2 august 2018
At HRbuilders we believe in the power of switching off from time to time.
- Festina lente -
And we designed this week's #ConnectWithContent with exactly that idea in mind.
Happy to share with you our top 3 on #TheFutureOfWork for you to to read while 'in holiday mode'.
1. Great Businesses scale their learning, not just their operations
Ronald Coase nailed it back in 1937 when he identified scalable efficiency as the key driver of the growth of large institutions. But Scalable efficiency only works in stable environments that are not evolving rapidly. Today the key driver for growth is scalable learning. In a world that is more rapidly changing and where our needs are evolving at an accelerating rate, the institutions that are most likely to thrive will be those that provide an opportunity to learn faster together. And this Goes beyond sharing existing knowledge more effectively because existing knowledge depreciates at an accelerating rate. The most powerful learning in this kind of world involves creating new knowledge. This kind of learning does not occur in a training room, it occurs on the job, in the day-to-day work environment and everyday life...
Author: John Hagel III and John Seely Brown
June 07, 2017
Ronald Coase nailed it back in 1937 when he identified scalable efficiency as the key driver of the growth of large institutions. It’s far easier and cheaper to coordinate the activities of a large number of people if they’re within one institution rather than spread out across many independent organizations.
But here’s the challenge. Scalable efficiency works best in stable environments that are not evolving rapidly. It also assumes that the constituencies served by these institutions will settle for standardized products and services that meet the lowest common denominator of need.
Today we live in a world that is increasingly shaped by exponentially improving digital technologies that are accelerating change, increasing uncertainty, and driving performance pressure on a global scale. Consumers are less and less willing to settle for the standardized offerings that drove the success of large institutions in the past. Our research into the long-term decline of return on assets for all public companies in the US from 1965 to today (it’s gone down by 75%) is just one indicator of this pressure. Another indicator is the shrinking life span of companies on the S&P 500. A third is the declining rates of trust indicated by the Edelman Trust Barometer — as the gap grows between what we want and expect and what we receive, our trust in the ability of these institutions to serve our needs erodes.
To reverse these trends, we need to move beyond narrow discussions of product or service innovation, or even more sophisticated conversations about process innovation or business model innovation. Instead, we need to talk about institutional innovation, or re-thinking the rationale for why we have institutions to begin with.
We believe there still is a compelling rationale for large institutions, but it’s a very different one from scalable efficiency. It’s scalable learning. In a world that is more rapidly changing and where our needs are evolving at an accelerating rate, the institutions that are most likely to thrive will be those that provide an opportunity to learn faster together.
We’re not talking about sharing existing knowledge more effectively (although there’s certainly a lot of opportunity there). In a world of exponential change, existing knowledge depreciates at an accelerating rate. The most powerful learning in this kind of world involves creating new knowledge. This kind of learning does not occur in a training room; it occurs on the job, in the day-to-day work environment.
For example, our informal survey of where employees are spending their time in major departments across large companies suggests that 60-70% of their time is consumed in “exception handling” – addressing unexpected events that the existing processes can’t handle. These exceptions are a great opportunity to create new knowledge – how to handle something never anticipated. Yet, today this work is generally done inefficiently – workers struggle to find each other and to access the relevant data and analytics required to resolve the exception. Once they resolve the exception, what they did and learned is largely lost to the rest of the organization.
Moreover, most organizations seem to use digital technology to simply automate tasks and eliminate people. But scalable learning harnesses technology to augment the capabilities of people. Routine tasks do need to be automated, but for the purpose of freeing up people to explore new approaches to create even more value. In this context, one key dimension of learning is for workers to discover how to more effectively use increasingly powerful digital tools in specific contexts. Historical studies of the Industrial Revolution have shown that there was a significant lag between the introduction of new industrial machinery into the workplace and resulting productivity improvements because it took time for workers to develop the skills required to get the most value out of the machinery – skills that could only be taught in a very limited form because they had to be adapted to specific contexts and needs.
