For HR to be a meaningful contributor to business strategy, it will have to evolve. Currently, the function appears to be content with waning influence, as it bears the burden of increasing compliance and process; and the longer it submits, the more difficult it will be to change.
Those in HR will be aware of the numerous conferences and associations that compete for their attention. They make no bones about being “Human Resource” gatherings without defining what exactly that is – no other profession focuses so hard on being so non–specific! People don’t go to conferences on engineering. Engineers are mechanical or electrical and practice without feeling the need to be ‘all things’ engineering.
There’s no handy verb that describes what the HR function does e.g. selling, accounting or manufacturing, which perhaps discourages specialism? There is compensation, OD, and recruitment, but these are generally subordinate to the lead HR position.
Consequently, ambitious HR leaders are coerced by the market, their organizations, and their profession into being generalists. While the marketplace distinguishes responsibilities, it does little to define overall expertise; this often leads businesses to throw anything people-related into the function, after all, no CEO wants more than one HR person reporting to them. This means that lead practitioners are expected to be masters of this universe, possessing detailed knowledge of an array of disciplines, techniques, products, and skills, without a uniform objective.
HR embraces digital networking perhaps more than other disciplines, and practitioners see nothing wrong in attempting a once-in-a-career project after talking to a few chums on the internet. Lives are not in danger or assets put at risk – so why not? For the most part, if HR gets things wrong nothing happens; at least nothing that anyone will notice, and certainly not immediately. Employers often raise the question: why pay top dollar for an experienced HR person, and then have to hire a consultant? Consequently, those projects tend to destroy value rather than create it. The result is that HR is the function less likely to use strategic external expertise.
The functionality starts to be perceived as no more than an expense, appearing to produce nothing tangible except low esteem from colleagues and inability to exert influence; and of course coupled with speaking in tongues! HR has its own self-made language (to aide self preservation?) with jargon that no one outside HR understands!
To combat this image, and feeling the pressure to be busy HR initiatives are often based on a business case of nothing more than competitive practice; a ‘busyness’ case. These take on the appearance of a “flavor of the month” solution not uncommonly for problems that don’t yet exist. Employers tend not to see the problems with this, pleased that this (expensive) resource is fully engaged, leading to an industry of suppliers eager to nourish busyness. Social media too is full of practitioners (like me) sharing their views (this article) on how best to keep busy!
Without a standard definition of their role, HR professionals are constantly searching for the best-in-class model – how often for example do we come across colleagues engrossed in implementing the latest fad?
Therefore, if the function is to meaningfully contribute to strategy, it needs to respond to three frequently−leveled criticisms:
1. An Unwillingness to be Transformative
I recently had coffee with a contemporary who had spent a large part of her career in operations who had temporarily assumed the HR role to enable her to make time for other things going on in her life. (Why do we assume that HR is a place of less pressure than operations?). She decided to give up HR and we were reviewing what had driven her to that decision.
She confessed that operations considered HR to be the “No to” function; that is to say, the folks that came up with reasons why we shouldn’t or couldn’t adopt the course we wanted to; in essence a function to be consulted, and then worked around.
The opportunity to lead the group seemed perfect; an opportunity to try and add greater purpose to a function perceived not to be at the forefront of business strategy.
She never really felt one of the team; she had no HR designation and the HR team consequently felt there was nothing she could teach them – she was temporary and to be tolerated. While they were positive and collegial, they felt that what she was asking of them was not aligned with their professional training – she, in turn, felt like Stockholm syndrome victim, and had begun to drink the Kool-Aid.
Here was a strong and successful operations leader, comfortable with change, trying her utmost to lead HR in a different direction. She was dealing with smart, energetic people who were mired in compliance and administration – seemingly content with doing what was expected of them and what their professional training had led them to.
2. A Penchant for Risk Mitigation
At an HR leader (industry and consulting) network meeting to review candidate screening, participants described using one, two, or even three techniques or products to test candidate fit with corporate culture.
Every approach to assessment examined the candidate profile with little or no evaluation of the potential for positive chemistry with the supervisor, and thus, the potential for upside. Questions were customized, with the ultimate decision to hire − in most cases − resting with the supervisor but the potential to add value was sacrificed to the perceived greater benefit of risk mitigation. My friend John Burdett refers to this as “HR artistry,” and promotes this as an important function of HR.
