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Evidence-Based Management as a Decision Science: Considering the Mental Models of Leaders. SIOP Annual Meeting New Orleans, LA April 2, 2009. John W. Boudreau Center for Effective Organizations Marshall School of Business University of Southern California 213-740-9814 - PowerPoint PPT Presentation
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© 2009 Boudreau-Ramstad Partnership. All rights reserved.
John W. BoudreauCenter for Effective Organizations
Marshall School of Business University of Southern California
SIOP Annual MeetingNew Orleans, LA
April 2, 2009
Evidence-Based Management as a Decision Science:
Considering the Mental Models of Leaders
© 2009 Boudreau-Ramstad Partnership. All rights reserved.
IPO Investors Miss the HR Connection
Companies whose investor communications indicate people are important:
At Time of IPO Priced lower
Five years later Valued higher Survival is
higherAverage HR value 70% survivalHigh HR value/rewards 92% survivalLow HR value/rewards 34% survival
Theresa Welbourne & Alice Andrews (1996)
© 2009 Boudreau-Ramstad Partnership. All rights reserved.
Manufacturing or technology company
High-growth potential in the long term
Strong market demand
Constrained resource:
Project engineers to customize the products to the needs of the clients
Example: Managing the Right Asset?
Example: Managing the Right Asset?
© 2009 Boudreau-Ramstad Partnership. All rights reserved.
Complete certain projects
Add six new project engineers
Goals:
Actual: Completed projects
Only added three new engineers
Traditional Budgeting Objectives
Traditional Budgeting Objectives
© 2009 Boudreau-Ramstad Partnership. All rights reserved.
Completed all objectives Expenses under budget
Most systems would reward budget goal
But, the expenses saved are minimal
They are in a weaker position – compared with if they had staffed as
planned
Typical Performance Appraisal
Typical Performance Appraisal
© 2009 Boudreau-Ramstad Partnership. All rights reserved.
Meet the operating budget for the region
Fill the vacant GM positions
Goals:
Actual: Met the operating budget
Hired only GM’s who did not require paying more than target salary
Actual Example from a Retail Organization
Actual Example from a Retail Organization
© 2009 Boudreau-Ramstad Partnership. All rights reserved.
HR At the Table But TraditionalHR At the Table But Traditional
HR Considered Very Important for its “Strategic Contribution” by 67% of Executives
Source: High Performance Workforce Study, Accenture, 2003
“Strategic Contribution” Is Defined Traditionally
Tools for Attraction and Retention
Succession Planning
Consistency in rewards, training, etc.
© 2009 Boudreau-Ramstad Partnership. All rights reserved.
Leader Talent Sophistication(Lawler & Boudreau, “Achieving Strategic Excellence”
2008)
Leader Talent Sophistication(Lawler & Boudreau, “Achieving Strategic Excellence”
2008)To what extent are these statements true about your organization?(1= little or no extent; 2=some extent; 3=moderate extent; 4=great extent; 5=very great extent)
Average (HR sample)
Average (Non-HR sample)
Strategic Role
(HR sample)
Strategic Role
(Non-HR sample)
Business leaders understand and use sound principles when making decisions about:
Motivation 2.7 3.0 .31** .40*.16 in ’04
Development and Learning 2.8 3.0 .27** .48**.18 in ’04
Labor Markets 2.7 3.1* .18 .33*.28* in ’04
Culture 2.9 3.1 .21* .32*.07 in ’04
Organization Design 2.8 3.1 .32*** .60***.17 in ’04
Compare to more “traditional” management disciplines
Business Strategy 3.6 3.7 .22* .15.15 in ’04
Finance 4.0 4.1 .20 -.04Marketing 3.5 3.2 .22* .25Technology 3.3 3.3 .22* .25HR systems educate business leaders
about their talent decisions 2.5 2.6 .28** .69***
© 2009 Boudreau-Ramstad Partnership. All rights reserved.
Applying Supply-Chain Principles
To Retention
Are Turnover Rates Too Dangerous to Share with
Non-HR Leaders?
© 2009 Boudreau-Ramstad Partnership. All rights reserved.
Typical Turnover Analysis LogicTypical Turnover Analysis Logic
Spend months defining the right turnover rate
Benchmark against industry competitors
Report turnover rates and benchmark levels to non-HR leaders
Hold leaders accountable for bringing turnover down
Calculate the costs of separating and replacing employees to show the millions of dollars saved
© 2009 Boudreau-Ramstad Partnership. All rights reserved.
A More Complete Turnover LogicA More Complete Turnover Logic
Starting Workforce Value
Quantity of employees
X
Quality of EmployeesChange in Workforce
Effect of Acquisitions
Quantity of employees added
X
Quality of Employees added
Ending Workforce Value
Quantity of employees
X
Quality of Employees
Effect of Separations
Quantity of employees removed
X
Quality of Employees removed
Minus the Transaction Cost of Processing the Separations and Acquisitions
© 2009 Boudreau-Ramstad Partnership. All rights reserved.
Talent Supply Chain: Sourcing and Screening
Talent Supply Chain: Sourcing and Screening
Building and Planning
Improve the number and quality of individuals that might become candidates
Potential Labor Pool
Labor Pool
Applicant Pool
Candidates for further evaluation
Offer Candidates
New Hires Productive Employees
Recruiting
Identify the number of qualified candidates that best suits your organization’s recruiting needs.
Screening
Screen for predictors of performance: Universal metrics as well as specific criteria by company.
© 2009 Boudreau-Ramstad Partnership. All rights reserved.
Talent Supply Chain: Selecting, Landing and Retaining
Talent Supply Chain: Selecting, Landing and Retaining
Selecting
Metrics that provide consistent predictors of performance and reduce human variability (error)
Offering and Closing
Objective is to close a high percentage of the highest potential candidates.
On-Boarding
Establish new person in their position and retain them. How long must employees stay to payout the recruiting costs?
Potential Labor Pool
Labor Pool
Applicant Pool
Candidates for further evaluation
Offer Candidates
New Hires Productive Employees
© 2009 Boudreau-Ramstad Partnership. All rights reserved.
Recurring Theme:
The Relationship Between Talent and Organization
Quality,
and Strategic Payoff
© 2009 Boudreau-Ramstad Partnership. All rights reserved.
Talentship Approach:“What is Pivotal?
Talentship Approach:“What is Pivotal?
Where would improvements in talent
quality or quantity make the biggest difference in the most pivotal processes for the Disney theme park
business?
© 2009 Boudreau-Ramstad Partnership. All rights reserved.
Sweepers • Stop sweeping and talk to
guests• Give accurate information• Create delightful
encounters• Fix problems before they
occur• Bring information to
product design teams
AlignedResponses
“What employee behaviors make the biggest
difference?”
AlignedResponses
“What employee behaviors make the biggest
difference?”
Example: Sweeper at DisneyExample: Sweeper at Disney
© 2009 Boudreau-Ramstad Partnership. All rights reserved.
Pivotal and Important Are DifferentPivotal and Important Are DifferentStr
ate
gic
V
alu
e
Performance
WorstMickey Mouse
WorstSweeper
There is more value in improving
Sweepers than Mickey Mouse.
Best Mickey Mouse
BestSweeper