HC Global

100,000 HR jobs at risk.......

2008-07-14T07:24:34Z

And today I focus on some research provided by er...us, VaLUENTiS as reported by Personnel Today on Friday. There is a full press release available.

My blog today is to provide some interesting insight into this headline and to focus on some real issues lurking behind this statement.

Thus my blog today is in three parts:
1 The economics
2 The HR function/profession risk
3 What can we do about it?

1. The economics

Let me first deal with some facts.

We use 'intelligence' to provide forward thinking. Forearmed is forewarned as they say. Seeing ahead means that you can take action now or that you won't get surprised. This is not about doomsday scenarios or about being gloomy - it's trying to make sense of market data and thus being aware of it. I see absolutely no sense in being in 'denial'.

]]> Thus on to the economic data......

The present economic signs are not good. Those thinking that this would be a short sharp shallow dent in an ever-upward march are very, very wide of the mark. There seems to be a collective denial until very recently that just maybe this downturn isn't going to be superficial. Now, I'm not going to bore you with the main ecomomic data as there is enough comment already. For an example selection amongst many, try -

Top Economist: UK will enter recession this year

Where's this long awaited recession?

Soros: Britain cannot escape US recession

UK months away from recession

And to all those who (falsely) think that we can talk our way into recession - think again

So enough on that. Most erroneously think that the last recession 1991-1993 (in the UK) was caused by high interest rates (this is a favourite of the Government and the BBC) and they would be wrong.

The sharp hike in interest rates were a factor but people forget that we had high interest rates for most of the 80s and they also soon came down again (after ejection of EU). It was driven by a loss of demand (consumption) due to the excesses of the late 80s. A real estate bubble appeared (remember the scramble because of the loss of MIRAS), some debt overhang, increase in inflation, cut in available spend (exacerbated by unemployment), oil, Iraq (part 1) and a few other variables.

Fast forward to 2008 - we have a real estate and other assets bubble, massive debt overhang, increase in inflation, severe cut in available spend, high taxation, high oil prices (it was 40p a litre in 1990), Iraq (Part 2/3), Afghanistan and Iran. And higher food/commodity prices..............

So we modelled the available data from varius sources including ONS and ran through the historical data with current employement numbers.

If, we are on the recieving end of another 1991-1993 style recession the numbers suggest that unemployment could rise by 1.5 million (taking us back to 2000-1 levels). What this means is that actual numbers in employment reduces by this amount over those three years (2009-2011). The figures are subject to some variation due to the mix of part/full-time and temp. For example, part-time was c.8% and actually increased in number during the 91-93 offsetting total full-time loss. This time around we have c. 14% part-time so it can go both ways. There's lots more data but not for here.

Our estimation of overall probability of similar style recession is currently High.

2. The HR risk

Trying to get a fix on exactly how many work in HR related jobs both functionally and as supply to the market place is notoriously difficult because nobody keeps a record.

However, by triangulating and adjusting the macro employment data (excluding self-employed) and using current HR FTE ratios provides us with a figure of around 200,000. The HR supply industry is difficult as data lurks and is hidden. For example, there are about 100,000 in the recruitment industry (REC). This number though is changing (see Hays recent announcement of job reductions last week).

Various estimates have put numbers as big as 500,000+ including those self-employed. We used a variety of data and came up with a 1 for 1 par basis (law of big numbers). In the scheme of things the headline perhaps isn't that shocking.

The big problem is whether the modern HR era, post 93 recession, (remember CIPD came into being in 1995 with ITD/IPM merger and 75,000 members) has really made any difference to HR roles - being related to numbers employed rather than any definitive value contribution no matter the circumstances. On this one we are certain that the answer is NO.

My concern is that HR staff are just more vulnerable than last time due to the number of non-jobs that have been created in HR's name. The phrase I hear most often from senior HR executives is the lack of capability in their teams. So here's a very good way to do some purging....or call their bluff.

When we first set out we thought that people management evaluation was a surefire way that the HR function could ensure its value proposition and capabilty (and execution). The fact that we are not the size of Oracle (yet) tells you another story. But we believe it leaves the HR function wide-open.

We will be very interested to see how all of the modern 'HR PR schemes' to get names in lights sustain their appeal? We will be glad if the coming downturn recession gets rid of all of the useless froth that's appeared in the last decade.