As organizations strive to improve engagement, mitigating risk associated with fit is important. A poor fit will negatively impact productivity, while a fit that complements the skills of the supervisor could add value. Some of the screenings attempted this, but on the whole most were dominated by risk avoidance.
Missing was the belief that the whole should produce more than the sum of the individual parts. It was less risky for HR to adopt its expected and easier role of identifying candidate problems than arguing for potential accretion.
HR’s role should not only be to identify potential lost opportunities resulting from being overly cautious (and equally, reckless) hiring, but also to focus on the sustainability of the organization through succession. They have the skills to address accretive fit, nevertheless, to assert this view can be discomforting because it is not what colleagues expect.
The function has a reputation for suggesting to others what is wrong with their business but avoids self-assessment, working on the assumption that it is everyone else that needs to change. No activity is immune from progress and now is the time for HR − if it wishes to remain relevant.
3. Unease with Innovation
Janet Wood Global HR Lead at SAP wrote an engaging article for Canada’s Globe and Mail recently entitled “The Death of HR,” that made a powerful argument for technology leading to more HR jobs as human interaction became more rather than less important in the age of the machine. Technology improves the quality of data and the quality of decision making; however, at least for the time being, decision making still involves people.
I recently spoke at a resource conference where industry leaders and entrepreneurs reviewed their view of the future. Amongst the 100 attendees, there was one other HR consultant and not one internal specialist. What a missed opportunity to exchange views with the industry’s architects.
Organizational sustainability is the ability to respond as the future unfolds. While some individuals can exhibit innovative behavior for an organization, creativity and experimentation must be a state of mind and be embedded in the culture. Employees need to be able to observe leaders testing alternative (albeit risk controlled) approaches and be motivated and rewarded for following suit.
A primary function of HR is to facilitate and monitor workforce preparedness for the change. A key component is keeping up with industry expectations. Without this insight how can HR stimulate colleagues to anticipate and adapt?
Are HR practitioners so bogged down with what is expected that they are unable to take time out for the unexpected?
A COZY CORNER
These are just three examples of how HR appears comfortable accepting a role defined by the expectations of others, and of course, it’s own training. A function increasingly accepting of more compliance and process will become a support function unable to transform itself, let alone an organization.
Technology has made day to day people management a sophisticated activity but not one that lends itself to being associated with talent strategy. Employee service is a critical task and a significant contributor to productivity through higher engagement. These functions have become recognized as HR’s primary purpose but increasing proficiency in these activities contributes to keeping HR out of the strategic process.
Stimulating management to achieve organizational strategy should be the primary role of HR. Managing service will become more onerous as operations become more dependent on HR analytics for decision making and is a significant misuse of skills.
HR has become a two-headed creature that can’t decide which road to take. The function appears to see the purpose in day to day tasks that logically should be outsourced or located elsewhere (e.g. Shared Services), whereas the potential for the biggest contribution lies in organizational sustainability and preparing the business for the future. To be functionally strategic, while at the same time delivering excellent administrative service, is next to impossible.
I lectured at a management school supporting a professor of cultural assessment and integration.
Students learned the theory and from me heard about the practical aspects of integrating international organizations. On one occasion I was flattered to be asked by two students how they could have an HR career like mine.
I came to realize that this would be highly unlikely if one were starting out in an HR function today. The constraints attaching to the profession based on how it is perceived were not going to enable engagement with their employer in the way I had been lucky enough to do. I spent a career in HR working largely outside the profession.
My start was with a well-known institution in the UK as an accountant which ended when I was told that I had reached a zenith, seven years prematurely, and determined that a stable but slow calling wasn’t really for me. The management training and accounting proved invaluable for the compensation, benefits, mobility, and M&A work that followed. Decisions from then on were made through the lens of financial statements.
I joined a Canadian company in London with HR responsibility for Europe whose global market had collapsed, and only radical action was going to save the organization − HR was not excluded. The company had made the largest profit in Canadian corporate history and the next, the biggest loss.
My role was negotiating with unions, where necessary, to remove expense and liberate surplus from benefit plans globally. We achieved many firsts including using benefit contributions to provide wage increases, accelerating the recognition of pension surplus and the retrenchment of medical plan expenses. These actions, despite taking several years to negotiate with union representatives, lawyers, and regulators contributed millions to the turnaround and paved the way for the relocation of the company to the United States and transformation into a different industry.
