now?
If we merge two departments, should the result be a net loss or increase of full-time employees?
How will this affect our use of contractor staff?
Where can I spend my current training budget to ensure that I meet the most urgent strategic needs of the organisation, rather than simply training those who demand it loudest?
But how can your boss get the answer to these questions? Quite simply by learning more about the organisation’s greatest differentiator and asset: its people.
Bad news good news
The bad news for your boss is that unlike a shovel or a software programme you cannot see this differentiator because it’s not the person itself, but what’s inside them. The good news is that you can find out about it by talking to the employee. Actually, for many bosses, that’s bad news, but guess what? If you want to treat people as an important asset, then at some point you’re going to have to talk to them.
However, once you have talked to your staff you will get an idea of how they add value to the organisation. It’s through their skills! And once you understand their skills, in a systematic way, you can answer those questions, and a lot more besides, all thanks to a little more conversation.
Of course, I’m being glib here. When I use the word ‘conversation’, I mean a structured skills assessment, regularly conducted, and using an agreed skills framework. I also imply that it should be backed up by an experts’ panel to ensure employees’ assessments are comparable, and an appeals process for when agreement on the results breaks down. If I use the word ‘conversation’, it’s because that’s how it should feel to both manager and employee – relaxed, open and natural.
So, suppose you collect this information for one employee, how much use is it?
Not much. But collect it for the whole department, or organisation, and share it, and it becomes very powerful indeed. By using it to underpin HR processes, it is possible to avoid the error of dealing with each process separately. By having a shared job profile based on skills for, say, recruitment and appraisal, there is no need to re-enter data.
It is possible to see the skills a new hire had on joining the organisation, and during appraisal to see how these have been developed. As well as avoiding the inefficiency of multiple data-entry, a single, shared view of skills enables each related HR process to be more efficient.
One of the results of an appraisal might be a view of an individual’s skills gaps. If training materials have been developed against a particular skills framework, then a training plan could rapidly be developed to plug those skills gaps.
More than a TNA
Thirdly, by sharing information on skills it would be possible to attain information that it is now possible to produce only with a great deal of effort. In the case of a person requiring training after their appraisal, it might be that one recommended piece of training is a classroom course. If others in the organisation require the same course, then it could be possible to amalgamate the requirements into a large enough number of delegates to get a reduced price from the training provider.
This concept of value from sharing data on skills extends well beyond the benefits of what is effectively a rolling training needs analysis. To take a simple example, suppose a construction company predicts that it will face a shortage of project managers in one area in 12 months if its planned re-structuring goes ahead. It feeds the resultant skills requirements into other HR processes.
Because all processes talk the same language of skills, the requirements do not have to be re-interpreted or explained. The HR department can then run a check on the skills requirements against the skill sets of known contractors. These may be able to meet some of the personnel needs in the short-term.
The management of this company, however, might prefer to meet most of the staffing need through full-time employees, and so a recruitment process can begin, searching externally for individuals with the required skills profile. At the same time the results of internal appraisals and career planning meetings can be checked to see which individuals have expressed an interest in becoming project managers, and of these, which are closest to the required skill set.
Training plans can be put in place for those employees with the closest fit. This followed by succession planning will enable the organisation to find suitable internal candidates to back-fill the posts that will become free when these personnel move to their new roles.
Those individuals that become project managers will receive their professional qualifications, which will be logged on the compliance asset register, ensuring that the building company is never in breach of its legal obligations.
The director of the departments where the project managers are needed will be able to use resource planning procedures to assign the new project managers to their most suitable roles. He will use talent management to ensure the continued development of these managers, and competency management to ensure that the skills required in his department are always clearly defined, and available for all to view.
The next big productivity tool
Finally, when giving a presentation on all of this to the board, the HR director will not refer to the individual output measures of each process, but to a single Key Performance Indicator. For the sake of argument, let’s call it CUSP, for Capacity Underpinning Strategic Planning. Yes, she will report, CUSP for the re-structuring exercise is running at 100%, we can go ahead with the project.
It’s a long way from the illiterate James Hargreaves and his Spinning Jenny, but it is how we’re going to ensure increased productivity in the future.
So, although your boss might not care about training, your boss should, because it’s one way to boost the capability of the organisation’s key people, and people are what make your organisation work.
While your boss might not like it, the first step to identifying those skills is to sit down and have a conversation. Conversation is going to be the next big productivity tool.
Originally published in Inside Learning Technologies Magazine, October 2006