Author: Dr. Sullivan

Tough economic times aren’t fun for anyone in the HR profession. During economic downturns, the HR budget is often the first to be cut, and no matter how well labor costs are contained, the function is routinely blamed for any fallout from even the smallest of layoffs. Given the climate, HR leaders shouldn’t make matters worse by utilizing what are commonly know as “voluntary” buyouts (as opposed to the nonvoluntary variety, also known as layoffs) that might result in your most valuable talent walking out the door.

    Buyouts have become quite popular these days. Noted companies such as Disney, Nissan, Sprint Nextel, Best Buy and IBM have recently used them to shed excess labor. They are favored by many in management because they allow managers to avoid making tough decisions and having emotional conversations with individual employees who need to be laid off. On the surface, buyouts seem like a win-win because no one gets emotional and the firm gets to cut labor costs, but buyouts may actually cause more problems than they solve.

Buyouts can be damaging and expensive
   Buyouts are an approach that let wimpy managers cede control of what should be a strategic decision to employees—the people who probably do not possess the knowledge or interest to make decisions that place the needs of the organization first. By letting employees self-select, you risk losing high-value employees who always have options, leaving you with low-value employees who probably can’t go anywhere else.

    Employees with mission-critical skills know who they are, and they know that their skills give them options even in the toughest of times. The same goes for another group: those who have always demonstrated an ability to do more with less. If a disproportionate share of employees from either of these camps opts out, they will carry with them any chance of your buyout program producing a positive ROI in the medium and long term.

    The reasoning is simple: Rarely do high-value employees receive compensation proportionate to their increased level of contribution. While you may shed labor resources with slightly greater compensation than average and below-average workers, you lose substantially more in terms of organizational capability, which is expensive to restore.

    Paying experienced employees to leave means losing many seasoned and knowledgeable workers who provide organizational capability. Their loss will likely cause serious economic damage in the long term, because ability to solve problems under pressure within your firm’s culture is not something easily replaced. Under voluntary circumstances, such employees are more likely to leave. Experienced workers are in more demand and usually have more incentive to leave because they are offered much larger buyout packages based on seniority.

There goes Tiger Woods
   In addition to losing experienced and resourceful people, there’s another problem with the volunteer approach, and perhaps the biggest one. The employees who are most likely to accept a buyout are probably your top performers. They’re smart—they realize that for months, possibly even years following a major reduction in force, life inside the organization won’t be fun. Development budgets will be cut, capital growth plans will be postponed, and pretty much any opportunity to innovate and grow will be limited. Faced with stagnation, those with options are the ones most likely to take the money and leave. Top performers know that even in a down economy, they will have numerous opportunities, so the last thing you want to do is offer them a large incentive to resign.

    Fortunately, firms such as Charles Schwab and Boeing have learned lessons from the mistakes made by others. This time around, they are abandoning buyouts and instead focusing their efforts on retaining experienced top performers. Another indication that many executives have learned a valuable lesson regarding consciously retaining experienced skilled workers is that the Bureau of Labor Statistics reports a 3 percent increase in the number of workers 55 and older who were employed last year. During that same period, the number of employed people ages 25 to 54 fell by nearly 3 percent.

    HR often institutes detrimental practices such as hiring freezes, pay freezes and buyouts without identifying their many unintended consequences. Rather than letting employees make a workforce reduction for you, HR must to learn to prioritize skills, individuals and positions, and to quantify the costs in dollars of losing valuable employees. Executives must know the actual dollar costs of paying your best people to walk out your front door.

A quick read of any newspaper reveals that the economy is down and many corporations are entering a cost-cutting cycle. It only makes sense that when a business is facing a downturn that all major cost centers contribute to containment efforts. While no one likes cost cutting, it’s important to realize that people costs are likely to be a major focus.

    In many industries, up to 60 percent of all variable costs are related to employee costs such as salaries, benefits and training. Unfortunately, HR has a bad habit of waiting until it is told to react and, as a result, is often forced to use the last-
resort tool of layoffs to adjust labor cost. Avoiding large-scale layoffs should be a key priority, because even when done correctly, layoffs can have legal implications as well as a dramatic impact on recruiting, morale, retention and overall workforce productivity. Fortunately, there is a workforce strategy that can significantly reduce people costs without much of the associated pain. That strategy is to develop a contingent workforce.

