The Untapped Potential of HR

Another CEO that I respect stated; "There is no doubt of the potential of HR to move my business forward; what is in doubt is the ability of HR to live up to that potential." While this is stinging comment about the HR profession it is a reasonably fair comment. HR rarely lives up to its potential because the potential is almost unlimited. HR is part of the team that hires, retains, and develops the staff that is the next generation of the business. HR is responsible for a wide range of challenges involving the management of the human capital of the business, while being in charge of very little and having extremely limited authority in most businesses. HR's potential impact is nothing less than the future of the business and HR, by design, must negotiate with other managers to accomplish the decisions that must be made.

The role of HR is to maximize the effectiveness and organization of your staff. This was elegantly put forward by the book "From Good to Great". In this business classic the author expresses a goal of "Getting the right people on the bus" and putting them in the "Right Seat". This is the potential of HR and the task is inherently difficult because every person put on the bus and every change in business strategy changes the right fit for the next seat. Proper assessment of your employees, contractors, and partners is critical to these bus decisions.

HR is a never ending stream of investigations, recommendations, negotiations, and decisions intended to assemble the best team. The problem, as every executive knows, is that there are a thousand ways to build a business, and not all people you build it with are the same. Right now our businesses are facing a very difficult economic period and it is time for many businesses to take roll call on the bus and assess the fitness of the team. This is where HR professionals can be a great asset to your management team.

HR's role is to manage the complexities of job match and to establish policy that provides a fair system for managing the unavoidable conflicts that happen in every organization. Some degree of personality conflict is actually good for a business and certainly we need diversity when we are trying to solve complex business issues. With diversity comes conflict and competition and when managed properly these are assets not liabilities. A strong HR can contribute as a natural third party that brings the diversity together and helps focus it on the business objectives.
As we lead our organizations through this difficult economic period we need to make sure we have the right people on the bus, and HR should take a lead role in validating this. We need to deploy the best tools we have for staff assessments, examine group dynamics, and professional development plans. We need to be asking the tough questions like:

Do we have people that have been over promoted?

Do we have people that need to be promoted?

Do we have technical experts in leadership roles rather than creating innovation in the organization?

Do we have leaders in technical roles?

Do the styles of the various leaders fit together as a well balanced team?

Do we need every position that is authorized?

Are salaries in line with the current market?

Do we have obtainable and clearly expressed goals for each position?

Are goals across the organization aligned with each other?

Are bonuses and incentives designed for maximum advancement of the business?

Are policies and procedures updated for changes in technology and staffing?

Do we have effective team practices in place?

Are people properly motivated?

These are tough introspective questions about your business but those that answer and then address these issues will be the ones talking about how they flourished during the 2009 recession. In the current economic condition some are going extremely defensive cutting every expense in sight and going to into extreme defensive mode. While others are taking advantage of their competitor's defensive position to gain market share. Which strategy is right for your business depends on who is on the bus and where you are going? It is time for the HR profession to step up and help their organizations facilitate this discussion.

Author: Sandra Dickerson Esq., Co-CEO, Your People Professionals

POP QUIZ: What Kind of Leader Are YOU?

Take our quiz to find out what kind of leader you are. Keep in mind that leadership qualities can change depending on your role, your manager's leadership style, and your employees' differences. Also, you might use a combination of several styles depending on your team's personality, the type of role you have, and the work issues you face. This quiz only suggests how you might respond to important decisions that you might face on a regular basis.

1. You have two days to make a big decision. You:

A. Decide without input from peers, subordinates or team members.

B. Depend on your veteran employees to make the decision, knowing they will make the right one.

C. Quickly convene a meeting with your team members and make your decision based on the prevailing attitude you hear.

D. Prefer to leave the decision to a subordinate, then take credit if it's a good one and stay silent if it does not work.

2. What do employees want most from their jobs?

A. Feeling valued

B. Less stress

C. Being part of a team

D. Shared vision and values

3. Your team misses a deadline. You:

A. Take responsibility, then immediately finish the project yourself.

B. Appoint one or two people on the team to get the project finished by a new deadline they set themselves.

C. Find out why the team missed the deadline and ask for suggestions about what the next step should be, then set a new deadline.

