Date: 06/01/2015 Duration: 00:21:16

Welcome to the first podcast for 2015! In this podcast Chief Executive Peter Cheese explains the key themes the CIPD will be focusing on in the coming year and introduces 4 important thinkers discussing what they think is significant and cutting edge for the profession right now. First we speak to Nick Chater, Professor of Behavioural Science at the Warwick Business School, about the science of human behaviour and its relevance to HR issues. Next we hear from James Rule, Director of HR Solution Effectiveness at Thomson Reuters who describes a scheme called ‘partnering for performance’ that embodies the idea of aligning talent within the business with opportunity and how they have used technology to achieve this. We also hear from Arnab Banerjee, an HR Transformation and Technology expert, who describes the ways technology can optimise HR and his predictions for what will happen in this space. Finally we hear from Rita Gunther McGrath, a Professor at Columbia Business School, who outlines why she believes that businesses should stop focusing on sustaining a competitive advantage and instead work towards identifying different opportunities and working in an agile way to take advantage of these opportunities.

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You're reading the transcript to the CIPD podcast series.

Philippa Lamb: Welcome to 2015 and the first podcast of the new year. This year the CIPD will be focusing on four key themes, they all play into the institute’s central aim to shape a profession that's fit for the future and to support the evolution of a new model for HR. Here’s chief executive Peter Cheese.

Peter Cheese: The first big thing that we’re looking at is the shifting context and that's all the way from continued uncertainty in the economy, which makes us think more about things like building more agile and adaptive businesses.

Secondly, that we are looking at all of the issues around the science of human behaviour and really understanding these different insights on neuroscience, positive psychology, behavioural economics, and all these disciplines which we need to better understand.

Third is about the analytics – better numbers – being able to measure what is really happening in organisations around human capital.

And then the fourth is how does this all apply to HR itself and what are we thinking about in terms of HR and learning as a profession and how we build the right capabilities to be truly future-proofed.

PL: So tell us how the CIPD is going to be exploring these themes throughout the year.

PC: So we’re already doing a lot on this. So if I take the first insight, the insights on the context, so particularly we’ve called out these megatrends, the changing nature of work; the workforce and the workplace. And there are huge shifts going on. So we’re already doing a lot of research on that. We’re turning that into learning for the profession.

Likewise on the analytics, huge amounts of work which we’ve been building on and are going to be pushing very hard into 2015 on better understanding of what you measure and how you measure around human capital and organisation, what we’ve called the ‘Valuing New Talent Agenda’ which is beginning to get a lot of traction.

And then on the science stuff, lots of fascinating work there with different leaders in the fields of behavioural economics and neuroscience and things of that nature, really updating our thinking, because this is the heart of HR from some of the rather tired and old models of things like Maslow’s Hierarchy of Needs which was written in 1943, to saying, “Well actually neuroscience and some of these new sciences can really teach us a lot more profoundly about what engages, motivates people, how they learn” and so on.

So given all of this for 2015 it’s a really important time for us as a profession to have our voice heard, to help to shape and influence some of the political and policy thinking that's going on. And I'm delighted that in this podcast we’ve been able to take the world of theory into practice and to listen to four very interesting thinkers about what they think is cutting edge and significant for the profession right now.

PL: The science of human behaviour is a big theme this year because many of the fresh insights into how our minds work are relevant to big HR issues like recruitment, people management, learning and development and organisational change. Nick Chater is Professor of Behavioural Science at the Warwick Business School and he's on the advisory board of the Behavioural Insight team. It was set up by the government and you might know it better by its nickname the ‘Nudge Unit’.

Nick Chater: Everywhere you've got human behaviour in your organisation behavioural science is potentially relevant. So it could be related to selection, it could be related to training, it could be related to how teams coalesce or it could be how organisations clash when one takes another over. All of these issues and many, many more are fundamentally issues of psychology, of human behaviour.

PL: Okay so for people who are new to this thought, examples.

NC: Well one example would be looking at remuneration. So there are lots of nice studies which show that in some cases when you want to encourage a particular behaviour by, for example, paying people to do it they do it less. So one well known example is nursery schools if you are late in picking your child up from nursery school you feel terrible and you don’t tend to do it but occasionally you do. One nursery school, which started to introduce fines, found that the rate of lateness went up because the parents started to think, ‘Ah! Well I don’t have to feel bad about it I'm paying them!’

PL: I'm buying the opportunity to be late.