3. What we can do about it?

As a HR practitioner, make sure you're focused on employee engagement, productivity and performance in their many guises - preferably all three. If you're not - get yourself focused on them. Time to also to look at your individual competency/capability. Time maybe for upgrading your capability like the HCMI for example.

As for the HR function, undertaking people management evaluations would be a good pro-active start. I have been very concerned with some recent conversations that show no inclination or understanding of what this can do. Its like Finance Directors dispensing with the annual accounts and all of the daily reconciliations.

And I wish those who are proactive and smart the very best. To the rest, time will tell of course.......... But the era of Human Capital Management is upon us. 'HR is dead. Long live HR.'

HC Global's Top Ten read blog entries to date.....

2008-07-07T08:27:54Z

Again - what has proved popular has been the reporting of the most read blog entries which I guess provides visitors with a quick summary of the main stories/observations catching people's attention.

Below are the top ten HC Global entries to date as provided by Google page ranking:

1. Employee Engagement (August 1 2007)

2. 'Train To Gain' comes off the rails (March 17 2008)

3. Topics covered in the HCMI syllabus (November 7 2007)

4. 2008 forecast.......half term report (June 30 2008)

5. CSR: Going, going, gone? But wait a minute.... (March 7 2008)

6. Facebook or should that be Face-the-sack-book? (August 7 2007)

7. Talent Management Part II - The sound of distant drums (November 21 2007)

8. The future of HR: Which HR are we talking about? (May 7 2008)

9. The HR role - Puppet on a string? (June 23 2008)

10. HR Transformation: Have we lost the plot? (May 19 2008)

A truly eclectic mix! I trust that they provide more insight (second time around for existing bog readers!). There's quite a back catalogue now and it is interesting to see how some of the entries change their relative position over time......

The next top ten will be done at the end of 2008........

NJH

2008 Forecast.....half term report

2008-06-30T09:04:12Z

What seems way back in December (2007) in my final blog entry of the year I forecast ahead for 2008. So how are the various predictions holding up?

Well I started with saying that it was going to be tough and I guess that's unfortunately been proven right (remember a number of 'experts' were still forecasting a nice sunny scenario, which meant they were either (a) in denial, (b) not much of an expert or (c) both - a point I made regarding the excessive talking up that had gone on since September 2007.

I said that HR restructuring was a big feature (though this has hardly been off the agenda for a decade) and that employee engagement and productivity were going to be central focus.
I believe this to be correct though it's a shame that all of a sudden a number of suppliers have recently joined the 'circus' including some big names without shall we say the necessary expertise. .....

So what else?

]]> So I said:

Expect HR budget cuts - yep though people are keeping quiet and despite some confusing messages, our frontline experience confirms this.

Expect recruitment firm acquisition/merging - a number have been mooted (see various Google comments) with the biggest being announced - Select/Ranstad in May. Expect some carnage in this field as previously predicted last year.

Expect one HR outsourcer to go bust.......In Jan/Fen Zeda part of Midland HR went into administration (see Feb 13th blog) - expect a few more in time

Expect focus on HR operational excellence and people management evaluation - yep though people management evaluation still amazingly only being done by lead group of organisations

Expect agency staff resourcing to fall - Got this one wrong so far as constraining economy has driven companies to do more as opposed to less due to the new rights kicking in

Expect CSR to become yesterday's PR item - growing acceptance this is the case see previous blog and earlier comment in The Guardian this year (amongst others)

Expect 'sustainability' to take its place but people still not having the foggiest what it actually means (to be supplanted by 'corporate resilience' before next year is out!) - yep still think this one on course

More generally
Expect the first university merger - wow Reading and Henley sure brought that one home - expect a few more...
Expect more NHS mergers - happening continually....
Expect unions to get tougher - this one unfortunately padding out as the Government is not being truthful with inflation and its getting cold out there. However the downside is any increase will result in job losses. One serious issue is that the Government is now reliant on 90% of its funds from the Union movement which is not healthy and will only go to exacerbate the problem.....
Expect real estate to continue to fall - I'm afraid so and as I said previously it's the 70s all over again - everybody is just going to have to hang in there for 5 years or more (By the way the real estate market is a giant pyramid selling scheme which we're about to find out - as for the idiot experts who were still forecasting growth/its different this time even in 2008, should I'm afraid be 'hung, drawn and quartered' metaphorically speaking of course......
Expect sub-prime fall-out to go on through 2008 (and some much bigger write-offs) - yep and 2009/10
Expect one council to get caught in the sub-prime fall-out - Not yet though a number of Aussie ones have been caught - plenty of time yet though.........
Expect UK macro-economic overspend and rise in taxes - YEP unfortunately last ten years of so called prudence is going to be well land truly shredded quicker than you can say Arthur Andersen & Enron
Expect some exciting developments in the on-line knowledge search space - yep Microsoft/YAHOO - what took them so long though YAHOO like their independence. Many commentators have been talking about the Microsoft demise and Google's supremacy. I think they have it the wrong way round. I think Google's business model is far more vulnerable than Microsoft's - we shall see