D. Yell at team members, tell the group at large to fix the problem, then stride away.

4. When you have an idea you believe is good for the company, you:

A. Float it immediately to higher-ups in your organization who can make it happen.

B. Ask highly trusted members of your team to research and test the idea and get back to you with their thoughts, then forget about it.

C. Present your idea at a team meeting and seek opinions before deciding what to do next.

D. It's not your job to have ideas.

5. When a trusted team member is late for three meetings in a row and is evasive with you about the reason, you:

A. Tell the employee privately that you expect punctuality and insist that the tardiness not occur again.

B. Ask human resources to find out what is going on, but request no report back to you.

C. Seek out the advice of several trusted peers.

D. Confront the employee in a public setting and ask in a loud voice why he or she keeps missing work.

6. Budget concerns mean there will be no raises in the new fiscal year. You:

A. Discuss the issue with no one, but write and distribute an internal memo instructing people with questions to see you.

B. Tell your veteran team members there will be no raises, and let them inform employees the way they see fit.

C. Convene a meeting of team members, break the news and allow questions. Then ask them for ideas on how to tell everyone else and what your organization can offer instead of raises.

D. You never plan raises in your budget anyway, so it doesn't matter.

If you answered mostly A: A is for autocratic leadership. Although you get the job done efficiently, you tend to be a bit inflexible and this could build resentment among employees, giving you results that will prevent your organization's growth (lack of development and high turnover).

Light-bulb moment: Develop some of your trusted subordinates by teaching them what you do so well, and you won't have to work such long hours. You might even enjoy work more!

If you answered mostly B: B is for benign, or laissez-faire leadership. Your style works best when people are old hands at their jobs, and your employees appreciate you for putting your trust in them. However, be sure to designate specifically who is responsible for which projects or they may not get done.

Light-bulb moment: Set firm deadlines and check along the way to make sure you get what you expect. Also, schedule dates for reports to come directly to you in the form (written or oral) that makes sense for you and the team.

If you answered mostly C: C is for collaborative leadership. It's a nice way to make team members feel useful and a good development tool. It also cuts down on cutthroat competition if everyone has an equal say.

Light-bulb moment: If you are a leader who thrives on quick decisions, or if your organization requires them, find a way to compromise between you-think and group-think.

If you answered mostly D: Your employees probably do not trust you. Do you trust yourself?

Light-bulb moment: One of the first things you can do is to lay a strong foundation by treating others the way you wish to be treated. If you want the responsibility of leading, develop your interpersonal skills in leadership training courses.

"Business is a combination of war and sport." - Andre Maurois, French Author

Who is your Chief Performance Officer?

This week Barack Obama appointed a Chief Performance Officer for the Federal Government, focused on assessing the performance of government programs and finding opportunities to reduce waste and eliminate low-performing investments. So who is the Chief Performance Officer in a business?

We have been studying this issue and I wrote about this topic several years ago in CLO Magazine, so lets revisit this issue in today's economy. My thesis is that that strong Human Resources and L&D leaders have the opportunity to play this role in a highly strategic way.

Let us look at the three "owners" of performance in a business:

1. Business Leaders own operational business performance.

Unlike the Federal Government, where program managers are really "spenders," in our companies the people who spend money are held directly accountable for results. The VP of Sales has a sales quota, the VP of Manufacturing has a production and quality quota, and the VP of Customer Service has a customer satisfaction and rate of response quota.

2. Finance Leaders own financial monitoring and budgeting.

In most companies the CFO or Finance organization monitors spending, headcount, and expenses. Their job is not to drive performance, per-se, but rather to monitor financial performance and give the business and HR leaders the information they need to quickly realign resources when things are not going well.

For example, when Starbucks realized its business was slowing last Fall, the CFO quickly announced a slowdown in sales, store traffic, and other information - this information was then used by retail operations and staffing to cut or reduce hiring and close strategic locations. Ultimately the work of improving performance goes back to the business leaders.

3. Strategic HR and L&D Leaders create Processes and Systems to drive performance.

When done well, strategic HR or L&D leaders (often the CLO, or VP of OD) actually know more about why performance suffers than many other leaders. They have the tools and visibility to understand where weak leadership, low engagement, mis-alignment, or skills-gaps are holding the organization back.

