Why Human Capital Management Really Needs a Social Model

I’ve spent my career building business applications.

I’ve created ERP, CRM, supply chain, and industry solutions at Oracle, SAP, Salesforce.com, and other market leading companies. I’ve seen the continual change that our industry has created — or eventually accepted. Social is the latest such change. And I believe it will have the greatest impact on business systems since our industry started.

Think about “Human Capital Management.” I cannot think of two more commonly used but wholly contradictory expressions than “Social Enterprise” and “Human Capital Management.”

HCM needs a social model

“Social Enterprise” engenders a feeling of happy people coming together to achieve a common goal. There is great collaboration and meaningful transparency, which leads to both trust and alignment. By contrast, “Human Capital Management” sounds like a process for turning people into livestock for the company slaughterhouse.

But if there is any area that desperately needs a social model, it is HCM. People-centric systems should promote connection, communication, and collaboration. That is the core of the social enterprise.

Consider performance management, which is one of the most important processes for every company. Performance management systems are universally hated. Why? Because they create work for every employee in the company, while serving only to meet HR-driven compliance processes. Somewhere along the way in building these systems, we focused the core design on the wrong problem. And it’s as true for the most recent cloud-based systems as it is for traditional on-premise applications.

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The keys to performance management systems

So what should performance management systems do? It’s hard to believe we need to even ask this question. But given the history of how these systems were developed and designed, the reality is that we need to fundamentally rethink their purpose.

  • They should promote a continual dialogue across an organization around what the top goals are, how they will be accomplished, and how people are doing as they work to complete them. This then becomes the basis for meaningful feedback and collaboration — the true essence of performance management.
  • To do this well, these systems have to be designed differently from the very beginning. They must be engaging, easy, and fun to use. If they are not, no one will use them. And without usage, there will be no information. Lack of meaningful information is the hallmark and curse of every legacy HR system.
  • The system should be highly collaborative. Goals, key results, and actions should be understood and agreed on by entire teams. In designing a framework for achieving organizational alignment we should embrace a “bottom up” model for setting team and individual goals. Every individual — not just the bosses — should be able to define their goals, and help determine the results that constitute success. People should be invited to participate in meeting these goals. Making this process collaborative — and allowing people to commit to them — creates and fosters a real dialogue across an organization.
  • Feedback should follow the same model. It should be open to everyone — and collaborative. It should support formal goal-driven feedback or simple ad hoc input on a person or topic. The result? Transparency, trust, and alignment.

A new social model for what has been traditionally known as HCM will drive broad engagement by users — while also creating useful, meaningful content for organizations. A social HCM system still supports the creation of formal reviews and metrics-based assessments. But these processes now benefit from the rich dialogue possible because of the social design model.

The result is a system that both meets the organization’s HCM objectives AND creates the dialogue necessary for a healthy team.


6 Comments on “Why Human Capital Management Really Needs a Social Model

  1. This is a great start, John. I would like to add one more piece.

    Instead of a system that is “…engaging, easy, and fun to use,” any initiative must result in a net positive experience for the employees. If an employee is required to take on additional tasks, processes, or use new tools, yet receives no benefit (increased productivity, reduced workload, bonus, etc…), then the social initiative will join its predecessors on the scrap heap.

  2. Without negating anything John W. has said here, I do want to dig a little deeper and suggest some counter points and further enhancements to the general approach he is suggesting. I will elaborate on 5 quotes from his article:

    1.  “People-centric systems should promote connection, communication, and collaboration. That is the core of the social

    Yes, of course, but…there are alternate “flavors” of connection, communication, and collaboration that offer and support alternate objectives. As commonly practiced, the social enterprise promotes a many-to-many communication paradigm – each individual broadcasts information out to everyone in the group. Project team members share their personal goals with the whole team. Individuals send out queries company-wide seeking help. Shared document edits are seen by everyone. And, yes, in an open feedback forum coworkers award badges to each other.

    The benefits can be readily appreciated, but there are also limitations to these practices. Participation can be spotty; certain people contribute a lot, others not at all. Kudos are happily awarded, but critiques are never entered. Too much sharing can challenge a healthy respect for privacy and appropriate confidentiality. Groups tend to diffuse responsibility; information sharing is much different than accountability. Broadcasting needs and gathering input from a larger and larger social group has value, but social networks do a poor job coordinating work and actually taking action. Lastly, due to its more random nature,
    there is little hard data from which to develop meaningful performance metrics.

