John W. Boudreau Center for Effective Organizations Marshall School of Business

© 2009 Boudreau-Ramstad Partnership. All rights reserved.

John W. BoudreauCenter for Effective Organizations

Marshall School of Business University of Southern California

[email protected]

SIOP Annual MeetingNew Orleans, LA

April 2, 2009

Evidence-Based Management as a Decision Science:

Considering the Mental Models of Leaders


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)


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?


Complete certain projects

Add six new project engineers

Goals:

Actual: Completed projects

Only added three new engineers

Traditional Budgeting Objectives

Traditional Budgeting Objectives


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


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


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.


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***


Applying Supply-Chain Principles

To Retention

Are Turnover Rates Too Dangerous to Share with

Non-HR Leaders?


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


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


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.


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


Recurring Theme:

The Relationship Between Talent and Organization

Quality,

and Strategic Payoff


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?


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


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

John W. Boudreau Center for Effective Organizations Marshall School of Business

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