Chapter 8, Measuring the Contribution of your Human Assets
Nothing ought to be unexpected by us. Our minds should be sent forward in advance to meet all the problems, and we should consider, not what is wont to happen, but what can happen.
- Seneca the younger, Roman Stoic philosopher (4 BC – 65 AD)
Early lessons learned
In those early days, we made simple comparisons between actual and target figures, the target figures being the ones in the company’s manpower plan. The manpower plan was a projection of future needs (based on the existing situation), and these were intended to show which employees were the best candidates for promotion, which positions would have to be filled from outside, which employees would be made redundant, who would be retiring, and whether any entirely new posts needed to be created.
For the first year or so we also collected information on absenteeism, time-keeping, staff turnover, recruitment and training. These numbers, collected over a 12-month period, had to be put into graphs, and the graphs were supposed to indicate the future trend for each of these aspects.
In other words, those early years were spent getting an understanding of "what had just happened" in people terms.
The post-presentation discussions already carried the early signs of something more useful evolving, which would have an impact on the morale, productivity and effectiveness of each individual company and on the group as a whole.
Moving from score-keeping to added value
By small degrees, we broadened our focus from merely assessing performance in the areas of production, finance and sales to include new data points: our customers, our internal business, knowledge, and learning. Expanding the range of our measurements in this way gave us a deeper understanding of each company’s performance.
Despite this, our measurements still did not cover the people aspect well enough. We did not yet have the metrics to answer questions like "What does each employee contribute?" In other words, we could not tell how efficiently or effectively our people were performing.
Efficiency and effectiveness are the key metrics of human performance, and until you are able to measure them you can’t begin to manage them. (See Chapter 2 if you need to refresh your memory of the difference between efficiency and effectiveness.)
Traditionally, measurements of efficiency and effectiveness focused on HR processes – not on the desired outputs (results), so they gave a reasonable idea of what was being done, but no clarity on how well they were doing it.
A few examples:
We knew how much money we had spent on training, but not how effective the training had been;
We knew how much absenteeism we had, but not how efficient or effective the staff at work were;
We knew what our staff turnover was (i.e. the number of people who were leaving during the year), but only their Exit Interview gave us an idea of their reasons for leaving;
We knew whether someone was good or bad at time-keeping, but this was not a measurement of their performance (although monitoring each employee’s time-keeping was a contractual obligation).
How measuring efficiency and effectiveness helps you
How do you predict the future? Like most human beings, you can’t – not to any degree of sustainable accuracy. But you can be better prepared so that at the first deviation from the path to your goals, you can take action!
If you are prepared, you are able to see what’s going wrong immediately, which means you can react before lasting damage has been done.
If you really want to predict what is likely to happen in the future, and more importantly, to turn it into what you want to happen, you have to start by assessing what your employees are achieving.
To manage efficiency and effectiveness you need to pay attention to the five aspects I have been presenting up to this point.
Here is a summary of these five critical aspects, each with its own metric:
Selection includes both recruitment and promotion. The qualities assessed in a candidate are both the can do factors (including education and experience) and the will do factors (like personality and attitude).
Metric: Each candidate is matched against your ideal candidate profile. This is a profile put together by looking at the profile(s) of one or more existing employees in your company who are already doing an excellent job in this position. This has been described in some detail in Chapter 3.
Having identified the potential – both realized and latent – of an individual, it is important to develop this potential so that both the person and the company benefit from it. Training, coaching, and mentoring are all used to this end.
Metric: The Development KPI reveals the gap between an employee’s actual performance and their target performance. This is what Chapter 4 is about.
Motivation is a vital part of developing the individual, and I give special emphasis to this critical area.
Metric: One of the ways in which Agile Management measures motivation is the employee engagement survey, which measures how enthusiastic and committed the job-holder is. I go into detail about this in Chapter 5.
Attracting Competent People
If you don’t get this right, your selection process is always going to be extremely difficult! If you only attract unsuitable people, then no matter how efficient and effective your selection process is, it will be impossible to put the right person in the right job at the right time.
Metric: How good is your company brand? This can be roughly summed up as: "Are there, at all times, suitable future employees interested in working for your company, even when no posts are being advertised?" In other words, is it seen by the public as "a great place to work"? Chapter 6 illustrates this.
The retention of high-quality people is important! Employees are happier and more effective when, in Agile Management terms, they are "working to their strengths"; in other words, they are good at what they do. Equally, you need to be aware of the people who are in jobs for which they are not suited ("working to their weaknesses"). Putting each individual to work in a position where they work to their strengths is critical to the motivation and output of the entire team. (Chapter 7 is the story of what happens when you don’t pay attention to this aspect – and how to solve the problem.)
Metric: What percentage of high-potential employees leave within their first six months with the company?
The result of your efforts in these five areas is what creates a company culture. In turn, the company culture – as a result of contact between your employees and those outside the company – attracts new people, motivates them and retains them.
It is therefore essential to be able to measure the results you achieve in each of these five areas.
The dashboard – a tool for monitoring your progress
Back in the early days, when computers were still unknown in most businesses, we started developing a pen-and-paper dashboard that helped us track the company's progress from month to month by measuring what was actually happening against the KPIs and target figures in our strategic plan. This proved from the start to be an essential tool for ensuring that the company was on track, doing what it had set out to do.
Think of the automobile dashboard, where at any time, the driver can see the status of the vehicle at a glance – speed, fuel and oil levels, etc. In business, your company's dashboard is usually a series of graphics and charts that are derived from your up-to-date business figures.
Nowadays you can buy any number of software versions of the dashboard (digital dashboards) that provide a selection of at-a-glance views of the KPIs for each business objective you have defined.
When you regularly measure these five aspects of Agile Management, you will have, at all times, an overview of your company’s internal workings. But remember that these systems and their metrics focus on only one of the five stakeholders in your company's success.
Never forget the other stakeholders
Your other five stakeholders are:
Society in general and the environment
You need to consider the other four stakeholders and their effect on your organization, because they can offer you opportunities you never imagined – or destroy your business entirely.
Copyright © 2018 Robert Bluett
All rights reserved. No part of this book or publication may be reproduced in any form or by any electronic or mechanical means including information storage and retrieval systems, without permission in writing from the author.
Publisher: People Plus (peopleplusco.com)
Third Edition: 2020
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