Author: Dr. Sullivan

Is the economic sky really falling? It’s hard to say with certainty, but you would have to have been living on a desert island to miss the very real signs of economic turmoil occurring in the world today. If you are a business-savvy HR leader, then, today might be a good day to begin shifting your HR strategy to better fit these unsettled times.

    Unfortunately, most HR departments find it difficult to be agile. There are many excuses that can be offered for that rigidity, and nearly all of them relate back to the fact that corporate HR strategies are overly focused on transactional HR and compliance. Business strategies are purposely designed to flex whenever the economic environment shifts from expansion to contraction. Most HR departments, on the other hand, don’t flex. They simply find a way to do everything they were doing before the contraction—just with less money (something that leads many executives to wonder whether the original budget wasn’t inflated to start with).

    Unfortunately, there are signs everywhere of an upcoming downturn, including fluctuating oil prices of about $95 a barrel, layoffs in the auto, banking and pharmaceutical industries, and lingering fallout from the bursting of the credit bubble. The collapse of the subprime lending industry is rapidly triggering a broader credit crisis, as illustrated by the massive financial problems and CEO resignations at Merrill Lynch, Citigroup and Bear Stearns. (If the CEO must be changed, shouldn’t the HR approach be changing also?) Regardless of your personal prediction of exactly when a downturn will come, it’s important that you have a plan.

    There are many elements of your HR strategy that should shift during a downturn. When economic conditions threaten growth plans, employees begin to shift their interest toward increased job security, resulting in less pressure on you to provide cost-of-living adjustments or to build outrageous compensation packages to attract and retain talent.

    Now that the economy is cooling, with unemployment in December increasing to 5 percent, the relative supply of labor available to firms is increasing. This provides smart HR managers with an opportunity to cherry-pick from this expanded candidate pool, while simultaneously beginning a process for identifying and then releasing their own poor-performing employees. It’s time to trade up, in other words.

    Another shift that should occur when preparing for a downturn is an increased emphasis on maintaining a contingent workforce. This provides you with the opportunity to more rapidly shrink or expand your workforce to meet your firm’s changing business needs. By expanding the amount of work that you outsource, as well as increasing the percentage of part-time and contract workers that you employ, HR gives managers the flexibility they need to quickly reduce their workforce by releasing contingent employees.

    Although HR professionals are almost universally resistant to even discussing the need for layoffs, an effective overall strategy needs a component that allows labor costs to be reduced quickly. This often begins with HR conducting an assessment of how much “fat” there is in the headcount. If appropriate, HR can conduct a mock layoff to identify the positions that have the highest probability of being cut. In addition to cutting costs, the HR strategy must also have a component designed to increase worker productivity and output.

    The best approach here is for HR to work with the CFO to identify a target “revenue per employee” number. This figure indicates the approximate value of the output produced by the average worker. HR can then work with individual managers to increase employee productivity through a number of approaches, including improved training, better metrics, programs for increasing innovation and an improved best-practice sharing process among departments.

    It’s almost impossible to successfully make the case that it’s perfectly acceptable for HR to drone along without a contingency plan for an economic downturn. If you want to be a business partner, then you have to act like a businessperson. That means rewriting your current HR strategy and including in it plans that cover each of the most likely “What if?” scenarios. Adding this agility component will clearly demonstrate to senior managers that HR, just like marketing, finance, product development and supply chain, has an effective plan of action for any upturn or downturn—whenever one might occur.

Workforce Management, January 14, 2007, p. 34 — Subscribe Now!

No corporation has transformed the practice of HR more dramatically and successfully in the last decade than Google.

Google has changed the DNA of the HR function by not accepting that the old way is the right way. Many people are already aware of the company’s radical approach to recruiting, but other aspects of HR at Google are just as dramatic and exciting. If you expect your HR function to make a major contribution to your firm’s bottom-line results, comparing yourself to the world’s first true “talent machine” is essential.

No foray into Google HR practices would make sense without some understanding of the impressive results the company’s approach has helped produce, the most dramatic of which is employee productivity. The average Google employee generates more than $1 million in revenue each year.

This metric is a good indicator of how an organization leverages its workforce. Yahoo currently produces just $564,000 per employee, and Microsoft $647,000. This level of productivity has pushed Google stock into the stratosphere, with share prices recently topping $700—no small feat, given that Google only went public in August 2004 at a price of $85.

