Moving HR From Tactical to Strategic

03/13/2009

movingYou can tell who is swimming naked when the tide goes out.   CEOs who have chosen to make their HR department purely tactical are swimming naked and getting crushed right now – they have only blunt instruments at their disposal – hiring freeze, pay freeze, layoff.  (Freezing is not a smart way to survive a threat).    A purely tactical HR department does a competent and efficient job with compliance and legal issues, they serve employees and companies with increasingly efficient HR services…and by and large, are uninvolved with major business decisions. 

 John Sullivan ranted that he “can’t think of another time where human resources as a profession appeared to be floundering to the point where it’s embarrassing itself.”  Where was the workforce plan?   He sagely makes the point that business is cyclical, why not plan for that?  But when I think of the small and midsize employer market, I have a hard time placing the blame squarely on HR.   There is also a lack of vision on the part of the CEO.

CEOs who have demanded (and invested in)  strategic HR support are getting far better results.  They get worthy advice on major decisions.  They can use a scalpel to cut low impact items and wisely reallocate scarce resources to the things that matter – the things that have leverage – gaining a multiplier effect.  They avoid the idiocy of across the board freezes and instead focus on smart ACTIONS that drive business results.  They are avoiding  the predictable problems that come from guiding people through change, so productivity soars, and results come faster. 

For a brilliant distinction between tactical vs strategic HR, read John Sumser’s post today “Five Things HR Can Do.”  It’s brief, practical, clear and concrete.   I won’t summarize or explain it, you deserve to read the original.  (If you are an HR pro, please follow his instructions, he’s exactly right).

There has been quite a dustup over the latest round of HR bashing  – “Why the CFO Can’t Trust HR”   - this is counterproductive.   It’s not about who is competent and who is not, or who should trust whom.  It’s this:   

If you run an organization, and you must make a hard decision that involves people, do you have a strategic advisor for that?  If you don’t, you are a fool.  Go get one.

In the small and midsize employer market, I think many CEOs simply don’t realize that a significant part of their problems are really HR problems and a competent HR strategist could help them every bit as much as a competent CFO can help.


How HR Can Build Trust with the CFO

03/11/2009

trustHere 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:

  1. Job satisfaction is irrelevant to financial returns
  2. Time, money and training is wasted on poor performers
  3. Being an employer of choice is “silly”
  4. 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:

  1. Lack business acumen
  2. Pursue efficiency instead of value
  3. Pursue standardization and uniformity to reduce exposure to lawsuits, while employee needs are more varied
  4. 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.


How Companies Turn Crisis into Opportunity

02/24/2009

tightropeManagement guru, Jim Collins (author of legendary business classics  “Built to Last” and “Good to Great”) has extensively studied why companies succeed.   His latest research is on how companies manage in turbulent times.  In a recent interview with Fortune magazine he shared some of what he has learned.  I suggest you read the entire article -  it’s well worth it -  but here are a few excerpts:

“If you go back in history, a few companies used difficult times to bolster their legions of talent…if you do not find a way to get those great people, you’re not thinking long term enough.”

“The right people don’t need to be managed.  The moment you feel the need to tightly manage someone, you’ve made a hiring mistake.”

“People who take credit in good times and blame external forces in bad times do not deserve to lead.  End of story.”

You have to ask the question, what can we do not just to survive but to turn this into a defining point in history?”

No wonder everyone buys his books.

In a previous post, I defined a top performer as someone who is capable of, and interested in, driving the business results you need – someone who will take responsibility for getting results within the norms of your company culture.  Naturally, Jim said it better.  And how do you find these people?  Read  How to Hire People who Thrive in Downturns.

Has your organization has lost its’ focus on people?  You are not alone, but you may be in trouble.  A recent survey of the leaders of 500 global organizations asked participants to rank the their top challenges.  “Insufficient talent to quickly adapt to change” was listed by only 5% of respondents, far below “Financial pressure to cut costs,” “Rapid Market Decline” and 4 other choices.    Although unsurprising, the survey is still profoundly disturbing.  Just exactly who is supposed to be handling the adaptation to new market conditions – robots?  

The survey does not bode well for those 95% of leaders who aren’t paying close attention to their staffing.   In good times mediocre people can look like they are getting results, but as they say, when the tide goes out, you can see who is swimming naked.  In times like these, it may take very different skills to drive results.   Perhaps in the past you could follow a well-worn path to success, but now you might need to trailblaze a new path.  Different skills for different times.  The hard truth for most CEOs is this:  the people who got you to this point, might not be the ones who can drive results right now.