Scalable learning not only helps people inside the institution learn faster. It also scales learning by connecting with others outside the institution and building deep, trust-based relationships that can help all participants to learn faster by working together. For example, a number of entrepreneurial motorcycle companies in Chongqing, China have created product design networks connecting a large number of technologists and component vendors and helping them to work together to improve the designs of the components in ways that have led to significant cost reduction while maintaining or improving product performance and reliability.
What if we went further, redesigning our work environments (physical, virtual, and management systems) to help accelerate learning and performance improvement on the job? We have not been able to find a single company that has undertaken this in a systematic and holistic way. We did find some intriguing examples of companies that have introduced interesting elements into the work environment to accelerate learning. For example, Intuit has deployed experimentation platforms throughout the company to encourage employees to try and test new approaches to deliver more value while managing the risk associated with these experiments.
In institutions driven by scalable efficiency, it is the responsibility of the individual to fit into the assigned tasks and roles required by the institution. In institutions driven by scalable learning, the institutions must find ways to evolve and adapt to the needs of the individuals within their organization.
Scalable efficiency doesn’t just demand conformity among the individuals within the institution.
It also seeks conformity among those it serves – that’s the path to scalable efficiency.
Scalable learning on the other hand is driven by the desire to learn more about those who are being served by the institutions and then to provide ever more value to those constituencies by tailoring products and services to address the individual and evolving needs of those being served. That learning is a prerequisite to understanding how to deliver more and more value to those being served. Becoming more responsive to the evolving unique needs of the individuals being served by institutions could help to restore the trust that has been eroding.
Not only could innovating around scalable learning help to rebuild trust in our institutions, it could also lead to a profound shift in the nature of performance improvement. The scalable efficiency institutional model is inherently a diminishing returns model – the more efficient these institutions become, the longer and harder they will need to work to get the next increment of performance improvement. Scalable learning, on the other hand, for the first time offers the potential to shift to an increasing returns model where the more people who join together to learn faster, the more rapidly value gets created.
2. One-size-fits-all approaches for change?
Change is not a project. Really useful toolboxes should be used, but they should be considered for what they are: tools. The key elements defining the success or failure of such programs is… “all the rest”: > The time you spend talking to people > understanding them and their real needs > explaining, reassuring, showing consideration > getting a clearer picture of the company culture and history > and redefining all over again your approach based on what you’ve learned by listening to people. These are the critical success factors to change and transformation.
Author: Lynda Jouhari
October 16, 2017
- Firstly, top management should actively be engaged in such programs. They must be a part of it and be the first ones to accept to be changed or transformed by it. If they don’t, it is highly unrealistic to think that their teams will accept to go through it. Top management should not only pay for it, they should believe in it and see it as one of their top priorities.
- Secondly, the teams should be actively involved in defining the approach to make it a success. It is only when addressing the uniqueness and specificities of the people involved – and to do that, you must first understand them – that a change or transformational program can succeed. Because they know best what works for them. It's as simple (and complex!) as that.
Change is not a project. Really useful toolboxes exist and should of course be used, but they should be considered for what they are: tools. My firm belief is that the key elements defining the success or failure of such programs is… “all the rest”.
The time you spend talking to people, understanding them and their real needs, explaining, reassuring, showing consideration, getting a clearer picture of the company culture and history, and redefining all over again your approach based on what you’ve learned by listening to people. These are the critical success factors to change and transformation.
3.How to build an EX-Centric Organization
Great read on employee experience and How to build an EX-centric organization.
Author: Frank Van Den Brink
October 17, 2017
Our survey of 250+ companies and research on EX Pioneers, reveal a clear business case to transforming your business, designed around your customers and workforce (see links to more info at end of article)
The Customer and Employee Experience
by Elliott Nelson and Hannah Olvera Doman - Kennedy Fitch
We have seen breakthrough performance in companies in recent years who have built on the concept of Customer Experience (CX). Analytics and mobile technology have provided organizations with deeper insights into what drives behavior – what attracts customers, what makes them return, buy higher margin products, and most importantly, what makes them want to promote their company’s products.
