By Leerom Segal, Aaron Goldstein, Jay Goldman, and Rahaf Harfoush| Jun 20, 2014
How Big Data can be use to better get to know their people and to create a setting that better suits their needs
Big Data is the buzzword of the year. Every leader — whether they’re managing a small team or are at the helm of a multinational corporation with thousands of employees — is wondering how they can use Big Data to better get to know their people, to create a setting that better suits their needs and, in turn, drive recruitment and retention. As co-authors of The Decoded Company: Know Your Talent Better Than You Know Your Customers, we’ve spent a lot of time thinking about this exact topic. Here are the top five trends you should be thinking about.
1. We are living in a data-abundant environment, and it’s changing everything. Gary Hamel, one of the world’s leading thinkers on the topic of management, has written extensively on the topic of the technology of leadership (or what he more accurately calls the technology of human accomplishment). He believes — and we tend to agree — that this might be the most important technology humanity has ever created. It gives us extraordinary superpowers to organize people into achieving feats that would be otherwise impossible, particularly from an economic perspective. Consider, for example, that Apple has achieved a market cap of $468.99B with 80,300 full-time employees (from its 2013 Annual report), or almost $6m per head. The challenge is that the management tools we use every day were designed around the assumption that data is expensive to gather and therefore infrequently available. Today’s reality is very different. Data is abundant and incredibly cheap to gather, store, process, and analyze. This epic shift has led to radically different business models on one hand, but only incremental management philosophy tinkering on the other.
2. People are the most important thing. It’s almost a cliché how often leaders talk about their people being their most important ‘assets’. Fairfax Cone, former director of the American Association of Advertising Agencies, is reputed to have said, “The inventory goes down the elevator every night” in reference to his people. CEOs talk about their people as being their most important assets and resources without considering the definition of these words. Resources are defined as a source or supply from which benefit is produced. Assets are anything tangible or intangible that is capable of being owned or controlled. Even the language of accounting can be viewed as somewhat brutalizing — employees are owed money for their time which makes them liabilities (an obligation of an entity arising from past transactions or events). The traditional approaches to management are predicated largely on the idea that people were interchangeable cogs in a production machine. Whether they were harvesting a field, adding a part to a widget making its way through a factory, or even writing copy for ads, people were essentially units of labour. Our shift to a true knowledge-based economy has created a highly specialized and differentiated view of the people that make up our organizations. Unfortunately, our one-size-fits-all process hasn’t evolved to match it. We should call them “people” (or “talent”) and we should adapt as much as possible to empower them to achieve higher performance.
3. Big Data is no longer simply a technological issue but a strategic one. Our people are now swimming in an ocean of data. All of the data we need to personalize their experience already exists within our organizations and the technology to handle it is well understood. With the increasing popularity of Data Scientist roles within organizations, it is often easy to assume that dealing with the age of Big Data is as simple as outsourcing those responsibilities to someone with a statistical/computer science background. In reality, our ability to leverage data to answer challenging questions falls firmly into C-Suite territory. The ability to use Big Data, both internally and externally, has become a leadership issue that must be carefully considered at the highest level of an organization. Without a leader’s vision and foresight to guide the organization, all the data in the world won’t be useful and in fact, can be quite harmful to company culture, performance, and morale.
4. Every company has untapped analytical resources. Every company has the potential to be Decoded. Data has become such a plentiful resource that many companies are producing many streams of data already without capturing any useful insights. Being Decoded is not a binary state but a broad spectrum upon which every organization must find the place that best fits their needs. In that respect, identifying data sources and analytical resources can provide guidance in understanding your organization’s needs and capability to adopt a talent-centric data-driven approach.
5. Companies will need to develop and maintain Ethical Data Practices. As companies continue to use data to better understand their customers and their talent, the questions of privacy and transparency have become critical. We believe in creating and promoting ethical data practices that protect people’s right to privacy. Developing best practices that include transparency in what is being collected and how it’s being used is critical. In The Decoded Company, we introduce three Data Principles to guide organizations toward a focus on collecting data that is derived from non-sensitive performance-based sources, targeted towards empowering the employee and helping to create happy and humane workplaces.
Based on case studies from a wide range of industries, we believe that the new key to a sustainable competitive advantage is to become a Decoded Company: talent-centric, data-driven, flexible, and fast. Big Data provides a set of new tools to help leaders transform their organizations into centres of gravity for talent. The Decoded model helps leaders today leverage these trends into a strategic advantage for their organization, and is the result of over 16 years business experience in applying these practices inside our own organization, Klick Health, as well as over two years of in-depth research to identify other like-minded organizations.
