The biggest buzzword in Human Resources these days seems to be “Big Data”—the idea that we can now gather so much complex information about our workforce processes and can churn that data into a meaningful analysis that will help us better manage our business. Like our federal government, however, we in HR can sometimes be accused of over-engineering, as in the proverbial definition of a camel being a “racehorse designed by Human Resources”. Still, we spend lots of time and resources on gathering and crunching numbers to either improve our processes or possibly to justify our professional existence.
In my last corporate assignment, our Big Data arrived each month in the form of a four-page report that contained about 125 statistics. I, personally, thought that only about three of them were really significant. That could explain why I no longer work there, I guess. Still, the question… have we become so fascinated with Big Data that we continually miss what I consider to be one of the most singularly important pieces of data in the HR world?
One of the largest public accounting firms in the world, Deloitte, conducted research that showed that their 55,000 employees were spending 2,000,000 hours per year on the annual, employee performance appraisal process (“Reinventing Performance Management”, Harvard Business Review, April 2015). On average, that computes to over 36 hours per year, per employee.
Deloitte determined that the return on that time and expense investment was unacceptable. Only 42% of their executives believed in any correlation between the appraisal process and increased employee engagement, improved performance, or enhanced bottom line. Like others, they have made some adjustments to their process but at last report, they continue to complete an annual, year-end, summary process.
Unlike others, however, Deloitte should be credited for gathering this data. Many Human Resources and C-suite executives in other companies seem to accept the inevitability of the annual appraisal without question.
The Dating Game
The vice-president of HR of one of the largest online dating services in the world, when asked about their program’s effectiveness responded: “While I don’t have any data, per se, I know my people and our process works well here.” Why do so many organizations spend so much time tracking and improving efficiency and profitability in other operational units while HR, at least on this issue, seems to get a “pass”?
How much time are employees spending on the annual review process? The research is sparse but telling. The least documented time data is found in the Society for Human Resources Management website, showing managers spending as little as eleven hours per year on the process. Research conducted by iSi Human Resources Consulting in Houston shows managers spending significantly more.
Big Numbers for Big Companies
The general manager of the Fluor Corporation’s Houston office tracked his actual hours spent on the process in 2008 and found that he invested 400 hours (ten weeks a year), of his time in the process. That ten-week commitment to the traditional process was verbally validated by the same online dating service HR executive mentioned above. An engineering manager at NASA who was recently interviewed said that he is responsible for producing formal appraisals for 43 different employees, three times per year and he is not allowed to delegate any of that responsibility. He spends about 1,000 hours on the process each year; almost one-half of his occupational life!
While these numbers may first seem unrealistically large, caution is advised. HR professionals will want to take ownership of this issue, conducting research to assure an adequate return-on-investment for their organization. Everyone in the HR world seems to be concerned with “big data”. It is difficult to imagine any bigger data than knowing the total amount of time, money, and resources organizations are committing to the appraisal process and, of course, the dollar value of the benefits or outcomes.
HR executives who determine that “the juice is not worth the squeeze,” will want to consider creative alternatives like Big Five Performance Management at www.bigfiveperformance.com.“Big 5” has been in use since the late 80’s but has only recently been thrust into the corporate limelight. Big 5 is a simple, yet sophisticated way to cut to the heart of the employee performance issue.
The whole Big 5 process can be summed up this way. At the end of every month, have each employee submits twp shortlists:
- What are the five biggest accomplishments this past month?
- What are my next 5 priorities for the new month?
This process takes no more than 10 minutes per month per person but gives employees the chance to tell-their-story, taking credit for their contributions. Managers then have the opportunity to respond with affirmation/praise, coaching, and even correction, re-directing the team member’s efforts. DaVinci said that “Simplicity is the ultimate sophistication.” We could not agree more.
When a full year passes, you now have 60 data points from which you make your assessment decisions; employee rankings, merit awards, bonuses, etc. No need for really big data here.