Engaging Encounters at the AOM on Talent Management and Engagement

I'm posting from the annual conference of the Academy of Management in Montreal, where I took part in a workshop organized by a close colleagues of mine, Kerry Grigg from Australia, who has recently crossed the academic-practitioner divide.  Kerry's intention in this workshop was facilitate a discussion on the problems that many academics have in engaging with practitioners by bringing together four practically-oriented academics and forty plus practitioners, practitioner/academics and academics new to the profession.  My thanks go to her for the excellent facilitation and thought that went into this engaging encounter, which provoked some excellent interaction with the audience and allowed me to work (again) with Paul Sparrow from Lancaster and Elaine Farndale from Penn State  and Tilberg, and to work with for the first time with  John Boudreau from the University of Southern California, whose books have also featured on this blog.

Although this divide has been explored a number of times in the past, we don't seem to be much closer to a resolution.  The increasingly dominant publish or perish culture that dominates the lives of academics working in business schools in the USA and UK has had the paradoxical effect of creating disincentives for academics to get too close to practice.  For example, it is difficult to get published in top journals using (a) the research methods most valued by practitioners, i.e., single case studies, qualitative research, action research etc., on (b) the topics of the day of most interest to practitioners, talent management and engagement being such two examples.   Practitioners, on their part are usually looking for results that are 'roughly right but fast' and wish to use these results to secure some kind of competitive advantage, either for their organizations or in career terms.  At minimum they do not want to be disadvantaged as a result of their links with academics, which can be the case when results are unearthed that show these practitioners, or more likely their senior managers, to be part of the problem rather than the solution.

What came through strongly in terms of advice was the need for younger academics to do a major risk assessment before tying their careers to research that can go dangerously wrong, so preventing them from publishing.   They need to recognise that they are entering into an exchange relationship, in which both parties have to gain for the relationship to flourish.  This means that the 'terms of trade' have to be made explicit at the beginning of the relationship, and the lines in the sand clearly delineated.  What happens if the results of the research show that organization or key individuals in a bad light - which is often the case in engagement research?  Typically this exchange is best approached in a gradual manner, perhaps through pilot studies that allow both parties to learn about each other and about the benefits of working together.  

What has also to be made clear is the distinction between a consulting and a research relationship.  At their best, academics can produce consulting advice to organizations on par or better than anything produced by the major consultants  - for example, providing insights into the nature and factors influencing employee engagement, or the alignment between HR and strategic advantage.  Consulting (and executive educations) can also lead to follow up projects with major academic spin-offs. Consulting, however, is based on a different kind of relationship, which places academics in a role of service providers and that needs to be recognised by unwary scholarly entrepreneurs.  The advice from the panel for less experienced academics was to ensure they and the service commissioners understood the distinction and for both parties to be ready to walk away if the terms of engagement didn't feel or look right.

One of the Book of (Last) Year: Management by the Markets

I'm doing some work with colleagues on HR and governance and writing another paper on HR and the global financial crisis.  Both projects have been influenced by my book of the year (which came out last year - takes me a while to get up to speed) and some academic papers that have shaped its formation.  The book is by Gerald Davis and is entitled 'Managed by the Markets: How Finance Re-shaped America' published by Oxford University Press.

As Jeff Pfeffer described it and I agree, this book is an intellectual tour de force account of the American economy by a sociologist who is as comfortable with financial economics as he is with history.  To quote, his core argument is that 'financial markets have shaped the transition from an industrial to post-industrial society.  For most of the twentieth century, social organization in the United States was shaped by the gravitational pull of the large corporation.  It is now oriented around financial markets to a degree that was unfathomable until it was revealed by a global economic crisis' (p. 1).  Given the UK's dependence on the financial services sector, the argument applies with almost equal force to this country, though with a few differences.

Davis provides compelling evidence of rise of shareholder value as a mantra for corporate governance and the decline of the traditional corporation.  This was associated with increased stock ownership in the early 1980s, mainly resulting from George W Bush's plan to privatise Social Security so ending defined benefit pensions.  What emerged was what Davis describes as a portfolio society in which 'free agent' individual investors began to treat themselves, their homes and their colleagues as human and social capital with a view to securing financial returns on their investments.  This was evidenced by the huge take up of 401 (k) pension plans and the purchase of investment properties (not just second homes) that individuals felt free to walk away from if their speculations turned sour.  It also resulted in the growth of the bond market and the growth of the shadow banking sector, which forced changes in behaviour among the traditional banks, most notably the growth of investment banking.  The rest as they say is history. 

