Find out what Todd calls the 'Herman Effect'

Image of Todd Herman

You may have seen one of our marketing pieces – a Venn Diagram having three overlapping squares, each representing People, Process, and Technology – and their intersecting area labeled ROI, for Return On Investment. The idea? The better the alignment of a business's key assets – its People, Process, and Technology – the better its business results.

ROI Venn Diagram 1

I write mostly about Process and Technology, and only occasionally about People. So, a natural question to ask is – What about the People? How are they involved in aligning a business' key assets for results?

Going into a project, we assume the client's People are capable and competent, and will perform better, once they have better Process and Technology. Our assumptions of capability and competency have largely been true, and improved performance does indeed occur.

Nonetheless, People are occasionally... well, people, and they need help adapting to change. Here are three effects I see in many of our projects.

Pygmalion Effect

The Pygmalion Effect refers to situations in which students (or staff) perform better because their teacher (or manager) expects them to do so. When we are retained, it is generally because managers want their staff to perform better. While we like to think our process and technology improvements were major factors in performance improvement, managers' expectations actually reinforce the effect of better tools.

Hawthorne Effect

The Hawthorne Effect reflects short-term improvements caused by observing worker performance. The underlying rationale – employees equate observation with appreciation, and appreciation improves performance. During a project, we see a deeper application of this effect – we don't merely observe people performing processes and using technology, we also actively ask them "what" and "why" and "how" questions, causing them to deliberately think about their tasks. This question-and-answer process helps realign People, Process, and Technology, and thus improve employee performance.

Herman Effect

The Herman Effect is something I formulated during one of my early projects. After deploying software to integrate shop floor transactions with the accounting records, I soon heard "the new application is causing problems." I investigated the reported problems and traced them not to the new application, but to eroded processes or technologies. These problems had always existed, but now the integrated system made them visible. Once visible, problems may cause People to play the "Blame Game," which does nothing to improve overall performance. Thus, the Herman Effect states, "Problems during a system project are typically not new – rather, they are existing problems brought to light." The remedy? Deal with the problems, rather than point fingers.

We have seen all these effects in a recent project – an application we developed to download and serve up various Receivables items to be researched and resolved. In under three months, 84 users have been trained and have used the application to process over 130,000 items.

  • The Pygmalion Effect – Supervisors expected their staff to perform better – research more transactions, and do so more thoroughly – with the new tools, and they did!
  • The Hawthorne Effect – During our business analysis phase, we asked lots of questions to understand what was being done manually, and why – and these interactions helped people understand both what was being done and how automation could do things better.
  • The Herman Effect – Some persons believed the new system was slowing down processing. Data revealed more transactions were being worked, but many were being worked poorly, so problems recurred. Armed with this information – which was not available under the old manual processing – people were trained on appropriate steps to process the item correctly the first time, thus avoiding rework.

So, while our project descriptions, included in this newsletter, may not emphasize People, our Technology and Process improvements are always undertaken to benefit our clients' People – the most versatile, adaptable, and mobile assets of our clients.

As a manager or leader, your job is to get work done through your People – regardless of circumstances. Keep these effects in mind when you undertake any Process or Technology project. Our experience on many such projects helps us shepherd our clients through a complex project and its inevitable hiccups – and help their People work through these and embrace the new reality.

Todd L. Herman

Todd L. Herman


Client Project Update:

I am pleased to provide you with an update on our client projects. Projects we have completed over this period are...

Data Analysis Finds Revenue

Developed new applications of, and advanced analysis techniques for, address-based data of municipalities, identifying new areas of revenue enhancements.

Designing an Estimating System

Designed and developed technical specifications for a new estimating system for this construction-related firm, applying a single estimation methodology and enforcing company-stipulated controls, thereby simplifying and improving bid analysis, accuracy, and competitiveness.

Improving Pricing & Quoting Process

Prototyped and developed this custom Lotus Notes application to quickly produce a quote to e-mail and fax, linking technology usage and process changes to improve the pricing and quoting processes, and also employee productivity.

Specifying Costing & Inventory Systems Modifications

Analyzed current costing system modules, reviewed proposed process and inventory flow for a new offshore plant, specified the necessary modifications to the business and integration system, and developed comprehensive test scenarios, enabling this manufacturer to minimize system changes and meet an aggressive timeline, while still producing accurate accounting transactions.

Claims System Improvements

Developed a system to extract rejected and denied claims from the main billing system of this medical services company, and then route these to the appropriate Billing representative to research and resolve, eliminating the previous paper-based approach, and yielding time and quality improvements for this process.

Business & System Analysis

Evaluated the current state repair-related business processes in the stores, repair center, and central office of this specialty retailer, designed the future state processes, and developed technical specifications and screen mockups, helping improve the operations of this growing line of business.

Providing Training on Non-Profit Accounting

Conducted training on not-for-profit accounting and finance concepts for this organization, explaining these concepts in non-technical language, thus enabling officers and executives to better understand and fulfill their fiduciary duties.

Future projects we are planning include...

Faster, More Accurate Analyses

Develop SQL Server integration and analysis routines to perform repetitive complex matching and analysis techniques, improving overall analysis efficiency and effectiveness by reducing manual effort.

Review ERP Project Costs

Review implementation and other costs associated with two ERP packages for a not-for-profit agency, ensuring comparability of costs and reasonableness of planned work, thereby helping the Board make a better decision on this large investment.

Mobile Quoting Training & Rollout

Plan the training and rollout, including creation of process and user documentation, of this Lotus Notes-based mobile quoting system, ensuring the inside and outside sales force quickly deliver process and technology improvements.

Updating Process & Technology

Analyze the business processes supported by an obsolete workflow application, design updated processes, and develop functional specifications, enabling this specialty retailer to efficiently handle high-volume transactions using up-to-date technology.

Integrating Systems for Transaction Integrity

Deploy the final modules of a complex integration application for this insurance company, automating journal entries to satisfy auditor requirements and to enforce integrity in financial and statutory accounting and in management reporting.

Assessing Service Quality

Design, develop, and launch a Lotus Domino web-based client service questionnaire for this professional services firm, helping the firm receive valuable client feedback quickly and easily.

Increasing Efficiency Through Systems Integration

Design and develop billing adjustment request functionality into the existing electronic billing system, allowing our client's customers to easily make adjustment requests.