    The most effective social enterprises will blend the many-to-many social paradigm with its newer counter-part, the one-to-one paradigm – i.e. two specific people having a focused interaction. It’s still about connection, communication, and collaboration, but at a granular level taking action involves a performer delivering some outcome to someone else who can assess the completeness and express specific satisfaction. This dialog can be either private (visible only to the two parties) or open (visible to a broader group of interested parties). The key principle here is the authenticity and personal integrity of the two people involved. This emphasis is less freewheeling than the many-to-many paradigm, but this more disciplined communication drives more intimacy and personal accountability by making commitments explicit and tracking each deliverable. Accountability and engagement are made palpable, and tracking deliveries against commitments yields a wealth of actionable metrics.

    2.  “Lack of meaningful information is the hallmark and curse of every legacy HR system.”

    This is perhaps a bit overstated, but the point has merit. I would urge, however, that while creating a social enterprise will render new information, the meaningfulness of that data has limits. Tuning in to the social buzz around what’s been called the “enterprise social water cooler” can certainly provide a more real time picture of employee concerns than a survey. Employees can share comments and suggestions that lead to improved operations.  Badges awarded to colleagues can be accumulated at review time. But, I submit, the inherent diffusion of a large social group coupled with its anonymity and randomness of participation will severely limit real meaningful metrics.

    3.  “Making the [performance management] process collaborative – and allowing people to commit – creates and fosters a real dialogue across an organization.” 

    I’ve spent a lot of time studying the process and practices associated with making commitments. Commitments are, indeed, what really drive actions. But just making performance management “collaborative” does not get it done. Commitments can and should be shared publicly, but as noted above the actual formation of commitments is a more person-to-person endeavor. Sure, we’re certainly moving away from command-and-control practices and toward more bottom-up participation and engagement. But the actual process of making and tracking commitments, plus the feedback and metrics associated with delivering on those commitments, requires more discipline and rigor than that typically offered in purely social many-to-many dialogues.

    4.  “Feedback should be open and collaborative…which results in transparency, trust, and alignment”. 

    This is certainly overstated.  Sure, some feedback can be more open and it’s fine to get
    kudos from colleagues in other departments, but other feedback (one could even
    argue the most important feedback) should certainly not be open.  And to make the leap that open and
    collaborative communication automatically yields more transparency and trust is
    overly simplistic at best.

    5.  “A social HCM system still supports the creation of formal reviews and metrics-based assessments.” 

    Yes, sharing goals with the group and accumulating badges and feedback from colleagues across the enterprise is a step beyond the old 360-review process, but providing “metrics-based assessment”, not so much.  Meaningful metrics rely on facts that are documented and comparable. The system for collecting data must be structured and consistent across the enterprise. These are not typically the qualities of a purely social, many-to-many network.  The complementary one-to-one social systems coming along will add an important adjunct that can provide meaningful metrics.

    The social enterprise is coming and with it comes a wealth of new opportunities. But let’s bridle our enthusiasm with an appropriate understanding of the deeper practices and behaviors we all seek to transform.

  3. Good points, but its far more than just “social.”  Modern management practices are not only “social,” they are “agile.” We’ve been doing a lot of research on social rewards applications and solutions, and this market is also being reinvented.

    I think the word “social” may need to be replaced by “peer to peer” – the real issue in organizations today is that the old-fashioned top-down approaches to management itself have changed. We have a whole model we call “The Agile Model of Management” which describes what this means.

    I wont try to explain it here, but maybe John will let me write an article describing what we’ve uncovered :-).

  4. Great write up, John!  

    I think it’s really easy to say a system should be “this” or “this” but simply put – it’s gotta work the way employees do to be successful and whatever that means is going the different from company to company, from worker to worker. It’s about finding the best fit and finding the best platform that really flows with the worker and doesn’t create a lot of, well, work! That just defeats the purpose then, doesn’t it? 

    Loved this – happy to share it with our community. 

    Jocelyn Aucoin
    Community Manager

  5. actually nowadays erp vendors are building up system that is more human centric. Social ERP or Social CRM will be some good start. Salesforce has created social crm that is operated with people in mind. and look at the IT trend now, most of the business are looking at human interaction, management and sharing of information.
    So yes, this article is a good suggestion to most of the erp product out there. human capital management~

    crm software

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