Replacing HR with HRT – the behavioural economic crisis in talent management

Behavioural economics is simply how our choices about what we do and how we do it – our decisions - affect performance, both hard and soft – results and reputation.

I never had much time for HR in my old corporate life. I was a commercial snob. They were on the margins of the business not seeming to understand what it meant to drive business and, frankly, being a bit irritating and time-consuming with their processes and procedures - so many loops to jump through. But now I see it differently. These poor undervalued, marginalised people professionals, experts in their field, never gave up trying to ensure that good people management and development decisions were made. While part of this was defensive, trying and keep everything legal, it was also to trying to build competitive advantage by getting the right people in the right places with the right support and culture to perform their socks off.

But now they’re not around, or they are fighting fires because there are so few of them left. In their wake, according to Harvard Business Review last month (Oct 2013), there is a significant problem for talent management which, in the hands of line managers, will result in a behavioural economic crisis.
HR used to put the rigour, balance and process in to these decisions but now we have no conscience challenging our assumptions, testing what the outcomes are that we really want; pointing out (with enormous diplomacy) that candidate ‘A’ might be a great bloke but Candidate’B’ will be the woman that delivers the result.

Men over-index on HRT

      HRT, in this context, is the Homosocial Reproductive Tendency – in other words the tendency to promote and recruit in your own image and in keeping with the current profile of a group or team. And men over index on this tendency*. This means white men will favour recruiting and promoting white men and compounds the issues of unconscious gender and ethnicity bias. So, the outcome of pulling back on HR will be the dilution of any gains in diversity. And here’s some stark evidence that this is already happening, even in our most successful businesses

        Since the Lord Davis Report in 2010, the aim of which was to address the lack of women in executive positions in the FTSE 350, there has actually been a decline in the number of female executive directors. With Burberry’s CEO Angela Ahrendts leaving for Apple we have now only 2 female CEOs in the FTSE 100.

         The fact is that the busier we are the more we rely on our judgement and our beliefs of what makes a good, great or just safe-bet for a key role. These beliefs are developed predominantly through the assimilation of the prevailing view and attitude of society, and rarely firsthand experience. Consider this - if you were in an aeroplane flying through a violent storm, how would you really feel if the captain spoke up and it was a woman’s voice? We all share the same default settings because that’s what we ‘know’, and the unknown – however logical - is just not what we go with when the chips are down. We know men are successful pilots, leaders, scientists but it’s only because that’s all there has really been till very, very recently and women remain the exception. Of course men are great leaders, they are also rubbish leaders and mediocre leaders and every shade in between.  But we assume that they are naturally a better bet than women. This is just how human brains work, but this is at odds with how we approach the question of making a business succeed. We must be bold, innovative, creative. We must do what others haven’t yet done. We must spot opportunities they haven’t identified and go for it. We must be externally focused and be prepared to make mistakes on the path to greater success.

•          Recent research has shown that the most successful innovation teams have a greater than 50% female composition**

So you must be as bold, as creative and as innovative in promotion, recruitment and project assignment. You must focus on what it is you want to achieve in order to be clear on the sort of talent you need and what sort of environment will enable that talent to thrive

•          Credit Suisse Research 2012: "In testing the performance of 2,360 companies globally over the last six years, our analysis shows that it would on average have been better to have invested in corporates with women on their management boards tan those without" ***

         Given we are human and our brains do prevent our judgement of people from being objective we must put in place check steps to give us the best chance of preventing behavioural economic damage – reputational damage and bottom line damage. And be really, really clear – you are not the exception to the rule (and neither am I). We must individually take responsibility - assuming it’s an issue for someone else is a classic response, as is, ‘it’s different here’. It’s not, and if you’re not acting on this issue then neither is anyone else.

        So, here are the simple Pause for Success™ check steps you should implement whenever you are making a choice about people (project roles, talent assessment, promotion, recruitment and even extra curricula socialising). The more literal you are about following these steps the more likely you are to succeed – and vice versa!

1.        Articulate the key capabilities you are really looking for; Articulate the traps you could fall into if you let your cognitive short cuts dominate your true objectivity; Articulate the type evidence that would indicate individuals have the potential to deliver the outcomes you want.
2.        Before you make your final decision PAUSE.
3.        Challenge any decisions that feel instinctive or gravitational (you are pulled towards them, but struggle to justify them). Go back over the first point and check you are being as objective as you can be.

