At 18 percent less productivity than the average of G7/developed countries, the UK has begun to address this discrepancy to remain at the top table of Economic regions. The Government estimates that matching the US would raise GDP by 31 percent (£21,000 pa additional annual household income. Article by Tracey Deeks and Karen Woods – Canada Life Group Insurance.
At the top of Government this is clearly a worry and employee engagement and health and wellbeing provides a significant opportunity to address productivity, noting that the UK State disability bill is estimated to be £36bn annually2. So at an organisational level what should we be doing as HR professionals to support increased productivity and how can employee engagement be delivered and evidenced to provide value? From management to leadership- a vision: For us this means a paradigm shift from operational HR management to HR leadership. Today, in differing ways, we set objectives, have employee discussions, have performance reviews, make compensation decisions, succession plans, receive engagement survey results, reward, recognise, care, manage and lead… And the list goes on and on and we already have excellent managers of this. But do we have leaders?
Our vision is somewhat different in HR of leadership. We are stepping back and taking an integrated view of the whole picture and aim to move from, and build on, our tactical excellence with a strategic vision where we are viewing our business differentiator as our culture and our people, having recognised that our people deliver their level of performance based on their level of engagement. As part of this, as leaders, we have recognised that we are directly responsible for their experience at work and their resulting engagement and that increasing empowerment of our people, of course aligned with increasing responsibility is one way in which we can bring this culture to life.
In financial services we have our people, our processes (and technology) and our policies and so a true focus on people makes perfect sense from a business perspective (as fortunately our focus on processes and policies has been incredibly strong and has led to great success). The pace of change, the need to innovate and move quickly, increasing legislation and increasing competition/new entrants all means that people will define our success going forwards. Something recognised at the very top of our organisation which is a great start!
Delivering the vision: Our new HR programmes are being designed in an integrated way to support leaders in creating and growing our employee experience with the ultimate goal of lifting their level of engagement and performance. As a result we have challenged our senior business leaders to also move from operational management to leadership by challenging them: How will we inspire our employees to be greater than they think they can be? How can we inspire greatness, exceeding even our own expectations? How can we help others be successful? How can we move from transactional leadership to transformational leadership
We have emphasised that it is important that we as leaders need to focus on delivering strategy and look forward. In order to do this it means that we need to empower our people. For some this is proving to be challenging culture shift. To do this we have focused on our ‘Talent Agenda’ centred around ‘employee engagement’, having the ‘talent to win’ and ‘operational efficiency’. We cannot lose the latter as are revered for the service that we provide to customers and so in addition to empowerment we need to, “Keep the lights on!”
So the aim is to not only build on our internal resources to leverage our cultural strengths and provide development opportunities we will also, where appropriate, bring in external candidates to bring additional market insights and new capabilities. Again this will challenge an established culture.
To support this our HR strategic shift is moving us from a tactical and functional focus to either new or improved strategic and advisory support focused on improving and delivering services, programs and operations to support the business and leaders and the better sharing of talent and capabilities. Our HR Business Partner have been tasked to be the partner to the business leader in measuring and therefore maximising performance and so they too are undergoing change. Model that needs to be delivered: To achieve the move from management to leadership we developed a model which was designed to be a simple framework that can evolve, that identified key differentiating capabilities that will drive our strategies forward, which specified our desired aspirational end-state and simultaneously allowed for business specific functional capabilities to continue without disruption.
Specifically we have set some clear parameters we are expecting from our leadership team: The ability to have outward focus and the capability to understand the business environment and internal/external customer needs. Leaders need to be able to identify business opportunities that create a competitive advantage. If we are honest our strength has been the long-serving nature of our colleagues in what is a technical area of financial services. This has provided technical and operational excellence but also stifled change and innovation and so having external focus and people, when aligned with increased empowerment (and accountability!) will start to find us new leaders and increase creativity. We have identified the leaders as people who demonstrate capabilities such as business acumen/entrepreneurial approaches, are customer focused, are problem solvers, are strategically agile and also have enterprise-wide perspective as we can certainly learn from each other.