How to Hire People Who Thrive in Downturns

02/22/2009

thriveHave you noticed that some of your employees are less productive, just when you need them most?  Some people are frozen in place from fear, while others are innovating, trying new things and challenging the status quo.  Harvard Business Review posted an article on the need for flexible, positive leadership, quoting futurist Alvin Toffler.   

 “The illiterate of the twenty-first century will not be those who cannot read and write, but those who cannot learn, unlearn and relearn.” 

The path forward is not clear.  We need innovation to survive and thrive.  And innovation demands that we all develop our patience and persistence, while our leaders must demonstrate optimism and enthusiasm. This is the time to step up and take risks, making plenty of mistakes along the way. 

If your key people do not have the skills to thrive in this market, it might be trade-in time. In an earlier post, I mentioned how to hire for resilience - and patience, persistence, optimism and enthusiasm are essential to resilience.   I’ve heard it said that you can’t trust someone who has not failed at something, learned and bounced back.

Look around you, do you see resilience and indomitable spirit or just people trying to look good by avoiding mistakes and placing blame on external factors?


Where the Jobs Are . . .and Other Fallacies

02/17/2009

economic-forecastI’m looking forward to an onslaught of news articles about how the stimulus package will create jobs in different industries.  And I will dutifully devour that material and breathlessly report back to you on how it will affect the DC region.  And I will be wrong in ways I cannot even imagine.  As Yogi Berra once said, “It’s tough to make predictions, especially about the future.”   (He’s a national treasure, that guy).

So Yogi’s comment is my first disclaimer as I share with you a snazzy state by state interactive map of economic forecasts, but before you have fun with the interactive forecasts, let’s first review the forecasts made LAST year by BusinessWeek’s impressive panel of notable economists.  In December of 2007:

“The economy won’t sink into a recession next year. That’s the overwhelming view among the 54 economists in BusinessWeek’s annual economic outlook survey.”

OK, so 14 months ago, literally 2 of 54 economists actually predicted this recession we are in.   And these are the guys who are telling us how long it will last?

If you still believe in economic forecasts, just slog through Black Swan, and your misplaced trust in economic forecasts will be forever put to rest.  

This is not to say I am pessimistic, far from it.  I just have no confidence that anyone can accurately forecast the future. So we all need to be ready for an unpredictable future, which very few firms are doing.  Being ready does not just mean cutting costs, it means challenging old ways of thinking and reallocating resources to support your future growth.  It means asking new questions about the business.  “Where are our strongest growth prospects?  Do we have the right team in place to capitalize on those opportunities?  What costs can we eliminate if we try a different approach?  Who is effectively driving results for me right now, and who is just lost in the turbulence?”  (Are you a CEO?  Click here.  Are you a recruiter? Click here

Read the rest of this entry »


Recessions Spur Innovation

02/11/2009

innovation1Adversity often brings out the best in people.  Our current recession holds the potential for sparking both innovation and collective action for social change.  Many people do not realize that the Great Depression sparked enormous management innovation (see  “Recession: The Mother of Invention?”). 

Many successful organizations started during an economic slump. Why?   Market upheavals provide rich opportunities for innovation.   Wary buyers begin looking for more cost-effective ways to meet their needs so new business models gain traction in the market.  (For that very reason, I’ve argued that search firms must innovate their way out of this recession).

Some people say a lack of venture capital money is really not a constraint to innovation.  Tim O’Reilly in an article in Forbes, sees it this way “many of the great waves of creative destruction . . . didn’t even start with the profit motive.  Rather they started with interesting problems and people who wanted to solve them . . . because exploring new ideas was fun.”   He suggests that venture capital follows innovation, not the other way around.  “The people inventing the future are doing so just because it’s fun.”

In this economy, fear of change might be the biggest danger facing your business.  So, here’s the question: are you innovating?   Are your employees showing resilience and really swinging for the fences, or just playing it safe?


Recruiting Myths: Good People Don’t Look for Jobs in a Recession

02/02/2009

good peopleOne of the many reasons I like to blog is to gleefully disagree with conventional wisdom.  I don’t know if “good people don’t look for jobs during a recession” qualifies yet as conventional wisdom, but it does meet my four criteria:  It’s widely repeated, simplistic, unexamined, and outdated.  Therefore you can gain a serious competitive advantage by challenging it.    