This period in my career was more beneficial than any amount of training that I could have undertaken – it was in fact an MBA on steroids. A young charismatic CEO demanded loyalty and appointed younger managers to huge portfolios. Years later I asked him why he had not been concerned with the significant risk associated with neophytes managing these major roles. In his opinion, the company was only going
to survive with radical new methods and none of you were going to say it could not be done. He was right; necessity proved to be the mother of invention.
This expertise and international orientation attracted a large consulting firm in Canada to offer me the role of leading their international consulting unit. I learned two things there; the value of time and the importance of clear communication. These, and the previously mentioned accounting perspective, are traits that have never left me.
Next up was with a North American industry consolidator operating in three segments. I was attracted to the “in the moment” customer service work. I integrated numerous acquisitions and from there joined RJR Nabisco in Switzerland to help spin off their international tobacco operations. We knew that there were only two potential buyers; one who would keep the brands and fire the staff and the second, a Japanese company who needed both the brands and people to pull off their global aspirations. We knew we had to convince the Japanese Company to buy us or we were all out of work. These early experiences formulated how I began to think about the purpose of HR. I recognized very quickly that for a business to thrive, that the function had to be part of the solution. To endure a takeover, we had to convince the right company to acquire us, to survive bankruptcy HR had to contribute savings. I learned quickly to look for the business role that human capital needed to play.
This becomes crystal clear of course when survival depends upon it. When the business is doing well it is much harder to convince others that grey clouds are on the distant horizon. I wasn’t much help to the two students other than convincing them to focus above all else on their employer’s business at all times.
SO WHAT IS HR?
An entrepreneur develops a widget, an app, discovers a mineral deposit, a service or process that the market wants. She organizes people into jobs and the jobs into a hierarchy, motivating and managing performance and training to be able to meet this demand. There’s nothing more important than people. The leader and the team are essential to one another in getting to market.
If the offering proves to have legs and is scalable, the organizational hierarchy will require adjustment, the necessary skills will change, and processes must migrate away from those of a startup. All actions aimed at creating a sustainable workforce.
At around 100 employees the founder begins to realize she can’t keep everyone’s names in her head and that people administration and compliance are becoming a burden. Assistance is required, someone who can help navigate compliance, maintain records, deal with queries, recruitment, and exits; keeping the boss away from the minutiae and allowing the business to stay on point. These activities are universally
viewed as HR and various organizations can provide the training that enables individuals to perform this perfunctory role. The business’ leader or leaders continue to be responsible for identifying needed skills, recruiting for values and managing engagement. Everything else now falls to HR.
As the enterprise leaves its start-uproots behind, its path becomes clearer. Leadership practice has been established to enhance velocity toward business goals but there’s recognition amongst the top team that more is required in managing their people. However, this time the role is less clear and requires expertise in areas other than administration and compliance. An expert is needed, who is influential and able to collaborate in preparing the workforce for the next market phase.
This role could not be more distant from that described earlier, and yet still described as an HR role. A better job description might be:
“The Maintenance of a Sustainable Workforce”
Constantly facilitating improvement in the way the leadership team leads; introducing and improving
techniques, approaches, and methodologies to deploy strategy, reinforce culture, and track performance.
A unique function customized to the needs of the business.
Entrepreneurs often spend their entire working lives growing their business without the opportunity to work elsewhere, or witness how other organizations of any size manage their people. Defining the organization’s first talent management role, which often mimics the role of the founder, is therefore challenging. No professional association teaches how an incoming HR leader might take on this function.
Multi-generational family businesses do this best recognizing that talent management is their differentiation − even when the organization has grown beyond the founder’s direct influence.
In the absence of a clear workforce sustainability mandate, organizations will default to a definition of HR based on contemporary practice. The role of HR must be a unique capability within the organization and competitive industry. The durability and velocity of a business depend not on the product, software or service delivered but on how people are organized and motivated.
“Our people are our most important asset” is a well-worn mantra in which the origins of the need to be “best in class” can be found. With this new HR role positioned, often at the top of an organization and without a sustainability mandate, it is not difficult to imagine how an organization might look to others for their model.