Google acknowledges the huge role talent management plays in its success by noting in Securities and Exchange Commission filings that the continued attraction, retention and motivation of its employees are key factors behind its success.

By focusing on developing effective management practices and letting others tell its story, Google has established an employment brand that is arguably the strongest in the world. On its first try, it was ranked No. 1 on Fortune’s “100 Best Companies to Work For” annual ranking. And Google recently was identified as the No. 1 choice of undergraduates and MBAs by BusinessWeek. These factors keep employee turnover below 5 percent, as thousands of job seekers apply daily. Google expects to receive more than 2 million résumés this year—nearly 6,000 a day!

Google is achieving these results by using innovative HR approaches. Take its approach to development, unique by any standard.

Rather than emphasizing traditional training, the development effort is decentralized. Development leaders at Google state that “training courses are a tiny piece of what we do.” As an organization, Google can shift the burden of learning to employees because it focuses on hiring individuals who already demonstrate a love for self-directed learning.

It’s essential that Google hire people who learn rapidly and can innovate. The work at Google changes so quickly that few employees end up doing what they were initially hired to do. To provide time for learning, Google utilizes a 70/20/10 time allocation model that leaves as much as 30 percent of an engineer’s time to his or her own discretion. Ten percent of work time is allocated for “innovation, creativity and freedom to think,” while 20 percent is for “personal development that will ultimately benefit the company.”

Google also emphasizes development through on-the-job learning by coordinating continuous movement across projects. Additional employee development occurs through new-hire mentors, frequent departmental “tech talks” and an amazing on-site speaker series that has featured former news anchor Tom Brokaw and Sen. Hillary Rodham Clinton.

Google’s approach to motivation and performance management also is unique. Google’s primary motivation mechanisms are constant change, rapid decision-making and an atmosphere that not only encourages ambitious ideas but expects them.

By limiting bureaucracy and providing approvals for employee ideas in days rather than months, Google maintains employee passion and energy. The company also supports this culture with an array of what’s been called “outrageous benefits,” including free gourmet meals, company movie day, purchase grants for hybrid cars and free Wi-Fi-enabled shuttles that carry employees to work.

Rounding out this unique performance environment is an unusual attitude about performance management. Because every hire has been extensively screened, Google believes that all employees have high potential. So if someone does fail, Google managers take the attitude that they’re to blame, not the employee.

What a groundbreaking concept. And how like Google.

Workforce Management, November 19, 2007, p. 23 — Subscribe Now!

There has been a good deal of discussion recently about the need to transition from paper résumés to video résumés. If you’ve been involved in recruiting for a while, you know the concept of accepting video résumés was also hot during the late 1990s.

    Although leading firms like Hewlett-Packard and Intel experimented with it, the approach died rapidly. Curiously, most of those who now seem to be supporting the switch are not recruiters, but career counselors, academics, and vendors that provide video resume services. Instead of rushing to acceptance, corporations need look at any new technology or idea through the lens of practicality.

    The primary flaw with the concept is that you just can’t get managers or recruiters to view these videos. Their main issue is time. While traditional résumés can be scanned in a minute or so, videos cannot be easily scanned. If each video resume is only five minutes long, for a position with 30 prospects that’s an eternity.

    A second problem is that managers and recruiters are generally resistant to change, and it’s almost impossible to treat video résumés the same way that you would handle traditional ones. For example, using paper résumés, you can highlight certain key items for others to see or even make notes on them for later follow-up investigation, but neither option is possible on video résumés.

    It’s a common practice for those involved in screening to place paper résumés literally side by side on their desk. You can’t instantly compare multiple video résumés in the same easy manner. In short, I have found that managers hate video résumés and simply reject or ignore them.

    A second area of concern involves legal issues. In the U.S., we long ago dropped attaching pictures on résumés for EEOC reasons. But almost by definition, video résumés are pictures of the candidate. As a result, there are numerous possibilities to identify an applicant’s sex, race, disability, age and other characteristics that should not be available to those assessing résumés.

    To make matters worse, some might voluntarily include information that should be excluded from résumés, such as hobbies and religious affiliations. Even the fact that an individual can actually afford to provide a video resume probably tells the firm a lot about the applicant’s economic status.

