Why we hate HRWhy we hate HRIn knowledge economy,

companies with best talent wins.Why does HR do such a bad job finding,

looking after and developing talent?

For 20 years, HR talked about becoming “strategic partner” with a

“seat at the table”.Why has it failed?

How the world sees it (1)How the world sees it (1)

“Necessary evil” – at best. At worst, “dark bureaucratic force”

Blindly enforces stupid rulesResists creativity, stops constructive changeHR - function with the greatest potential

(driving business performance). Yet consistently under-delivers

Put themselves into a ghetto, not integrally aligned with business strategy (- ct. Finance, IT).

How the world sees it (2)How the world sees it (2)

“Good” for retaining high quality workers - 40%

Job training “favourable” - 58%Gives “few opportunities for promotion”

- most“Takes an interest in my well-being” -

50%Source: Hay Group survey (2005)

Good at “administrivia of pay, benefits, retirement”

How the world sees it (3)How the world sees it (3)

Corporations are outsourcing these functions to specialist external contractors.

So what is left for HR?“Raising the reputation and the

intellectual capital of the business”

Just what HR is NOT good at

WHY? (1)WHY? (1)Problem with HRProblem with HR

HR not the brightest bunnies- ambitious business students not join HR- may be intelligent, not BUSINESS people

Transferred from other departments – not good enough, a low-risk parking spot

Joined for good intentions but wrong reasons:- “To help people”, “like working with people”- “HR is about doing good. It’s about finding the best and brightest people and raising the value of the firm”

Gap between ability & job needs is widening:Few HR staff today have higher degree than 1990 (SHRM)

WHY? (2)WHY? (2)Problem with HRProblem with HR

What is best academic study for successful HR career? (SHRM survey):- Interpersonal communications skills83%- Law 71%- Business ethics 66%- Change management 35%- Strategic management 32%- Finance 2%

WHY? (3)WHY? (3)Problem with HRProblem with HR

HR managers are not interested in “doing business”

As “custodians of company talent”, HR must understand business objectives

“Business acumen is the single biggest factor that HR professionals in US lacks today”

Three questions HR professional Three questions HR professional must answermust answer

Who is our company’s core customer?Have you spoken to one recently?What challenges do they face?

Who is the competition?What do they do well? Badly? Why?

Who are we?What do we do well? What do we do badly - vis-à-vis customer & competition

How many HR staff can answer those questions?

Source: Anthony Rucci, Exec VP Cardinal Health Inc

2. Cost before value2. Cost before value

More interested in the activities (training, etc) than the outcomes

“You are only effective if you add value.You are not measured by what you do but by what you deliver”.

HR can say how many people trained, how satisfied trainees were. Rarely links training to performance

David Ulrich (Professor, University of Michigan)

3. Evaluation3. Evaluation

Rarely prove the benefit of training to performanceOr if employees feel more “engaged” in the company

Rucci: 12 questions to measure “engagement”, - including:

Staff understand company strategy?See a connection between that and their jobs?Proud to tell people where they work?Rucci correlates answers with survey of 2000

customers, monthly sales data & brand-awareness surveys:

“I don’t know if our HR processes are having an impact. But I know employee engagement has impact

Is HR working FOR you? (1)Is HR working FOR you? (1)

Covering back:Why conduct appraisals?Protecting itself against employees: if have a confrontation with an employee, - “I documented this problem”.

Defence against increasing number of employment laws.

Protector of corporate assets, makes sure a company not run foul of law HR says NO a lot.

Favours standardisation and uniformity(in workforce increasingly complex and diverse)

Is HR working FOR you? (2)Is HR working FOR you? (2)

”One-size-fits-all”Bureaucrats hate exceptions: fear of accusations of bias; exceptions are hard work; take time; expensive

BUT .....exceptional staff drive the business

Keep best staff by rewarding them for being exceptional, by not treating them like everyone else

Correct message: We value high-performing employees, will reward you, want to keep you

Is HR working FOR you? (3)Is HR working FOR you? (3)

By contrast:

HR benchmarks salaries- function-by-function, job-by-job

Compares pay with competition- to pay the least

Object to glowing appraisals- risk inviting exceptional salary increase

Short-term cost v long-term value Short-term cost v long-term value

Many HR managers report to Head of Finance.

Finance worries about taking money out of the company

HR is interested in putting investment in.

How business leaders see HRHow business leaders see HR

“Tea-and-sympathy” imageLesser function:

- plan company trips- manage the trade unions

How do business leaders behave:- TALK “soft” (training, development, commitment)“Employees are our greatest asset” - ACT “hard” - improve the bottom-line.

Would listen if HR proved its worth

Case: Hunter-DouglasCase: Hunter-Douglas

Before:Departments with highest turnover had damage rates of 5%+.

70% of employees left within 6 months:- not feel respected / no “say” in decisions / lack of connection

New mentoring programme matching new workers with experienced workers. Mentors got special uniform

After:6-month turnover dropped to 16%. Attendance improvedProductivity and damaged goods rate improvedProven improvements to the bottom line

HR & business strategy (1)HR & business strategy (1)

2005 survey:HR professionals said 23% of time was spent “being strategic partner”- same as in 1995.

Outside HR managers:“HR is far less involved in strategy that HR thinks it is”

HR & business strategy (2)HR & business strategy (2)

Why HR disconnected from strategy?HR brings strong technical expertisebut no view of future or how organisations will change

Difficult to align HR with strategy:Strategy changes very fast. Hard to change pay structure quickly

 Source: Lynda Gratton, Professor, London School of Economics:

HR & business strategy (3)HR & business strategy (3)

Risk: 94% of large employers will outsource at least 1 HR

activity By 2008, many will outsource: learning & development,

payroll, recruiting, health and welfare, global mobility

HR replies - this frees us from the administrative minutia

BUT ….

Outsourcing takes away what HR does well.What is left? What HR is weak at“Educated incapacity” - “You know the way you’re working today isn’t the way you will work in 10 years. Trouble is, you haven’t the capacity to move up to the next level”Source: Jay Jamrog, HR Institute

HR & business strategy (4)HR & business strategy (4)

Professor Boudreau, USC: “HT is a unique organisation in the company. … It discovers things about the business through the lens of people and talent. That’s an opportunity for competitive advantage”.