Multiple studies show that CX-Centric companies see significant growth vs. the competition, including research that shows organizations with high NPS ratings grow at twice the rate of their peers.
If this CX data is true, does the same apply to Employee Experience (EX)? Business leaders should be asking themselves 3 questions:
- What is the correlation between business results and Employee Experience (EX)?
- How is EX different from Engagement (which is steadily declining)?
- What does it take to weave EX into the fabric of an organization? Is there a common ‘EX Playbook’ that seems to work best that can be applied in a variety of business situations?
To answer these questions, KennedyFitch launched a global study to understand how companies are approaching the Employee Experience. Over 250 companies worldwide responded to our recent online survey. 4 out of 5 said EX is very important and 9 out of 10 said it would become more important in the next 1-2 years, but fewer than 1 in 10 felt their company had made significant progress on EX. And many reported that lack of internal EX expertise is a big problem.
We interviewed another select group of companies who were further along in the journey, including GE and AirBnB, who are considered ‘EX Pioneers’. We also looked at current publications – books and internet articles – to see what existing research could tell us.
We share a few of our insights here and invite you to sign up for our free workshops and full EX Report and Playbook: ‘Building an EX-Centric Organization. This article is our high level ‘Executive Summary’ of that research. To start, we found the following answers to the three questions mentioned above:
- There is a clear business case and correlation between EX and business results.
- Engagement and EX come from two different worlds - they measure quite different things, come from different sources and have widely different applications.
- Building an EX-Centric organization requires a complete Transformation in the way of thinking and operating, and most companies are in the early stages of learning what EX is and what is required for implementation.
What we found in our research make us believe that the movement to design CX and EX as part of a Disruptive Business Transformation is one of the most revolutionary and impactful actions a company can take.
Let’s dive a bit deeper into each of the three questions.
What is the EX Business Case?
Research  done recently by Jacob Morgan found the following comparisons of EX vs. Non EX companies:
- EX companies were 4.5x more frequently listed on Most Innovative Companies lists by Fast Company, Boston Consulting and Forbes, than non EX companies
- 6x more frequently listed on GlassDoor’s Best Places to Work, Fortune’s 100 Best Companies for Millennials and LinkedIn’s Most In Demand Employers
- 3x more frequently listed on Brand Z and Forbes’ ‘Top Brand Value’ companies
- 40x more frequently in the list of Exponential Organizations (companies whose impact is disproportionately large – 10x larger - vs. other organizations)
- 2.1x Average Revenue vs. non EX companies
- 4.4x Average Profit vs. non EX companies
- 2.9x Average Revenue per employee vs. non EX companies
- 4.3x Profitability vs. non EX companies
The shift to EX is rooted in a silent revolution taking place in organizations across the world as companies transition from treating humans as assets or ‘capital’ (= Engagement) to treating them as human beings (= Employee Experience); from forcing them to submit to and work within certain processes and norms (= managing assets) to understanding them and how they work best and designing solutions around their needs (= individualization).
Tom Friedman, in a recent article succinctly describes how technology is making a huge impact as work is being disconnected from jobs, and jobs and work are being disconnected from companies, which are increasingly becoming platforms. (= moving from “owning” employees to “having access” to capabilities). This major shift from the traditional idea of ‘We own talent’, as reflected in the concepts of ‘Human Capital’ and ‘Talent Management’ – to ‘We create an attractive platform for you to learn and do your best work’.
EX and CX companies create platforms for Employees and Customers to individuallyexperience their organization. The organizations who do that well, will be the winners as the disruptive force of technology shifts the balance of power from companies to both consumers and employees.
What is the difference between Engagement and EX?