    Having a contingent staffing strategy helps HR avoid traditional (and flawed) approaches such as the freezing of hiring, promotions, pay or budgets. Each of those measures can have tremendous negative impacts on top performers. Nothing frustrates top performers and innovators more than freezing projects that excite them and that allow them to remain on the leading edge. In the same light, the common practice of freezing raises or promotions reduces their motivation. Such efforts cause retention problems among top performers because they can look outside the firm to organizations that would fully fund and reward their work even in the toughest of times.

    Contrast those painful choices with a contingent labor strategy, in which a portion of the workforce is easy to scale back (or ramp up). This allows organizations to shift resources rapidly from low-return to high-return areas. The concept is relatively simple. Instead of hiring everyone as permanent, HR develops an approach that designates a percentage of all positions to be contingent. When labor costs must be reduced, this more flexible percentage of the workforce can easily be manipulated.

    Because contingent workers are designated in advance as contract workers, part-timers or temps, their numbers can be reduced more easily by just not extending their contracts. While many firms currently use some form of contingent labor, few have developed a strategy to help ensure that such deployments maximize the organization’s return. Recent studies indicate that contingent labor utilization is so ad hoc that more than 70 percent of firms cannot accurately account for total spending on contingent labor despite the fact that it represents nearly 18 percent of the total workforce on average.

    There are many advantages related to hiring contingent workers. The first is that managers are more willing to release them. Contingent workers are more available during tough times, and because they don’t require pensions and sophisticated benefits, they’re cheaper. Hiring workers on a contingent basis also allows you to assess them as they work and to convert only the best to staff positions. Knowing that others are designated as contingent can also help ease the security fears of the remainder of the workforce. Leveraging a contingent workforce can also help you maintain a strong employment brand. Releasing them doesn’t garner as much press coverage as large-scale layoffs.

    The key element of a contingent workforce strategy is to mandate that a certain percentage of jobs must be contingent hires. The figure can be as low as 5 percent in growth times to a high of 25 percent in turbulent times. The high is based on the maximum conceivable percentage of the workforce that could become surplus in a worst-case situation. Another key step is to determine in advance which jobs will almost certainly be reduced during downturns. They might include call center positions, some sales positions, order fulfillment jobs and customer service positions. These “likely to be reduced” positions should be designated for a larger percentage of contingent hires. Other possible steps include increasing the use of vendors and outsourcers with contracts that allow you to quickly reduce their service levels. In highly volatile environments, managers should be rewarded for leveraging alternative labor types when the nature of the work is short term or directly related to sales volume.

    In tight times, HR must increase its workforce planning efforts. A contingent workforce strategy, if used correctly, can reduce labor costs and increase your firm’s flexibility. Now’s the time to start.

Workforce Management, July 14, 2008, p. 58 — Subscribe Now!

The Summer Olympics start August 8, and you just might be surprised to know that there are several lessons that HR professionals can garner from the event. Before you dismiss the connection outright, think about the Olympic model as one of the most effective motivation processes in the world. What better example is there than a system that motivates tens of thousands of individuals to make extraordinary sacrifices and to develop themselves beyond the capabilities of athletes who preceded them? The Olympic model routinely brings out record-breaking human performances. Unlike the corporate model, where professionals are paid thousands in salary and benefits just for showing up, the Olympics motivate without money and only reward performance. As with most sports, competing in the Olympics offers little statistical chance of even winning a medal, so it only makes sense to study the Olympics to see if there are any motivational principles we can use to set records with employee performance.

    The Olympics and HR share the same ultimate goal, which is getting the most out of human talent. Other things that HR has in common with the Olympics include the use of metrics, a continuous improvement process, teamwork and the use of technology to enable greater human performance. Both the Olympics and business are competitions (although it is often forgotten that business is so). By studying this model, which has operated successfully for decades around the globe, HR can capture some operational principles that can be modified and then applied to the way that HR manages employees. Here are four of those key principles:

    Competition is a powerful tool. Thousands participate in the Olympics, and millions watch them. That demonstrates that the competitive model excites people. Just to get a berth on your country’s team, you must successfully compete against your own teammates. In direct contrast, HR tends to discourage both internal and external competition, because it prefers harmony and it doesn’t like the discord associated with the heat of competition.

