Author: Mu Sheng, head image from: Visual China
At present, the biggest challenges facing the human resources profession are two: one is the lack of professionalism, the selection of conventional modules such as Yuliu is more based on the feel, lack of standards, and reduced to metaphysics; the second is that the direction is lost, and the selection of conventional modules such as Yuliu is difficult to support business strategies and cannot create value at the business level.
The inability of HR to respond to these two challenges has led directly to questions from the boss and the business unit about this profession. If you are creating a profession based on your feel, but you can't promote business, why set up such a department? Recently, ByteDance as a whole abolished the Talent Development Center, which is actually a case of this kind of doubtful outbreak. ByteDance's "big family" action is particularly typical, and what people give is a very clear signal - I have a lot of money, but it is not blown by the wind.
First, the professional data of human resources
In response to two challenges, the transformation of the HR profession should be a complete chain of logic:
On the one hand, it is to reshape the "professionalism", that is, to quantify the profession with data, and to change the human resources major from "language problems" to "mathematical problems"; on the other hand, it is to calibrate the "directionality", that is, to promote the operation with the profession, so that the human resources profession truly becomes a business.
But back to reality, the ambitions of the latter aspect seem to be really too big. As a result, a large number of researchers and practitioners have put their minds on the front and formed three directions of attempt (Figure 1):
Figure 1: Three attempts to digitize HR
Source: Mu Sheng Consulting
The direction of the first attempt is "quantifying people". Typical genres such as engagement, competency, leadership, etc. These concepts have been widely accepted by the public, and the methods of quantification have tended to be unified, but each has its own form of presentation, and the essence is similar.
But the steel straight male logic of "all things don't work, people can't do it" actually doesn't make much sense.
On the one hand, what determines the state of an individual? If you can't open up the logic of the impact of human resource functions such as the selection of education and retention on people, and quantify this logic, the human resources profession will fall into the embarrassment of "after-the-fact analysis", and it is still metaphysics.
On the other hand, can a good individual certainly produce excellent business performance? This logic still does not hold without taking into account the chemical reactions between individuals within the organization, and without considering the impact of such chemical reactions on business. The typical example of the former is the failure of several All-Stars players in the NBA to form a team, and the current Lakers are encountering this embarrassment; the typical example of the latter is the collapse of many entrepreneurial teams with a hot organizational atmosphere. Therefore, you may wish to recall that the famous Gallup Q12 questionnaire believes that employees are satisfied, and the company's performance is good, is this logic really correct? In fact, this is a very typical logical fallacy.
The second attempt is to "quantify the professional function of human resources". Typical genres are IIP assessment, HR audit, HR maturity model, etc. The general idea is to quantify the selection of yuliu actions, and then examine the gap between these actions and standard actions.
In fact, the human resources profession does not have too many standard actions, which is itself a customized solution given by weighing the needs of the enterprise. In other words, performing some kind of standard action does not necessarily lead to business performance. Therefore, these models are very popular in HR, but in the end they have not become the consensus of the industry, and the boss and business department are not interested.
The quantification of this direction has also led to two evil consequences: one is that the human resources department loses credibility, they seem to continue to give themselves examination papers, and then continue to get high scores; the other is that the human resources department is obsessed with shaping professionalism, deriving a variety of fancy operating models, more curved and low, this phenomenon is commonly known as "poor stationery more" and "people are addicted to food".
The third attempt is to quantify the "human resources professional value chain". The so-called "value chain", each link produces a corresponding value, and there is a clear causal link between adjacent links. Typical genres are the HR Scorecard, the Saratoga System, etc. These models state the causal value chain from "selection of professional actions" to "hr resource status", and seem to be compatible with the first two quantitative directions, covering every corner of the HR profession.
However, there is a clear lack of underlying consensus on the professional value chain of human resources. A thousand people have a thousand Hamlets in their hearts. For example, for the final output of the human resources profession, the cognition is completely different, some people think that it should be the output of organizational capability (Organization capability) or corporate culture (Workforce mindset and culture), some people think that it should be the output of employee satisfaction, and others think that it should be the output selection and retention of various professional results, such as recruitment in place, assessment fairness, training execution, etc.
Because of this, the idea of quantifying the value chain of a human resources profession is beautiful, but the divergence is enormous.
The above is the whole story that existing human resources professional scholars and practitioners can tell: on the one hand, the human resources major can identify suitable employees and enhance the ability and willingness of employees; on the other hand, it is said that their selection and retention are more standardized and can support the strategy.
But these stories are more like self-talk in the "deep wells of expertise" in human resources; they are too far from the business to feel like bosses and business units.
2. Human resources effectiveness dashboard
At present, we can basically be sure that the dataization of human resources professionals will definitely go in the third direction. But the question is, there is a core disagreement in the third direction – what are the core delivery metrics for the HR profession?