Engagement and EX come from 2 different universes. Engagement sprang out of the era of top-down, command and control management when management wanted to know if employees were content with current decisions and practices. It was essentially saying: “Here’s what we’ve decided to do, how happy are you with these decisions?”
Engagement surveys were long lists of things management decided to ask, with a quantitative rating. In the end, companies were ‘guessing’ if they were asking the right questions (why else ask 80-90 questions?). Moreover, Leadership Teams would only run the surveys every 1 or 2 years at most, and if it was a ‘Bad Year’ they would cancel the survey because ‘We already know people are upset.’ Imagine asking your customers for input once every year or two, and only when you know they’re happy.
Multiple studies from leading engagement research companies (Gallup, AonHewitt, Hay, Mercer, WillisTowersWatson, Bersin) all confirm falling engagement scores over several decades. So it seems that focusing on engagement does not deliver any business value.
EX is built on Design Thinking – where organizations watch and observe and continually ask employees open-ended qualitative questions e.g. ‘What matters most to you?’ rather than guessing “Does X matter more or does Y?”, when it’s actually ‘none of the above’. EX Pioneers build and test prototypes of Employee Journeys. And similar to CX, EX puts the Net Promoter Score in the mix.
Jacob Morgan relates how EX is “really about building that connection and relationship with your employees and, in a sense, giving them a type of ownership to shape the organization they are working for.”
EX gets input on what matters to employees from a variety of sources outside of surveys including face-to-face interviews, focus groups, hackathons, instant feedback apps, and analytics. Together these paint a picture of what employees feel most strongly about, with emotion being a powerful window into behavior.
Paul Davies, Head of EX at GE defines EX as “Enabling our people to do the best work of their lives through moments that matter”. Cisco, Deloitte and LinkedIn have similar definitions. GE uses Personas, Design Thinking, and Story Boards. Paul says, “We don't go an hour without using one of these. We asked our candidates what mattered to them, listened to their stories, listening especially for emotions.”
Mark Levy, Head of EX at AirBnB since 2013, says they borrowed the idea from Disney that ‘every frame matters’ in telling employee stories. Cisco holds regular hackathons where employees give input on People processes.
Using all these ongoing insights, EX involves employees in the design and shape of the company, helps identify organizational strengths, and discovers the situations in which people learn and perform best. These insights are being used to restructure (remove silo’s, layers and titles),trim processes, turn rules into employee judgment. All of which helps companies unlock new paths to faster growth, profitability and innovation.
We asked EX Pioneers how they measure success of EX. While some use Engagement scores to check the temperature, most prefer to use their business KPI’s (EBIT, Profitability, Growth, etc.) as key indicators, rather than invent another set of measures.
How to build an EX-Centric Organization?
Our study of existing books and publications did not yield a standard definition of Employee Experience. Nor did it reveal an outline of the steps for designing the Employee Experience – a Playbook. Most importantly, we didn’t find research that matched the depth of the Transformation that EX pioneers say is required to become an ‘EX-Centric Organization’.
Our primary research therefore became a quest to find a common definition, discover a Playbook and understand the kind of transformation required.
For more experienced EX Pioneers, we found that while there are some common elements in designing EX, the particular ingredients are refreshingly unique to their companies, their culture and business context. In Designing EX, it is not the “What” that matters (e.g. ticking the boxes of 17 or 21 precise EX elements),it is rather the “How”. You need to learn to cook, but the best chefs go by taste, rather than by recipe.EX design is unique to each organization.
This is quite a radical departure from the past when large consultancies scanned 100’s of companies to distill the exact ingredients of ‘good Talent Management’ or ‘Leadership’, and sold assessments and maturity models.
Unique EX design means also that the definition of EX varies from company to company. Most organizations look holistically at ‘Workforce’ (FTE’s as well as contract, temporary or ‘Agile’ workers). They look at everyone who interacts with the company from recruits to alumni. Most definitions talk about ‘Holistic end-to-end journeys’ and ‘Designing the best possible experiences for employees’. The main point is that organizations are designing experiences around the employee rather than making employees fit to the organization.