    Unfortunately, avoiding competition means lower levels of excitement and productivity. Some firms have embraced the competitive model. While firms like Google and Microsoft use contests to identify potential hires, MGM Grand has really mastered the science, employing “black box” competitions to seek out and identify talent anywhere within a function regardless of tenure and experience.

    In the food and beverage department, for example, any employee can sign up to compete in tournament-style culinary challenges in which winning contestants move on to the next round. Contestants are provided black boxes that contain ingredients they must use to prepare an original dish (anyone who has watched Iron Chef knows how this works). The challenges allow employees new and old, with and without experience, and from anywhere within the function, to showcase their skills and abilities to complete truly job-relevant challenges.

    In the recent past, black-box challenges have enabled a 23-year-old sous chef in a nonrated venue to be promoted to executive chef in a four-star venue, and a wait-staff member to be promoted to general manager, both having proved their ability to manage all aspects of the job through various challenges. Not only do the challenges enable superstars to shine, but they also remove all doubt among other employees why someone got promoted.

    Performance-based hiring is best. In the Olympics, you don’t make the team based on seniority, education or experience. Selection is based solely on the person’s performance in real-life trials. Corporations could benefit by shifting some of their emphasis away from interviewing and instead give candidates real problems or simulations to solve, as Microsoft, Google and GE have done.

    Reward superior results, not effort. In the Olympics, medals go exclusively to those who produce the top numbers. There is no “show-up pay” or guarantees. Although dozens might compete in a grueling event, only three will be recognized and rewarded with medals. HR, by contrast, tries to utilize the “soccer mom” model, where everyone gets equal praise and some reward and the differential between the top and the average performers may be marginal. HR also can over-praise intangible factors like effort, heart, loyalty, commitment, perseverance and values. The lesson is that dramatic differentiation in rewards sends a clear message that exceptional performance is the goal. Average results have little value because only exceptional results can teach us how to change the process so that all can improve.

    Compare yourself with the best in the world. In the Olympics, the standard is an external “best in the world” standard. You compare everything you do with the holder of the continually improving world record. HR metrics, rather than being internally focused, also need to be compared directly with the best HR results in the world. Winning requires comparing yourself with the results produced by the world’s best firm—and then beating them.

    The overall lesson to be learned from the Olympics is that it’s not the shoes that create champions, despite what the advertising slogan says. Obviously it takes talent, but it’s equally important to have great managers and superior processes to select, develop, motivate and get the talent to work together as a team. Sounds a lot like HR.

It has been nearly impossible to avoid all of the press coverage surrounding the escalating price of gas lately, but chances are that you haven’t asked yourself what high energy prices have to do with HR. The answer is simple: Everything that affects workforce productivity should be addressed by a truly strategic HR function. Rather than waiting for national gas prices to top out this sum, HR leaders should act now by enabling more remote work options that help inflation-battered employees save on energy costs.

   Employees will not be the only ones to benefit. Studies show that telecommuters are often more productive than office-bound employees doing the same work. Cisco Systems, for instance, estimates a 25 percent increase in worker productivity among telecommuters. In addition, the secondary benefits of leveraging more remote work stack up quick. Cisco Systems, Sun Microsystems and IBM have saved millions on real estate costs; Deloitte estimates a $40 million savings in reduced employee turnover costs; and Google has found that you can often hire higher-quality talent by taking the work to the talent.

   If you doubt the visibility of this issue among workers, eavesdrop on what they are talking about. Chances are you’ll overhear numerous conversations about the cost of gas or groceries throughout the day. While some items have actually gotten cheaper, the increase in the cost of goods that people buy frequently is affecting your employees’ budgets.