NC: I'm buying this very expensive childcare yes. And of course suddenly you've changed the sort of implicit bargain, and this is something I think is very, very important in human behaviour, the implicit bargain from being we’re being helpful and constructive in trying to achieve a common, smooth goal of getting our kids cared for and picked up on time, to - it’s a financial transaction. And once you think like that you treat it completely differently in a way that, for example, an economist looking at this problem would not appreciate without some behavioural science input, they'd think, ‘You pay people more, I mean how could that do anything other than make them do it more?’

PL: It works yeah.

NC: Yeah.

PL: That's something very important for organisations to understand isn’t it in the realm of reward?

NC: Mm I think it is and just in general in terms of organisational culture actually. So to the extent that the culture of an organisation is all about we are helpful to each other; we like each other; we generally look out for each other, because that's the sort of group we are, and people who don’t do that are slightly looked down upon or looked askance at, that's very different from – no you've got to get ahead by any means and if that involves sometimes going it alone then that's fair enough. They’re very different cultures.

It’s not necessarily the case that one is better than another, it probably depends on the kind of business you’re in but you've got to be very careful about which organisation you’re creating because if you accidentally create a much more individualistic business than you really need or really want then it’s very hard to get back.

PL: Nick’s team carried out a study that showed just how hard it can be to get people to do things. The results make fascinating listening for HRs.

NC: They had to complete a survey and then they had to come back to get their money, and it was all done online, they had to click on a link but they couldn’t do it straightaway, they had to come back the next day. So it was very, very simple. Everybody says as they leave the survey, “Oh yeah I’ll do that tomorrow,” but about 30% of people actually do.

So the problem is that if you want someone to do something you've got to make it really easy. If you make it a little bit difficult, even if it’s just come back tomorrow and press a link, that's too hard for most of us. So the thing I think intuitively we should hang on to is we’re creatures who are very overloaded with all kinds of challenges and tasks and so the things we’re likely to do are the things which are in front of us now and are very easy to do and anything that breaks up that it’s immediate, there it is in front of me, is going to slow me down.

PL: So what does this mean for HR and management?

NC: Well I think what it means is that we should be very sceptical of our intuitions that people are behaving in a really sort of coherent way. We’re very much more influenced by the moment than you tend to think.

PL: So how should we respond to that then?

NC: To some extent I think the answer to that is to think about things from an experimental point of view so if you’re trying a new policy the obvious thing to do if you’re thinking about behavioural science is to think, ‘Well people are really complicated, there are all kinds of things that are going to affect them so let’s try something really small and let’s try various other variations of it and compare them in a carefully controlled fashion,’ in a way that in medicine or agriculture would be completely standard but it wasn’t, it didn’t used to be in medicine or agriculture it took a very long time for people to really develop randomised control trials. And that's one of the things that the Nudge Unit has done and the scientific community in general has built over a century and it’s a very, very useful experimental method. And trying to do that in HR is often difficult but I think it’s really important.

PL: James Rule is Director of HR Solution Effectiveness, for a global organisation which I'm going to leave nameless for now. He's been putting Nick’s advice into practice and piloting a new performance management scheme amongst a small group of employees.

James Rule: My goal is to make that cake. So I’ll make the cake. But what we’re trying to do is try to say, “Well someone’s making a similar cake over there so rather than have two cakes, one cake is better than two so why can't you work together on it?” We’re calling it ‘Partnering for Performance’. It’s the culture change for us to try and say, “Look it’s not just about how you achieve your goals.” And there is a lot of research at the moment that's saying there's a direct impact to the bottom line if you get people doing their work, helping others and sharing and recycling at the same time. And the difference on multi-million pound companies is huge.

PL: Actually James’ organisation isn’t a bakery it’s Thomson Reuters and the scheme, Partnering for Performance is now going to be rolled out more widely.

JR: If you can get the organisation to work cleverly around how it aligns its talent to its opportunity they will do it themselves. So some of the things that we talk about is saying, “How can you hit the sweet spot of enabling people to do what they really want to do, their passion, you know, the stuff that they can't help but get involved in? And how can you align that up to the best enterprise organisational band, so you can see the sweet spots coming in, it’s to the benefit of the organisation and at the same time the benefit for that individual. If you can make more of those little explosions go off, one per employee, or in pockets of employees, you'll have a bigger outcome I believe than just focusing on the top echelons of an organisation when we think of the word talent management.

PL: The wins are easy to see and technology plays a leading role. Here’s how it works.

JR: We leave a digital footprint pretty much everywhere, we use a platform which is effectively a business Facebook. So if I keep answering a question around a subject and people like what I say and my knowledge and network around that area is growing but say my job code is something completely different...

