Your HR Strategy Needs a Strategy or… Why We Still Hate HR
It’s been 10 years since Keith Hammond wrote, “Why We Hate HR”. The human resources profession, led by their representative advocacy organizations, like the Society of Human Resource Management (SHRM) have spent a great deal of time and money to move the needle on HR’s image amongst employee populations and in boardrooms across America. The result — its 10 years later and many still hate HR but the reasons that Hammond put forward have begun to change.
In 2005 Fast Company’s deputy editor Keith Hammond reduced every HR division to an obsolete company appendage consisting of the least educated, talented, and business minded people in the corporate world. In his famous article, “Why We Hate HR” Hammond summarily writes that, “The human-resources trade long ago proved itself, at best, a necessary evil — and at worst, a dark bureaucratic force that blindly enforces nonsensical rules, resists creativity, and impedes constructive change.”
Hammond had survey power on his side. According to the Hay Group, for example, only 40% of workers valued their company’s ability to retain talent, only 41% believed their performance evaluations were impartial and only 58% considered their job training valuable. In today’s view, from two recent PwC CEO surveys, 66% of HR teams are not prepared to manage talent and 63% of CEO’s are concerned with HR not having the right skills and talent to lead their company in to the future, all that with 40% of major projects having no ROI calculations performed as a part of decision making process.
Hammond also had other writers and additional data on his side. For example, David Sirota (Wharton School Publishing at UPenn) says that “IT and HR are repeatedly rated the lowest,” on surveys trying to rank the best and worst company departments.
So in virtue of these deficiencies, under-trained and under-talented HR departments lack both business acumen and the experience and ability to argue strategic issues. It’s been 10 years since Hammond’s article, and HR still isn’t any closer, a bit more vocal perhaps, especially if you like reading self serving snippets or promotional fodder on LinkedIn.
And that’s the thing. Its 10 years later and while some of the reasons why employees still hate HR have changed—not much has changed.
Some of the reasons in 2015 include—
Complaining about not having a seat at the big table…
Look at the best CEO’s and best companies, especially financially profitable ones, 9 times out of 10, the human resources executive is a C-level peer. HR should, in every company have their own seat at the big table, certainly not reporting to the CFO, COO, Chief Legal Officer or anywhere else. So HR’s complaint is well founded but poorly positioned to make change happen.
The result is, frankly, everyone is sick and tired of this HR complaint and it creates its fair share of animosity and counterproductive behaviors, and just some of that can be annoying, agitating, and stir up some hate.
The answer lies in the problem. HR managers and CEOs fundamentally approach business from different and disparate angles. The two aren’t speaking the same language. Take the difference between how they both talk about value. For CEOs the formula is simple: companies make money the way toasters make toast. If a toaster doesn’t make toast, lots of toast, it’s not a very good toaster. If a company doesn’t make money, lots of money, then it’s not a very good company.
But HR gets caught up in the semantics of terms like ‘value added’, ‘transformative’, ‘best practices’ and ‘engagement’ and can’t connect with what they think is this mysterious CEO fascination with the bottom line. HR people fixate on what they want value to mean, and try to impose their definition by showing how they cut benefit costs, save recruiting dollars and validate training as an investment that they don’t know how to quantify.
Of course, social and financial goals are not mutually exclusive, as IBM and General Electric show, but setting priorities for how to properly combine the two is fundamentality different between the big table and HR. Take this passage from Bernard Marr explaining this difficulty:
HR departments are trying to serve two masters – which, in most cases, is not very successful. On the one hand, they are there to provide support for the employees and, on the other hand, they are there for the company and the senior management to help manage (and monitor, discipline, appraise, etc.) employees. This conflict of interest can cause friction and in many instances HR departments swing to the ‘support the company’ side, rather than the ‘support the employees’ side.
The opposite is just as true.
Because the fact of the matter is that HR works for and in the interests of its superiors and its superiors have a profit-based mentality. When HR fails to understand what that means to how they should attack things, the big table can see it as a hindrance to the bottom line.
That’s the thing: talking up the latest trends does not, by itself, improve the bottom line. You can’t tweet your way to the big table. Big data, evidence based HR, social media, engagement surveys, best practices, change management, don’t get you a seat at the big table, either. New compensation plan designs or cutting costs doesn’t set you in the right direction. These aren’t the creative and innovative solutions and initiatives that constitute real strategy and leading the organization forward.
Having the vision and the ability to execute on the CEO’s strategic mission to advance the bottom line and the long term health of the company and its employees; that’s what the big table needs from the HR function.