Davis concludes with some speculations on a 'society of investors', in which everything and everyone is commoditised, a continued decline in the power of corporations and a rise in importance of the financial services industry - broadly defined.  These developments will have important implications for employees, with a continued decline in the potential for them to form long term 'resourceful human' attachments to corporate 'feudalists'. Instead they are likely to treat themselves (and be treated) as 'human resources' or 'human capital', which will lead to a further erosion of employee engagement levels, commitment to and identification with individual employers.  It will also lead to less mobility, more inequality, educational insecurity (already happening in this country) and the end of the corporate safety net (again already happening).  Is this what is driving David Cameron and Vince Cable to reduce the reliance on increasingly dangerous financial services?

There's Something Interesting Going On at the Academy of Management for Practitioners

It's nearly time for the annual bash at the Academy of Management.  For those readers not familiar with this annual event, it is probably the biggest and most important event on the academic management calendar.  However, very few practitioners attend, which is a great shame because if you attend the rights sessions it really does deliver some excellent, well researched ideas of great value that you are unlikely to get from going to much more expensive practitioner events.  As an example from the last two years, there were ground-breaking sessions on employee engagement and management consulting, which went far beyond the usual fare at SHRM/CIPD events.

One of the reasons guess that practitioners don't go is because of the divide between academics and industry.  Many of the sessions at the AOM display this in spades, especially those following the traditional hypothesis testing approach of old and safe ideas (nothing new here), which get wrapped up in statistical proofs and arguments that few people understand.  However, when you get good academic work aimed at theory generation or providing solid evidence on management fads, there is nothing so practical (as good theory!).

With this in mind, two practitioners with an academic backrgound are putting on a symposium with some practically minded HR academics (including this one) to help bridge this gap.  If you can't attend, please do follow the blog for the event.  You can participate from afar and help us in our quest to become more relevant while remaining rigorous.

Senior Leaders, Organizational Performance and Sir Fred

When I'm doing presentatations on leadership, I often like to throw in the quotes from Jeff Pfeffer and Robert Sutton's well known book,  'Hard Facts, Dangerous Half Truths and Total Nonsense', which summarises the academic evidence on the (lack of) impact of senior leaders on organizational performance. 

'Scholars who conduct and evaluate the best peer-reviewed studies argue over how much leadership matters and when it matters most. But when they set aside their petty differences, most agree that the effects of leadership on performance are modest under most conditions, strong under a few conditions, and absent in others.

'Studies from leaders from large samples of CEOs…, university presidents to managers of colleges and professional sports teams show that organizational performance is determined largely by factors that no individual - including a leader - can control’. Pfeffer & Sutton, 2006 (p. 192).

However, they do make the point that senior leaders that senior leaders can have an enormous negative effect, especially on reputations!

In the august Academy of Management Journal this month, there is an excellent article which explains why Sir Fred Goodwin may have be one of the few leaders to have had a strong effect, positively and negatively on RBS - he went from hero to zero in a few years, like many of his counterparts in the banking crisis.  For those interested, the reference is Li, J. & Tang, Y. (2010) CEO hubris and firm risk taking in China: the moderating role of managerial discretion, Academy of Management Journal, 53: 45-68.

Popular views of the impact of leadership are that CEOs have a big effect on firm performance, partly explained by our need to attribute relatively simple causes to complex issues.  The underlying theory and data that Pffeffer and Sutton are referring to, however, comes from two different stables of research - popular ecology and neoinstitutionalist theories - both of which argue that CEO and senior leaders can have little effect on firm performance, except under certain conditions, because of overwhelming external forces such as market pressures, etc.  The two Chinese authors point to recent attempts to reconcile these views through something called 'Upper Echelon' theory, which highlightlights the role of managerial discretion.  In bringing this idea together with the notion of managerial hubris - the exagerated belief that some managers have about the their own judgements against objective standards - they help us understand the dark side of management.  For example, they point to research which shows that CEO hubris is associated with paying over the odds for acquisitions, and that cross-border acquisitions are often driven by managerial hubris.  Which brings us to Sir Fred Goodwin's impact on RBS's failure.