PL: All right.

JR: ...there’s an interesting conversation that either should be had or might be had in the future which could be, “You really like doing this stuff, you must do because you wouldn’t do it.”

PL: So you're capturing that data, those interactions.

JR: Yeah and at the same time thinking where could we use those for the best benefit of the enterprise.

PL: It’s a touch Big Brotherish isn’t it?

JR: Well that's a good point because people ask that but really when we’re going to do this it’s going to be about opting in, so we can use that data to try and help get you into the right opportunity to get you into the right projects.

PL: All this relies on employees using social media but even now of course not all of them do so what about the ones who aren’t interested.

JR: Technology is not a silver bullet and it’s not the panacea to everything. There are demographics and groups of people that don’t want to play on social media and I think that's absolutely fine. I think Thomson Reuters as an organisation is becoming more social savvy and social dependent, if you like, in terms of how we interact.

PL: So won't they inevitably get marginalised, even if your intention is that they don’t?

JR: Because it’s not the panacea you don’t close off the other channels.

PL: This sort of performance management approach produces all sorts of benefits: firstly from the knowledge-sharing and then later on the wins from getting the right person into the right role. Selling the concept is the first hurdle but the next challenge is to genuinely embed a new way of behaving right across the organisation.

JR: If you can prove the impact of the bottom line, if people behave in a different way, to senior business leaders they will go, “I will want the same outcomes in my area of the business so can we start behaving in the same way as well?” And this is already happening, our head of enterprise architecture is going, “I want us to behave in an enterprise mindset across 50,000 people. All the technology decisions we make we want to make sure that it’s coherent and it’s all joined up.” So they’re trying to do it. In a different area of Thomson Reuters I'm already collaborating with two or three people who are going, “Hey that's interesting!” because I've shared the ideas on social platforms and I've blogged about it. And they’re going, “Well we’re trying to do something similar to that as well why don’t you come and help us and then we’ll help you?” I can collaborate by talking to a group of five people. I can collaborate better if I've got some information that I think is useful and share it across the enterprise and if we can reward people for doing that you can see where this goes and you say it’s like the world’s biggest water cooler.

PL: The next expert we’ve chosen is Arnab Banerjee. Arnab is all about optimising technology to make HR more effective and he's worked with a string of global businesses, including Deloitte and IBM.

Arnab Banerjee: I think we are seeing a fundamental shift in this area. We had what we now call legacy applications, big legacy applications, housed within organisations in big servers, probably in helping organisations to transact finance and HR and procurement in one system. That is changing. HR was not an influencer when it came to choosing those systems, they had to go along with Finance, they had to go along with Procurement, they had to listen to what IT had to say. They have a choice now. So HR has a choice to influence how employees perceive the organisation, how to help them to feel empowered literally.

PL: These cloud-based systems don’t need organisations to spend millions buying infrastructure or servers, HR simply rents the application and pays per use and according to Arnab most big companies in the US and Canada are already using systems like these. For employees the benefits are obvious, they can access the application on the move to do things like requesting leave or expenses, changing their bank or contact details and their managers just respond virtually.

AB: It’s to do with the flexibility of working patterns, so people don’t do 9 – 5 jobs within an office, they are always on the move, they’re working from home and these applications kind of echo that kind of change and transformation that's happening in the world of work.

PL: But this isn’t the end of the story a wealth of data is being generated in the process and tools to mine that data are now in development too.

AB: If you take the recruitment function, for instance, software can put together the various digital footprints that a potential candidate has and find out more about the candidate’s behavioural characters, traits, that may influence recruitment decisions. They can also find out what motivates their employees better based on how they are using the net or how they are using social platforms. Those are the kind of things, also predictive analysis, it would help companies to identify populations who are more likely to leave the organisation, find out the things which make people leave, the flight of talent is something that everyone has to worry about and these will help them develop practical policies which will influence how their talent is retained within the organisation.

PL: Sounds expensive? In fact growing competition and innovation in the field is driving costs down and over the next few years this cloud process solution and the data it generates will change the landscape of HR.

AB: Data and how we use, analyse and interpret the data and that's going to be one of the things that HR will have to focus on to justify their role going forward.

PL: And almost why wouldn’t they.

AB: Yes and these tools will definitely give them the wherewithal of doing that. I mean there were tools in the past but I don't think they were user-friendly enough now I think they are coming closer and closer to that kind of a solution.

PL: How fast is this going to happen do you think?

