ADP Research Institute: The HRXPS – How To Measure The Performance And Impact Of HR Through The Lens Of The Employee Experience With Marcus Buckingham

Music:  00:00

This is RecruitingDaily’s recruiting live podcast, where we look at the strategies behind the world’s best talent acquisition teams. We talk recruiting, sourcing, and talent acquisition. Each week. We take one overcomplicated topic and break it down so that your three year old can understand it. Makes sense? Are you ready to take your game to the next level? You’re at the right spot. You’re now entering the mind of a hustler. Here’s your host, William Tincup.

William:  00:33

Ladies and gentlemen, this is William Tincup. You are listening to RecruitingDaily podcast. My guest today needs actually no introduction. However, we will go through introductions because that’s the bit, we will do that. It’s Marcus Buckingham and he leads the ADP Research Institute. We’re going to be talking about this most recent research that they’ve done. They put out HRXPS and it’s how to measure performance and impact of HR through the lens of the employee experience, which I just find fascinating. And I can’t wait to get Marcus’s take on it. So Marcus, again, I know you need no introduction. People listening to the podcast have probably read everything and have been to see you and all of that stuff, but go ahead and introduce for those that haven’t or live under a rock, introduce yourself and also introduce the research institute.

Marcus:  01:30

Yeah, so I’m Marcus Buckingham. I’m a researcher by training actually. I researched in the world of psychometrics, which is the measurement of things that are important in the world of work anyway and that are very tricky to count. Well, actually you can’t count them. So how do you measure them? How do you measure strengths? Obviously, while I was at Gallup, we built StrengthsFinder, we built an engagement metric over there as well. And then now I co-lead actually, the ADP Research Institute, focused on measuring resilience, measuring engagements, measuring inclusion, strengths and talents and passions, all the things that psychologically anyway, make up a person’s experience at work. The institute itself, ADP funds this institute, frankly because, well, there really isn’t a place these days where leaders, business leaders, policy makers, HR professionals, just members of the working world, there really isn’t a place where people can go to know definitively about a particular subject, whether the subject is performance management, whether the subject is the Great Resignation, whether the subject is how many people truly trust their leader, what do we want from leaders today?

Marcus:  02:52

We wanted to have a place where people could go and trust that the research was being done in a way that was methodologically sound and the discoveries and the results were unbiased, objective. And I think the institute’s filling that role because although we live in a world today where there’s a lot of content being made, it’s actually quite difficult still to filter through that content, push past the noise and identify signal that you can trust. So our hope I suppose is that the institute will be a place that people can go to find things they can really trust. What they do with that, how they act on that, the prescriptions that flow from that obviously will vary according to who they are, but that’s really what the purpose of the institute is.

William:  03:40

I love it. And again, it’s great. ADP does some really, really great work and especially not just in the research institute, just great work around the labor statistics and things that they put out. I think some of my friends that are on Wall Street, they pay more attention to ADP’s reporting then they do the Bureau of Labor Statistics, which I find fascinating. Just-

Marcus:  04:05

Well yeah, I mean, actually the institute has got two aspects to it. One aspect is the part that I described, which is the sentiment part of it. And then the other aspect is the labor market itself, which run by my co-head Dr. Nela Richardson. And as you said, all of her focus really is on the labor market, is on the behavior of actual employees. What do they do in terms of getting a job, in terms of leaving a job, in terms of the wages on the job? There’s an awful lot to learn about the actual configuration of the labor market that is different than the BLS, the Bureau of Labor Statistics, which is a different approach, obviously with ADP paying 30, 40 million people a month. There’s a line of sight there, actual employee behavior, which is interesting.

William:  04:53

That’s almost 10% of America.

Marcus:  04:57

Yeah.

William:  04:57

I mean that’s a big number. That’s a pretty good indicator, but let’s talk about your research, because I love the pulling together, the performance, and looking at it of HR. Again, this is a topic that’s going to be interesting for the HR folks that listen to this, but through the lens of the employee experience. So their perception and their thoughts, beliefs, et cetera, but their experience with their employee experience. Whenever you do a study like this and you’ve done jillions, you start out with a thesis or a hypothesis of what you think might come out of the data and it’s always happens that some of it’s validating like, “Yeah. We thought that would be there. Yeah. That’s cool.” And then there’s something that’s like, “Yeah, that came out of left field. We had no idea that that thing happened. we didn’t we had to go back and look at the data. Are we reading is right? Are we sure this is actually correct?” So for you, what were those things when you did this study?

