How to Invest in People vs. Processes
A few years ago, a regional utilities client (who had been a client for many years) made a commitment to invest in a new IT infrastructure which would allow for efficient bookings for the field teams and the use of handheld devices in the field to record data and take photos which would both speed up the process and reduce human error. The entire process had been evaluated, costed and the business case was clearly established.
The organisation invested £45 million in this new technology. It is now some years since the system went live and in a recent conversation with the client, I was told that although the new system is indeed better “many aspects under-delivered” because “the missing piece was the investment in people to make the culture change”. As a result, they are not getting the real benefit because the investment in people was not made to enable people to maximise the potential return on the new technology. The manager said “we are still waiting for the culture to change so we can unleash the full benefits”.
This got me thinking about how organisations perceive and evaluate the investment in people compared to how they invest in processes, technology or physical resources. So now imagine I am a salesperson pitching a new piece of software or machinery to your executive team; as expected they are challenging me about my claims, they ask me for what proof I have, so I say:
We have tested our product against 6.7 million people over a number of years and have seen the following results:
6% Revenue growth
4% Increase in operating margin
In addition to this an independent organisation has compared 263 separate studies on our products and found the following results on average:
– 27% drop absenteeism
– 62% drop in safety incidents
– 12% increase in profit
– 26% increase on average in productivity
How much would your organisation be willing to invest in this new software/hardware?
Well these are the findings of research by AON Hewitt and Gallup into the impact of employee engagement. These figures and many others are now well established, moreover these results are being consistently repeated in year on year studies. Yet we find the willingness (or trust) to invest in people is only a fractional percentage of the investments made in upgrading systems, processes or machinery. Thinking back to the utility company example I mentioned earlier, imagine what might have been the difference if just 1% of £45 million the company spend was set aside for the people and cultural aspects of the change process – maybe if we truly embrace this conversation we could imagine what 5% or 10% might do?
To be completely honest after 17 years in this industry, what I see many HR managers achieving with their fractional budgets is often extraordinary but importantly it doesn’t answer the question of how executive teams should balance both their focus and their investment.
Recently I found myself in an interesting position, a global logistics provider asked me to put together a proposal to address some problems in their organisation which were negatively affecting performance. The problems were quite well known within the organisation but seemed to never fully be resolved. The client was also considering a second proposal from another company. I was intrigued to discover the other proposal was a process focused solution from a company who had expertise in auditing, evaluating and redesigning internal processes and systems.
After some discussions and research, we concluded that firstly, most of their systems and processes were fit for purpose and that errors were occurring when people deviated from the process. Secondly, there was genuine knowledge and expertise in the organisation that meant they should have been able to solve even the most complex issues. With this as the basis, we wanted to emphasise that the critical component for successful processes is the attitude and skill levels of the people interacting with those systems.
As a result, our proposal focused on two key strategies;
1) training managers in critical problem-solving methodologies
2) training more senior managers to adopt a coaching approach – to ask questions of team members rather than ‘tell solutions’.
My sincere belief was that no matter what changes were made to processes in that organisation, the people and cultural factors would have caused a similar set of problems repeatedly until this factor was addressed. I was pleased when we won the work and have since seen meaningful changes in the business within just two months of the project starting.
I want to emphasise this is not an ‘either-or’ conversation – this is most definitely an ‘AND’ conversation. We need investment in both process and people. It is true that if you want to create change or develop an effective strategy that your process must be scrutinised and (often) changed. What is interesting, however, is to look at the balance of the investment made against the anticipated outcomes. Why is it so hard to make the case for people investment with equal strength and impact? My gut instinct is that for many executives, a company who promises to ‘fix the process’ in order to fix the problem, is hugely tempting. It is somehow more tangible and more measurable, so I believe this option is quite seductive! A broken process or buying a new piece of machinery is much easier to mentally buy into, but for those of us who believe that ‘hard factors’ are only ever one part of a solution then this is the challenge we must embrace.
Some responsibility must lie with HR where often the language and commercial approach is not as compelling as the business case from other functional areas. In fact, we offer free seminars to support HR professionals to strengthen their strategic alignment and impact at board level. Hand in hand with this however, needs to be a change of attitude from executives about the importance, impact and (crucially) return of strategically aligned investment in people.
Our answer to these specific challenges was to create our leadership cube model as a way to illustrate all of the areas that a strong executive team should focus on. The cube helps executives balance their focus on both ‘hard’ and ‘soft’ factors and likewise balance their investments of time and money.
In summary, we must stop expecting to make high value purchases of equipment, software or consultancy without pairing these investments with a sustained and committed investment in the people aspects.