    Unlike with printed résumés, questionable material cannot be marked over or cut out, and proving that these characteristics were not used in the screening decision would certainly be difficult. In addition, because video résumés are verbal and visual, rejecting individuals on weaknesses in these areas could be problematic if the job itself doesn’t require excellent verbal and visual presentation skills.

    There are certainly technology issues. First, most applicant tracking systems just can’t handle them. Next, some IT systems might actually block them because video files can carry viruses that are difficult to detect. If they are received, not all video résumés will even be viewable because they can be produced in various formats that not all corporations support. Because video résumés would have to be stored as part of record retention requirements, finding a way to economically store these large files would be difficult.

    A final area of concern is assessment. Accurate assessment is difficult because there is no standard format. As a result, the content of video résumés varies widely. To make comparisons even more difficult, only a percentage of applicants will actually utilize the video format, so accurately comparing video résumés with those in the standard resume format will be difficult. If your company gets a significant number of international résumés, the fair assessment issue becomes even more complex. Finally, even though they shouldn’t, bad video production values will likely negatively influence the selection decision. I’ve reviewed many of them, and it’s rare when one actually impresses.

    I’m a big fan of technology, but at this time, the pitfalls of video résumés outweigh the benefits. In this case, 1,000 words are worth more than a (moving) picture.

Workforce Management, October 22, 2007, p. 50 — Subscribe Now!

Measuring and reporting turnover might seem simple, but that is because most organizations report only on aggregate turnover, a generic measure that can be very misleading. While aggregate turnover adequately shows the number of positions vacated, it does not account for some turnover being positive, some negative and some catastrophic.

Failing to recognize that some turnover is desirable and cause for celebration while other turnover is catastrophic and cause for punishment sends the wrong message to managers. Organizations that hold managers accountable for turnover based on a basic measure may be doing more harm than good by encouraging managers to resist terminating employees who no longer provide value to the organization out of fear that they may not realize their full bonus potential.

Traditional measures of turnover count every separation equally, regardless of the performance of the individual, so bottom performers leaving count the same as the loss of a superstar. This is a ridiculous notion, as most seasoned managers fully understand that a bottom performer may actually be a liability to the organization while a superstar can deliver as much as 300 times the productivity of an average employee.

Instead, try measuring and reporting “performance turnover.” This measure starts with the premise that all employees are not equal and the loss of a high performer is much more damaging than the loss of a low performer.

The first step is to determine the weight that should be assigned to losing a top performer. Start with the assumption that losing a high-performing employee is three times as bad as losing an average-performing employee. Losing a bottom performer should carry either no weight or, in extreme cases, a negative weight.

The second step involves doing the actual calculations, where the number of top-performing employees that are exiting would be multiplied by three (to increase their importance), the number of midrange employees exiting would be multiplied by one (to show their neutral importance) and the number of bottom-performing employees exiting would be multiplied by zero (to show that their leaving shouldn’t count against a manager’s turnover statistics). Below are three examples to illustrate the difference between the traditional calculation and the performance-turnover calculation.

Traditional turnover calculations, illustrated in Example 1, don’t put any weight on employee performance ratings, so turnover scores would be exactly the same as the number of employees who left.

Example 2 shows “bad” turnover, assuming three top performers left. Example 3 shows “good” turnover, assuming three bottom performers left. In all cases, three employees left, but the performance-turnover numbers tell a different story. High-performer turnover was a 9, indicating a big problem. Low-performer turnover was 0, indicating a small problem. The traditional calculation was 3, giving no indication of the magnitude of the problem. The six-point spread in the manager’s scores clearly demonstrates the difference between performance turnover and the traditional turnover calculation. The performance turnover scores would be calculated monthly and then distributed in a report to all managers that listed each manager’s performance turnover from best to worst.

Reporting performance turnover sends a much clearer message to line managers and more adequately assesses the impact of turnover to the organization. To expand on this concept, organizations that categorize positions as high-impact, mission-critical and supporting could add an additional weighting factor for the position being vacated. Whatever method you pursue, I highly recommend converting turnover into an estimated dollar impact, a measure of the damage realized by the organization that includes lost productivity and administrative costs as a result of turnover.

Workforce Management, May 21, 2007, p. 42 — Subscribe Now!

