Linking HR to Business Outcomes
One might take any work within HR and frame it in one of two ways. You could think about the task at hand, such as “delivering training to customer service reps” or about the desired business outcome, such as “more satisfied customers”. Since HR is routinely criticized for not being connected to the business, it’s worthwhile considering if we can do more of the latter.
Judging a trainer’s performance in terms of a business outcome like “more satisfied customers” can be problematic. There are many things that affect customer satisfaction other than how service reps are trained. If we focus on the business outcome, the trainer may be rewarded or punished for something they only have a small impact on.
However, judging a trainer’s performance in terms of their own activity, such as “delivered training to 100 customer service reps” is also problematic because, if training isn’t solving the business problem, it can reward someone for doing tasks that have little value.
The traditional way of dealing with this is to rely on an effective bureaucracy to achieve the business outcome. The idea is that the trainer need not care about anything beyond their immediate task because people higher up in the bureaucracy will ensure that it’s part of an effort that will deliver a business outcome. In this scenario, a trainer, like other employees, should just do their prescribed task as well as possible and not worry about the bigger picture. It’s a simple solution that overlooks the insights a trainer might have on whether or not their activities are effective.
Perhaps we get off on the wrong track when we think of this in terms of judging an individual’s performance. It’s not so much whether the formal reward system balances individual activity versus business outcomes as it is that we want individual to think in terms of the business outcome. We want them to speak up when they know the activity isn’t contributing to the business goal.
I remember the managing director at Hay Malaysia leading a performance planning session and calling it to a halt mid-way through when it became apparent no one took the commitments they were making seriously. He could have easily just finished his activity of facilitating the session—and the client would happily have paid him for that—but he felt there was no point going through the motions if it wasn’t going to achieve a business outcome. It was a matter of an individual who saw their role as being bigger than the activity they were tasked to do.
If HR wants to be seen as more business focused, then the starting point will be HR leaders who act as role models in showing concern about the business outcome. They’ll take the time to explain the desired business outcome to their staff when they assign projects. They’ll ask their team if they think the activities are helping achieve the business outcome. And, when it comes to look back on the project, they’ll talk about it in terms of the business outcome.
This is one issue where the formal rewards get in the way; it’s up to leadership to demonstrate that even though your formal goals may relate to your own individual activities, your mission is about playing a role in delivering a business outcome.
David Creelman is CEO of Creelman Research. He is best known for his workshops on Agile Analytics, Evidence-based Management and the Future of Work. You can connect to him on LinkedIn or email firstname.lastname@example.org.