AB: This is a disruptive technology that is shaking the technology world as far as HR is concerned, I think it’s going to take another three to five years and we will see most organisations going in for one application.

PL: Here in the UK.

AB: In the UK.

PL: Rita Gunther McGrath is Professor of Management at Columbia Business School. Her area of special interest plays into the CIPD theme about the need for insight into the changing context because she concentrates on strategy in uncertain and volatile environments. In the next 12 months she predicts that great swathes of the global workforce will be affected by technological advances.

Rita Gunther: 3D printing, nanoscale manufacturing, certainly cloud computing is already very much with us but I think you'll see those things starting to have a real commercial impact in the next year or two and that's going to change the constraints that a lot of different industries operate under. That really then changes business models, it changes how people relate to one another. You may have the right skill and talent for what you’re doing today but not have the right skill and talent for what you need to be moving forward to in the future.

PL: Rita’s new work is an attack on the idea that business leaders have resolutely clung to even as everything else in their working environment has moved on and that's the idea that competitive advantage can be sustained.

RG: Sustainable competitive advantage is this incredibly popular idea and if you can find one that's absolutely terrific but in more cases than not I think it really leads leaders astray because they get so involved in defending an existing advantage they’re not really thinking hard enough about building the next one or indeed leaving ones that are exhausted behind. And so what you have is people constantly focusing on lagging indicators rather than really focusing on the leading indicators that they need to be looking at. And so what I've been trying to work on is how would you build an organisation and what metrics would you use if you genuinely felt today’s competitive advantage was not going to carry you through to the future.

PL: Picture the ocean, wave after wave heads towards the shore and then breaks one after the other as they hit the beach. Now that's the image Rita uses to show organisations how they should behave. They need to be aware when they’re on the crest of a wave but they also need to understand that in the end all waves break and they must constantly be looking towards the next wave and the next opportunity.

RG: Once you've identified an opportunity there is actually three capabilities you need to get better at if you want to make that opportunity realised. So the first one is indeed finding the ideas or ideating but then there's a process of creating something real out of those ideas: you can think of it as incubation. And this is where the skills of prototyping, of options thinking, or trying things out, of being willing to tolerate high failure rates in some cases, those kinds of things come to bear then. And once you’ve got something you think is really going to work then you've got a process of acceleration which takes this innovation and brings it up to scale and allows it to take its role in your business portfolio. And what I find companies tend to obsess about is the ideation part: so they think that there are not enough good ideas and so they invest huge amounts of money in coming up with good ideas only to have them die on the vine because the other two processes aren’t in place.

So you need ideation but you also need incubation and you definitely need acceleration if you’re going to make innovation really work for you.

PL: Now you’re probably thinking that Rita’s ever change-ready organisation spent every day in an exhausting state of internal flux but that's not what she found.

RG: What I expected to find was companies that reacted to these volatile environments by themselves being very volatile inside, you know, I expected to see lots of lay-offs and lots of rapid restructuring.

PL: The constant change idea?

RG: Yeah that's what I thought I’d find and that wasn't at all what I found. What I found was an interesting and somewhat more subtle mixture of sources of stability combined with sources of dynamism. So the sources of stability were things like their values; their culture; the leadership messages their leaders send; their networks, very networked companies both inside and outside. And so there was a lot of stability there and then at the other side of it was a lot of dynamism so they’re into and out of markets, people’s roles change a lot. People would, let’s say today you’re in manufacturing tomorrow you might be in marketing. So there was a lot of dynamism in terms of go to market and in market and experimentation kind of approaches, which I thought was fascinating.

PL: So this is a nuanced approach to this idea which has become current of change is the new normal. It’s not throughout the organisation, not in every way, not in every area is there change but there certainly is agility.

RG: And I think agility and change are often used interchangeably but they’re not necessarily the same thing. I also think change is hard – people aren’t good in vastly uncertain situations so you need to provide people with enough stability so that they can trust you, that they can take a chance, that they can be willing to step up and try an innovation if they think so, because if they’re uncertain, they don’t trust, they’re concerned about their futures, there's not a lot of stability for them, that’s when I think people just stop trying and that’s when you lose a lot of that innovative capability.

PL: Four leading thinkers there with fascinating insights for HRs to ponder on and put into action in the year ahead. And talking of insight remember you'll find a new podcast on the site on the first Tuesday of every month.

Next time it’s Part II of our double episode on business partnerships with stories from the front line at Rolls Royce and Shell and don’t worry if you missed the first episode, it aired in December and you can catch up anytime at