Few things are more important to senior leadership than anticipating and being ready for changes in the marketplace. CEOs call it “looking around corners” and they expect their organizations to be able to do it, because market leadership cannot be achieved or maintained simply by reacting to changing circumstances. Attaining and retaining market leadership requires that companies anticipate any upcoming challenges or opportunities and take immediate pre-emptive action to either reduce the potential impact or leverage the opportunity. Around the globe, few HR departments manage this way. But if they did, they could prevent or mitigate many of the people management problems that now overwhelm them.

   Reading leading indicators: The best way to accurately predict upcoming changes is to look at leading indicators. All around us, leading indictors are in use. Water management organizations routinely monitor snowpack to predict the availability of runoff water and water table movement, while firefighters predict future fires by looking at the amount of undergrowth and the humidity it contains. In business, lots of organizations manage according to leading indicators, including the Federal Reserve Bank, which offers its Beige Book eight times a year with information on leading economic indicators that predict the direction of the economy. Despite their prevalence in many other organizations that deliver essential services, leading indicators are seldom used by HR to drive management action.

    The use of leading indicators supports a model known as proactive HR. We all know that preventing fires is a superior approach in mitigating damage compared with fighting them once they erupt, but more often than not, HR departments get so caught up in fighting the daily fires of people management that they have no time left for forecasting.

    For organizations trapped in an endless cycle of damage containment, the notion of proactive HR might seem a stretch, but a few firms have already proved the transition is possible. The best example is Valero Energy, the winner of an Optimas Award from Workforce Management in 2006. At Valero, industry visionary Dan Hilbert has championed an effort to both identify the leading people indicators of critical incidents at the refining operations level and quantify the potential dollar impact on the company if corrective action is not taken. Imagine being able to predict a critical failure in your business based on human capital analytics such as vacancy rates, workforce demographics and overtime utilization. Adopting proactive HR is more critical than ever before as the rate of change in business makes even the slightest increase in organizational downtime more destructive.

    Finding your leading indicators: To get started, identify the key people management situations in which you could mitigate damage or prevent it altogether—if you just had an early warning signal. Typical problem areas (or opportunities, if you like) include mission-critical role vacancies, increased turnover, increased absenteeism, increased job-site injuries, decreased worker productivity, increased time to hire and increased contingent workforce utilization.

    In the second step, you use three to 10 years’ worth of data to identify when there was a significant spike or downturn in each of the identified people management measures prior to a critical incident. If a data trend consistently occurs before each similar incident, you have identified a leading indicator for the incident. An example of a precursor for rampant turnover might be a spike in internal transfer requests, or growing absenteeism. Some critical incidents can be correlated to internal measures, while others may be driven largely by external forces. Starbucks, for example, found that there was a direct relationship between the unemployment rate and the turnover in certain jobs, but not in all jobs. The final step is to work with the CFO to quantify the dollar impact of these problems so that senior managers understand the dollar consequences of not acting in time.

    At first, the idea of investing all the time and labor required to conduct this type of analysis may seem too intensive, but I assure you that accurately predicting just one critical incident in your organization will do more than generate a positive ROI. The impact of a manufacturing plant being taken offline for just a few days because of the defection or retirement of key workers can easily be millions of dollars—billions in some industries.

Workforce Management, Apri 23, 2007, p. 42 — Subscribe Now!

The days of being satisfied with achieving “business partner” status are over. The rapid flattening of the business world presents nearly every business function with an opportunity to dramatically affect results and renders overhead functions that are merely efficient invisible.

    To keep that seat at the table and remain a viable part of the executive committee, HR leaders must shift their approach from maintaining the status quo with only incremental gains in efficiency to a new model that I call “business impact HR.” Failure to abandon the satisfaction that comes from past successes and embrace new realities will result in the decline of the HR function’s scope or a total outsourcing of the function.

    Let’s start with the fundamentals. The primary measure of any business function, according to most senior-level executives, should be demonstrated impact on the bottom line (preferably a positive impact). Obviously, functions that have the most visible impact on profit receive the largest amount of recognition and respect. Finance, for example, directly increases profits by making effective investments. Marketing increases profits by increasing the volume of prospects that can be processed by sales. In contrast, functions that do not have a clearly visible impact on profits (accounting, IT, HR, etc.) are doomed to battle for funding or may face elimination. It’s either “show me the money” or you will be “shown the door.”