Marcus:  06:06

Well, so the study started because a number of CHROs, including ADP’s CHRO in fact, was saying we need to have some way to measure what we’re doing through the lens of the employee. Everyone these days in the world of HR, as you well know, is talking about the employee experience, what is the employee experience? We’re living in some of the tightest labor markets we’ve seen in the last 20 years, except for the blip of the pandemic. And that’s going to continue. So a lot of the power lies with the employee to choose where they go, and so many CHROs are going, “I wonder what the role of HR is in ensuring that people have a quality experience at work.” And when you go hunting for that, you actually find, and I’ve been in HR for 25 years.

Marcus:  06:55

My dad was in HR his entire career. My grandfather was in HR his entire career, and all the way through that time, shame on us, but we never actually built a reliable way to measure the HR functions through the lens of the employee experience. So that was the impetus for this, going, “Well, this is silly.” We don’t have a way to understand the role of HR in people’s lives at work. So that was what started us off. And in terms of something that didn’t surprise us from this, and if people want to go to adpri.org, they can and they can see the technical report. They can see an executive summary, which is more like a five minute read. So I won’t go into all of that. But in terms of it didn’t surprise us, the five core experiences that make up people’s experience of HR are not actually that surprising.

Marcus:  07:52

It is a hierarchy. It’s a statistical hierarchy. It’s Maslovian in the sense it’s a hierarchy, but it’s non Maslovian in the sense that it’s not just a theoretical hierarchy. It is statistically derived from the items that we were using, but the base is people want to make sure that HR gives them what they need obviously. If that works for folks, they want HR to make them feel psychologically safe. So I can take any issue to HR and not fear that it will be shared, confidences will be reached or retribution will occur if I bring something unpopular. The next level is know me and value me. So does HR know who I am? Does HR understand who I am? Does HR value who I am? If that need gets met, then you’re up at the level of what we call the growth.

Marcus:  08:40

So yes, of course your manager going to help you grow, but is HR helping you to find parts to growth and improvement in terms of your performance in your career? And if that need gets met, then you pop out the top if you like, and you feel that HR deeply cares about you and deeply trusts you. So that if you think about needs safety, know me, value me, help me grow and then if that all happens, I deeply trust you. That wasn’t, that surprising, [crosstalk 00:09:09] that model. What was surprising, which we can get into if you’d like.

William:  09:15

Oh, yeah. Oh yes.

Marcus:  09:15

Is what it drives and what drives it. That was like, “Oh, that was quite mind boggling actually. We had to go back and do exactly what you said,” and go back and look at the data and go, “Wait a-”

William:  09:27

“Are you sure?”

Marcus:  09:28

Exactly. Exactly.

William:  09:31

Before we get to that, I love that you put it in Maslow’s hierarchy of needs. And there’s a consumer marketing axiom, a B2C marketing axiom that basically says the very moment that you get to know your customers is the very moment they change. And there’s some truth in that with employees. Right? It’s true in candidates too, if we want to fix or we want to talk about recruiting, but it’s true with employees and this triangle of meeting their needs, exceeding their needs, et cetera, on all those different levels. Now knowing what you know and validating what you already thought was there, do you see that shifting and being a movable target for HR?

Marcus:  10:22

Well, so there are five levels that I just described and there’s three items, three questions for each level. We’ve asked those questions on a scale of one to five, with five being strongly agree and one being strongly disagree. So we got a metric, we built a metric really to measure those five experiences, like a thermometer. As things stand right now, you’ve got 23% of people, so basically anybody answering those 15 questions, we could put them in one of three categories of people, people who see HR as value promoting of their own work, experience, people who see that HR is just performing and people who actually see HR is valued detracting, like taking away value from my experience.

Marcus:  11:05

And you’ve got 23% of people in the us at the moment that see HR is value promoting and almost exactly the same number see it as value detracting, which for the moment is like, that’s our baseline. To your point, that set of expectations may change over the course of the next few years. And it might turn out that on the scale of one to five, what was a five before is no longer a five anymore because you’ve met my expectations. And so now my expectations have been raised.

William:  11:35

That’s right. That’s right.

Marcus:  11:37

So that may be like a movable feast as HR professionals of the world overgrapple with, “What do people really expect from us?” I think for right now though, all I could say to you from data would be, we’ve never had even a baseline.

William:  11:49

That’s right. That’s right.

Marcus:  11:49

So it is movable and I’m sure people are going to have to come back and got to recalibrate. But at the moment there is fully 75% of people going to work today in America who don’t think that HR is value promoting. 75%.

