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Why we hate HR In knowledge economy, companies with best talent wins. Why does HR do such a bad job finding, looking after and developing talent? For 20.

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Presentation on theme: "Why we hate HR In knowledge economy, companies with best talent wins. Why does HR do such a bad job finding, looking after and developing talent? For 20."— Presentation transcript:

1 Why we hate HR In 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?

2 How the world sees it (1) Necessary evil – at best. At worst, dark bureaucratic force Blindly enforces stupid rules Resists creativity, stops constructive change HR - 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).

3 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

4 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

5 WHY? (1) Problem 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. Its 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)

6 WHY? (2) Problem with HR What is best academic study for successful HR career? (SHRM survey): - Interpersonal communications skills 83% - Law71% - Business ethics66% - Change management35% - Strategic management32% - Finance2%

7 WHY? (3) Problem 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

8 Three questions HR professional must answer Who is our companys 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

9 2. 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)

10 3. Evaluation Rarely prove the benefit of training to performance Or 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 dont know if our HR processes are having an impact. But I know employee engagement has impact

11 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)

12 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

13 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

14 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.

15 How business leaders see HR Tea-and-sympathy image Lesser 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

16 Case: 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 improved Productivity and damaged goods rate improved Proven improvements to the bottom line

17 HR & business strategy (1) 2005 survey: HR professionals said 23% of time was spent being strategic partner - same as in Outside HR managers: HR is far less involved in strategy that HR thinks it is

18 HR & business strategy (2) Why HR disconnected from strategy? HR brings strong technical expertise but 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:

19 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 youre working today isnt the way you will work in 10 years. Trouble is, you havent the capacity to move up to the next level Source: Jay Jamrog, HR Institute

20 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. Thats an opportunity for competitive advantage.

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