Profile - Hay reaps benefit of change

Hay Management Consultants, the human resources consultancy, is best known for the integrated work it does in job analysis and evaluation, remuneration survey (pay analysis), and pay and benefits advice (reward).

Its consultancy work spans all market sectors, from oil and gas to telecoms and financial houses.

“If you ask customers what Hay does, they say that Hay is pay, Hay is job evaluation,” says Vicky Wright, the newly appointed managing director worldwide in knowledge management and integration for the Hay Group.

Wright, who was formerly managing director of Hay Management Consultants, adds that while Hay is proud of its work in these areas, and does not want to lose its competitive advantage, it is cultivating new fields.

While developing new change services worldwide, the firm has also spent the last two months reorganising and developing new global roles for its top consultants – Wright’s worldwide knowledge management appointment is one example.

“We’ve become business consultants, whereas we used to just be HR consultants,” says David Patterson, who recently took over as UK managing director.

But unlike the Big Six firms, Hay is not just out to get the six and seven figure global roll-outs. “The thing about a HR consultancy is that you have to be prepared to do the smaller pieces of consulting,” says Wright. “Hay is structured so that it can profitably do smaller assignments.

We’ve got a spread of projects in the UK, which vary from #2.5m assignments right down to doing one day’s consulting.”

Worldwide the firm has 1,300 consultants and that number is set to increase into the millennium. In the UK, there are 125 consultants and revenues at the end of September 1997 were #25.3m.

By the end of next year the firm expects revenues worldwide to rise to US$300m with 80 per cent coming out of the North American and European markets. The rest of its business is in Asia and Latin America.

Like other consultancies over the last decade, Hay has had to reassess its needs for the future and the needs of both the global and local businesses it serves.

Patterson was part of an executive change team set up by Wright in 1994 to change Hay’s business and people mix. The slogan “Organisations realising their strategy through people” was the mainstay of the change programme and is still critical to Hay’s vision.

The realisation that its consultants have a choice pushed Hay into using all its people focus methodologies internally.

“In 1995 we changed the competency model against which we were recruiting because we wanted people who were much more capable of working in teams,” says Wright. “We looked at what differentiates the best performers from the average performers. By shifting the performance one standard deviation you can yield performance improvements of up to 10 per cent.”

Rather than employ people with very specific skills, generalist, team-focused consultants were brought on board. Hay recruited people with industry knowledge, those who worked in line management roles in the private and public sectors and had MBAs.

The new mix of people has enabled the firm to change its business mix.

Today Hay is steaming ahead – it has developed its organisational change business so that it can expand its global reach. It has linked people change methodologies very closely with organisational change methodologies.

Hay’s organisational change business grew by 32 per cent in the UK from 1996 to 1997. And today in the UK 20 per cent of its business is in organisational change. Job evaluation constitutes 50 per cent of its business and HR, pay and development make up the rest.

Hay is taking on another 38 UK consultants this year – the majority will be assigned to the organisational change team. Patterson says that although the consultancy has been growing this area of expertise “it is a strain because we are becoming resource constrained”.

Says Wright: “The mix of work we do has altered, we are doing more large change projects. And we have clearly developed a distinctive approach to transforming change in organisations.”

Since 1943, when Hay Management Consultants was set up in the US by Ed Hay, it has focused on people and job evaluation.

It boosted its core skills in designing and defining employee roles in firms and selecting candidates, when it joined up with niche competency consultancy McBer in 1985 to form Hay/McBer.

Hay came into the UK in 1962 as part of a joint venture with Management Selection; Hay-MSL was the former brand name of the UK company. Hay had the job and technical analysis capabilities and MSL had the clients in the UK marketplace.

In 1977 Hay bought a majority stake in MSL and it was eventually absorbed into the Hay Group, but run separately. Saatchi & Saatchi bought Hay in 1984, but then sold it back to Hay partners in 1990 as part of a management buy-out. Earlier this year MSL was sold to US advertising group TMP.

“Hay has always been interested in matching people and jobs with company culture, and one of its great strengths is to do with helping managers to learn these core skills in any client organisation,” says Barry Curnow, a former worldwide director of the group and chief executive of Hay UK, who now runs the Maresfield Curnow School of Management Consulting.

Job and organisational development, competency, pay and reward analysis, and compensation design are the reasons for Hay’s success, Curnow says.

But even though people and people focus methodologies are central to all business operations, Hay wants to be more.

Developing its image from that of a pure HR consultancy to being a provider of integrated global consultancy services is now its main task. Its vision is to increase firms’ business benefits through integrated consultancy services.

“Hay can show clients the impact on the bottom line of changing people,” says Patterson, who joined Hay in 1980 after a stint in town planning with Berkshire Council. He is driven by a desire to help businesses to change. At Hay, he has had a chance to influence change in some of the top FT 100 firms – he cites Orange and British Gas as two firms where he has seen Hay really effect change.

“You don’t have to work with many firms like Orange before you get a reputation,” says Patterson. “First we did reward analysis for Orange, now we are doing a lot of change management work. If we do good work in reward consulting, then clients are willing to talk to us about other things. So that is how we migrate our brand, on the back of reward.”