They aren’t strategic no matter how many times they say so…
Let’s start at the top; CEOs are tasked with running companies that focus as much on the company’s long term viability and growth of the business as on the maximization of shareholder value. In a free market economy, there can be pressures in the short term but over long periods of corporate history we have all seen that innovation, sustained results and talent partnered end to end, achieve the greatest results for all.
HR cannot simply become strategic by using the word in its latest set of PowerPoint’s. The typical HR strategy or “strategic plan” talks about engagement, succession, diversity, human capital analytics, executive compensation, performance and talent management, all of which are huge blankets that are certainly needed and certainly contribute to a basic conversation on managing the business but often serve to fill the weighty category of “strategic buzz words” pushed by consultants to CEO’s whereby HR managers need to look tuned in to the critical issues of leading the workforce.
Let’s examine one slice of strategy, “talent.”
Before the turn of the millennium (1998) studies showed that companies who coveted and sought out the best talent were the ones most likely to succeed (see The War for Talent). With all things being equal in a globalized economy-capital, strategy, and R&D-the one thing that ensures a company’s rise over the rest is the recruitment of the best and brightest to make its creative and tactical decisions.
But it’s not a matter of simply finding any talent. It’s a matter of finding those talented individuals who meet the particular needs of the company at a given time, and-to give more concrete criteria-who can add flow instead of friction to the business. In order to add flow, add value, accelerate results; HR has to identify those, “critical points of the business where the strategy succeeds or fails, and provide relevant talent solutions.”
Asking whether this or that action adds friction or flow to the business is a good start. Why on earth HR hasn’t, is nothing short of baffling.
When asked what keeps them up at night, everything you need to understand about why HR needs major help reveals itself. When asked you get answers like Obama Care, retention, skill gaps, inclusion, engagement, communications, a whole laundry list of HR centric speak.
What keeps the best HR leader awake at night, the one that can beloved and revered is easy to identify — whatever keeps the CEO and business leadership awake is the answer.
So if HR wants to be a strategic partner they need to think like a strategic partner and take on the same issues as the CEO and the organization. Its time that the HR strategy finds a new strategy.
The overuse of “business partners” and other spurious phraseology…
Its 10 years later, and HR departments, led by the consulting community have realized that they have run out of paradigm shifts to leech onto, so they’re either renaming old ones or recycling a few for their newer greener version.
Let’s look at a huge effort that adds no value… the title game and word magic.
Why do companies have HR Business Partners titles? Did you ever notice it’s the only function in the company that uses the business partner moniker? What about my marketing business partner, or sales business partner or my administrative, finance or janitorial business partner. Aren’t we all partners already? Why does HR get this extra special tag line? It got this special tag not through effort but through convenience in most cases. Business line executives want a business partner; they want someone who knows the business, its drivers, its levers, its competitors, its needs, wants and people. So to meet that need, HR departments added the term Business Partner to their titles, no actual business knowledge was added in the process, just the title. The HR business partner is mostly aspirational and should be dropped immediately.
Another title, amongst many, is ‘talent acquisition directors’. Didn’t they used to be called, simply enough, recruiters? Recruiter is great for two reasons: it’s not ridiculous to say out loud and they used to actually recruit talent. Everyone should know better by now, including human resource executives.
What is all a symptom of? HR is insecure-and rightly so- about its position that it uses inflated jargon to pawn itself as owners of much need intellectual capital, without which the corporation could never survive.
What’s needed is commercial knowledge and business impact, not spurious phraseology. Then and only then can HR personnel demand a seat at the big table.
Failing to understand human capital management…
Andrew Carnegie said, “The only irreplaceable capital an organization possesses is the knowledge and ability of its people. The productivity of that capital depends on how effectively people share their competence with those who can use it.”
Managing human capital is managing knowledge and the creating of new knowledge; making it available to those who can use it most effectively and for the highest return. The capital is not the “body” it’s the mind. Look at human capital management in terms of diversity initiatives. The key measures are often measured in expressions of ethnicity, gender, age or cultural profiles. Human capital managers measure the color of skin when they should be managing the color of thought and ideas. A perfectly diverse corporate profile, whatever that would be, would be claimed by the human capital manager as a success if there were a nice mix of different colored marbles in the bucket. Rather real success is the promotion of knowledge, creativity, innovation, inclusion and customer journey that creates shareholder and stakeholder wealth. Human capital success comes from the diversity of thought and experiences purposefully combined and directly applied to our most promising opportunities.