There are two schools:
One is to emphasize effectiveness. This genre either measures internal user feedback, i.e., whether employees or business units are satisfied, or professional outcomes, i.e., whether retention is working well.
I'm deeply offended by this genre: the former makes HR a licker, and I want HR to remember that you're providing professionalism rather than service, and you can never fully satisfy employees and business units; while the latter is still talking to yourself, and professionalism must bring results, but that result should be business-level value, not self-congratulation.
The second is to emphasize organizational ability or corporate culture. I have done in-depth research more than a decade ago, and these two concepts are actually synonymous, including three parts: organizational values, organizational rules, and organizational knowledge. There is nothing wrong with saying that the human resources profession produces organizational ability or corporate culture, but the question arises again, how to quantify organizational ability? Some institutions send out countless questionnaires as soon as they come up, which in my opinion is a very funny thing. Enterprises see these survey results, smile and smile, rest assured, no one is more real.
I endorse the latter genre and firmly believe that HR Efficiency is the best endorsement of organizational capabilities.
A business is like a black box of organizational capabilities (Figure 2), with resources on one side and performance on the other. Strong organizational ability, black box becomes an amplifier, small resource investment brings big returns; weak organizational ability, black boxes become attenuators, and large resource input brings small returns. Therefore, the ratio of resources to production, that is, efficiency, just illustrates the organizational capabilities of the enterprise.
Figure 2: Sandwich model of organizational ability
Efficiency is divided into financial efficiency and human resources efficiency: the former is reflected in the return on assets, gross profit margin, profit margin, etc.; while the latter is reflected in the labor cost production ratio, labor cost return rate, per capita revenue, per capita gross profit, etc. Since human resources are the center of all resource circulation and the center of all revenues, costs, and expenses, human resources effectiveness determines financial efficiency to a large extent. According to the research of Musheng Consulting, in the enterprises with Internet attributes, for every unit of human effectiveness change, the financial efficiency will change by 4.33 units. In this sense, human effectiveness is clearly more representative of organizational capacity.
Based on this solid logical starting point above, Mouson Consulting has developed a tool, the HR Efficiency Dashboard (HED). We have found that using human effectiveness as a core delivery indicator for hr professionals can make the value chain of HR professionals clear. We can not only improve "professionalism" through uncontroversial quantification, but also use it as a fulcrum to promote business and perfectly calibrate "directionality".
Our framework is to quantify three dimensions:
The first dimension is the performance layer. This level is to interpret the complex requirements of business strategy as the requirements of human resource efficiency, which is the "fulcrum" to promote business. Typical indicators include labor productivity, rate of return on labor costs, etc.
The second dimension is the team level. The team is the guarantee of continuous output efficiency, and the organic combination of people constitutes combat effectiveness, which can not only form the advantage of "Tianji Horse Racing" with the competition, but also produce human effect results in orientation.
Some companies mistakenly believe that the team inventory is the talent inventory, and do the nine or four square grids of values and performance from the beginning, which is very shallow and cannot produce any meaningful conclusions.
The team should include two sub-dimensions of organization and talent: the former measures the organizational structure, for example, we have an indicator called the flat index; the latter measures talent, and the engagement and talent quality that are often mentioned are quantifications in this direction. Of course, one of our most proud attempts is to combine the two and take stock of the distribution of talent in the organizational structure, which can lead to many meaningful indicators. For example, we took stock of the distribution of capabilities at different management levels, formed a talent reserve index, presented the state of the company's talent supply chain, and even identified the size of the broken parts and gaps.
The third dimension is the functional layer. This level is the selection of education retention, the high-level operation of the functional level is the guarantee of the previous team building ideas, and the modules of the human resources profession should cooperate in an orderly manner to jointly output a set of overall solutions. On the surface, there should be a lot of quantitative indicators in this dimension, after all, HR has been talking about professionalism in this dimension, but you may wish to think about it, is there any quantitative indicator that can be taken?
A typical scenario is that HRD worriedly states to the boss that the completion rate of training programs this year has dropped by 50%, but this insincere indicator will only exchange the boss's blank eyes. Because of this, we have developed a number of penetrating indicators that we hope to make up for this lesson.
These three dimensions are linked together, which is the human resource management value chain we mentioned. Here, we do not mention human resource management, but human resources management. Management is planning, organizing, leading, controlling, is step-by-step; while management is to create market value, is unlimited creation. In this value chain, each enterprise will have its own set of playing methods and form its own human resources strategy map. If we quantify each part of the HR strategy map, we form a DASHBOARD of HR effectiveness.
Let's think that the development of human resources professionals to an ideal state should be through the adjustment of the various indicators of the selection of the retention function, which can trigger changes in the team, lead to changes in efficiency, and ultimately lead to fluctuations in business performance. I think that if this state is reached, no boss and business department will doubt the significance of the existence of the HR profession.