In addition our best leaders will develop talent with the capability to attract, motivate and develop people and who can build the right team to meet our strategic direction and tomorrow’s needs. Leaders will be expected to demonstrate the capability to develop talent by coaching. Encouraging development will challenge but also motivate and inspire. Evidence will be found in well thought through, clearly articulated people plans. Leaders will be expected to maintain business results throughout the process of changing the culture and organisation and so the capability to drive results, contribute to changing processes that improve organisational performance and create a culture of accountability will also be required. People who demonstrate this capability will achieve this through the continued pursuance of operational effectiveness, pragmatism, tenacity and persistence and through accountability themselves for business results and profitability.
Our leaders are not alone in delivering this model and our HR Team will support them throughout the change programme. Specifically HR will complement our leadership hiring process, assess our current leadership capabilities and development planning and design leadership learning programs and events. Through this process, as HR professionals we aim to identify our high performing and high potential current leaders, identify and differentiate our future leaders and, bearing in mind our long-serving strength is also a risk to us, build stronger succession and development plans.
No-one thinks that pulling off this change in culture and approach will be easy but with clarity and easily implemented steps we believe that our senior leaders will gain much more time than they invest and so are constantly reinforcing the business case for the change.
Hegemonic approach to engaging with senior leaders: As part of this we have evidenced why adopting a talent management and leadership strategy is important by evidencing the business case benefits as that is something that they both understand and embrace in their daily lives. To achieve this we have communicated some of the great research that has been undertaken and which shows: Organisations with high levels of engagement continue to outperform the total stock market index and those in top quartile posted total shareholder returns 17 percent higher than average in 2015. Those that were granted Best Employer status using the criteria established by Aon produced shareholder returns 57 percent higher than average.
A true talent management strategy should deliver a return on investment for any size organisation with the proof being in its measurement. A talent strategy should impact all the HR metrics that impact the bottom line: retention rate overall; cost to hire; time to hire; voluntary turnover; retention rate of new hires; retention and promotion of high performers; employee engagement/surveys; number of internal vs. external promotions. In the UK it can cost around £30,000 to recruit a new employee and so retention of the best people and ensuring you get strategies for retention and recruitment right are clearly important.
The monetary impact of a poor hire can be significant. A 2013 survey indicated 27 percent of UK employers had a single bad hire cost over £50,000, BUT functioning without employees in key roles can cost money. A typical assumption is that initially the cost is 3 times salary but it can be more than £5,000 per day if a pivotal position isn’t filled which is clearly important to succession planning. It has been estimated that managers spend 13 percent of their time managing poor performers and 14 percent additional time correcting their mistakes which is the equivalent of thirty-four days every year dedicated to trying to mitigate the negative effects of underperformers.
One study shows that organisations without a performance management culture increased their net income by 1 percent over 11 years. Those with a performance management culture saw a 756 percent increase in net income. On average high performers make up only 5 percent of the workforce but produce 26 percent of your output. If leaders are not identifying them they are probably also not keeping them! Finally we recognise that change is not easy, especially when dealing with senior, successful people. We have additionally suggested to our leaders that not only is a talent strategy good business sense, Boards, such as ours, are looking for this in their leaders, competitors are doing it (and in our world so are our regulators) and so both stick and carrot are coming into play to ensure active engagement and commitment to the change process.
We appreciate that many of the senior leadership team are nervous and are seeking comfort that this will not affect their day jobs and take time but we are also clearly stating this is a growing part of their day job! To evidence this commitment it is in every one of their objectives so a real, tangible benefit to engaging with the process. We are also starting on a work life programme to make sure that the lives they lead are enhanced and not diminished by the workplace. We want them healthy, happy and engaged as our best role models for our employees. If still nervous our HR Team is offering on-going support.
None of us underestimates the complexities of change management and no doubt there will be challenges and casualties on the journey we have started. But we are clear where we want to end up. We have developed the tools to make the change happen, have implemented a stick and carrot approach to ensure the leaders act on what they are being asked to do, have asked them to be the leaders in the change and employee engagement themselves and have support from the top of our house. With all that in place what can possibly go wrong?