William:  12:04

That’s-

Marcus:  12:05

Oh sorry, 77% if you do the math.

William:  12:07

77%. Yeah. Yeah.

Marcus:  12:08

Right? So it’s like, “Wow HR.” This is a call to arms. Unless we think that HR isn’t that important. But if you think HR is important.

William:  12:18

Yeah. Yeah. But what’s interesting is coming out of COVID, we’re not technically out of COVID, but HR stood up and we leaned on HR more than we leaned on HR pre-COVID. You’d think that the perception would be different? It’s almost like approval ratings for presidents right? You’d think that having been through the hell of at least the start of COVID where HR really, really, really did a great job of employee communications, pulling people together, dealing with everyone going remote on a Friday, all this stuff that was just chaos, you’d think that the perception would be higher, but it is what it is, I mean.

Marcus:  13:07

Yeah. Well, again yeah, you wish things are a certain way, but until you wish you ask people, you don’t really know how they are.

William:  13:17

That’s exactly right.

Marcus:  13:18

The challenge for HR, it’s a huge existential challenge for HR that it’s facing right now. HR has long labored under the insecure misapprehension that it is basically there to protect the company from the employees. So much of HR came up through compliance and through legal. And so even particularly during these times of COVID, there’s an aspect of HR that is trying to protect the company from the people, which is not terrible. There’s certain things that have to happen that way.

Marcus:  13:53

But of course, really what people are saying right now is, “No, no, no. I want you HR to make sure that I can be seen at work, heard at work, understood at work, valued at work. I want that to be part of my life experience and I want you as a function to help me. I don’t think yet the entire HR function has really grappled with that. That our role in people’s lives is not to protect our company from us. The role of HR in people’s lives should be to help people at work find full expression of themselves at work. That doesn’t mean there should be no rules, but it what’s our intent? What is our overall intent? And it looks from the data to me anyway, it looks as though HR hasn’t really got its intent act together yet.

William:  14:39

Right. Right. So did you notice anything in the data regarding, and I don’t want to make this a generational thing, but did you notice anything that came out of it from a just demographic perspective that shook out where the expectations were different? Like that 77%, did that break out anyway that was something telling for you?

Marcus:  15:02

No. Well, funnily enough so you slice it by age, there isn’t a variation. You slice it by gender, there isn’t a variation. You slice it by tenure, there isn’t. You keep slicing at company’s ties and it doesn’t slice the way your question originally was like, what surprised you? So if I know your age, I don’t know what you would’ve said to those fifteen questions that measure [crosstalk 00:15:24]. Yeah, I just don’t know but-

William:  15:27

Now we do. Are you going to do it quarterly or are you going to do it annually? What do you-

Marcus:  15:31

I think we’re going to-

William:  15:32

Now that you have the baseline.

Marcus:  15:33

Yeah. So TBD but I was talking to Jason Averbook the other day who I’m sure you know.

William:  15:37

Oh yeah, of course. Love him.

Marcus:  15:38

And Jason was like, you should do this, yeah. You should do this quarterly. We’ve never had it. We’ve never had it as a function.

William:  15:44

Yeah.

Marcus:  15:45

So are we getting better. Are we getting worse? I mean, that would be your question if I was in your shoes. Are We getting any better? Right now, the answer would be, “We have no idea.”

Marcus:  15:51

“Why do you have no idea?” Well, because we’ve never had thermometer before.

William:  15:54

That’s right. That’s right.

Marcus:  15:55

To see if it’s getting hotter or colder.

William:  15:56

I mean, it would obviously be very difficult and all that other stuff, resource intense, but I would love to know if that 77% is going up or down.

Marcus:  16:06

Yeah. Yeah.

William:  16:07

Just that alone. I mean, outside of that, just a finger on the pulse of what’s actually going on which would be wonderful.

Marcus:  16:16

If you slice it and dice it, it’s not gender and it’s not age and so on. The first thing actually was just to go back. The first thing that was the biggest surprise is what it drives. So some CHROs actually, because we’ve shared this a little bit with some CHROs, just getting their vibe around it. And a couple of people were like, well, “Why do we have to be navel gazing around HR? Surely HR is merely one department or one function of many and we should just be looking at the overall business.” And that’s true in some respects but when you look at what people’s experience of HR drives, by the way, independent of their experience with their team leader or their team, because we had a whole bunch of other questions that were measuring people’s experience of their team leader and team.