We asked companies about the motives and challenges they have in building EX. Our 250+ Survey Respondents listed their Top 3 most important reasons for building EX:
- Business growth
- Creating competitive advantage
They listed their Top 4 challenges as:
- Transforming the Culture – given the radical shift to an outside-in, bottom-up culture required for successful EX, companies recognize the need for an equally radical transformation.
- Leadership mindset – EX pioneers emphasized that the CEO and leaders at all level must be on board for EX to succeed
- Complex Organization – Simplification is one of the keys to making EX work
- Lack of internal expertise in building the Employee Experience – given that most companies have never built EX, this is not a surprise. EX Pioneers report using Marketing, Design, Facilities experts.
Here are a few other highlights of what we learned:
- EX Pioneers often start with CX. Customers are a good place to engage the CEO and senior leadership, who then pivot more naturally to seeing employees as customers (a big mindset change!),understanding what is meant by ‘experience’, and looking holistically at ‘Workforce’
- EX Pioneers make CX and EX the centerpiece of their Transformation as they design everything around customer and employee drivers. An oft-cited goal of Transformation is to become Disrupters.
- CEO’s of the more progressive and successful EX Pioneers e.g. Adobe and AirBnB promote EX and CX at the top of their agendas because there is such potential for strong business outcomes. Monir Azzouzi, Head of EX Pioneer Maxis, emphasizes that it is a non-starter if the CEO isn’t in the lead and driving key changes. Companies we interviewed who struggled to implement EX and CX did so because they lacked CEO support and sponsorship.
- Successful EX companies design around customer and workforce, and transform to out-side in, bottom-up thinking. They become more agile and innovative. They adapt and simplify processes and decision-making in response to new customer and employee insights. EX and CX Pioneers become flatter, less hierarchical.
- EX pioneers e.g. Google, LinkedIn, ING and Intel borrow heavily from Design Thinking, starting with listening on multiple channels; observing, interviewing, feedback tools, hackathons, utilizing employees to identify holistic journeys, listening for feelings and emotions, creating personas, designing experiences which in turn are vetted, tested and prototyped, and ultimately folded into a Digital People Strategy (see Figure 1).
- EX (just like CX) is designed around a series of questions to get at feelings and behaviors that build on predictive data e.g. Why do our top performers join or leave? Why do our expats leave? Why do some teams outperform the rest?
- EX Pioneers are constantly testing what they roll out, getting more feedback which is brought back to EX design teams who make changes and then the process starts all over again.
- EX and CX companies are “insanely” data-driven; they borrow, buy or build analytics capabilities to collect and interpret data. They build seamless and borderless cooperation between different data-intense parts of the company and seek to integrate and connect a wide variety of data points
- Hot new role: There are only 40-50 Heads of EX and new Heads of EX positions are being created all the time. In some cases, like AirBnB and Adobe, the CHRO role is being replaced by the Head of Employee Experience. We believe that this is the way of the future.
- The lines between HR and Marketing disappear as they start sharing a common responsibility for both their internal and external brand (Adobe and others have one person who is Head of EX and CX, replacing the CHRO). But it doesn’t stop there – EX Pioneers have Marketing, Design, Facilities Management and Analytics roles in their EX Teams.
- ·Talent, Learning, Recruiting, etc. realign to reflect holistic journeys. Key processes also are radically redesigned e.g. Performance Management (more ongoing development focus),Learning (bite-sized, Just-in-time),etc.