Li and Tang demonstrate in a Chinese context that CEO hubris is postively related to firm risk-taking, which is facilitated by the market context to support risk, the complexity of the market, room for opportunities to take risk and the degree of market uncertainty. When the context is munificent, when there are opportunities and when information is ambigious, overconfident CEOs can, and do, feel compelled to take greater risks.  At the organizational level, there are also key constraints on CEOs, including the age of the firm, its size, its resources and the governance structures of the board.  If a CEO has greater control over the board and has resources, s/he is more likely to act on the basis of hubris in making risky decisions.  What is evident from the RBS case is that most of these factors were evident, so providing a better good explanation than  some of the woolier theories of semi-detached, narcisisstic leadership and its negative effects.  What do readers think?

Employee Voice and Engagement

A very good colleague of mine, Paul Gollan, from Macquarie University in Sydney has been writing and researching on employee voice for a number of years, assessing whether employee voice has a positive impact on participation and through it, key outcomes for organizations and employees. The usual distinction made in this important stream of literature is 'between direct communication, upward problem-solving, or representative participation. The first two of these are essentially direct and individually focused, often operating through face-to-face interactions between supervisors/first line managers and their staff. Some take the form of informal oral or verbal participation, while others are more formalized in the form of written information or suggestions. The third form centres on the role that employee or trade union representatives play in discussions between managers and the workforce, via mechanisms such as joint consultation, worker directors or collective bargaining in the form of problem solving communications' (Budd, Gollan & Wilkinson, 2010).
Paul and his colleagues have just produced a special issue on this topic for the journal Human Relations, which has some excellent articles in it.  He is also running a seminar series this month at the LSE which looks excellent (and, he tells me, is free!), where he will also launch a new book on this important strand of work.
Among the best (for me) papers in the Human Relations collection is one by Kim, McDuffie and Pil, who write about the impact of different kinds of voice and engagement in the automative industry, and their impact on productivity (see the last post).  The results of this study are complex but generally support the importance of employee voice as an engagement strategy, so resonating with the findings in the earlier post on Steve Wood's research.  Here's a summary of the Kim et al paper by the editors - no need for me to do it. 
'Turning from the determinants of individual participation in voice mechanisms to the effects of employee voice and participation, Jaewon Kim, John Paul MacDuffie and Frits Pil (this issue) analyse the effects of team voice and worker representative voice, as well as their interaction, on labour productivity in ‘Employee voice and organizational performance:

'Of particular note, this research centres on teams’ influence on key work-related issues and worker representatives’ influence on collective voice issues rather than simply assessing the presence of teams or unions. Drawing data from automotive assembly plants from around the globe, the findings reveal that when examined solely, neither channel of voice has a significant effect on labour productivity. Rather, the influence of team voice and representative voice on worker efficiency depends on the interaction between these channels of voice. These findings challenge the conventional assumptions of advocates of both direct and indirect voice because neither type of voice on its own consistently predicts better labour productivity. Significantly, even when the two forms of voice are combined, these findings suggest their relationship with labour efficiency is complex because the positive effects of one type of voice are partly offset by them being partial substitutes. Consequently, the two forms of voice can interfere with, or neutralize, each other’s positive effects on productivity. The findings suggest that this occurs more frequently than the mutual reinforcement some might expect. However, consistent with recent European policy-making on employee participation and voice, the combination of both forms of voice does ultimately have a positive impact on performance and productivity. Overall, the findings therefore reinforce the importance of increasing various forms of employee voice for greater positive organizational outcomes'.

Solid Evidence that HRM and Engagement can Work

As HR academics and practitioners we are consistently looking for good evidence that HRM actually works - that the adoption of high performance work practices pays off in terms of ley measures of performance, such as productivity, quality, customer service, etc. We need such evidence to build our respective cases, and there has been quite a bit of it around for the last twenty years beginning the Mark Huselid's large-scale statistical studies in the 1990s. Often, however, the academics have have failed to look at this issue over long periods of time, so demonstrating consistent and long terms effects of the use of high performance work practices and related engagement strategies, which, if done well, would represent something of a gold standard of proof that investment in HRM actually works.

This morning I and quite a few of my HRM academic colleagues were sent the results of a paper that goes some way to delivering such proof, though they are more modest and, like good academics, highlight their study's shortcomings. The work comes out of the Institute of Work Psychology stable at Sheffield University, run by Stephen Wood. Here's his summary of the paper and its contribution in the email he sent out.