   Rising costs are leading to increased rates of depression and increased commuting time as employees shift to public transportation, both of which decrease employee productivity. In addition, higher energy prices are affecting home heating and air conditioning bills. While real wages have kept pace with inflation in most markets, the uptick in the price of goods purchased frequently is driving the perception that “real” income is declining. As a result, workers with specialized skills who understand their value in the global talent economy are exerting pressure to raise wages. When demands are not met, turnover rates increase and individuals seek work closer to where they live.

   Some HR departments are way ahead of the curve: The most obvious action to consider is increasing the number of remote work options that are available to employees. Nearly 60 percent of American workers state that they would like to have remote work options, yet only 18 percent do. A few firms are taking the lead, allowing more than 50 percent of employees to work remotely. Best Buy, for example, created a breakthrough program known as the Results Only Work Environment (which won a Workforce Management Optimas Award). It affords employees working in their corporate office the freedom to choose when and where they work, as long as they produce negotiated results. Early evidence suggests the new workforce strategy is producing productivity gains as high as 35 percent. Other major firms that have done extraordinary things with remote work options include Capital One, Xerox, Agilent, McGraw-Hill and Microsoft.

   Both Sun and Microsoft have begun providing remote “touchdown spaces” in suburban locations closer to where employees live. This option allows employees to access secure networks and collaborate with co-workers one or more days a week without having to drive long distances.

   Some action steps: There are many things that HR can do, but the first option should be to re-assess which jobs can be done remotely—at least one day a week. Next, invest in technologies that support or enable workforce collaboration independent of the workers’ locations, including conference phone lines, wikis, online forums, videoconferencing and other Web-based meeting platforms that keep dispersed workers connected.

   While it is certainly true that many in HR and line management still believe it’s harder to manage workers you can’t see, leaders need to demand change. They can point to the growing number of success stories to demonstrate that personal biases to maintain the status quo will not be tolerated. Forward thinkers in HR need to develop education that demonstrates with statistics and examples that more jobs can successfully be accomplished remotely.

   It might seem crazy to some that HR would consider energy, grocery and housing prices among the things that should drive HR strategy, but that’s old-school thinking. If HR is to become more than an overhead function role, it must become an internal productivity consulting center, providing solutions to managers for every issue that affects workforce productivity.

Workforce Management, June 23, 2008, p. 66 — Subscribe Now!

It has been nearly impossible to avoid all of the press coverage surrounding the escalating price of gas lately, but chances are that you haven’t asked yourself what high energy prices have to do with HR. The answer is simple: Everything that affects workforce productivity should be addressed by a truly strategic HR function. Rather than waiting for national gas prices to break $4 per gallon (in some cities, this has already happened), HR leaders should act now by enabling more remote work options that help inflation-battered employees save on energy costs. Employees will not be the only ones to benefit. Studies show that telecommuters are often more productive than office-bound employees doing the same work. Cisco Systems, for instance, estimates a 25 percent increase in worker productivity among telecommuters. In addition, the secondary benefits of leveraging more remote work stack up quick. Cisco Systems, Sun Microsystems and IBM have saved millions on real estate costs; Deloitte estimates a $40 million savings in reduced employee turnover costs; and Google has found that you can often hire higher-quality talent by taking the work to the talent.

    If you doubt the visibility of this issue among workers, eavesdrop on what they are talking about. Chances are you’ll overhear numerous conversations about the cost of gas or groceries throughout the day. While some items have actually gotten cheaper, the increase in the cost of goods that employees buy frequently is affecting your employees’ budgets. Rising costs are leading to increased rates of depression and increased commuting time as employees shift to public transportation, both of which decrease employee productivity. In addition, higher energy prices are affecting home heating and air conditioning bills. While real wages have kept pace with inflation in most markets, the uptick in the price of goods purchased frequently is driving the perception that “real” income is declining. As a result, workers with specialized skills who understand their value in the global talent economy are exerting pressure to raise wages. When demands are not met, turnover rates increase and individuals seek work closer to where they live.