Marcus:  17:01

And although there’s some overlap, like you do tend to see some parts of your HR experience through the lens of your relationship you might have with your team leader, fully 49% of the variance of your experience of HR does not come through your team leader. So you could have a really good relationship with your team leader and have a rotten experience with HR or vice versa. Your experience of HR is independent.

Marcus:  17:25

And when you look at what people’s experience of HR is, it drives three things that are really interesting and that if I was a HR practitioner inside a company, I would take those three slides from the presentation and run down the hallway to my CEO or actually my CFO probably and say, “Look at this,” because the first thing it jives is likely to recommend the companies as a place to work to friends and family. If you see HR as value promoting, you are eight times more likely to advocate the company as a place to work. That’s your talent brand. That’s your company’s talent brand.

William:  18:00

Right.

Marcus:  18:01

And real estate-

William:  18:02

And potentially employee referrals.

Marcus:  18:04

Oh completely. Yeah, in terms of recruiting. Imagine every CEO these days, I was just talking to a CEO of a healthcare system last week. You’ve got 700 nurse openings. 700 and truck drivers, they can’t get any people back in the cab so they’re trying to figure out ways to lure people back in. You’ve got California state public school system folks, and now if you’ve retired, you can go back and start teaching again immediately without having to recertify. I mean, everyone’s trying to find ways as you well know, to spill openings. Well, if you’ve got a talent brand where there’s bunch of your existing employees are running around basically badmouthing your company, then you’ve got a huge headwind. So the idea that HR, just people’s experience of the HR function is a huge driver of talent brand?

Marcus:  18:54

Okay. That’s interesting. the second thing it drives is likelihood to leave. We ask people, “Do you have any intent to leave and are you actively interviewing for a new job? Seven times more likely to be actively interviewing to leave if you see HR as value detracting.

William:  19:08

That’s right. Yeah.

Marcus:  19:11

And then the last thing of course, because a ADP themselves have data on whether people did actually leave. I could go to Sreeni who’s the CHRO of ADP and together we could look at, well, three months ago we asked these people the 15 questions about their experience of HR. And then three months later at time two, we could see whether they actually did leave. And if you see HR as value depleting or value detracting, you are almost twice as likely to have actually left three months later. Now from a psychometric standpoint, that is the holy grail. Actually it’s called criteria related validity. Does your instrument that you measure at time one actually predict behavior at time two. So for an HR practitioner to walk into the CEO’s office and go, “Listen, the way in which you experience HR drives talent brand, it drives intent to leave, and it also drives whether people do leave. We in the HR world have never really had that kind of dimensionalized precision about our influence, our power as a function. So that was the big surprise, frankly and interesting.

William:  20:26

Real quick, two things. One is, do you think the real reason why, you’ve built the thermometer now, do you think that HR didn’t want to know? I mean now [crosstalk 00:20:38] playing armchair psychologist for just a second. Here we are, it’s late 2021, we’re almost in 2022, why hasn’t the thermometer been built to this point? What drove that in your mind? Just again, not having any empirical proof or anything, but just your thoughts on, why didn’t we have a thermometer?

Marcus:  21:04

Well, two things, and this is obviously I think, because to your point-

William:  21:08

Yeah, yeah of course.

Marcus:  21:10

Yeah, I don’t have data on this, so I should be clear. I think though, having had the experience of my dad and my grandfather talk about this to the nth degree, I think that HR is insecure as a function about its influence.

William:  21:29

Yes.

Marcus:  21:30

And we’re reticent to throw open the doors if you like and go, “No, no, no. Come on. Tell us, how do you feel about the kinds of experiences that we’re providing you when you come to work?”

William:  21:42

That’s right.

Marcus:  21:43

I think they were insecure and maybe frightened.

William:  21:48

Terrified. Yeah. I’d go further.

Marcus:  21:49

Terrified. Yeah. And which other function does this? But these days, it’s funny. The rise of reliable, easy to use survey instruments have enabled us, some may say we’re actually over-surveying, but it does enable us to very quickly get the sentiment. Immediate, real time sentiment. And that’s useful.

William:  22:17

Well, and, and some of it again, they might have been terrified. Again, now that we have one we can go forward and that’s going to help all HR folks, all HR leaders and all lead leaders in general, just to understand what’s going on. I love the thermometer example, and as a metaphor, I love that because again, we can all look at the thermometer and go, “Okay, here’s what it is. Now, what?” Et cetera. You’ve done some work or I’m sure you’ve studied NPS in the past. Do you see a relationship between the thermometer that you’ve built and the baseline that you built and in some way one way or another tied or tethered to NPS for HR?

