Prep for Fads: From Holacracy to Continuous Feedback

As with anything else, fads in HR come and go — but in this case so could employees if employers don’t plan ahead before implementing a new policy.

In early 2014 Tony Hsieh, CEO of Zappos.com, introduced holacracy to the online shoe and clothing retailer. Holacracy removes power from a management hierarchy and distributes authority and decision-making across self-organizing teams with clear roles instead. It’s a decision that has received a mixture of praise and controversy.

To ensure the move was accepted companywide, Hsieh gave his 1,500 employees two options: adopt holacracy or take a generous severance package and leave the company. A sizable 18 percent of the company’s employees chose to take the severance package, resulting in 30 percent total turnover in 2015 — a rate 10 percent higher than the company’s annual turnover the previous two years.

While 2016’s business results will say more about whether Zappos’ big change is a success, not every company can afford to wait until the end of the year to see how its bold human resources move will play out. Fortunately, there is a better way to assess which talent programs are worth investing in — and it starts by taking a scientific approach to HR.

Get Intelligent About Your Workforce

Prior to adopting the latest HR fad, it is important to take stock of what is going on in your organization. Using analytics from the outset provides you with data that can help inform your organization. (Editor’s note: The author works for Canadian software company Visier Inc.)

Begin by determining what workforce problems exist within your company, and take care to identify patterns and trends in your data. Workforce intelligence software can make it easier to sift through all the information so you can drill deep into what’s going on across the organization, in key business units and with individual team members. This step is necessary to help you find areas to focus your efforts.

For example, you may notice that turnover has increased this year, but instead of assuming you have a retention problem, you look deeper into the data and discover that most resignations are occurring in a certain department. This could indicate that there is an issue with that team’s manager and save you from implementing an organizationwide program that would have done little to stem turnover.

If we examine our Zappos case study, how could a data-driven approach have enabled the HR team to predict the impact of holacracy before it was deployed?

Since turnover has been a key metric in this case, this would be a likely place to start focusing. By pulling workforce data from all available human resources information system sources, HR can identify key or top talent that are at risk of resigning because of the organizational change, and then take the necessary steps to retain those individuals.

Furthermore, this information can be used to create highly accurate workforce plans that show the total costs of implementing holacracy for various scenarios, such as with and without turnover. Some workforce intelligence software can make workforce planning a more seamless and collaborative process, but the importance here is that you have a process that prepares you for a range of outcomes ahead of time.

Vexed by Vacations

Another hot HR topic is the unlimited vacation policy adopted by companies such as General Electric Co., Netflix and Virgin Group. The debate is over whether such an open-ended policy could discourage productivity — even though some organizations have reported that employees took the same amount of time off as before and performed just as well. Which camp could your company fall into if you were to pursue this program?

First, you need to assess what your paid-time-off situation looks like today. Is everyone taking all their vacation days? If so, are they still showing high absenteeism or resignation rates?

Second, use the data you’ve gathered to determine what problem requires fixing. If burned-out employees are simply not taking time off, you can investigate why this is occurring as it might indicate that their workload doesn’t allow them to go on vacation. However, if you discover that overworked staff are maxing out their days off and still showing signs of high stress, it could be a sign that your vacation policy needs an overhaul so employees can get the proper rest needed to perform their best.

Performance Reviews

With over 30 large companies getting rid of their annual performance reviews in favor of alternative systems, such as year-round and continuous feedback meetings, this is a fad that may encourage others to make it a best practice. However, the reality is that it doesn’t matter if your company does away with performance reviews as long as a program is put in place that monitors performance.

In order for a data-driven approach to accurately guide your talent decisions, you need a complete picture of your workforce — and performance is a critical metric. Its value lies in connecting how well an employee is doing with other workforce dynamics such as compensation and promotion as well as ensuring that you are being equitable with how rewards are distributed to everyone in the organization.

As you gather evidence to support your next bold talent policy move, remember that the key to success is not to copy the latest HR fad. Gaining maximum returns from program investments requires you to tap into what will uniquely work for the employees who make the most impact on your business outcomes. Retaining and hiring these people is what matters — and with the right data and an analytical mindset, this will become much easier to do.

Ian Cook is director of product management at Visier Inc., a workforce analytics company. To comment, email editors@workforce.com.