'My colleague, Lilian de Menezes, and I examined the integrated use in British manufacturing of a set of lean management practices in which employee empowerment was a major component over 22 years. We found in all 22 years that those firms that used the integrated lean approach (my emphasis) has higher levels of productivity (measured by value-added). In addition, we found that the pioneers of the high lean approach continued to outperform even those that subsequently adopted it. These later adopters gained the performance advantages associated with the integrated approach, but their productivity growth was not sufficient to catch up with those which had adopted it earlier. This shows that the employee engagement, so central to lean production, achieves its aim of continuous improvement.

The practices included in the study are: empowerment, intensive training and development, team work, TQM, Just-in-time, integrated computer-based technology, and supply-chain partnering

The study was financed by the ESRC and will appear in: L. de Menezes, S. Wood and G. Gelade, ‘A longitudinal study of the latent class clusters of modern management practices and their
association with organizational performance in British manufacturing’, Journal of Operations Management'.

Lilian, Steve and Gerry acknowledge the limitations of their study, suggesting that gold standard proof would need to consider not only productivity data but also evidence on quality and lead times in manufacturing. Nevertheless, this study represents an important step forward and substantial argument for integrating engagement strategies - team working and empowerment - with lean techniques. Given the widespread adoption of the latter in healthcare in the UK, maybe its time to puut in place a similar study to test the impact of these large scale and somewhat controversial initiatives.

Back in the Frame and Following up on Engagement

I’ve had a (partly enforced) break over the holiday period (and beyond), due to some many writing deadlines, being overseas and being laid low for a few weeks (first time for me), so I'm likely to be a little ring rusty in the blogging sense. Anyway I would like to follow on with the post from November regarding engagement. In that post I was critical of the Macleod report’s discussion on the subject because it lacked the necessary rigour to make engagement a useful practitioner tool that would stand real scrutiny. Susan Hetrick and I first raised this issue of engagement in our 2006 book on corporate reputations and HR, suggesting it was little more than consultancy re-packaging of old ideas designed to refresh their HR product portfolio. Since then, I’ve come around to the idea of engagement, in part because it is so big in practice. So I’ve been working on developing a model of how leadership and high performance HR work systems influence different components of engagement to produce critical business and public sector outcomes. This model will be published in a forthcoming chapter on employer branding (with Saskia Dyke from Switzerland) and another in an article on leadership branding (with Julie Hodges from Durham). Susan and I will also be using it as the basis for a forthcoming financial services presentation.
Co-incidentally, two prominent HR academic colleagues of mine, Elaine Farndale from Tilburg and Paul Sparrow from Lancaster have been working on engagement, both of whom have made major contributions to the literature on the topic and have influenced my thinking significantly.
I’ve mentioned Paul’s work before and his Centre for Performance-led HR at Lancaster University. Along with Shashi Balain, he produced a really insightful contribution to the notion of engagement in a white paper. As part of that contribution, Paul and his colleagues have also made a series of short videos summarising their work. These are really worth looking at.
However, to my mind Elaine’s work on engagement with colleagues from Tilberg, represents a major breakthrough in bringing some rigour and evidence to the topic and anyone seriously interested in engagement should contact Elaine to get a hold of this paper by Bejier, Farndale and Van Veldhoven . For me , the most important contribution has been to define two different foci of engagement – work engagement, which I’ve already written about on this blog, and organizational engagement, which is what most consultants typically refer to as employee engagement. It also makes a key distinction between state engagement (attitudes and emotions which people hold to work and their organization) and behavioural engagement (actions that employees report taking to display engagement with their work and the organization). For example, many professionals are engaged in their work but not the organization, often to the point of over-engagement or burnout. Conversely, managers can become over-engaged (or over-identified) with the organization, which can lead to a form of collective blindness, intolerance of others who are not ‘organization men’ and a failure to privilege professional and moral values in decision-making. This is a topic that Elaine, Japp Paauwe and I hope to be discussing at a forthcoming symposium on HR’s contribution to corporate governance at the Academy of Management in August – the ‘darkside of engagement’ – something most of us can recognise but which has rarely featured in the practitioner literature..
Currently, we’re working on expanding the range of engagement foci – what people at work engage with – to show how they are distinct but related. For example, in healthcare and financial services, it is clear that people are engaged or can become disengaged with the industry, which is very important in explaining recruitment and retention. It is also clear that people can be more or less engaged with each other in the performance of their work, which is related to team-working and distributed leadership, both critical drivers of effective performance.