In addition, the tools of talent management (performance management, goal alignment, leadership and supervisory development, succession management, total rewards) are powerful levers over performance. Our research clearly shows that these "people processes" really matter.

How People Processes drive Performance

Consider some of our research findings over the years. Organizations with a strong "learning culture" are 12-15% more profitable over a 10 year period than those without such a learning culture (The High Impact Learning Organization®, 2008). Organizations with strong competency-based performance management processes drive higher revenue growth and profitability by industry (The Role of Competencies in Driving Financial Performance, 2007).

Consider the impact of people on expense and resource allocation. The typical business spends 60-70% of its total expenses on payroll, and of course employees make decisions every day about where to spend money. When people are unproductive or misaligned, vast amounts of money are wasted.

Finally consider the importance of decision-making in an organziation. Every day virtually every employee makes decisions about what to do, how to behave, how to deal with customer or internal problems, and how to share or interact with others. These individual decisions (like tiny little economies in the macro-economy) make up the lifeblood of organizational performance. When the people side of the business is not managed, dysfunctional and unproductive decisions are being made all the time.

Building the "People Performance Model"

I would suggest that one of the most strategic things you can do as an HR or L&D leaders is to build your organization's "People Performance Model." Essentially this means uncovering the "secret sauce" which makes your organization perform. Let me give you an example.

This week I had the opportunity to talk with the Chief Talent Officer of Lowes. He told me that after a year of research among thousands of stores they found that the #1 driver of retail store financial performance is employee engagement. This is not a glib or simple conclusion. Similar research by Gallup (The Human Sigma), found that retail stores with high employee commitment levels generate 3.4X the return of stores with low employee commitment levels. In fact, this research found that retail employee engagement has a bigger factor on customer retention than satisfaction with the products themselves.

So in the case of Lowes, where the Chief Talent Officer analyzed store performance in detail, the company has now decomposed the level of engagement into three driving factors: employee-manager relationship, job fit and career opportunity, and total rewards. These findings are not rocket-science, but in the case of Lowes the correlation analysis is so strong that the company can go into each store, measure these three engagement elements, and predict how well a store will perform.
Lowes also found something else. There are two pivotal job roles which drive these three engagement indexes: the store manager and store sales manager. The store manager is a real manager; the store sales manager is actually an individual contributor who one would consider a strong "influencer" of in-store employee engagement.

This work is what one could call the "People Model" or "People Performance Model."
What Lowes can now do is filter all their HR and L&D investments against this model. In their case the Chief Talent Officer is looking at the company's leadership develpment programs with a strong focus on what it takes to help store managers better coach, align, and communicate with employees. In this case the solution involves a very specialized, highly customized supervisory development program.

Why HR or L&D Leaders are so Important

I would argue that you, as a strong HR or L&D leader, must lead this type of effort. You, as an HR or L&D professional, best understand the way that performance management, leadership, rewards, learning, and systems fit together to drive high performing teams and organizations. By working with your leadership, you also have the closest understanding of your company's "secret sauce."

As I will be presenting at IMPACT 2009® this year, our latest research clearly shows that organizations which implement high-performing learning cultures, strong talent management strategies, and build a true "people plan" drive much higher long term (5-10 year) financial performance than those which have weaker or less mature people strategies. If you are an HR or L&D leader, you should rethink your role as the "Chief Performance Officer." Rather than just "implement HR programs," focus on understanding the core people model in your organization:

What are the critical roles that drive success? What is the profile of a high-performer in your organization? What cultural and leadership elements drive success? Why do people fail in your organization? How can you use this information to build HR and L&D processes which build, reinforce, and improve these factors?

If you think about your role in this way, I can guarantee that you will become a "Chief Performance Officer" - and such a focus will improve your career, your impact, and your organization's success.

About This Analyst

Josh Bersin writes on the ever-changing landscape of business-driven learning and talent management. His favorite topics include strategic talent management, creating high-impact learning organizations, and how organizations drive business change and competitive advantage through talent strategy and technology.