    Business impact HR shifts human resources away from its current process-efficiency focus and instead adopts a goal of delivering a demonstrated business impact. The concept is borrowed directly from the most powerful business functions: marketing, finance and product development. The mission statement for this approach is short and to the point:

    “The mission of business impact HR is to understand the business and identify the specific areas where great people and talent management can directly affect business results. HR then focuses on those activities and develops credible metrics so that the CEO, CFO and other functional leaders will irrefutably see the direct connection between investing in these areas of HR and increased revenue, margins and profitability.”

    Proving an impact on profit is, of course, not easy. But all strategic things are almost by definition difficult to do. Fear not; others have already found a way to make the shift. For example, up until the 1990s, purchasing, inventory control and warehousing were considered overhead functions and, as a result, were treated with little respect. But when a few visionaries at companies like Wal-Mart and Dell decided that by adding a little technology and a lot of metrics they could transform these “backwater” functions into the profit-generating supply-chain powerhouse that we know today, they changed the game.

    If you’re ready to make that kind of shift, the first step is to identify high-impact activities. Start by talking to managers and taking a look at the research done by Watson Wyatt. The consultancy’s Human Capital Index identifies high-impact HR activities by correlating the performance of companies to the existence of world-class, average and pitiful HR practices. HR leaders must shift their talent and budget to focus on these high-impact activities. Also assume that line managers will be skeptical, so educate them with examples and correlations that show that high-performing business units also rate extremely high in their people management practices.

    In the financial area, HR must work with the CFO’s office to learn how to convert HR results into dollar impacts. You would convert a typical HR statement, such as “Our turnover rate is 2 percent,” into something more meaningful, such as “Turnover cost us $17 million last year and our total firm profit was only $12 million.”

    HR also must redefine its primary customer. It should be the firm’s external customers, because if you focus on the paying customer, you increase your chances of affecting profits. Other critical actions include changing to data-based decision-making, focusing on preventing people problems, and shifting the language of HR professionals toward the language of business (which includes productivity, ROI and profit).

    The last step is a longer-term action requiring HR to lead a companywide effort to shift the organization to a performance culture in which all rewards, recognition and people-related programs are focused on business performance.

    A final thought: In tomorrow’s business world, every function will be fast, agile, low-cost and will provide a substantial competitive advantage. It will also be expected to be innovative and, above all, able to demonstrate its irrefutable impact on the bottom line. Unfortunately for many in HR, there is no “option B” available.

Workforce Management, February 26, 2007, p. 50 — Subscribe Now!

Have you noticed that in announcements about people being promoted to the CEO level, their previous job title is almost always CFO, CIO or general manager of a business unit? Rarely, if ever, were they VPs of HR.

    I have monitored the topic for years and can attest that it’s incredibly rare to find a Fortune 500 VP of HR who has been promoted to CEO within his or her organization. It’s a striking indication that HR still has a long way to go. The dearth of direct promotions is especially troubling in that most outbound Fortune 500 CEOs have at one time or another declared publicly that “people are our most important asset.”

    Having had the opportunity to advise literally hundreds of VPs of HR around the world over the course of my career, I have concluded that there are a number of reasons why HR VPs are rarely tapped to lead organizations. Here’s my top 10 (unlike David Letterman’s list, I haven’t ranked mine):

• Failing to state CEO as a career goal. Many VPs of HR publicly declare that serving in that job is the pinnacle of their career dreams. They see themselves as a behind-the-scenes player. And they are therefore often treated as such.

  
  

• Failing to build a well-recognized internal HR brand. Image is as important within an organization as it is outside one. Unfortunately, most VPs fail to develop an internal brand as the solver of strategic business problems.

  
  

• Failing to prove impact. HR people are notorious for calling themselves business partners, but routinely fail to act like business professionals by not using the language of business: dollars and cents. By not assessing the business impact of HR actions in dollars, HR professionals demonstrate that they don’t understand the big picture.

  
  

• Failing to anticipate and forecast. CEOs seldom dwell on history, focusing instead on the future. In stark contrast, HR professionals rarely, if ever, forecast. They seldom issue warnings or announce plans to quell upcoming people/business problems.

