“People don’t want to buy a quarter-inch drill. They want a quarter-inch hole!” — Theodore Levitt, Harvard Business School
A statement as true today as it was when Levitt first said it. In fact, it could be argued that it is indeed more true today than ever before. People want “bundles of benefits.” Your marketing mix should not be centered around your product, nor your company, nor even your customers. It should be centered around your customers’ needs and wants.
What? A marketing quote? Isn’t this about Human Resources (HR)? Yes, indeed, it is!
The inspiration for this piece comes from two places, 1) plodding through my Strategic HR Management textbook with my college students and 2) my long-held belief that HR and DEI practitioners should seek skill development in business development and marketing, and 3) the need for HR to pivot from results to outcomes.
The Strategic Human Resources Management text I use in the classroom calls for presenting HR in a chapter by chapter review. To me, it supports HR silos, e.g., benefits administration, learning and development, diversity and inclusion, etc. Depending upon the organization, these may all roll up under one or a few practitioners. HR continues to seek a seat at the table. To me, this is achieved by shifting to a business development and outcomes-based perspective.
Outcomes vs. Results
HR practitioners are at times falsely and sometimes accurately accused of “checking the box” aka fulfilling a request in a manner that generally is a path of least resistance—a result is achieved but did it solve the right problem? The premise of this piece boils down to HR practitioners needing to use influence, curiosity, and courage to advocate for defining outcomes through a human-centered approach.
In the words of Peter Drucker, “It is always utility, that is, what a product or service does for him.” In the business-to-business (B2B) environment, many companies have moved away from this truth. They develop products and services (often described as solutions) from an internal view, and they attempt to sell them to the widest possible customer base. (B2B Companies Need to Focus on Helping Each Customer Achieve Better Outcomes.)
Said another way, “Most people naturally focus on outputs. It’s relatively easy to come up with a list for what you need to do today, this week and this month. However, as Stephen Covey explains in his book The 7 habits of highly effective people, outputs always come last. In order to be successful, you need to start with the end in mind. For many people, focusing on outcomes instead of outputs requires a significant shift in culture and thinking. Defining outputs is easy; we’re all focused on doing things. Doing something releases dopamine in our brain and makes us feel good. Doing things to achieve a certain outcome is a lot more complicated, and now success is not measured anymore by the percentage completion of your output.” (Perdoo)
Factors driving HR to an outcomes-based approach
Grove, Sellers, Ettenson, Knowles in Selling Solutions is not Enough do a good job of highlighting the market forces at play that drive change at the organizational level with regard to business development. For our purposes, we will align the philosophy with HR leaders and how they will need to adapt their approach to help support an organization’s ability to address seismic changes in the workforce.
For decades, B2B success relied on developing products or services that outperformed the competition and progressively improving them while maintaining strong sales relationships. B2B offerings were sold by specialists to specialists, largely on the basis of functional performance and technical sophistication.
In recent years, however, the dynamics of most B2B markets have been disrupted by four factors:
- The commoditization of quality. The technical and qualitative differences between competing offerings have been dramatically narrowed.
- New technologies. New technologies pose an existential threat to some business models—cheaper and simpler ways to deliver the same functionality.
- The abundance of product information. B2B customers can do research on their own before the formal sales process begins, which means customers are less inclined to ask, “What does your product do?” than “What can it do for me?”
- A shift from cost to value. Focus used to be almost solely on the lowest price. Today, it’s aimed at identifying who can generate the greatest business value.”
Changing from hierarchical to open-sourced development
Let’s shake it up a bit further by introducing the connection computer hackers may have with HR? I am not a computer programmer, nor do you need to be to understand Eric Raymond’s premise in his book, The Cathedral and the Bazaar.
“I believed that the most important software (operating systems and really large tools like the Emacs programming editor) needed to be built like cathedrals, carefully crafted by individual wizards or small bands of mages working in splendid isolation, with no beta to be released before its time.
Linus Torvalds’s style of development—release early and often, delegate everything you can, be open to the point of promiscuity— came as a surprise. No quiet, reverent cathedral-building here — rather, the Linux community seemed to resemble a great babbling bazaar of differing agendas and approaches (aptly symbolized by the Linux archive sites, which would take submissions.”
One does not need to be a programmer to understand the way open-sourcing completely disrupted the hierarchical process. Just as open-sourcing is currently being applied live-time to finding a vaccine for COVID-19, it is not a stretch to apply an open-sourced approach to long-standing HR processes.
Rethinking the customer
The existence of the Net Promoter Score and the Employee Net Promoter score illustrates the blurring of the lines between employee and customer as well as how organizations increasingly value their employees as customers.
Defining employees as customers can get lost in the quest to achieve a result vs. deliver an outcome. This is on display addressing a Total Rewards problem, “What to do with an under-utilized and/or costly benefit?”
Interestingly we find ourselves in the midst of a global pandemic. While concerns for employee mental health issues have been ramping up over the past several years, this new invisible “foe” called COVID-19 may create an all-out onslaught of anxious, stressed, and fearful employees, which holds the potential to pummel productivity for every aspect of commerce and community.
My favorite example of under-utilized programs are EAPs. Illustrating a more traditional results-based approach, we look at how an EAP program might be evaluated during preparation for a new plan year:
The solution—Save the organization money by eliminating or changing benefits that appear not to be valued by employees.
Background—with notoriously low participation rates, providing a ‘skinnier’ EAP program to curb costs is not uncommon. It may take the form of shifting to an EAP rider, which is attached to an existing line of coverage, e.g., Short-Term Disability versus a standalone program—generally a less expensive alternative. With participation rates of less than 5%, employees likely won’t think twice about the change—you can’t miss something you don’t use. HR and leadership can assuage organizational concerns through thinking that it may not be as robust as the one paid for on a per-employee fee. It will still provide some minimal mental health and legal support.