Marcus:  23:06

Well, I think what we’re going to do is build a more reliable measure of NPS for HR.

William:  23:14

Just specifically-

Marcus:  23:14

The problem with NPS. Yeah. I mean, this is going probably too much into the weeds, but there are serious reliability problems with just using one item to measure something called an NPS to the point where Bain actually came up with NPS would tell you don’t do it.

Marcus:  23:30

There’s a methodological problem with just one item to measure something as complex actually as whether or not you are seeing a function as value promoting for your experience at work. But yeah I feel like you can’t be angry with the thermometer. The thermometer’s just helping you know about whether or not you’re doing healthy things.

William:  23:56

That’s right.

Marcus:  23:56

And now that we have a thermometer and frankly at the moment, the phase that we’re in is just in the sharing phase. The education phase. We actually wanted to come out and share HR tech and stuff just to see what the HR function wanted to do with it, because ADP really isn’t in the HR transformation business. We’re not really a consulting practice. It was more like, “Hey, listen, we built something that we think is very, very useful for the entire function. A, here’s what we found. And then B, what do you want to do with this?

William:  24:29

Where do you want to take this?

Marcus:  24:32

What do you want to do with this? Yeah. So that’s where we are right now, which is why I’m talking to you. It’s like if someone can get the word out going, “What do you want to do with this? Because we think it’s really interesting, but we don’t want to push a noodle up a hill.” And to your point, if you’re still really scared about knowing how people are experiencing you, okay.

William:  24:49

Yeah, yeah.

Marcus:  24:51

We think it’s relevant, but we don’t want to force it on you.

William:  24:53

In an era of transparency, I think they’re terrified or whatever, the results. I think that they’re going to have to get over that and quickly and get to a point of like, “The number is what? Okay, 77. It is what it is. Now-

Marcus:  25:12

It is what it is. Yeah.

William:  25:15

Programmatically systematically, how do we make the changes so that we can increase those numbers? So some of it is just now that we know the numbers?

Marcus:  25:23

What do we do?

William:  25:24

What do we do?

Marcus:  25:24

Yeah.

William:  25:25

And-

Marcus:  25:25

Yeah. So now what? Isn’t it?

William:  25:27

Yeah. Yeah, yeah. Marcus, thank you so much for carving out time for us, A. B, I love the research. I love that you’ve built a thermometer. I love it. If I were an HR leader, CHRO, I would love this because now I have some insight that I didn’t have before, and now I can do something with it rather than operating blind.

Marcus:  25:52

Well, yeah. So first of all, it’s my pleasure. And I feel like our function is such a powerful function and affecting people’s lives at work. And we need to rally around how confident we can be in that, hold ourselves accountable for that. A Thermometer as part of holding ourselves accountable. And then if people do want to dive into the report itself, they’ll find that there’s a couple of drivers of people’s experience that were super duper surprising, and that really lead to quite interesting prescriptions in the world of HR that might even tilt against some of the mega trends in HR.

William:  26:34

That’s right.

Marcus:  26:35

So as people peel the onion on this and like, “Okay, well, what does actually enable you to have a healthy reading on the thermometer?” Some of the answers there are super counterintuitive and I hope will give greater en energy and greater focus to all of us in HR.

Marcus:  26:52

I mean, there’s no question we can be, in terms of the programs that we do, the technology that we have, the way that we approach things across the board from employee relations issues all the way through to leave of absence, to just getting your data right inside of the HRIS, all of the things that we do for people, if we do it really, really well, we can be hugely influential in creating for people a much better experience at work. And I for one, I’m dedicated to that. So I’m hoping that this sort of research gets people to really rally around that.

William:  27:24

Well, if they don’t, there’s no excuses. So you’ve been warned, it’s the beautiful part of this. Again, now you know. Before, you could actually say, “Well, I had no idea. I didn’t know.” Well now you know. Now the air’s out of the bottle. So it’s a choice now at this point going forward as an HR leader, you either choose to remain blind and operate blind or you choose to then dig into this and fix things and fix things for your employees so that they have a better experience, which leads to all kinds of great things.

Marcus:  28:01

Yes. Amen to all of that.

William:  28:04

Thank you so much for your time. I can’t even imagine how busy you are, but thank you for your time and I appreciate you being on the podcast.

Marcus:  28:12

My pleasure. Thank you for inviting me.

William:  28:13

Absolutely. Thanks for everyone listening to the RecruitingDaily podcast. Until next time.

Music:  28:19

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