  
  

• Failing to build a competitive advantage. CEOs are often focused on being No. 1 in everything they do. HR, by contrast, tends to manage to the average, focusing on internal comparisons and rarely on external competitors. Only one in a thousand HR functions routinely complete a function-by-function competitive analysis in order to assess and build their competitive advantage.

  
  

• Dwelling on equal treatment instead of differentiating and focusing on performance. Most VPs of HR seem to have an obsession with equity. Unfortunately, increasing workforce productivity requires that HR continually shift its best people and resources from low-impact/low-return areas to high-impact/high-return programs and focus on top performers.

  
  

• Failing to take the lead with technology. In a world of rapid change, nothing sends a clearer message that you are on the leading edge than early adoption of effective technology. Faster, more accurate decisions can only occur when VPs move to make HR paperless and to provide every manager with desktop access to decision tools and people information.

  
  

• Failing to think and act globally. The world of business is flattening, but most VPs of HR continue to be “location-centric.” Frequently, HR fails to develop a global strategy where “one size fits one.” They also fail to develop programs to share best practices, which can enable rapid learning and solution sharing around the world.

  
  

• Failing to demonstrate responsiveness and effectiveness within HR. Although it is essential in order to build credibility, HR often fails to deliver excellent, consistent service in the eyes of management customers, which is a prerequisite before anyone will truly pay attention to HR.

  
  

• Failing to build a performance culture. CEOs are expected to be winners year in and year out. VPs of HR should be no different. They are expected to build a performance culture that develops a sense of urgency about performance within every manager and employee. When the press, colleagues, competitors and top management begin describing your culture as “performance-focused,” then the VP of HR has succeeded in his or her mission.

  
  

    Whether you are a midlevel HR professional or a current VP of HR, the time is now for you to begin acting like a future CEO. The errors you need to avoid are clear. And even if you don’t make it all the way to CEO, you might end up being the most effective and influential HR professional in your industry.

It’s fairly common for HR professionals to call themselves “business partners.” I hate the term. It hinders HR’s success.

    “Business partner” is a term that was invented by academics for HR people. The term “partner” confuses people in corporations because, unless your organization is a professional services firm, the term “partner” is just not used. Even those within professional services firms think of a “partner” as an “owner,” which most HR people certainly are not.

    I would avoid using the term “business partner” for a variety of other reasons, including:

• Top management and CEOs often find it strange, because other staff functions don’t use the term “partner.” The CIO is not an “information partner,” nor is the CFO a “finance partner.”

  
  

• It doesn’t describe what we actually do. Most titles are descriptive of a service. Business partner makes it sound like we are the partner in charge of business operations. Actually, that’s what the COO does.

  
  

• Few HR people can define “business partner” or even agree on what it means. To be perfectly frank, when I visit corporations, I find more often than not that the people who use the term are “wannabes.”

  
  

• Using the term demonstrates that you truly don’t understand what “partner” means. Partners have skin in the game. They are accountable not for working hard, but for producing results. If by using the term “business partner” you are actually seeking to be an equal partner with your colleagues, then you need to focus more on producing results that impress them, rather than worrying about your title or even getting that much-discussed seat at the table.

  
  

    The overuse of this invented term, I fear, can be attributed to wishful thinking. Calling yourself a partner doesn’t make it true. I could call myself the president of planet Mars, the customer service champion or HR business partner, but eventually I would learn that it is my actions and my results that determine the level of respect I receive, not some made-up title.

Should we change our title … again?
    Our function is now called “human resource management” because we didn’t like the term “personnel.” The HRM title implies that we manage “resources,” i.e., employees. To shift it again to become the “business partner function” would lead to further confusion. “Business partner” leaves out the crucial element of what we do: We manage human or employee resources in order to make them more productive.

    If I were going to make up a term for proactive HR people who have a significant business impact, I would use the term “leader” or “internal productivity consultant.” At least those terms imply that we are not trying to just catch up, but instead say that we want to lead the corporation in matters related to people management. Real leadership is obvious. If we are really experts in preventing and solving people management problems, managers will seek us out and find us, no matter what our title, rank or location.