Companies survive without this functionality but adding this capability will improve performance and allowing them the freedom to act will significantly add to business value.
Where these evolutionary measures go wrong is in misdiagnosis of the problem. Often a business will recognize that it has people challenges, but not their cause. For example, a succession or incentive plan might be needed but instead of instigating a project to remedy these needs a senior HR leader is incorrectly identified as the solution; a paintbrush for doing some fine script. Without a clear, broad-based mandate the appointment will deliver poor ROI.
An ambitious professional will fix the identified problems fairly quickly and maybe a few more as well, but won’t be allowed to hire external expertise when needed. Why hire outside help when we have invested in our own major HR role? The nature of the challenges was not understood and a clear mandate for the role not developed.
The HR lead is now faced with undertaking this specialist task herself or abandoning it and, as a result of the exercise, learns that she is expected to be seen to be busy and not necessarily engaged in research, thought, and strategy.
New HR programs are mostly justified on the grounds of competitive practice. While that’s true for pay, most other things should first align with the company’s management system and culture to help differentiate. The same succession, recruitment, and development programs as everyone else make a company a replica rather than unique.
When HR is the sponsor the management team feels less able to ask about the impact on engagement. There needs to be a constant ebb and flow between the leadership team and HR. They must be interdependent. HR never taking the place of the business leader(s) works to anticipate and monitor talent needs, culture, and performance.
In this common scenario cultural influence starts to drift away from the leadership team to HR. Any organization-wide initiative, no matter who the sponsor is, needs to be robustly challenged by the leadership team who should then circle back and monitor its direct impact and contribution. Otherwise over time, disconnection will silently threaten engagement and productivity leaving the management team wondering why. HR needs to be alert to its potential position and resist abusing it.
Large companies are prone to this when they deploy standard policies and programs to diverse multi-location operations. The damage, however, is often limited to local management workarounds, or energy spent pushing back on the HQ’s HR function.
Gortex and Magna never allow plants to become more than about 100 people to enable management to define the needs of their local teams. GE and IBM, on the other hand, define their differentiation through superior uniform skill sets or methodology that they bring to business units or clients.
Few organizations would articulate that HR has responsibility for the sustainability of the workforce; most HR folks while aspiring to this functionality, would struggle to identify an organization that embraces such a philosophy.
HR is often a dumping ground for anything “people” and HR, for the most part, are happy with that as it helps their efforts to appear relevant and busy. The organizational equivalent of “Tell me the answer you want to hear”. Professionally, the function is training the next generation to be generic factotums, unable to align their skills with the achievement of business goals − whose output resembles that of other employers of a similar size including competitors! Why do we not think that this is a problem?
I have previously written about the changing nature of the workforce and why employers are facing a perfect storm − to recap: millennials are now replacing “baby boomers” and bringing new values and expectations to the workplace. There will be fewer people available to hire and employers striving to find ways to increase productivity in a low inflationary environment will continue to pursue employee engagement.
That means more stringent selection of values and fit from a smaller talent pool. But hold on! Those boomers it turns out are not leaving – they are working longer, retiring later or returning with non-traditional employment agreements. The new workforce wants to work connectedly and not necessarily in the office. Employers are coming to terms with analytics and how these lead to better-informed decision making. On the near horizon can be seen design thinking, artificial intelligence, and 5G; and, in the distance, robotics and blockchain.
HR has faced similar challenges before but never so many and even if you don’t buy the notion that their impact is imminent they are closely lined up behind one another. There has never been a more important time for the Coach in Chief, the Head of Sustainable Workforce, or if you must, HR.
FOUR KEY STEPS TO WORKFORCE SUSTAINABILITY
1. ANALYSIS – Establish first the criticality to the organization; how much and what is HR going to have to do to pull off a transformation in the way it utilizes human capital. For example, what is the level of discussion or activity around workforce sustainability; does the organization understand its importance and recognize the need for a facilitative role. What is the resistance − apathy or outright objection?
What is the level of exposure to threats such as generational shift? How open is the culture to different ways of working? How strong is management’s commitment to engagement? What is the likely impact of technology and does the succession plan reflect this? How are decisions made and does the organization live its strategy and continually adjust for performance in achieving it? In other words, how robust is the people system in supporting business goals? These questions will change from industry to industry, product or service, but timing and vulnerability will be unique and inform priorities.