This critical challenge is vital for business health and the pressure is now on individuals to get the right people, in the right places with the right support.

Try the process and let us know what your before and after decisions looked like, and what you have learnt about yourself and what benefits the new outcome will deliver.

* Eagly, A. and Carly, L. (2007). “Through the Labyrinth”. Published by Harvard University Press

** London Business School. The Lehman Brothers Centre for Women in Business (2008), “Innovative Potential: Men and Women in Teams”

*** Credit Suisse Research Institute (Aug 2012) “Gender Diversity and Corporate Performance”

Exit Stage Left - Female Talent

-           If you aren’t increasing women’s wages at least as fast as men’s ACT NOW

The poor old politicians of the UK and Europe are tormented.

McKinsey, Goldman Sachs, Credit Suisse and many others have shown them a significant strategy for step-changing economic performance– a recession buster. All they need is a critical mass of women at top of businesses. But how the hell do they make this happen any time soon when 40 years of Equal Opportunity legislation hasn’t done it?

Recent quotas and targets for female Non-Exec Directors on boards of leading companies have resulted in an apparently promising shift in the number of women who attend the board meetings of leading companies in various countries in Europe. But those are the only days these women are in the building, because, unlike Executive Directors, they work on, not in the business.
The number of female Exec Directors is static – and very, very small. So there aren’t the role models to encourage the up-and-coming female talent to hang on in there, demonstrating that it can all be worthwhile. So, there aren’t the individuals who have felt the pain of trying to find a route through the labyrinth to leadership that women face, who could champion the changes needed to make the journey more straightforward and tolerable for women.

And, what of the next layer down that feeds the boardrooms? Think tumbleweed, not female talent. Leading companies have recruited non-execs but they’re not succeeding in bringing their own existing female talent up through the business.

One of the reasons for this is linked to the fact that the vast majority of women don’t ask for pay rises and promotions, or the high-profile assignments that get them noticed. Unlike men, they don’t apply pester-power techniques, routinely engaging in “pay-me-more / promote me, or I leave”, negotiations. Why does that matter? Because if you don’t proactively give them what they merit without being asked, they won’t tell you they’re unhappy - they’ll just leave.

Maybe your competitor will gain.

However, more and more women now are setting up on their own. If the corporate world can’t reward their talent and give them a working environment that works for them, they’re choosing to make their own culture and rewards. And, my God, they’re making it work. Whereas the UK gender pay gap stands at 15.5%, the UK’s female entrepreneurs are reversing that imbalance and earning 17% more than men**. In the US, research has shown that women -owned firms (>50% female ownership) have grown at twice the rate of all privately held firms in the past two decades****.

That's a huge win for them as individuals, a win huge for their business. Oh, and a loss for you... and your shareholders

In a recent selling meeting, I was asked how the Board could possibly be convinced to introduce the Women’s Sat Nav to Success™ given one of the outcomes is that women cost more money through the pay rises and promotions they secure. The answer is clear. The short version is - can they really afford not to. To spell it out - the opportunity costs arising from the loss of their talent [back to Credit Suisse]; the costs of recruiting and training their replacements and the reputational costs will be far higher.

So, companies must learn how to read the deeper implications of the gender pay gap for their business. They must understand the implications for their bottom line, their shareholders and our economy of not securing the female pipeline. They must invest in developing the capability of women to speak up, and when they do, for their voices to be heard, and their contributions valued –in every sense.

* The Credit Suisse Research Institute. Gender Diversity and Corporate Performance. Aug 2012

** Barclays Wealth & Investment Management. Survey January 2013
***Eagly and Carli, “Through the Labyrinth”. Harvard Business Press Aug 2007

Guest Blog: What do my pelvic floor and job prospects have in common?

.

 .... I fear they’ve both been shot by having kids

I recently interviewed for a new job in Switzerland.  The interview was held in London and to my delight, the conversation quickly advanced to discussing details about relocation. Not only was the job in my dream location, but the role and the boss seemed fantastic.

As the conversation progressed, a second interview with another Director was suggested and would be set up the following week. The plan was to fly me to Switzerland for the next stage. And on the topic of relocation, I was told, “It’ll be no problem initially as we would just put you up in a hotel until you can find somewhere to live”. 

Yep, I definitely thought the interview was going well. I replied that ‘I’ was actually four, as I have two children and a partner (and I’m pretty sure there are morals, if not laws, about just skipping the country without them).  Surprise was quickly followed by a commitment to get HR to contact me next week to help with knowledge of schools etc.