    Some HR departments are way ahead of the curve: The most obvious action to consider is increasing the number of remote work options that are available to employees. Nearly 60 percent of American workers state that they would like to have remote work options, yet only 18 percent do. A few firms are taking the lead, allowing more than 50 percent of employees to leverage remote work options. Best Buy, for example, created a breakthrough program known as the Results Only Work Environment (which won Workforce Management’s Optimas Award). It affords employees working in their corporate office the freedom to choose when and where they work, as long as they produce negotiated results. Early evidence suggests the new workforce strategy is producing productivity gains as high as 35 percent. Other major firms that have done extraordinary things with remote work options include Capital One, Xerox, Agilent, McGraw-Hill and Microsoft.

    Both Sun and Microsoft have begun providing remote “touchdown spaces” in suburban locations closer to where employees live. This option allows employees to access secure networks and collaborate with co-workers one or more days a week without having to drive long distances. Other innovations include a 100 percent work-at-home call center implemented by Jet Blue and free shuttle services—complete with wireless Internet connections—at Google, Yahoo and Microsoft.

    Some action steps: There are many things that HR can do, but the first option should be to re-assess which jobs can be done remotely—at least one day a week. Next, invest in technologies that support or enable workforce collaboration independent of the workers’ locations, including conference phone lines, wikis, online forums, videoconferencing and other Web-based meeting platforms that keep dispersed workers connected.

    While it is certainly true that many in HR and line management still believe it’s harder to manage workers you can’t see, leaders need to demand change. They can point to the growing number of success stories to demonstrate that personal biases to maintain the status quo will not be tolerated. Forward thinkers in HR need to develop education that demonstrates with statistics and examples that more jobs can successfully be accomplished remotely. Whatever remote work options you pursue, HR must refine employee performance objectives and implement corresponding metrics and rewards systems so that both the quantity and the quality of someone’s work can be better assessed, regardless of where and when they actually do their jobs.

    It might seem crazy to some that HR would consider energy, grocery and housing prices among the things that should drive HR strategy, but that’s strictly old-school thinking. If HR is to become more than an overhead function role, it must become an internal productivity consulting center, providing a range of solutions to managers for every issue that affects workforce productivity.

It’s unusual for corporations to benchmark against the best HR practices of government agencies, which are often risk averse and extremely conservative. But there is one glaring exception to that rule: the U.S. armed forces. Every corporation, from Google on down, can learn a lesson from the comprehensive and bold recruiting practices currently in use by the military. Regardless of your personal opinions about the military, you would be hurting your organization if you didn’t at least look at some of the things that they’re doing.

    Use of technology: The U.S. armed forces utilize recruiting technologies that most corporations have never even attempted. The most widely known and perhaps most successful of all has been the Army’s use of a video game as a primary recruiting channel. “America’s Army,” an interactive video war game, has been downloaded by 9 million people. Its most unusual feature is a “virtual” recruiting station that allows the gamer to enlist in the Army. The game will soon be on mobile phones and in video arcades—where primary recruiting targets hang out.

    Spreading the brand message isn’t done solely through video games. The military was one of the first to post live-action videos on sites like YouTube. The National Guard shows music video ads in movie theaters.

    The military also excels at using simulations to engage potential recruits. At public events, the Army offers a virtual ride in a Humvee, which is armed with lifelike machine guns that shake as would-be recruits fight an explosion-filled simulated battle. The Army has virtual helicopter rides. The Marines have a kiosk simulation known as “Strategic Corporal,” which allows players to test their ability to make tactical decisions. Not to be left out, the U.S. Navy has a motion simulator that excites and entertains by simulating a flight with the Blue Angels.

    The U.S. Navy is also leading the wave in using technology behind the scenes. It has implemented Siebel CRM, a customer relationship management tool, to help keep in touch with potential applicants and prospects stored in the Department of Defense’s controversial Joint Advertising, Marketing Research and Studies database, which contains demographic information on high school- and college-age youth who meet minimum military requirements. Data mining tools will help them identify and communicate with the most likely prospects.

    The Internet: Everyone knows that young adults are avid users of the Internet, so the military can be found on almost every plot of virtual real estate available. An excellent example is the GoArmy.com Web site. It contains features that many corporate Web sites don’t have, including downloadable podcasts, interactive forums and lots of video. Perhaps the most innovative feature is a virtual-reality soldier (Sgt. Star) that uses artificial intelligence software to instantly answer almost any question in a conversational format (example: “Is the Army a good place to meet girls?). The Army also utilizes blogs, social networks like MySpace and Facebook, and text messaging to personalize its communications with potential recruits.