Words for 2008
Expect to hear more of:
'accountability' - yep
'authenticity' - still to come
'productivity' - in spades
'resilience' - definitely on the radar
'lack of visibility' - over-used already
'mashing' - appearing frequently
'talent pool' - overdone
'wikis' - growing nicely
'dead cat bounce' - already here and will happen several times in the next two years
'the walking dead' - many new companies setting up in the last 3 years about to become them
'debt overhang' - MASSIVE, ENORMOUS DEBT OVERHANG
'recession' - Ah yes the R word. Get used to it - Apparently New Zealand is the first economy to be categorised as such in 2008
'systemic' - everywhere
'drift' - littering the various business columns
'competency' (the return of) - coming soon
'value' - more used in the terms 'losing value' or 'lost value'
'worknet' - still on the fringe
'algorithm' - 2008 has seen a number of publications with algorithm in there. Will dominate the HR/HCM space in the next decade
'people science' - that's ours - hands off already here!
'atlas shrugged' (Ayn Rand) - film due out in 2009 one directorship sorted with Angelina Jolie playing lead
'HCMI' - the course is growing as is the Institute.....

The HR role - Puppet on a string?

2008-06-23T07:07:42Z

Nowadays there's so much ephemeral market research but one caught my eye last week - HR forced to neglect business areas as ecomomic slowdown continues.

Why did this catch my eye?

Well a survey of 102 HR heads found something deeply disturbing as 80% admitted that they had neither the time nor the resource to concentrate on 'strategic activities' - namely, leadership development, retention, attraction, productivity and growth. Instead their time was focused on recruitment (or of course outplacement) and training citing a lack of senior management commitment/funds

Now admittedly the research was carried out by another recruitment firm trying to differentiate itself, however, these results are sufficiently objective (allowing for some discrepancy in the definitions).......

So why did I find it disturbing?

]]> Well - if you've been reading this blog regularly I shouldn't have to spell it out but....

Three big concerns:

1) We're not even in a full-blown downturn yet and already it seems as though several HR strings have been cut, never mind the serious question over the HR function's role/remit/value proposition

2) There's a bit of 'victim space' here. HR has to provide the business case for strategic HR/HCM activities and make it forcefully at times linking to competitive advantage (or losing it by inaction, of course) or aspects of organisational productivity/performance. The lack of funds seems a little too easy excuse. It doesn't always need big funds. Most HR budgets with organisations of 750 employees plus are at least £1million in budgetary terms so maybe zero-based budgeting (starting from scratch) rather than incremental increase/reduction is the way to go, something we've advocated for ages with value-based HR.

3) If all is HR is doing is taking orders from the CEO about what to do and what not to do it raises some serious suggestions over (a) the professional status, and (b) more seriously suggests that many HR Directors are in fact glorified HR managers - thus effectively being overpaid for their remit. In a downturn, being overpaid in a support function is not a good idea.

If this survey does reflect reality for a majority then it suggests that many HR functions are indeed 'Puppets on strings'. And I am reminded of a conversation I overheard in the office some time back with one of our team and a very 'succesful' HR Director. The conversation was focused on utilising the HCM evaluation to provide insight and strategy with which we assumed that this leading organisation would be interested in given its performance. The HR Director said it wasn't needed because at the moment 'My CEO's happy and thus I'm happy'. It has resonated ever since......

One other concern and the hippo in the corner

There's one other concern that has been flagged a number of times by me on this blog and that of organisations' attempts at serious people management practice as opposed to say, PR.

If this is reflective of wider industry then I return to my previous observations that people management under the HR era has not gone forwards, and as such is the 'hippo in the corner' for many to critically evaluate.

When you read the general industry gumpf (save PT) you would be forgiven for thinking that there are at least two HR parallel universes one of which is not real.