Third, the IBR of human resources data
The HR Effectiveness Dashboard quantifies the company's unique HR management value chain. To achieve this quantification, three foundations are needed, which I call IBR. Let's look at the simplest model (Figure 3):
Figure 3: IBR model
This model is the epitome of the relationship between upstream and downstream indicators in the human resources operation value chain. For example, X is the degree of organizational leanness, while Y is the effectiveness of human resources, and obviously, the streamlining of the organizational structure has an impact on human effectiveness. To build this model, we need to know three types of information:
The first is the indicator algorithm (Indicator), that is, to find indicators that quantify the degree of organizational structure (X) and the effectiveness of human resources (Y). This has changed the hr resources major from "language problems" to "mathematical problems". This direction tests both the designer's data mind and the designer's understanding of the HR profession. There are many institutions that talk about human resources indicators now, but to be honest, whether the indicators are talented or not, whether they are greasy, and clear-eyed people can see it at a glance.
For example, we measure organizational leanness through the "Flat index", which is affected by the width of management and the level of management, the larger the width of management, the fewer levels of management, and the larger the flat index.
For another example, we measure whether the assessment is a real knife or a gun through the "Incentive True Index", we quantify the actual change in the performance score, and then divide this part by the total score to get the floating proportion of the total score.
The second is the indicator baseline ( Baseline ) , that is, how many indicators to answer X and Y are high and how much is low? This makes hr professionals a radar that can quickly self-test and reflect corporate problems.
Continuing with the previous example, the baseline we gave is that a flat index below 1 is organized redundancy, and an incentive true index below 5% is a fake knife and a fake gun. When we conducted a quantitative inventory of the organization and human resources of a company, we found that their functional department flat index was only 0.3, and I joked - you are not a pyramid or a small pyramid, you are directly the Eiffel Tower.
The third is the rule of the profession, that is, how much should the influence of the answer X on Y be? Is it possible for us to improve human effectiveness by streamlining our organization? This allows companies to discover the best path to improve people's effectiveness. We have precipitated a lot of research in this area, and some conclusions are even completely contrary to your common sense. In the future, we will continue to release, and today's time is limited, so it will not be launched.
We found that whenever HR and their bosses discuss IBR, it is a "highlight moment" for them to increase their own value. To put it bluntly, if you have been working in a field for a long time, but you can't get your hands on IBR, then you are not getting started.
In the end, the HR effectiveness dashboard is a set of models, and only by substituting a large amount of past data can we correct variables, form baselines, and clarify laws. It should be understood that the model is "fed" with data, and the more data, the more accurate the models will be and the more efficient the decision-making.
But it's hard to scrape data in the HR profession. One bad habit is that HR people like to refuse to participate in research on the grounds of confidentiality. Interestingly, every time I go to class, HR students like to ask me - Mr. Mu, is this data high or low, is there a baseline? Is there any regularity? Guys, Baseline and the law are fed out with data, you don't give data, Teacher Mu's mouth has not been opened, how do I know the answer?
In some surveys, research institutions are required to participate in the survey to obtain results, so some HR people expect to get "real results" by reporting "fake data". As everyone knows, you think so, other HR also thinks so, so the whole sample bank is polluted, and such survey results are meaningless.
Musheng Consulting's data capture is based on the model of human resources performance dashboard, which has gone through two stages:
The first phase is a small sample survey to be done before 2020. We only collect data that we are sure of, which is slow, but also accurate.
The second phase is a large sample survey done in 2020 and beyond. We began to conduct research on enterprises across the country, and released the annual "Research Report on Human Resource Effectiveness of Chinese Enterprises" every year.
This research report is actually a pan-industry presentation of the HUMAN RESOURCE EFFICIENCY dashboard. Whether it is HR hoping to reconstruct its own human resources professional worldview with "human effect" as the core, or enterprises hoping to customize their own human resources solutions with "human effect" as the core, they can get certain support.
In fact, I think every business should have its own HR effectiveness dashboard. It is the foundation of modern human resources professions, and the application scenarios are very extensive, which is related to the survival prospects of HR. For example:
- Data base of the annual plan for human resources;
- Dashboard of the human efficiency improvement project;
- The core component of the human resources planning project;
- The core research content of the organizational transformation project;
- Algorithmic system basis of HR digital transformation project;
- ……
Fourth, the three ethics of human resources data
The above talked about a lot of our understanding of the trend of human resources data, which actually presents my human resources professional worldview.
I believe that every professional has his or her own professional worldview, influenced by their respective intellectual backgrounds, practical experiences, and even management philosophies. So, some people may agree with our views, and some people may not, just as professionally some people like to do quantitative, some people like to smell...