    Referrals, bonuses and events: The military knows how effective referral programs are. The Army pays bonuses of up to $2,000 and leverages referrals by spouses, children and parents. The slogan “Every soldier a recruiter” shows that the Army understands the need for everyone to be involved in recruiting. The National Guard even has a G-RAP program designed to supplement full-time recruiters with thousands of volunteer soldier “talent scouts” making referrals.

    The military far surpasses any corporation in the use of sign-on bonuses. The amount can be up to $40,000 for recruits with just a high school education. That amount changes, based on the length of service and job applied for. The Army also uses highly effective “exploding bonuses,” which decrease in amount the longer a recruit delays entry into the service.

    The military takes its message to where its prospects are, recruiting at rodeos, NASCAR events, shopping malls and skydiving events. The Navy is even attracting college students on the beach in Florida during spring break with various strength challenges.

    And while you might not have a Humvee or a virtual Blue Angels team to attract candidates’ attention, you can still adapt some of the military’s approaches to help you build your own army of talent.

Workforce Management, May 19, 2008, p. 50 — Subscribe Now!

Whenever a prominent firm fails as dramatically as Bear Stearns did recently, it should make everyone wonder what caused the failure and ask themselves, “Could it happen at my firm?” As HR professionals, you should also be wondering what role HR played in the collapse. It’s my contention that the failure of HR professionals at Bear Stearns to move beyond the traditional business partner role to become true business leaders was a primary cause for the firm’s failure.

    Following any major business collapse (some might even argue after every minor one too), it’s important for all involved to conduct a failure analysis in order to determine the contributing factors at work. Obviously, market forces could have played a role with Bear Stearns, but given that a majority of its competitors have managed to avoid collapse, it is safe to assume that market forces were not the cause. A second external factor to consider is predatory actions by competing banks, but that doesn’t seem to be a key contributor either at this point. With market forces and predatory actions by competitors ruled out, attention should turn inward.

    The collapse at Bear Stearns was a companywide failure, not that of a single business unit, so attention should focus primarily on factors that span the organization. The failure wasn’t caused by faulty computer equipment or a software glitch, so technology isn’t to blame. Bear Stearns enjoyed a fabulous reputation, attracting some of the best investors and talent. The firm had been profitable for over 80 years, so marketing and a shortage of resources were not the cause.

    The final internal factor to consider is failure of the firm’s employees and the people processes that governed them. In a quest for more profit, Bear Stearns’ employees took too many risks. When such failures arise, one must blame not only the individuals involved, but also those who designed the management systems—the processes and policies —that allowed the extraordinary risks to play out.

    In looking at possible management system contributors, the first area of focus should be the performance management and performance measurement systems. Bear Stearns dealt heavily in the extraordinarily risky field of financial derivatives. Given the significant risk, HR had a fiduciary responsibility to monitor employee performance even more precisely than would be expected at most firms.

    The firm is also known for targeting candidates who had a predisposition toward taking unnecessary risks, known internally as PSDs: individuals who were poor, smart and had a deep desire to become rich. This type of hiring, coupled with a reward system that provided major incentives for extraordinary return, almost guarantees a disaster unless you have designed sufficient performance management and performance measurement systems that monitor when employees stretch beyond the boundaries of sanity. In the same light, if the hiring, compensation and training systems don’t automatically “adjust” as market conditions change (dictating the need to take fewer risks), employees will continue to take risks based on historical expectations.

    Certainly there were financial processes and software that played an important role in assessing financial risks, but it’s important to remember that 100 percent of those processes and limits were designed and set by people. The fact is that other firms facing the same problems had employees and people management processes that successfully adjusted to meet the changing business environment.

    If you analyze similar failures at Enron and the French bank Societe Generale (with $7 billion in losses by a single trader), you’ll find similar HR-process causes. Employees learn that it’s OK to take extraordinary risks because the employee training process, performance metrics and incentive systems drive them in that direction. There is no effective counterbalance because the ethics, punishment and whistle-blower systems are toothless—they have little actual effect on employee behavior.