In every recession, a few search professionals advance the argument that “top talent does not look for jobs during economic downturns” (so presumably employers need to hire those same search firms to find the “A players”).   The concept is that in a bad market good people with good jobs become risk averse and hunker down – you practically have to dynamite them out of their chairs - and only a silver tongued headhunter with uncommon skill can recruit them away.   The theory is that good people will rarely answer ads, and mediocre recruiters (or what Josh Letourneau hilariously calls  “Big-Box Publicly Traded Candidate-Grinders”) will never be effective.  As with most conventional wisdom, this is all partly true (naturally it’s the part that’s not true that I think about).

Quite a few blog posts have been written about wooing passive candiates in a recession (Look here and here). I’ve heard variations of this argument from people I really respect in the industry (all vaguely implying that “active” candidates are somehow inferior to people who are not looking).     Finally, the cherry on top of the conventional wisdom sundae -  is the advice that you have to a pay a huge salary premium to get someone to “take a risk” on a new job – see “How Much Cash Does it Take to Steal a Passive Candidate?.   Perhaps I’ll revisit the whole “passive candiates are better than active candidates” myth in a future post, but probably not.  It definitely meets my 4 criteria for conventional wisdom – but Ronald Katz already did a brilliant job of eviscerating it in his post “What’s So Great About Passive Candidates.”  (For balance, be sure to read the comments -  the people who disagreed with him also made some decent points).

Ok, so why am I convinced that great people look for jobs in a recession?  Well mainly, because we’re talking to them every day.  Lots of them.  They are migrating to DC in droves.  Read the rest of this entry »


The Misplaced Loyalty of the CEO

02/01/2009

ceo-loyaltyThere is a consistent theme emerging from my conversations with CEO’s lately.  Loyalty.  While many people enjoy bashing Fortune 500 CEO’s for showing no loyalty to employees – and for dumbsizing, the bigger issue for smaller organizations is too much loyalty.   I see too much loyalty to long-time employees who are not performing, and too little loyalty to everyone else who is.   Truth be told, I’m not really a fan of Jack Welch, but he did have an interesting column about misplaced loyalty in BusinessWeek.

Most business leaders really struggle with their loyalty to long-time employees who are no longer effective, and while I think loyalty in general is both admirable and good business . . . blind loyalty is not.  It is dangerous.   The context matters. 

Sometimes the person’s performance just waned over time – they “got comfortable”,  sometimes the person was simply over-promoted (Think: Peter Principle), sometimes the person took on a job that appeared similar but required different skills (Think: salesman promoted to sales manager), perhaps the most common is when a growing company simply “outgrew” one of the original employees.  

Increasingly in this recession, the problem person was a good steward of a function during normal times, but simply cannot adapt to the chaos of the current environment.   They resist change, ignore market signals and get in the way of new initiatives – doing what is comfortable and familiar, instead of what is right.

My conversations with CEO’s generally go something like this: Read the rest of this entry »


Is SHRM Helping You?

01/30/2009

boring

If you know me, you know I try to read everything I can get my hands on, and bring you the most interesting, the most insightful and the most relevant.   My clients are entrepreneurs, hiring executives and HR professionals who mostly work for small to midsize companies here in the DC metropolitan area. 

I write a monthly newsletter as well as this blog, so I’m always on the prowl for interesting material you might find useful, challenging or just fun - something worth talking about. 

Hey HR pros, you know what I almost never read?  Stuff from our professional association – The Society for Human Resource Management (SHRM).  It just never seems relevant to the issues I work on.  Has that been your experience?

In a BFO (Blinding Flash of the Obvious) Jessica Lee wrote “You Can Live Without SHRM, Trust Me… ” and then proceeded to name where she gets her information – naming many of the sources of information I value most…none of them SHRM.  (Read the post and see for yourself)

I still like going to the meetings, hearing the speakers and networking, but for professional development, I need better reading material.  So how do you stay current?  What are you reading lately?  (Besides this blog)


Search Firms Must Innovate, But Will They?

