Here it comes again. Two years ago, Fast Company magazine rocked the HR world with it’s cover story on “Why We Hate HR.” It became required reading for HR professionals. Courses were developed to deal with it (but not very effectively). Well, the new game is “Why the CFO Does Not Trust HR.” It won’t be hard to learn the rules this time, the argument is not much different than the one Fast Company made.
The instigator this time is Rutgers University professor Richard Beatty, author of the new book “The Differentiated Workforce.” In a recent presentation to a CFO group, he stated that “typical human resources activities have no relevance to an organization’s success.” You can read more about the presentation here, but some of his arguments included:
- Job satisfaction is irrelevant to financial returns
- Time, money and training is wasted on poor performers
- Being an employer of choice is “silly”
- And finally, “the language of organizations is numbers and HR isn’t very good at data analytics.” Beatty went on to say that most HR pros “don’t think like business people.”
Frankly I found the arguments provocative, but most were relatively weak. He picked on employee satisfaction rather than employee engagement for example. (Indeed, reported job satisfaction is not correlated to performance, but employee engagement has proven value). Naturally, the blogosphere lit up with commentary. Trusty, reliable ERE posted something quickly, that community does not sit idly by when provoked. The guy who peers into our future, John Sumser, stepped back and put it all in perspective with a posting called “Here Comes the Train” – suggesting that this argument will hit HR with all the force of the Fast Company article two years ago. Admittedly while most of the conversation is about large companies, the very same issues apply to small and midsize firms.
So after reviewing the back and forth, I recommend you read the post from Jim Holincheck at Gartner. His post, called “CFO’s Should Trust HR, but Do Have Reasons to Be Wary” dissects the less compelling arguments Professor Beatty made, but notably, he left standing the most damning argument. Holincheck notes that HR pros are generally not strong at business acumen and speaking the language of numbers. He concludes his analysis with this:
The CEO and CFO “. . . should partner with the HR leadership to make sure that it is making intelligent decisions about workforce composition and investments. However, too few HR leaders are stepping up to the plate to build the necessary competence in the HR organization. This has to change. Investments in talent management applications and social software alone will not get us there (not even close). Workforce planning and analytics are the “secret sauce” to get the value from these investments.”
So just as a refresher, in the Fast Company article 2 years ago, the complaint was that HR pros:
- Lack business acumen
- Pursue efficiency instead of value
- Pursue standardization and uniformity to reduce exposure to lawsuits, while employee needs are more varied
- Do not understand the CEO perspective (see #1)
So, if you work in HR, and you ever want to be trusted (or even to be listened to) it’s time for an intense focus on developing your business acumen. It’s time to understand and speak the language of the CEO and CFO and make hard business decisions based on “the language of numbers.”
Here is how you will know you’ve succeeded. Don’t ever mention HR programs without first linking them to a strategically desirable business result – then be willing to be held accountable to the business result you promised – just like sales, just like accounting, just like every other department. Except your job is harder, because your success involves the people in all those departments . . .because HR underpins every single part of the organization.
Daunting? Yes. Achievable? Definitely. Rewarding? Absolutely.