    Given the scope of this failure and its contributing causes, it’s only logical that Bear Stearns chief human resource officer Pamela Kimmet and her staff should share the criticism surrounding the firm’s downfall. They are responsible for maintaining shareholder value. Instead of being an effective business leader, HR at Bear Stearns spent significant effort working on a companywide weight-loss program and becoming certified in HR. Shame on them, and shame on you if you don’t learn a valuable lesson from their failure!

Workforce Management, April 21, 2008, p. 42 — Subscribe Now!

I routinely hear complaints like this one (paraphrased only slightly):

    “Get real. HR can’t be held responsible for hiring, retention or development because managers actually do the managing of their team. Expecting HR to affect the bottom line is not fair because HR authority doesn’t equal HR responsibility. HR is the scapegoat.”

    My response is a visceral one. If I hear this series of excuses from the HR whiners one more time, I will gag.

    Professionals take responsibility. In business, those who manage a process are responsible for the process’s results. Period. For brand results, for example, product branding takes the heat, even though plenty of managers can do things that actually damage the brand. The same established connection between ownership of a process and accountability for its results must finally be accepted in HR.

    Process owners in every area of business routinely accept the fact that if you design a process and manage it, you own the results, and the associated blame or rewards. They also accept the reality that with that accountability, you will never have total control. Sales, for example, must sell or get no bonus, even though the sales organization might be provided with weak advertising, a bad brand and marginal products. Can anyone honestly argue that HR doesn’t design, modify and manage the processes of hiring, development, retention and, by the way, manager appraisal?

    Excuses, whining and finger-pointing don’t change this relationship. Just because you find it unfair really doesn’t matter. No other function attempts to cry that demanding results from process owners is unfair. Fairness and responsibility are not even measured in corporations. True fairness and authority that equals responsibility only occur in academic textbooks and, maybe, in the Land of Oz.

    The corollary to the “designers take the heat” rule is the “owners must influence” rule. This rule says that if you design and manage a process, you must find a way to successfully educate, convince or cajole everyone that has touch points in the execution of the process—even though they do not report to you.

    In fact, most process managers must flawlessly execute this maneuver again and again—despite the fact that they do not have the power to fire or severely punish. Accounting, purchasing, security, sales and, yes, even corporate counsel all have the relative authority of pussycats. They can’t force. They can only point out and then use the credibility that their expertise and their data carry to persuade those who often have a higher rank to change their behavior. Even lowly accounting has to produce results with no more power than the ability to send managers a threatening e-mail. Influencing others to do something your way also requires that you present it so that others see the direct value to them. If you don’t, you will never achieve great results, let alone be fully respected. Successful process owners must learn to persuade, not order, to produce results.

    Now, turning to HR’s business impact: People really are an organization’s most important asset. Jack Welch said it best: “What could possibly be more important than who gets hired, developed, promoted or moved out the door?” But HR rarely functions as it should. That’s an outrage. HR should be every company’s “killer application.” In sports, the connection isn’t even seriously challenged: Great players and managers produce wins and thus profits. To think or argue that it’s the shoes that made Michael Jordan great or the clubs that vaulted Tiger Woods to the top of the game would be laughable.

    In the business realm it’s the same: Most new product ideas, process innovations, marketing campaigns and customer service come from people, so it follows that business results must also result primarily from people. In the cases where software, machines or smart investments increase outputs and profits, people still make the decisions as to what software and equipment to buy or where to invest. Studies by Watson Wyatt, the Russell Investment Group and the Gevity Institute have already demonstrated a direct relationship between great HR and profit or stock value. So yes, people management does affect profits!

    To me, the reason we in HR don’t take full responsibility is clear: Too many in the profession lack the courage and influencing skills to guarantee results from the processes they own. It’s time for us to stand on the table and shout once and for all: “I own people results and I guarantee our firm will have the best people metrics and results in the industry—no exceptions, no more excuses. If I don’t meet our deal, consider me gone. Any questions?”