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The Result—The HR team produced a result. However, exploring it more deeply, how might the result be evaluated based on the following questions:
- Is the shift to an inferior EAP program the equivalent of “penny wise and pound foolish?”
- Is low employee participation actually due to missing the mark in communicating cost, benefit, and access to employees?
- Prior to making this decision, who might the HR team have turned to inside and outside the organization to create the employee value message, e.g., the learning and development team could help translate the message from content-centric (what the EAP program does) to learner-centric (acknowledging the employee voice as central to the learning experience), the DEI team or Employee Resource Groups (ERG’s) to help shape messaging to address specific employee demographics, and the marketing team might have been able to craft a more compelling message?
Pivoting to human-centered outcomes
Let’s bring this all together using a model designed to help HR leaders put the outcomes-based approach into practice. Since we used an EAP decision process to look at a traditional results-based approach, we’ll use my other passion, Diversity, Equity, and Inclusion (DEI) to explore the shift to outcomes-based.
1. The problem to solve
What – The organization believes its ability to survive and thrive in the current market will be correlated with the ability to grow through innovation.
Why – Although we’ve been a market leader, a market disrupter could severely impact our ability to continue to thrive if we do not increase our ratio of revenue from innovative new products/services to traditional product/service solutions.
2. Resources required
Looking through an HR/DEI lens changing the innovative revenue ratio, the organization will need to attract, retain, and engage diverse talent, which will require continued development of an inclusive organizational culture. To make such a culture shift will require an all-hands-on-deck approach from the leadership down through the entire organization—prioritizing resources throughout the process—inviting and creating a Bazaar-like community—folks who can hack HR/DEI’s ideas as they are developing and help reducing time horizons for the organization’s journey to transforming the organization’s culture.
- Organizational leadership
- The entire HR team: learning & development, compensation and benefits, performance management, compliance, technology
- Internal sales, marketing and communication departments
- External consulting experts in taking on such an endeavor
Certainly, this is not an exhaustive list. Rather than hitting every possible partner, my emphasis is on thinking of who might be part of a Bazaar community.
3. Tasks and activities
Regardless of mildly impressive numbers, Fortune 500 and 1000 organizations have been engaged in DEI activities for decades. Through these efforts, we have seen the recent introduction of CEO Action. DEI is now gaining momentum in smaller organizations as mid-market CEOs sign the “Pledge” and begin to recognize that they, too, face an increasingly diverse workforce and that to survive and thrive will require embracing DEI and building inclusive cultures.
The second of four actions required with the ‘CEO Pledge’ is, “We will implement and expand unconscious bias education.” While I fully support unconscious bias education, it needs to be done so within a culture that will support the education learned either virtually or in the classroom. Sans that culture, retaining what is learned is unsustainable, and the action is more akin to checking-the-box.
The outcome we previously identified was growth through innovation. Following are two considerations when looking to shift the paradigm from result to outcome:
- Data – How much do we know about what our people are thinking? In a recent conversation with a DEI leader, I inquired about the kiosks employees in a manufacturing plant use to access the organization’s intranet. Apparently, it was unknown as to whether anyone or department was pulling the kiosks click-through data? The data would be important to determine, 1) what, if any corporate DEI messages were connecting with employees—especially those who usually do not have company-issued emails, 2) was there any activity at all on the kiosks beyond the most basic tasks of asking a payroll question or getting a claim form?
- Strategy – Sustainable learning requires that when a participant leaves the training event, the lessons learned will be supported by their manager, their manager’s manager, and so on. Thus, before training is launched, it must first be determined where on the continuum leadership, management, employee DEI learning readiness fall? Where are the gaps? What are key organizational understandings and misunderstandings about DEI? What inclusion elements are in place? Once questions such as these can be understood, a strategy can be formed.
4. Outcomes – (short & long term) targets, implications, reporting out
There is a myriad of outcomes to consider in this process. Following are just a few:
- What does the organization revenue picture look like currently, e.g., traditional or new product/service lines?
- Are there aspirational sources for new revenue streams in existence but not yet acted upon? What might be done to move these towards reality?
- What analysis has been done on succession planning, e.g., the who, what, where, and when of talent in the organization will be needed to create innovative revenue channels?
- When we communicate DEI objectives and goals are, we are presenting data regarding representation or a combined message of both representation and development?
We have explored how the market is demanding change in how an organization develops business, the disruptive nature open-sourcing had on innovation in programming, and how HR should value employees as a customer. My belief is that we find ourselves in a world that demands life-long learning and re-invention in order to survive and thrive. Thus, it seems fitting to close with an example of ushering in a shift from the Learning function of organizations. Conveniently, some of the ideas presented in this piece are discussed in a Chief Learning Officer post on April 3, 2020, Reimagining workplace learning during COVID-19:
“As an example, just a few days ago during the COVID-19 onset, Yo-Yo Ma, a world-renowned musician, started sharing his cello performances digitally. Following suit, a large number of musicians started offering their performance pieces, as well as mentorship, on a pro bono basis for learners in need — from kids to adults who wanted to cultivate their music passion and find peace amid these challenging times.
This “learning marketplace” concept could become more predominant in the professional learning space, where everyone in a given community (e.g., a company or an institution) is likely to have certain expertise they could offer to others in the same community. These learning nuggets can be in the form of blog posts, shareable tips, videos, or even coaching calls/ mentorship dinners.”
Be safe. Be well. Be inventive. Be curious. Be a leader.