Figure 1 – Key steps in designing the Employee Experience
Sample of insights from EX Pioneers
We discovered in our interviews with EX Pioneers that companies have many different business cases for investing in the Employee Experience. Here are a few examples of companies we interviewed:
- Scaling Culture for growth - AirBnB’s CEO Brian Chesky was adamant about scaling their Culture. When the new EX Head Mark Levy brought together the groups touching Culture (Recruiting, Events, Facilities, Real Estate, Design, etc.) to create an End-to-End journey for employees as they had done for customers, Brian liked it because ‘it wasn’t HR!’ AirBnB have used EX to change the way they interview, to judge whether someone is joining for the right reason, assessing how they fit with AirBnB values, and approach to life and work.
- Regain Market Share and Competitive Advantage - Maxis was the largest, most successful Telecom company in Malaysia but lost their market position to disruptive startups with leaner, better business models. They used EX as a primary way to accelerate growth and build their way back to competitive advantage. Along the way, they flattened from 51 job grades to 4 and removed titles. Their CEO Morten Lundal sits in the same kind of open space as everyone else.
- Integrate 2 distinct Cultures - Startup Learnvest was built around apps for Millennials to do Financial Planning, and was bought by 160 year old Northwestern Mutual Life, who saw the EX concept in Learnvest as the key to integrating their two distinct cultures. Head of EX Lina Stern says EX starts with the idea that 'Employees are your first customer'. LearnVest wanted to be the destination of choice for innovators – by attracting, engaging and learning to do things differently. They focused on building an enriched and flexible environment, building great data, and helping people engage in immersive experiences e.g. virtual reality offices where people can come together, and having a professional film editor to help you create your own movie.
- Digital Strategy – ING began with CEO Ralph Hamers declaring to his business leaders: ‘Become Disrupters before someone disrupts you’. ING developed a clear Digital Strategy for CX, based on Design Thinking understanding the psychology of our clients. Then we asked, if we can do this for our clients, why can’t we do this for our employees? We started by interviewing employees – asking "What are your common pain points, hurdles", defining with them what a good solution looks like. We developed an App to help employees develop at that point of their career where they might have a short term assignment.
- Raise Productivity - GE recognized that EX was the pathway to raising productivity and getting the best work from their people. Paul Davies, GE’s Head of EX, spent his first 100 days visiting other companies e.g. AirBnB, Disney, Deloitte and Brooklyn Navy Yards, and saw that everyone is doing EX differently, according to what makes sense for them. At GE, they focused on designing the digital and physical space as well as the Culture, putting the employees at the center of what the company does. Paul has a small team with people from Technology, Analytics and data scientists.
- Restructure under new business model – ABN Amro’s Head of EX, Frank van den Brink says EX and Digital HR are key to success in their 4 ‘Must Win Battles’. Frank and his team have used insights from EX and CX to do away with traditional HR and build a new operating model, based on what they designed for 5 Personas and their Employee Journey.
Fig. 2 – Infographic of Key figures from our Global EX Study
Elliott Nelson is a partner at KennedyFitch, a consulting and search firm building new ways of thinking and practices on the Future of Work. He coaches and advises leaders and organizations on Disruptive Transformations and building EX-Centric Organizations. He is a former head of Talent, Learning and Organization Development at Pfizer, AzkzoNobel, Novartis, Fujitsu-Siemens Computers and Compaq.
Hannah Olvera Doman is a Research Assistant at KennedyFitch, specializing in studying how companies design and implement the Employee Experience. Hannah is working towards a Bachelors’ Degree in HR at Brigham Young University, where she is also a Board Member and writer for the Marriott Student Review, and leader in the local SHRM Chapter.
 “The Employee Experience Advantage: How to Win the War for Talent by Giving Employees the Workspace They Want, They Tools They Need and Culture They Can Celebrate”, Chapters 11 and 12, 2017.
Comments on this article
Really a well documented article !
Its content is to be considered in relation to lifelong learning mindset and functionnal mobility to give full sense to EX move.
I attented a lecture by Vineet Nayar about his book " Employees first, customers second" that is also a good example of the positive effects of paying attention to employees experience.
Many thanks for this summer reading !
With kind regards,