This assessment cannot be arrived at by comparison to others. Competitive practice or best in class do not figure in this review. Some conclusions may be similar, but they will relate to different strategies in the pursuit of different outcomes. There needs to be a customized functionality to first survive, and second to beat the competition. This will not be the same for any other organization.
Talk to the management team and probe their openness toward a strategic approach to HR management. The best friend of HR should be Finance, working together to develop metrics to monitor the results of effective people management and help the organization become more prescriptive.
Ram Charan in his book, “Talent Wins,” talks about a company’s “crucial decision nodes”, the places or roles in the organization where important choices are made that drive value – and often it is not those with the fanciest titles. This high-leverage group might include designers, scientists, salespeople, up-and coming leaders, influencers, integrators, and support staff tucked away in unglamorous corners of the company. Jony Ive, Apple’s chief design officer, is obviously one, as is Steven Nissen, chairman of cardiovascular medicine at the Cleveland Clinic. But so, is the navigation team at United Parcel Service, whose software helps drivers avoid left-hand turns saving the company millions of dollars on gas.
These are the pivot points in an organization that HR needs to uncover. They are where soft due diligence is increasingly conducted in mergers. As many as 80% of business combinations fail to deliver promised synergy with the causes relating mostly to people. Identifying these roles is to understand how value is created (or destroyed), and a key part of talent development, retention, and reward. Charan comments that Google famously reports that it rewards “unfairly” in situations where people (doing the same work and in the same pay scale) make a disproportionate difference in contribution. Hierarchy becomes less important in a meritocracy where opportunities are created for the most talented people.
Those who have never thought about the function in this way are going to say this is an analysis for a management consultant; but even a well-researched function designed in a vacuum by an outsider will not get to the nuances and sensitivities of an organization’s unique circumstance. The research is an important part of the HR leader’s journey in understanding the role that HR needs to play. A management team that insists on the analysis being performed by an outsider is already saying something!
2. ORGANIZATION – Next is to recast the function and the skills needed to reorient the focus toward workforce sustainability. The challenges and organizational complexity will inform the functionality − but undoubtedly the list will include the following capabilities:
- Skills Mapping
- Securing, retaining and developing
These activities are typically not found in the traditional HR landscape with this orientation and some will fall to the function lead. They all, however, need to be heavily integrated and together comprise the means to workforce sustainability.
Talent, Engagement, and Performance are the three logical support roles requiring inquisitiveness,
analytical skills, and the ability to communicate conceptually at the highest level. They should influence and design process and administration while being separated from it.
Readers could be forgiven for thinking that this outline of activity appears similar to what used to be called Organization Development, or OD, but this is a much broader role with a wider time horizon responsible for stimulating the executive team into consideration of workforce sustainability and the organizational steps necessary to achieve it.
There may be a reluctance to shed administration and compliance, duties that have come to be accepted as “HR” and they will be a distraction under a leader who should be spending most of her time on strategy; and besides, they consume too much energy. To do both well requires different skills; nevertheless, they will form the delivery mechanism for many of the programs that will stem from sustainability.
HR analytics is playing a bigger role in assessing behavior and will bring HR closer to the skills of Finance. The risk, however, is that HR becomes a data farmer in itself.
Understanding how to design insightful analytical studies will be a key function of the strategic group including the identification of proxy indicators. The production and harvesting will be best left to others.
For example, how many organizations have the curiosity, or capacity, to examine how effective their onboarding program is in contributing to retention or accelerating productivity? Why invest in a program if it cannot quantitatively demonstrate its benefit?
External experts should be used for specialty tasks – the same experience cannot be acquired so why try – the outcome will never match someone who performs this task once per month. What the outside expert will lack is the context of your organization; the knowledge to predict the ramifications of one solution over another, the unforeseen effects on behavior, etc. Programs cannot be developed in a vacuum and HR is the conduit for fashioning them for optimal benefit.
There are often sensitive or perceived confidential (e.g. Board support, executive pay etc.) duties that fall to the most senior HR person. While these may be flattering and considered important for career and influence, they are usually administrative in nature. They are not why the senior HR role exists. Compartmentalize them and performed them well using minimal personal effort.
