hi,
In case the news has not reached you yet, my book “Blueprint for Transforming HR through AI and Evidence” is out. It even became bestseller in Human Resources in Sweden.
If you are in Sweden, my suggestion is to avoid Amazon though, and order here from Bokus. Anywhere else Amazon shipment works well. Kindle version is also improved for easier readability. I hope you enjoy the book and benefit from it.
Onwards to our topic today:
Output vs Outcome
No HR initiative has ever failed, at least in my 20 years of HR experience. Never, not once. I have witnessed countless human resources (people) initiatives. Statistically speaking, some of them should have failed. However, we don’t like failure in HR very much. So we silently kill some of those HR initiatives, make them disappear from PowerPoint slides, and pretend they never existed. The remaining majority of HR initiatives have been celebrated enthusiastically for their successes, within HR units at least. Despite that positivity, one needs to look closer to the real business impact those initiatives have resulted in.
Even though the designers and implementers of those initiatives are good HR professionals with the best of intentions, the same pattern takes over: we focus on the output instead of the outcome.
For instance, a company going through a “culture change” program (I know, what you are thinking.. Who does culture change programs in this day and age?), aimed for culture meetings where they announced their three new values. Those were online meetings with a couple of hundred people at a time. At the end of 8 months, the project was deemed successful because more than 12 thousand people had gone through the workshops. The values initiative deemed to be a success, the facilitators of the meetings and the culture change agents received high performance ratings. And then the initiave got wrapped up. Nobody measured the relevance or adoption of those new values. No monitoring of behavior change, not even a simple survey was conducted. The output was employees joining the workshops, but the executives failed to demand an outcome or even asked the simple question, “Have those meetings worked?”
Another example is when HR deploys succession planning across the company. Months of work, numerous templates, and hours of sitting down with leaders results in a list of successor names for critical roles. The cost to the company, if we calculate the hours spent discussing whose job is critical and who should be a successor, is immense. The output is there: succession planning process deployed and we have successor names (accurate or not). But the company doesn’t do anything with those names. There is no real development happening and no serious action is being taken where the succession pipeline is weak. When there is another abrupt vacancy for a critical position, the company panics, choosing from not-ready candidates or going external and bearing the cost of a few years of integration of the new person. The succession planning initiative is deemed a success because there is an output, while the outcome and the business value are underwhelming at best.
In both cases, the CEO should demand the outcome and expect more from the CHRO at that point. In the meantime, it is worth exploring the underlying reasons why output illusion shadows the outcome. Because this behavior is not specific to HR functions: a procurement program consolidating vendors but not resulting in any business outcome, a monthly newsletter created by internal communication that no one reads, an IT software feature developed but never used, and the list goes on.
We can start with the reasons of this output mentality, and then discuss its depreciating effects afterwards.
Why Do We Have Output Mentality?
1. Understanding the Real Business Need Is Not Easy
Specifically for people functions, understanding the underlying business challenge is not easy. Continuing on the succession planning example: once a critical position is vacant and there is no internal candidate, conventional wisdom dictates that succession planning should be in place. But succession is usually a symptom. The underlying reason could be that the organization hires average performers who over time don’t become good successors. Or the leadership style of the company encourages lone wolves, causing good, collaborative executive successors to leave the company. Without understanding the real need, any initiative will be treating a symptom, falling short of creating a real outcome.
Understanding the real reason requires in-depth conversation and insight. But we seem to always be in a rush. When the CEO asks, “Why don’t we have any ready candidates for my CMO position?”, the CHRO feels compelled to answer: “We don’t have succession planning.” A calm, thoughtful response like “We need to look into this and understand what is really happening” is interpreted as a failure.
Thoughtful discussions and evidence based deductions based on deep business knowledge are required to understand the real business need. We should be able to find that time and build our knowledge accordingly. It is not an easy task.
The question “what is happening here?” is key but underrated.
2. Marginal Improvements and Smooth Operations Don’t Make Good Slides
An important factor for people functions (and many others) rushing to deploy programs without really understanding the underlying needs is that nobody gets a promotion for maintenance and smooth operations. In HR, the spotlight always goes to the new initiatives, and the owners of those programs are recognized and rewarded. At the same time, there is nothing glorious about marginally improving the current services or making the daily lives of employees frictionless.
For instance, improving the user experience of a performance management software module, fixing those clunky and unintuitive screens, gets a weak clap, even though the improvement of the user interface would significantly increase the adoption of the system. Instead, attention goes towards a fancy initiative like “moving from a three-scale performance rating to a five-scale one.” That initiative usually addresses no real business need, takes significant effort to explain to the leaders, and at the end of a four-month initiative, the company moves to a five-scale performance rating. Somewhere in some steering committee meeting, the whole initiative becomes a success slide, and the company applauds the output, even a lame one, leaving the business outcome out in the cold. Making core processes exceptionally well while improving and maintaining them with high care should be recognized as critical successes.
This constant new initiative focus, instead of business-need-based thoughtful improvement, is called “the build trap” by Melissa Perri, an important dysfunction in product management, where product features or new products are built for the sake of building new stuff.
Separate Note: I am working on a comprehensive HR operating model based on product management, which will ensure that people initiatives are based on real needs, and the products and services are improved with customer (employee) needs. More to come on that.
3. We Don’t Know What to Measure
It is not easy to measure outcome, especially if the initiatives are talent-related. The real impact is usually observed in the long term: outcome of a leadership training, outcome of high-quality hiring, outcome of an organizational structure change. They are difficult to measure.
For example, what is the indicator that the new organization works better than the previous one? Go-to-market speed? Productivity? Can HR use those as an indicator and follow up over six quarters? Rarely. In turn, organizational change success is when the change is finished in the HR systems, everyone joins their departments with a welcome meeting, and the 20% redundancy is reached. That's a typical output measurement, not an outcome.
This item of measuring outcome versus output has its causes in the first topic related to real business needs. When the activities have their origins based on real business needs, it is easier to define what to measure. When the initiatives are based on superficial symptoms then the measurements become output focused.
After discussing the three main causes of output mentality, we can move to the negative results.
What Does the Output Mentality Cause?
Having an output mentality hurts the business and the culture significantly. It is a silent destroyer of business value and undermines a culture of learning, fairness, and performance. Here are three key impacts:
1. We Don’t Learn From Mistakes
The beauty of failing is learning from it. If organizations don’t admit they have failed to achieve an outcome, they can never learn from that failure.
2. We Chase the Next Shiny Thing but Neglect the Core Operations
New initiatives should only start if there is a clear business need. Constantly chasing new initiatives means core operations improvements, which usually add significant business value, are neglected.
3. Undermines Real High Performers and Glorifies Slide Performers
Focusing on outputs breeds a culture of "slide performers," sidelining genuine high performers who aim for impactful outcomes. And in time those high performers leave, creating a natural selection of more slide performers in the teams.
Conclusion
To close on a generative note, the switch from output towards outcomes is not a difficult one. A few tweaks of ways of working, strengthened critical thinking and a safe place to speak up go a long way. I plan to write a more comprehensive solution to this problem; but first we need to create awareness of the problem. It is a sneaky one.
Above all else, CEO’s and CHRO’s should start demanding outcomes and reject any celebration based on outputs.
In large company HR units, we have covered ourselves with cushy (and toxic) positivity, which hinders our personal development and business success. When we get our focus right and create outcomes, it will create happier employees and better businesses.
If Interested,
Burak