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?
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“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).
How the world sees it (1)
“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%
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Source: Hay Group survey (2005)
Good at “administrivia of pay, benefits,
retirement”
How the world sees it (2)
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”
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 Just
at
what HR is NOT good
How the world sees it (3)
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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? (1)
Problem with HR
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What is best academic study for
successful HR career? (SHRM survey):
- Interpersonal communications skills
83%
- Law 71%
- Business ethics 66%
- Change management 35%
- Strategic management
32%
- Finance
2%
WHY? (2)
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”
WHY? (3)
Problem with HR
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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
Three questions HR professional
must answer
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
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David Ulrich (Professor, University of Michigan)
2. Cost before value
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Rarely prove the benefit of training to performance
Or if employees feel more “engaged” in the company
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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
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3. Evaluation
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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? (1)
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”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? (2)
By contrast:
 HR
benchmarks salaries
- function-by-function, job-byjob
 Compares pay with competition
- to pay the least
 Object to glowing appraisals
- risk inviting exceptional
salary increase
Is HR working FOR you? (3)
 Many
HR managers report to
Head of Finance.
 Finance worries about taking
money out of the company
 HR is interested in putting
investment in.
Short-term cost v long-term value
 “Tea-and-sympathy”
 Lesser function:
image
- 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 bottomline.
 Would listen if HR proved its worth
How business leaders see HR
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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
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New mentoring programme matching new
workers with experienced workers.
Mentors got special uniform
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After:
6-month turnover dropped to 16%.
Attendance improved
Productivity and damaged goods rate improved
Proven improvements to the bottom line
Case: Hunter-Douglas
 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 (1)
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:
HR & business strategy (2)
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
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HR replies - this frees us from the administrative minutia
BUT
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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 (3)
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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”.
HR & business strategy (4)