TECHNOLOGY CAN BE A COACH AND A TRAINER
High-performance athletes, across every sport, share at least one thing in common: they all have a trusted coach in their corner, whispering in their ears to help them achieve a far greater outcome than they could on their own. Technology as a Coach gives everyone on your team the same competitive advantage. It enables the use of data and systems to transform your technology from a referee shouting “offside!” to a coach who provides real-time guidance and recommendations to your people. A referee enforces rules in the most unbiased sense possible; a coach is on your team and there to help you win. Most enterprise software systems are referees, slavishly enforcing business rules even at the expense of your people’s time, engagement, and even sanity. You can easily turn your technology into a coach that constantly helps your people achieve better results.
HubSpot, a Cambridge-based marketing automation company, was founded in June 2006 by Brian Halligan and Dharmesh Shah. We had the chance to chat with Brian and Andrew Quinn, their Director of Training and Development, about a variety of topics, including their influence-mapping project. Brian never wanted HubSpot to follow a traditional management hierarchy. He designated one of its meeting room whiteboards as its official influence map when they moved into their current offices, using it to understand the flow of power and influence among their people. The map helped HubSpot answer questions such as:
- Who are the power brokers in the organization?
- Who gets stuff done?
- Who drives change and innovation?
- Who has the most sway over the organization?
Traditional org charts answer none of those questions (though they are useful for figuring out who you should ask for a raise). Hierarchical reporting relationships rarely define the flow of true influence, which follows a more matrixed model.
HubSpot’s map ran on an honour system. Each employee would write their name into a free spot on the board when they started. They’d add black lines to reflect their reporting relationships, erasing and redrawing them as their role changed over time. More important, they’d add blue lines whenever they felt that someone had had a repeated influence on them or the work they were doing. Andrew, for example, had a lot of blue lines coming into his spot, because he runs training and development for the whole company and was an early influence on most new hires.
The board was a huge success for HubSpot during its early years. In classic get-what-you-measure fashion, the board drove HubSpotters to go out of their way to meet new people and collaborate across org chart black lines in order to accumulate more highly valued blue lines. The board was ultimately a victim of its own success, though, helping to grow the company to the point where the whiteboard could no longer hold all the relationships (and the meeting room was needed for office space!). The influence map was so important to Brian and Dharmesh that they’ve resisted rolling out most collaboration and ERP systems because they’re too hierarchy-based. They’re still looking for a digital influence map to this day.
From a recruitment and retention perspective, this helps organizations in several ways. First, high performers are attracted to cultures that have technology that can be adapted to their habits and skills, and will respond well to individualized training. Second, delivering customized services increases talent performance by establishing a good foundation of habits that are aligned with the company’s culture, increasing tenure and job satisfaction.
LEADERS CAN TAP INTO DATA AS A SIXTH SENSE
One of the most powerful benefits of data is that it provides leaders with an insight into their organization that simply wasn’t possible a few short years ago. Using the Decoded model and metrics, leaders can now keep a finger on the pulse of their organizational culture, identifying high performers who contribute, share good ideas, monitor the collective health of projects, tap into the experience of their most tenured people, and always ensure that their talent pool is motivated, happy, and feeling valued.
Whole Foods Market is a great example of a company that uses data to generate metrics that shape sixth sense-led decisions. The company has been ranked among Fortune magazine’s “100 Best Companies to Work For” for 15 consecutive years, since the list’s inception. When Whole Foods’ first store opened in Austin, Texas in 1980, it had only 19 employees. Since then, it has grown to over 73,000 employees with more than 310 stores throughout the United Kingdom, Canada, and the United States. The company went public in 1992, and has since become the ninth-largest food and drugstore in the United States, and has achieved a rank of 284 on the Fortune 500 list.
Whole Foods managers post their store’s sales data each day and regional sales data each week, compare the figures with historical information from the previous year and provide year-to-date totals. Once a month, each store gets a detailed report that contains an in-depth analysis on profitability, including a breakdown of sales, product costs, salaries, and operating profits for every Whole Foods store. It doesn’t receive a report only on its performance, but rather on the same data points for everyWhole Foods store. That shared ambient data gives their managers a sixth sense about what’s failing and what’s working across the board and can inform their intuition about how they can maximize sales at their own location. The data is an essential resource for decision making, because the individual teams manage their own spending, ordering, and pricing. According to a 1996 article in Fast Company, Whole Foods shares so much information so widely that the SEC designated all 6,500 employees it had at the time as “insiders” for stock-trading purposes.