Achievement says more than any title
    My recommendation to HR professionals is to stop using the “business partner” designation. And, for that matter, stop relying on external HR certifications to build your credibility. Demonstrate your expertise through actions and approaches that make it apparent to everyone that you are indeed an expert in forecasting, preventing and solving people management problems.

To accomplish this, use the language of business: money.
    If HR wants to gain respect, it needs to stop inventing terms like “engagement” and “empowerment.” Instead, it should focus on converting the results of HR actions in the areas of hiring, deployment, motivation, innovation and training into hard business dollars. Then everyone will understand and directly compare the impact of HR efforts with those of the marketing, finance, sales and supply-chain organizations. HR must begin to act like an organization that’s based on Six-Sigma, quarterly results and metrics. It needs to employ a decision-making approach that is used in other, more credible business functions like finance, engineering, supply chain and marketing.

    You need to be proactive. True leaders don’t wait for things to happen; they forecast upcoming problems and act to prevent or mitigate the damage. They also seek out opportunities to improve workforce productivity and present them to managers in such a way that the managers want to invest their own money in these HR programs.

    You need to build a competitive advantage. Provide the business with a competitive advantage in workforce productivity by continually comparing what you do in HR with your competitor’s people management practices. Nearly everything in business is a competition, and HR should not be exempt from this rule.

Final thoughts
    HR people have spent a lot of effort attempting to become business partners. I urge you to aim higher and continue up the ladder to the next rung, which is to become producers of measurable business results. What would you call HR professionals who acted this way? Start with the words “experts,” “respected” and “problem solvers.” And yes, you would call them leaders.

Having the competitive advantage is now essential to the survival of any business function, especially human resources. In the past, it was possible for HR to focus 100 percent on internal issues, never demonstrating superior performance when compared with talent competitors.

    This internal perspective is no longer acceptable. The business world has changed dramatically, and global competition for talent has been ratcheted up several levels. Now more than ever before, the HR function and its activities affect the success or failure of the business.

    This increase in competitiveness has eliminated the tolerance senior leaders once had for any product, service or function that didn’t directly increase the firm’s competitive position in the marketplace. Building and proving a competitive advantage is now a requirement for every function, including HR. Human resource leaders must comply or face elimination through outsourcing or loss of their scope and authority to other functional leaders, such as those in operations and information technology.

    Unfortunately, HR has a long history of operating as if it were not in a competitive environment. All too often, HR people favor cooperation and consensus to direct competition. Contributing to this lack of competitiveness have been the facts that most people in HR have no P&L experience and that there are no universally accepted HR benchmark metrics to facilitate external comparison. HR professionals are about as keen to compete with other businesses as are the characters on Sesame Street.

    As proof, I offer the minuscule percentage of HR departments that conduct periodic competitive analyses that assess and report to senior management the performance and standing of HR on a deliverable-by-deliverable basis compared with major product and talent competitors.

    If you agree that HR must demonstrate a competitive advantage, here’s what you can do:

4First, conduct a function-by-function competitive analysis between your firm’s HR program offerings and those of your closest competitors, using benchmark research and interviews with individuals who have worked at those firms.

4Next, require that any presentation of HR performance metrics be accompanied by approximated data from select product and talent competitors. Use these comparisons to institute a “bad manager” identification program. Weak managers are the prime cause of weak recruiting, low employee productivity and high turnover.

4Also, leverage the comparisons to determine which of the HR functions need to be superior and which ones merely need to be “just as good” as prime competitors. The best approach is to go to top-performing managers in business units with high margins and high revenue growth and have them tell you which HR functions need to be superior to help them succeed. Generally, managers expect HR to excel in:

4Recruiting: Managers expect HR to build a strong recruiting function that manages the employment brand so that your organization leads a top performer’s “I want to work there” list. Managers expect HR to accurately source and procure rising talent. To find such talent, you need to improve the employer referral program, making every employee a recruiter. Work with hiring managers to improve their selling skills and help them tailor their jobs to make them more challenging and exciting.

4Retention: HR must help managers identify top performers who are at risk of leaving and develop a retention plan to motivate, develop and challenge each of them.

4Give away/take away: HR must become aggressive in recruiting and retention so that you give away less of your top talent to key competitors than you take away from them.

4Pay for performance: HR should increase the percentage of every worker’s pay that is “at risk,” or based on their output. Pay for performance, more than increasing base pay, increases performance and attracts top talent.