3. TRANSITION – In researching this article I spoke with the Head of HR at a significant global
employer who argued that it was a question of who defines the identity of HR. HR would like to be the one to do that, but considering itself a service allows the user to define what that will be. Some CEO’s will recognize the broader role of HR and utilize it strategically, while others will think people-strategy is their role or are too busy to give it the attention it warrants.
HR leaders find their level at the point of least resistance, somewhere between reactive and influential reflecting the mix of the CEO’s outlook, the business of the organization, and self-preservation. Many organizations still believe that they want a Personnel department having never seen the advantages of the alternative. There are few opportunities for HR to learn, or observe, a strategic mandate in action.
Nonetheless, the executive responsible for people needs to view workforce sustainability as their prime role. A CEO who understands this or at least who is malleable to the idea is the best scenario. Others may be more challenging and take longer to win over.
Practitioners may find their way blocked by traditional thinking or worse, an executive team blinded by “adequate performance”. Here the CFO should be won over first and be HR’s best ally. I have been working with several groups of CFOs who want to be more predictive about performance. They realize that they tend to steer the organization by looking through the rear and side view mirrors (the income statement and balance sheet) and consequently miss the deer in the headlights. If HR fails to grasp this
role, the Finance function will.
Don’t assume that the Board will help and identify the need for sustainability through cascading talent management demands. Boards focus on strategy and governance and, by virtue of time available, typically limit talent discussions to CEO succession. Waiting until the Board finally does figure this out may take so long that their first question is why has management (HR) missed this? Once underway, however, HR should try and elevate board awareness of the talent risks associated with achieving the corporation’s strategy.
No one said this was going to be easy. Launching this refreshed perspective may not go as hoped and advocates need to be prepared for setbacks. There will be eyes rolling in heads when workplace sustainability is first raised − and it will be a judgment call whether executive colleagues are going to be most receptive to the big reveal, or a progressive approach, subtly changing the language and the level of discussion.
The friction from a contentious or contrarian perspective may result in being tempted not to attempt the change at all and to settle back into the role that is expected! We have all seen avoidance and deferral. If HR wants the recognition of being a strategic contributor, then it has to step up and overcome the obstacles.
Start the conversation with clear, jargon free strategic content and position views that demand further exploration recognizing that HR may have information not available to the executive team and vice versa.
4. STARTING THE PROCESS – A sustainable workforce is about identifying and filling roles when a company doesn’t have the skills or the innovative proficiency to survive and thrive. The role of HR is to help management identify and articulate these gaps, recruit those profiles, and integrate them successfully into the organization; simultaneously ensuring that the top team is held to account for constantly creating the next employee generation.
Talent-driven organizations launch new strategic initiatives only when they have the right people on hand, nimbly matching the right talent with the project even before considering the financial planning. Harvard Business Review refers to the failure to do this as the “Strategy to Execution Gap”, and suggests that overcoming this leads to superior performance. HR can play a major role in this endeavor by:
Defining Culture – Identifying the unique characteristics that led to past success and encouraging leaders to spend more time engaging the organization in a discussion about enablers and future barriers.
Organizing Resources – Optimizing talent by reviewing skill requirements, development, succession, and the organization’s ability to attract and retain. Can we get from “here” to “there” with what we have or do we need something different?
Living Values – A culture does not occur by accident or overnight. A shared understanding of the values and the organization’s superior capabilities reinforces culture. Successful organizations consistently reinforce behaviors that lead to success and support them with incentives.
Systemising Strategy – Periodic performance against financial and operational metrics associated with strategic goals should be reviewed and, as appropriate, resources and behavior modified. Understanding constraints will cause the organization to be more agile at course-correcting as the environment changes.
Contributing to strategy, monitoring performance in achieving it, protecting culture, and establishing talent supply are key functions of the sustainable workforce that will inform the mandate of HR. An organization that depends on its current strengths will not outperform in the long run − management teams that constantly monitor culture and facilitated by HR, challenge human capital capability will.
Whether the influences that are forecast to impact the workplace result in the death of HR or its reinvention remain to be seen. But why wait until the dark clouds arrive? Managing workforce sustainability, whatever the future holds, will lead to improved performance and in twenty years time, a movie will remind us what that meant.