I left Kensington beaming and I travelled home excitedly researching Swiss properties and schools (and imagining my impending fuller figure from a new diet of fondue and chocolate). Premature? Hmm, maybe, but it was a pretty good way to leave an interview wasn’t it?

I spoke to my Dad that evening, who was concerned I had dropped the ‘I-am-a-Mother” bombshell.  I reassured him, stating that if it were a problem, then the role and company would not be right for me. (And anyway, a next interview was in place and HR would call me, so that clearly wasn’t an issue).

·         The first week passed. Must be very busy.

·         The second week passed. Yes, very busy indeed. And maybe ill from doing too much, propping up an incomplete team.

·         Week three. Perhaps they’re now on holiday. Or maybe the illness is more serious? How selfish of me to expect contact when they’re that poorly!

My over zealous imagination would have seen the dog dead, mother infirm and both arms in plaster, unable to lift the phone (let alone croak out the details of the next interview as advancing glandular fever would be ravaging the vocal chords). I knew something must have happened.

So I called.

Within 30 seconds I was advised “that despite my brilliant CV, unfortunately it’s not good news.” Someone with more relevant sector experience had been found.

How disappointing! The next 16 minutes & 23 seconds of the call were filled with advice my ‘dream boss’ had gained following our meeting;

1.       School opening times are a nightmare (closed Weds & every lunchtime). I would need a full time nanny to cope, especially as you can’t always leave work at 5pm.  And watch out, as an employer will be able to assess if you can afford an expensive nanny by your salary and judge if I’d be able to do the job.

2.       Then there’s shopping, which is not 24/7 like in London. Working, managing a kids’ schedule and doing the shopping would be incredibly difficult.

3.       Don’t commute! Live and work in the same place, as adding a train journey to points 1 & 2 would just make things impossible, as transport links aren’t very good.

4.       And consider not mentioning your family to the next interviewer. Not that that had made any difference in this case of course, but you never know.

During the call I felt the need to interject. I have managed to juggle kids, childcare (at a painful £1,350 per month), shopping and have thrown in an hours’ commute for good measure, whilst working in demanding roles in London. Also, international schools are open all day and I have a partner to share these things with.

I wondered how Swiss families managed to work, have kids AND eat all in the same week! Those professing a higher quality of life in Switzerland were clearly mistaken. We parted the call exchanging wishes of future success.

It took me about 10 minutes (and a glass of wine) for a conspiracy theory to take hold in my head. Was I really pipped at the post by someone with more relevant experience?  Or (please no), was my Dad right?

The role had been re-advertised that morning, so had it really been filled? My partner asked me if I had any regrets in having children, as he believed the job would be mine if I had less ‘baggage’.

Amongst the disappointment of my Swiss bubble being burst, was disbelief. Yes, time had elapsed since the interview, but it hadn’t been left as “we’ll be in touch”, but rather with a pledge to fly me over and manage initially with being put up in a hotel.

To top it all off, I was shocked at how I’d been misled.

Shock may seem a strong word to use.  But you see, my interviewer was a woman. An English woman. And about the same age as me. A fellow member of the 30% club*, which surely boasts the more enlightened in society, striving for more women in business and to break barriers of gender-biased thinking?  Shocked that surely I hadn’t been just been ‘dissed by the sisterhood’ for the beautiful baggage I have created by way of a family?

 

Would I have been less affected if I had been dealing with a man? Possibly.

Would I have been as open about mentioning my family in the first place? Probably not.

Knowing that I may have been less upfront if I were talking with a man is telling.  And I clearly had different expectations of how that information would be treated.  I obviously had preconceived ideas on the level of empathy or degree of judgment I would be afforded in speaking to a fellow woman.

All of this is academic. As after all, I was out-shone by a candidate with more relevant experience. Re-advertising the role must have simply been an administrative error on their part.

One thing I have learned is to err on the side of caution. In future I will keep information sharing strictly to that concerning the role, as I fear the art of spotting those with stereotypical views on working mothers, seems as challenging as pinpointing that elusive pelvic floor muscle.

* The 30% Club was founded by Helena Morrissey and consists of individuals “committed to bring more women onto UK corporate boards, by supporting and encouraging successful women in business.”While the author of this blog is keeping her identity hidden, we'd both love to hear your thoughts, views, experiences. What would you have done and why? Have you faced this dilemma from either side of the table