What do cars and HR have in common? Costly variation. According to the Human Capital Institute, fully engaged employees return 120% of their salary in value while disengaged employees only return 60% of their salary in value. Gallup estimates that a disengaged employee costs an organization approximately $3,400 for every $10,000 of salary. In total, disengaged employees cost the American economy up to $350 billion a year due to lost productivity.
After reading those staggering employee cost statistics you might too be thinking that reducing variation in your employee base is a high priority. Responding to this need, we consider a simple application: Lean Six Sigma can effectively reduce variation in manufacturing, why not apply it within HR to improve and standardize their processes, increasing employee engagement? Many organizations do not consider applying LSS in this non-traditional domain because of the specific challenges it presents:
- Processes are not well defined
- End-to-end process thinking is not prevalent
- Data is mostly qualitative and discrete
- Accountability to maintain process standardization is rare
- Performance data (e.g.,defect levels and cycle time) is difficult to access or may not even exist
- Human capital is not comprised of divisible parts that can be easily added or eliminated
Despite these known challenges, green belt teams were formed to improve the HR processes of a professional services company. HR and business executives sponsored three green belt teams to create a more strategic, holistic, and formalized approach to their talent management process. Three project teams were mobilized to focus on standardizing the role of the people manager (PM), increasing the breadth and depth of performance feedback, and developing a rewards and recognition program. These projects were identified based on the results of a talent optimization initiative that identified and prioritized projects that would impact employee engagement.
Our green belt team focused on standardizing the role of the PM. Ideally, PMs establish an on-going Counselee-People Manager relationship to provide career coaching, represent the Counselees in performance review cycles, and provide feedback on job behaviors. Our preliminary research showed high variation around the level of involvement and skill set of PMs.
Over several months, our team successfully utilized the established Define, Measure Analyze, Improve, Control (DMAIC) process to analyze, improve, and standardize the PM role. Several challenges arose while our team applied LSS to improve the PM role. First, unlike a typical manufacturing environment where process flow diagrams are readily available, definition of the PM process required our team to map the current state process based on data solely gathered through interviews. However, our interviewees often provided inconsistent, and sometimes conflicting, information due to the differences in their understanding of the process.Therefore, extra time was taken in validating the compiled current state process map with key stakeholders to ensure an accurate representation of the process.
Understanding the Process, End-to-End
Second, end-to-end process thinking was rare. Both PMs and Counselees often had an inconsistent understanding of the scope of the People Manager-Counselee relationship, as well as the process involved. Having an end-to-end view of all the processes involved in the PM role proved beneficial for our team, since front-end PM assignment and back-end Performance Evaluation processes were critical to the overall PM role.
Leveraging Qualitative data
Due to the nature of the HR function, the data that our team gathered while analyzing the PM role was mostly qualitative and discrete. This limited our ability to utilize the powerful LSS statistical analysis tools to analyze the data set. Instead, we relied on structured qualitative data analysis to draw insights from the collected data. Root cause analysis performed on qualitative data is still powerful. It helped the team find the drivers behind employee dissatisfaction and variability. In addition, performance data for the PM role was not readily available. Therefore, our team spent additional time gathering baseline performance data in order to develop meaningful insights.
Establishing Process Control
Accountability to maintain process standardization in the HR function is often not well established or executed. In our case, we found that although standard guidelines and tools exist for PMs, these guidelines and tools lacked a dedicated team to maintain in order to stay relevant to the continuously changing organization. In addition, many PMs were unaware of the standard guidelines and tools that existed or were using out-dated material. Therefore, accountability for maintaining process standardization needed to be well established to ensure compliance from the organization.
Improving the Employee Experience
Finally, in contrast to production lines, human capital is not comprised of divisible parts that can be easily added or removed. Optimization of the PM role required an understanding of boundaries between subprocesses and the impact of proposed changes on the entire end-to-end process. After all, our objective was not to optimize portions of the employee’s experience in the PM process, but rather to deliver overall increased satisfaction from employees.
Based on our team’s LSS analysis of the PM role, we piloted new training materials and a standardized training schedule. In addition, we also recommended standardizing PM tools, clarifying and socializing PM expectations, using 360 feedback, and modernizing the PM assignment process. As the HR team continues to invest in pursuing our recommendations, we are eager to see how employee engagement changes with the implementation of these initiatives. As Sir Henry Royce of Rolls-Royce stated, “The quality is remembered long after the price is forgotten.” Investing in HR process standardization may be a costly endeavor, but the reward of quality, engaged employees will benefit the organization long after the bill has been paid.