What Works in HR: New McKinsey Research

Author: Dave Crisp

20 Nov

Last week here consultants from McKinsey presented research on what makes Human Resources strategies succeed and produce better business results in organizations. More studies are being done in this area, in this case based on over 115,000 questionnaires from executives in 230 companies. Their original research is described by Forbes with a link to their write-up provided. To see their longer article you need a free membership as it will tell you at that link, but if you work in HR it’s definitely a valuable newsletter to get.

I’ve long pointed out my objective isn’t to do research myself. Several people, noting my interest, have suggested I start a PhD. Not for me, thanks. I love working with actual clients way too much. Their needs are usually short and easy compared to the time needed academic work. Besides there are others who enjoy it more and are probably better at it. I see my role as simplifying a lot of hot new findings and relating them to what produces results for individuals and organizations.

This relatively new (last year) McKinsey work deserves a much wider audience. It reinforces much of what we already know, but puts some solid proof behind it. And it simplifies quite usefully.

The take-away is this: you or your organization can get far better results from people by focusing on just two things. First, stop doing dumb things or using patently bad practices. Second, focus on three to five key practices that work together. Pursing practices that don’t work together or choosing single "quick fixes" is one of the bad things you should stop doing.

That raises two questions. How do you figure out what’s bad? Easy. Most people already know because others have told them many times, but they don’t want to admit it. A sure-fire way is to ask others what you do that bugs them. Then stop it. At a company level, my old employer persisted with a bonus plan everyone laughed at. The biggest gainer each year was a guy who purposely set stretch goals and failed to meet them. The problem was his goals happened to be to reduce his sales to ease the company out of his line of business. Each year he didn’t make the effort to reduce so his sales far exceeded the low target he set. Paradoxically that meant he beat people who set targets to raise sales and failed to make as much over target as he did. A simple fix could have made this logical, but senior management refused to change anything several years in a row. So the entire bonus plan became a joke… and a serious irritant. Similarly bosses have often been told not to yell at employees. These things aren’t rocket science. Just stop. But many executives can’t seem to grasp this.

Interestingly, the key HR practices that the McKinsey guys found reliably improve results turned out to be very close to the five I recommend at every level, for all size of situations from individual to total organization. In their findings, these boiled down to setting a clear, inspiring vision of the goals needed, then developing a culture of positive trust and openness (honesty) and finally helping each person see clearly what their own role is in achieving these goals. I would only add – keeping these factors in balance as you move forward. That’s captured in their insistence that these only work if they work together. When one or two are allowed to dominate and aren’t balanced with the others, things break down.

They go on to point out, as I do, that neither individuals nor organizations need to be perfect. Far from it they say. What’s needed is consistent effort. And their stats show companies who do this versus those that don’t end up with double the results financially (and every other way) over the courses of a year or two. You can see why I get a kick out of following such research. It consistently validates what I show people how to do. Pretty simple, but highly effective.

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