01/27/2009

search-execThis is my third recession in the staffing business, and this one is different.  The search business has arrived at what Andy Grove would call a  “strategic inflection point” – where the fundamentals of its’ business are about to change.   Costs simply must come down, way down.  I saw alot of search firm repositioning in the last recession – mostly tinkering with their pricing models, but not fundamentally changing  who they hire and how they deliver services. 

The largest search firms got crushed in the last recession – some laying off 40% of their staff.  Of course they got into trouble because they gorged on the dot com bubble.  But they learned their lesson, right?  Wrong.   Good times returned and then they used the same inefficient business model to gorge on the financial services bubble and surprise!  now they are now laying off again.  Note to my investment advisor:  The next time any major national search firm earns a third of their revenue from any business sector…that’s the very definition of a bubble – a whole business sector not paying enough attention to costs.

Now the blogosphere is lit up with comments about “disruptive innovation” in the recruiting world.  Most of the comments are about technology and social media, but the same market forces apply to search firms.  One of the most thoughtful is David Manaster’s ERE post – (R)evolution.  In another must-read article, John Sumser bluntly counsels that HR “should be hammering its vendors for cost reductions.  Get the same for less money.”  John refers to a brilliant article in The Economist about the flip-side of Moore’s Law:

“Suddenly there is more interest in products that…provide a particular level of performance at an ever-lower price.”

Here is the problem.  Read the rest of this entry »


Cold Call Recruiting = SPAM

01/20/2009

Spam in mailboxThis post will not make me popular in some circles.  Oh well, here it is.  Your recruiting budget supports spam. . . but that’s the least of your problems.  When you pay fees to old-school, traditional search firms, you are paying them to cold call.  Cold call recruiting is just another form of spam - sending unsolicited, unwanted messages to strangers.    

Full disclosure:  cold calling is how I was taught to recruit 20 years ago (I changed).    I also regularly refer work to a few high end retained search firms who I think do superb work, but they are the exception. 

But take it from an expert – cold call recruiting is phenomenally inefficient and very hard to do every day.   Therefore the salespeople who make these calls must be compensated exactly like sales professionals, or the good ones can take their mad telemarketing skills and go sell something else.   And that, ladies and gentlemen, is a primary reason why search fees are so high - it costs serious money to get people to make those calls.  (Actually , it’s only one of many, many reasons search firms are inefficient, but it’s a biggie.)

But spam is not the real problem (for you anyway).   When you hire an old-school agency to telemarket (headhunt) for you, you are not only causing more spam, but most likely, you also just made a really poor hiring decision – you hired the wrong person to do your recruiting.  Read the rest of this entry »


If Staffing Looks so Easy, Why is it so Difficult? (2 of 2)

12/18/2008

InterviewThis is the second post in a two part series on what is why staffing so often fails to get results.    

 

RESUME SCREENING

 

Resume screening is so dull and time consuming that it often gets treated as a clerical task assigned to a junior team member.  Junior people often lack the judgment to do much more than look for keywords or years of experience.   The lifeless Job Description is a perfect guide for this dull task.   This tedious cycle of simplistic evaluation ensures that all context is fully and completed removed from consideration of both the job and the job-seeking candidate.  By its very nature, this guarantees that every exciting, “out of the box” candidate is ruled out, without any consideration whatsoever.  

 

Next, the resumes of people with the “right” keywords and years of experience are passed to the hiring manager, who is, by definition, short-staffed and too busy to look at them.  After weeks elapse, the busy manager grabs the stack of resumes and asks himself or herself one question:  “Which of these resumes is least likely to waste my time?”  Managers vividly remember every moment wasted interviewing bad candidates, so, to avoid making that mistake again, they look for any reason NOT to see most of the resumes.  At some level, we all know that great employees often have mediocre resumes and mediocre people often have great resumes.  We certainly know that a resume is, at best, a very poor representation of a real, live, thinking, breathing human being. We know a resume cannot even attempt to represent the values, intelligence and work ethic that make someone “fit in” and contribute to an organization.  Unfortunately, the crushing pressure to “save time interviewing” completely eclipses these considerations, and we proceed to overlook about a third of the best candidates.  

 

 

INTERVIEW SCHEDULING

 

Now that the manager has selected 3 or 4 “good looking” resumes of candidates to interview, the recruiter or admin assistant tries to get them scheduled.   This is not easy of course, because the manager is short-staffed and overscheduled.  So, about a month after the job description was initially posted, candidates finally get in to see the manager for a first interview.   Of course, the best candidates who initially applied have already received offers from other firms, so they decline to even interview.  Luckily, the less desirable candidates, who are not getting job offers, are still available to interview. 