But if you agree that hr professionals should move toward data, there are at least three ethics that must be followed:
The first ethic is to penetrate as king (Woo).
What is penetration? That is, after you throw out an indicator, the person you see will have a "Woo" reaction, which means that you expand his cognition and make him sigh "how I didn't expect it". We should be clear that bosses and business units have limited windows, they can't discuss the details of this profession with you, and we must present the most penetrating indicators.
Some people do the indicators that are greasy. For example, I can guess that the talent inventory idea of some companies is nothing more than using a two-dimensional matrix of values and performance to make a four-square or nine-square grid. The HR friends of these enterprises were surprised to hear it: "Teacher Mu, how do you know?" "Friend, if you only have a ten-year-old dress in your closet, what you're going to wear tomorrow on the street, is that hard to guess?"
Some people do indicators that are very talented and elegant. For example, in the NBA's statistics, the five big data of points, assists, rebounds, blocks, and steals are easy to count, and the strength of most players can be identified from these data. However, there is a category of players, these five statistics are not high scores, but when they are on the field, the team is more likely to win. You can't just attribute this to people being "Fuwa", one or two games may be luck, those dozens, hundreds of games and this law, is it necessarily that people have superiority in strength? For example, his co-defense allows his teammates to complete steals or blocks, and the data is not on him, but he is contributing. So the NBA-based data company designed an indicator — the player's efficiency value, which is how many points the team has won when the player is on the floor. Such an elegant design suddenly pierces the phenomenon, which is what the human resources major should pursue.
The second ethic is objective.
I stress that we must rely on objective data, not subjective data. Some institutions, when doing organizational and human resources research and diagnosis, throw out questionnaires to collect subjective data at the beginning, and then, on the arbitrary conclusions formed by subjective research, they go to find objective data to support their own conclusions.
To be honest, subjective data doesn't mean much in my eyes. Taking the engagement survey as an example, the most dissatisfied in every enterprise is the salary, but it is not necessary for employees to leave. Dissatisfaction with salary is more of a professional performance, the best posture for professionals to protect themselves.
As another example, if you ask an employee if he has any intention of leaving, how can he tell you? Therefore, we are more about measuring the profit and loss that the departure has formed for him, focusing on maintaining the part of the people who have great benefits after leaving but the sunk cost is small.
Therefore, subjective data is not unusable, but as a supplement to objective data. When we do organizational and human resources diagnosis for enterprises, we must first analyze objective data, to put it bluntly, several key indicators come out, and the fundamentals of the enterprise are basically clear at a glance. Then, according to the fundamentals of objective data anchoring, a customized subjective data survey is carried out to add temperature and detail to the conclusion. This way of operating is completely different from the traditional way of playing.
Some consulting agencies and HR also have a delusion that they want to control quantitative results, so they like to use subjective data. But then again, the boss is not a fool, you think you are playing with people's cognition, people have long been on fire to prepare to make a plate of "fried squid".
The third ethic is Connecting.
This means to think outside the profession and think about business. No matter how fancy the profession is, it cannot produce business results, and it is all hooliganism. Some HR often asked: "Teacher Mu, can we promote business?" I said, "Be confident, remove the word 'what' and the question mark." ”
As I said, the operation of a business is actually a "three-rate double-effect logic" (Figure 4). "Third-rate" is the flow of business, capital and talent, and business is the flow of funds and talents to promote business flow; "double effect" is financial efficiency and human efficiency, that is, what level of financial and human investment to pursue what level of business results. As mentioned earlier, human efficiency relative to financial efficiency is a more forward-looking driving indicator. Then, with human effect as a weapon, HR can definitely affect the operation.
Figure 4: The three-rate dual-effect logic of business operation
So how does HR affect human effectiveness? HR masters the motivation flow and knowledge flow (push empowerment), which is the basis for driving the talent flow and reaching high human efficiency. I also refer to the talent flow, incentive flow, and knowledge flow as "small third-rate data", corresponding to the "big third-rate data" of business flow, capital flow, and talent flow. From this framework, every action you take in the profession can affect the business outcome.
The above three ethics are summarized by me as WOC, and I think that every friend who is committed to promoting the human resources profession to data must have a WOC in mind. The so-called "WOC standards keep in mind, professional transformation is not biased." "This is the best of times and the worst of times for organization and human resource management. The good thing is that the big change in business has given the human resources profession a particularly big opportunity, calling for a revolution in this profession, and also making it possible for practitioners to soar; but the bad place is that under the big change, pseudo-concepts, rotten tools, fake masters, and cancerous enterprise benchmarks are flying everywhere, and the information explosion fills the limited windows of the public, making it difficult for everyone to access real knowledge and thus unable to evolve.
May human resources professionals not achieve nothing in the blossoming scenery, but seize the opportunities given by the times and reach a new professional realm.
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