This is a particularly powerful tool for recruiting and retention because leaders can make decisions about promotions, incentive plans and policies armed with knowledge of how each person is contributing to the organization. This ensures that every employee is rewarded for their efforts which makes them happy – and increases the likelihood that they will stick around.
COMPANIES CAN USE DATA TO ENGINEER ECOSYSTEMS THAT AMPLIFY THE BEHAVIOURS THAT ARE THE BUILDING BLOCKS OF GOOD CULTURE
Traditionally, organizational culture has been considered elusive and intangible, something mysterious that some companies get right and others get horribly wrong. Analytics can help provide a new set of quantitative feedback that helps identify your people’s values, beliefs and attitudes, highlighting the behaviours that you want to amplify and the ones you need to get rid of. Data can help shape the behaviours that are the foundational building blocks of good culture.
What makes top talent leave an organization? There are many theories, including a lack of passion for the work, a feeling of being unappreciated, unnecessary bureaucracy, poor development programs, and a lack of strategic clarity from management, among many others.
Erika Andersen, author of Leading So People Will Follow, has spent more than 25 years consulting and coaching executives. She says it all actually boils down to one thing: “Top talent leave an organization when they’re badly managed, and the organization is confusing and uninspiring.” In other words, people don’t leave jobs. They leave managers.
Klick Health originally had a formal value system and delivered training in areas such as client empathy and achieving profitability through ingenuity. We discovered that there was a problem with those approaches: People were having a hard time establishing a link between abstract concepts and their practical applications within their everyday jobs. This disconnect made it harder for us to encourage the kinds of behaviour that we wanted to see as a part of our culture.
Taking a different approach, we introduced our Klick Stories feature, an internal online channel for employees to show appreciation or give long-form kudos to colleagues. We intentionally provided no guidelines at the launch beyond encouraging people to thank anyone for anything they felt like.
An interesting thing started happening when Stories launched: People thanked each other for actions that embodied the very values that had been so hard to communicate in an abstract form. Stories became a veritable catalog of concrete examples of how someone could demonstrate traits like empathy and ingenuity—and the circulation of those stories resulted in an increase of those types of behaviour. It became a showcase of the values that Klick wanted to promote. The likes and comments provided reinforcement for both the person receiving the accolade and their teammates, socializing best practices and helping to turn them into repeatable behaviour. Our leadership team has monitored the types of stories that get told over time, using them as a bellwether of how closely our current culture matches our ideal culture. Identified gaps become organization wide teachable moments, allowing us to provide small course corrections that reengineer our ecosystem back toward its intended path.
An incentive system was developed to further encourage participation in Stories and Klick Talks: We reward the people featured in the three most-viewed Klick Talks and the most liked Stories each week. Third place winners receive a massage at their desk. Second place winners receive experience certificates that they can redeem for activities such as white-water rafting or flight-simulator training. First-place winners are given the use of the company Porsche Boxster (aka the Klickster) for a week. At the end of the year, the people with the top-rated Klick Talk and Story are invited to join the partners on their annual retreat. Because the winners are decided by their colleagues’ votes and not a manager’s say-so, these incentives reinforce the importance of merit as opposed to hierarchy: Because everyone can clearly see the data that determined who won, the values of collaboration and transparency are underlined, fostering our efforts to engineer an ecosystem in which everyone is invested in one another’s success.
Although some of these rewards represent fairly significant investments by the company, the data shows that they pay back every penny and more in the value they provide our people—which is reflected in both the work product they deliver to our clients and the profits they add to our bottom line.
This isn’t a utopian system—there is always the risk of people gaming it. For example, deals can be made between two teams to vote for each other in order to secure prizes. This isn’t always a big issue. Sometimes the gaming behaviors are even desirable. After all, they have to act like a team and build camaraderie in order to collude, so at the end of the day, it’s okay by us.
Engineered Ecosystems, deliberately and intentionally designed cultures such as these, allow organizations to identify the most important characteristics (often different from skill sets) that a person needs to have to fit into the organizational culture. This understanding will speed up onboarding, as well as increase retention since a healthy work culture plays a large part in determining how long an employee stays with the organization.
Reprint from Ivey Business Journal