  Read the rest of this entry »


If Staffing Looks so Easy, Why is it so Difficult? (1 of 2)

12/17/2008

interviewIn a tough economy, every employee really matters, otherwise they would not still be around right?   Well, not really, because most organizations do not manage performance that tightly – but we’ve already discussed that at length in previous blog posts.  So in this 2 part series, let’s talk about your critical new hires, the ones who really count extra now – the really critical new hires that still get approved despite your “hiring freeze.”   These are hires the CEO has to approve, like when your CFO or Director of Development quits exactly when you need them most.  Hiring freeze or not, when someone absolutely essential to your future existance  quits – you are going to replace them.  And, odds are, you are going to make some big mistakes in how you hire that new person you can’t live without. 

The only reason to hire is to get business results. If you didn’t care about results, you wouldn’t need employees – so, if staffing is ultimately about getting business results, why does it so often fail to deliver them?

Tolstoy observed, “Happy families are all alike, but every unhappy family is unhappy in its own way.” Similarly, every company that becomes unhappy with staffing becomes unhappy in its own unique way. Although staffing appears to be a routine, traditional business practice on the surface, it is actually one of the most daunting and complex tasks facing today’s executives.

Why is staffing so difficult? Let’s break it down. To regularly find and select candidates who can rapidly contribute to business results, you must always succeed at all of recruiting’s critical tasks. First, you need the business acumen to clearly identify the business results you want and how you expect someone to achieve those results. Next, you must identify the precise competencies an employee requires to drive the results you expect. Next, you need to identify exactly what it would take to attract the right person to each job for the right reasons. Next, you need a recruiter who knows how to access a large pool of qualified job candidates, present your opportunity in a compelling way, generate interest, and get the right people to apply. Then, after all the candidates have been fairly evaluated for competency and cultural fit, you must narrow the field and make a job offer. If the candidate you select has not already accepted other employment and accepts your offer, (s)he can finally begin to apply his or her skills to getting the business results you expect. If along the way, you make even one misstep, you end up unhappily starting all over. It’s no wonder that so few recruiters actually measure themselves by the standard of getting specific business results from their recruiting efforts.

In reality, the situation is far worse. Almost every aspect of traditional recruiting stopped being effective over 20 years ago, but nobody seems to have noticed. Let’s review some of the most common hiring mistakes and the very understandable reasons people make them. Read the rest of this entry »


The Recession Survival Guide – It’s “Trade-In” Time

12/05/2008

57438667Ok, we’re in a recession - it’s official.  So fear and panic are evident in decision-making and mostly we see people frozen in place.  Waiting to see what happens.  And not driving results.

Do you know who in your organization will get you through the downturn?  Look around.  Your top performers are still driving results, taking on new responsibilities, trying new things, improving your current processes, cutting expenses, suggesting new ideas, challenging outdated thinking, doing work on their own time, solving problems and accepting the reality of the current market without making excuses. Anybody not doing this is just wasting your salary budget.

Sadly, most performance review systems don’t really identify the people you need most, because what it took to succeed last year is not necessarily what it takes to succeed right now.   In these turbulent times, you might need more people in one department and less in another, or you might suddenly need people with very different skills.  There is nothing like a downturn to shine a bright light on your mediocre people.   So if you can’t tell who to keep and who to cut, you might be tempted to follow the herd and implement a hiring freeze, or just be sluggish in hiring (which has the same effect).   Except here is the problem.  A hiring freeze locks in place your mediocre performers and prevents any better people from getting in.    Big mistake.  

This is the time to freeze the budget, but not the people.  It’s “Trade-In Time” – when you can finally afford to replace your underperformers with winners.  Read the rest of this entry »


What the CEO Wants From HR

11/13/2008

200118379-001I just got back from moderating a panel discussion for the Human Resource Association of the National Capital Area. The topic was “What CEOs Want from HR.” I love joining the local SHRM chapters, and used to be on the Board of HRA-NCA, but honestly, it’s been a while since I made it to a meeting. Lately, I’ve spent alot more time in CEO circles.

One issue that keeps emerging from my CEO forums is that entreprenuers and company CEOs put their jobs or their income on the line all the time. 

Read the rest of this entry »


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