4Development: Offer on-the-job development opportunities, so that your firm trains employees quickly with practical skills as opposed to theoretical skills. No one will leave citing lack of challenge and growth. Your ability to promote and move people laterally will increase.

    Other actions to consider include developing an alert system to warn managers of upcoming people management problems, as well as a SWAT-style rapid-response team that can head them off. Following such an intervention by human resources, conduct an HR “postmortem” to identify a situation’s causes. Then, circulate the best practices you’ve identified throughout the firm.

Workforce Management, November 20, 2006, p. 50 — Subscribe Now!

The movie Snakes on a Plane depicts the terror of being trapped in a confined space with life-threatening pythons, rattlesnakes and the like. While some might see this movie as having no connection to human resources, I see it as the perfect metaphor for the typical HR department.

    Snakes are much like the scary types in HR who contribute to making the function less effective. They quietly undermine efforts by others to transform HR into a powerhouse function by choking off innovation and injecting paralyzing venom in the form of socialism and compliance-speak. Some might think that putting these people in the same category as dangerous reptiles is harsh, but in my 35-plus years in HR, I’ve found their actions scarier and more despicable than any real snake I’ve come across.

    Who are the snakes in HR? Every organization has people who resist change and thwart efforts by real HR professionals to dramatically improve human resources, so in reading this list, think of both current and past snakes who have hindered progressive work you were trying to do. I hope we are talking about a small percentage of HR professionals here, but it is important to remember that the damage they do well exceeds their numbers.

    HR generalists: Generalists are the ultimate silo- and boundary-builders in HR. They set up empires and resist change by saying, “That’s great for everyone else, but it won’t work in my business unit.” They have made it to the top by building relationships and playing politics, instead of producing measurable business results. International HR managers, particularly those in Japan and Europe, tend to be the worst of the lot. Most lack the cojones to manage talent aggressively, blocking staffing professionals who try to innovate. You can spot these snakes easily because they are always “in a meeting.” They love meetings, and think that going to a meeting is more beneficial than reviewing metrics, doing a postmortem or forecasting future people problems.

    Lazy recruiters: Great recruiters are aggressive and are constantly trying new sources and approaches to reach the best talent. However, there are snakes in recruiting. The most venomous are administrative recruiters, who are not really recruiters at all but rather requisition managers more concerned with seeking approvals and ensuring that the forms get filled out. Other snakes in recruiting include those who regularly scream “That’s illegal!” when in fact their exclamation has no basis in law, and “search firm managers” who do more to stifle the work of retained search firms than help them. The final group includes those recruiters who use the same sources no matter what job they are trying to fill, as if janitors and lawyers come from the same bucket.

    Compensation and benefit cost cutters: These people hinder great recruiting and retention by giving “equal pay” wherever possible in order to avoid conflict. They lose candidates by being slow and generating offers with lowball starting salaries in the hopes that candidates might accept them. Benefit specialists make the list when they dedicate 100 percent of their time to cutting costs while ignoring the impacts of benefit changes on worker performance, recruiting and retention.

    Pseudo-technologists: Among my favorites, these snakes will buy almost any argument that a vendor gives. They love to form task forces that endlessly study technology to the point where the system they eventually buy is obsolete. The task force approach allows them to avoid individual accountability when the system they buy handcuffs the productivity of everyone in HR.

    Employee relations specialists: No one avoids conflict better than these individuals. They will postpone firing someone for years. These snakes never have the nerve to confront—no less fire—bad managers, who cause 85 percent of all recruiting, retention and productivity problems.

    You could probably keep adding to this list, but I’m sure you get the point. When you have HR professionals who say they know the business but can’t read a P&L statement, refuse to remain current on business issues by reading Workforce Management,BusinessWeek, Fortune, Business 2.0 and leading business books like The World Is Flat and Jack Welch’s Winning, and who are unwilling to abandon intuition and emotion as a basis for decision-making, you have a bunch of snakes with individual objectives slithering sideways in an effort to derail or slow change.

    If you agree with me, help your organization by confronting them the next time one crosses your path. Incidentally, don’t bother looking under rocks. HR snakes are best found by going to meetings and looking for the people who say, “That’ll never work.”

Workforce Management, August 28, 2006, p. 50 — Subscribe Now!