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News Analysis: KPMG Tests Shift from Engagement Surveys to Analytics

Readers of ESM and its blog know the issues people are raising about the relevance or utility of traditional employee engagement surveys, most recently by Dr. Bob Nelson, a prolific author and speaker on recognition and engagement, in the recent ESM article: Bob Nelson: Employee Survey Industry an Epic Failure.
 
Now, an article in the Australian Financial Review, a leading business journal there, reports that KPMG, the global consulting firm, is testing a new form of diagnostic tool that measures “something truly worth measuring,” as described by the company’s lead partner for global transformation center of excellence, Robert Bolton. He expressed scorn for traditional engagement surveys.
 
According to the article, KPMG has developed a proprietary analytics tool that it has tested with various clients that measures outcomes rather than engagement. The article says the company “has started weeding out one of the longest running ‘rackets’ in human resources: annual engagement surveys.” The new tool looks at, among other things, revenues, net promoter scores and a new concept better known in the U.K. than in the U.S. called “conduct risk.” Ironically, this new concept itself lacks a clear definition. According to the business news service of Reuters, it is a term used primarily in the financial industry that “refers to risks attached to the way in which a firm, and its staff, conduct themselves. Although there is no official definition, it is generally agreed that it incorporates matters such as how customers are treated, remuneration of staff and how firms deal with conflicts of interest.”
 
In the Financial Review article, KPMG’s Bolton was quoted as saying, “This term engagement is abused, it’s misunderstood, it’s not evidence-based, and it’s a minefield.” He believes that evidence is mounting that engagement doesn’t drive performance, and in fact it’s the other way around. He says engagement is “an ill-defined term. And measuring it once or twice a year with some static survey is not very scientific.”  
 
Human Resources at a Crossroads
The KPMG tool reportedly “looks more specifically at the nature of the deal between employer and employee.” The intellectual property is unique evidence-based people management, Bolton says, rather than an assessment of engagement, and is “a revolution” in data analytics. Bolton takes a position very familiar to ESM and its blog readers: “The human resources function is at a crossroads. It can be a cost center or drive bottom line value.” He further states that “The few organizations where the ‘golden triangle’ between chief executive officer, head of finance and head of human resources exists have one thing in common: the chief HR officer brings as much evidence to the conversation as the chief financial officer.” The human resources manager, he says, “needs to understand the organization’s human capital balance sheet – i.e., the cost of employees in all its forms, capacity, the shape and size of the workforce.” 
 
As an example of the utility of the company’s analytics approach, the new diagnostic tools blow up traditional assessments of who is right for what type of job. For instance, a study of McDonald’s U.K. franchises found that having someone on the crew over 60 years old actually increased customer satisfaction by 20%. Similarly, a study of a 1,000-branch U.K. bank found that measures of revenues, net promoter scores and conduct risk revealed that branches with part-time older workers had better scores across the board.
 
KPMG’s shift to analytics helps explain why we call it “Enterprise Engagement.”  It’s not about having engaged employees; it’s about having all of an organization’s community of people proactively involved in its success.