Last year, Hay rolled out its integrated approach to consulting, worldwide.

Its key slogans were “creating business benefits” and “what approaches could change levers”.

“This was critical because it is about integrating all the work we do on people and providing an internal consulting framework about how to think about the work we do,” says Wright.

Since the firm embarked on its change programme in 1994, its vision has been to be the consultancy of choice for organisations, realising strategic change through people, says Ian Tinsley, Hay’s newly appointed UK marketing director.

“Our market survey shows that we are increasingly known for what we do in competency,” says Wright. “Our change business has doubled in size and a lot of that is competency work and aimed at behavioural change.”

Hay still intends to give a personal service to clients, but will work along team lines. Patterson believes that Hay’s consultants have bought into the change process. “There is a slogan: ‘the lone ranger is dead’.

It’s the people in the business that say this and this summarises that we work more effectively in teams,” he says.

Hay uses a climate survey methodology to ensure that people are clear about what they should be doing, says Patterson. “The main thing that makes people work harder is clarity of purpose,” he says.

There are six measures of good climate: clarity of goals; recognition of good performance; clarity of standards; what employees expect from firms (this includes reward, whether that is commercial or non-commercial); good teamwork and encouragement; and finally empowerment – giving employees the freedom to get on with their job without having to ask permission.

Wright says that many firms use strategy consultants but never really understand the strategy. “We used our own methodology in clarifying our strategy and setting our priorities,” she adds.

The “Online Process” has also helped the firm lift the capability of its people, both in training and development. All new recruits attend a week’s induction course, either in Europe or the US, covering the firm’s culture, its vision and the opportunities available in its four main business streams: expertise, project management, client relationship management and operational management (running a team of consultants).

Training is completed within the first six months of joining. Each consultant is assigned a team manager, who is responsible for his/her training, induction and utilisation. From then on consultants work together with senior consultants until they are accredited and trained in certain areas of expertise and methodologies – there are 150 to choose from.

Assessing employee performance is very much part of the culture. Once a year all employees undergo a 360o appraisal: with input from team members as well as team managers and directors. The data is collated to see where the individual needs to improve performance.

“Even I am appraised,” says Tinsley. “No individual is ever identified, so as well as respecting privacy it focuses on not lambasting people.”

Clients also get a chance to comment. Once a year, Hay does an in-depth client satisfaction survey. “Clients talk about the relationship between them and Hay and whether it is working. It’s now a fundamental feedback process for the firm, and it has built a clearer idea of what clients are looking for,” says Tinsley.

In her role as worldwide head of knowledge mangement and integration, Wright will focus on how best to disseminate data and methodologies.

The aim is to share tailor-made solutions and their results globally.

“A lot of our work is tailoring programmes to clients, both in human resources and organisational change, and you cannot prescribe a methodology for that sort of work,” says Wright. “The issue for us in knowledge management is capturing that sort of knowledge and being able to disseminate it quickly.”

Her concern at the moment is that Hay’s clients and consultants based in Australia, Thailand and Hong Kong do not have access to information, and that it is preventing Hay from being truly global. She aims to rectify this with global IT networks. Hay already uses Lotus Notes, but its other databases are not yet linked as much as Wright would like.

“There are two issues: one is IT, which most people understand, and the other is consultants’ behaviour when knowledge sharing. The knowledge has to be transferred in the way that the receiver finds easy to process,” says Wright.

One of the largest online global databases that the firm currently has is a benchmarking database on employee competencies and performance across all industries, where it holds information on the best and average performers.

It shares the data with clients who want to diversify into other industries.

With this it builds profiles on how businesses can shift people’s behaviours to match the best performance in those new industries.

“We want to make it easier for people to share knowledge, but also to build the expectation that knowledge sharing is part of the Hay culture, and that sharing knowledge across national boundaries is the key element,” she says.

Hay aims to link up its global job evaluation and reward databases and develop new IT links for its organisation change methodology data.

The captured information will give consultants a full CV of change work done within each client company: what was changed, where and how and from whom consultants can get more information.

Knowledge management is key for Hay if it wants to create a fast-moving environment where virtual teams can discuss and argue the case for new job evaluation and reward solutions.

Hay has already created C-Sort, a fact-gathering tool, and a ” how to do” methodology to help clients and consultants discuss areas of disagreement, like how to bridge the gap between clients’ current and desired cultures.

Hay aims to set this up online worldwide, so that virtual teams can bridge national boundaries.

In January 1998 Hay will launch one of its knowledge sharing schemes via the Internet. For a small fee, clients will be able to download online analysed information from PayNet on salary movements, recruitment and pay forecasts across 50 countries. The database is already available in the US and can be accessed on http://www.haypaynet.com.

“IT is not the sole answer. It needs to be there. But for me it’s about maintaining your ability to be flexible, fast on your feet, strategic,” says Wright. “What that means in your organisation is how your people are working, how they behave, how they are motivated at work and how we create environments that are a success; for me this is the heartland of Hay.”