Human capital management speaks of itself in terms of best practices. Using the term best practices is like, ‘try the veal, it’s the best in the city’ and we know how that conversation ended. Whose “best”? My best? Your best? Best practices are something cooked up by someone else to fit their strategy, not yours. But since the average human capital manager/human resources executive/ business partner/talent manager/chief people office really doesn’t know how to deconstruct a strategy in to its fundamental parts, someone else’s best practices are the path of least resistance. The best HR teams reframe situations such that the business leads are encouraged to put their highest value resources on the company’s biggest opportunities rather than using someone else’s best practice hoping for the right outcome. Human resources should see their competence and other best practices as departure points for improvement rather than replication.
We still hate HR because they don’t have the skills or desire to become business people first. They haven’t had the experiences they need to create value. They aren’t ROI driven and not only from a business sense but in terms of their own function as well. Companies invest a ton into the HR function and the function can’t articulate what it delivers to the bottom line let alone even trying to have a top line contribution argument.
And that’s why we have some hate still because the truth of the matter is that we have the least sophisticated business people looking for and trying to develop the most talented business people.
Even the bachelor’s degree in HR amounts to little else besides sibling rivalry to a general studies B.A. Communications classes take up the bulk of major-sensitive credits while electives get divvied out to classes like, “18th Century Shakespearian Culture in Northeastern Scotland.” Finance and business classes scarcely make the cut. Mathematics, statistics and economics are almost nowhere to be found save in the ‘minimum requirements’ which can be satisfied by an online community college course, if required at all.
There are several well known liberal arts colleges where you can earn a Human Resources management degree without taking a single business course.
What about a Masters in something like HR management? Is there at least some of hope at the graduate level? Well, according to Forbes the answer is no. Forbes ranks a Masters in HR management as one of the top 10 worst educational choices in America.
The most glaring example that demonstrates the human resources capability as a business catalyst comes directly from the one organization who should be leading this charge and that’s, the Society for Human Resources Management (SHRM).
SHRM has been pushing for legislation that requires public companies to report on a set of human resources metrics in their annual reporting and accounting disclosures: i.e. SHRM proposes to codify standards that measure workforce diversity, turnover, job training, etc. But the proposal has been met with backlash from CEO’s, investors and other HR organizations. Looking at SHRMs efforts, it’s not even clear that the measuring standards they propose could be applied company by company to produce objective results. What a classic blunder, trying to create a tool from a functional perspective that the end user, the CEO doesn’t want and doesn’t support. If the leading organization for HR professionals doesn’t understand how to position itself to add value to the business, how can we expect that it can advise and lead its members in the same effort?
So after 10 years we still hate HR, maybe a little less for old reasons, maybe a little more for new reasons. Is that so wrong? In their biggest attempt for relevance they missed the mark wildly and in a hugely public fashion they proved one thing and left no doubt remaining— they don’t understand how to deliver value to their key customers.
Will we love HR 10 years from now?
Will love and salvation shed our hatred of HR departments through things like best practices, workforce analytics, evidenced based HR, engagement consultants, diversity initiatives and social media recruiting of millennials?
No doubt, these are more sophisticated tools than what personnel departments possessed in the past, but you can’t give the keys of a Ferrari to a 17 year old. And fancy tools, like fancy cars mean nothing— it’s all about the driver and that’s where human resources executives need to focus. Driving results through the language and lens of business, by taking their functional expertise and in conjunction with business leadership, develop an integrated approach to leading people, managing process and delivering the best custom tailored solutions aimed at commercial success, looking at the top line for once instead of $1,000 in cost savings amortized over 3 years.
The only hope is for HR leaders and human resources personnel to become a learning function— to learn business—- to learn what approaches and efforts are needed in their organization to drive value creation and long term corporate wealth. HR departments need to take on the fundamentals of leadership and competition and the technical perfection of process and execution. They need to understand the economic levers of their businesses from the front line as drivers of “mission” and to stop seeking self worth through buzz words and strategic consultant speak. Again, it’s time that the HR strategists finds a new strategy.
While we may still hate HR ten years after Hammond’s article, there is a clear first step to finding love. That is taking up the challenge of changing HR’s behaviors and viewpoints and embracing the fundamentals of business. To never hire a person on the HR team who hasn’t served in a business role or another function first. To decide that the best practices of others should be the bottom, not the top. To strip away the artificial phraseology and esoteric regalia. In that challenge is accepting fault, wherever it lies; then looking forward and tackling it with conviction, commitment and courage.