At some point, collectively we are going to have to be honest in a brutal kind of way. For some in the 'profession' it may perhaps be too much. For others it will be a breath of fresh air and when it comes it will move people management practice up the curve by some notches.........

Human Capital Measurement - the story so far

2008-06-16T07:31:07Z

Ahead of the HCMI course module this week on workforce intelligence (part 1 of 2 of the HCM module) I thought that I'd repeat a coversation recently regarding the state of play.

The conversation had been focused around education and learning being the fulcrum of the human capital argument. The focus of attention switched to that of measurement. All nodded when the statement was made that measuring something helped to understand what you were measuring without exception. This was particularly key around social science subjects....

]]> Somebody made the comment that 'they thought measurement related to human capital/human capital management had come a long way since its beginnings'.

Unfortunately my response was that 'Based on the evidence, I didn't believe this was the case and that it was more wishful-thinking than reality.'

Sure, simple HR metrics had been around since the seventies and are still very prevalent today. But actually despite effort relatively little headway had been made on any large scale, save for a few exceptions.

Using education as an analogy, I remarked that putting some simple one-dimensional metrics together like absenteeism, HR FTE/total FTEs etc was akin to Infants School. Putting these metrics into some kind of scorecard was Junior School. Developing a more robust design of scorecard using strategy mapping, metric trees and trade-offs was akin to Secondary School.

Developing these into modelling (causation) analytics and evaluating human capital management, like the 15OE framework (See JoAHCM Volume 1 no 2 2007 & Vol 2 No 1 2008) and the subsequent derivative analysis and intelligence was similar to tertiary education and beyond.

In a market context, many organisations had not got out of Infant School as they were still 'benchmarking' single metrics of limited insight. Some had progressed to Junior School and a fewer number had managed to get to secondary level. Very few had got to tertiary level given our knowledge of the market-place.

'Why was that?' asked one of those present.

'A multitude of reasons' was my reply, 'lack of understanding, lack of importance, lack of emphasis, lack of resource, lack of diligence, lack of expertise, limited ambition of HR functions and too much ephemeral band-wagon jumping by various players - and throw-in the complete red-herring by analysts wanting to value human capital'.

'But we are talking people, here - right? enquired another.

'Yep - but that doesn't necessarily mean much when you've got PR. There are a few exceptions that we know of and work with,' was my response.

'That's pretty damning' came a further comment.

'Unfortunately it is - would you like me to say it nicer,' I replied.

'No, no - I just meant that it doesn't say much for industry or the HR profession,' the person responded.

'Yes - I know'...............

HCM versus HR.........and the winner is......

2008-06-09T06:57:48Z

Interesting to see comments last week about opportunities in great times of change - By a strange coincidence in last month's HCMI class, a question on organisations and people management in terms of what had fundamentally changed led to a 'non-discussion' because in the analysis little had actually changed.

There was no denying that there was much activity but little had really actually changed. More critically the view was taken that the HR function was in many instances not doing anything different to Personnel before it.........

]]> Which brings me to HR and HCM.........
Well - it goes to the heart of the matter over the current debate between HRM (human resource management) and HCM (human capital management) and the HR function.

There is still much confusion in the market-place regarding HR and HCM due in part to the clever marketing (rebadging) of various suppliers and lazy practitioner thinking.

Ahead of the 'Human Capital Management Manifesto' publication later this year I thought that I would set out what the difference is between HRM and HCM. Because I believe in the current era this is going to be vety important.

And again I want to make the point that it is necessary to differentiate between the terms 'HR profession' and the 'HR function'. They are not one and the same. They can have quite different definitions although commonalities exist. Occasionally they may totally align.

The main reason being that the 'profession' should be defining the role of the function in lieu of organisation requirements. A profession should never be ruled by the function because the function's role, in an organisational context, can be artificially limited and thus stifling from a professional perspective. I think that HR has suffered because the profession has been to often driven by the function (order-taker). I'm not sure if many in the profession acknowledge this (perhaps too many don't care?!). A test question: If HR is seen as too often political and falls back on an 'award industry' - what can we derive from this?

But back to the HCM versus HRM debate.....

Here's twelve ('dirty dozen') contrasting attributes:

So, now you know....(and there's another ten plus differentiators not stated here).

It's not about winning

Of course, relating to the blog title, there is actually no winner since this is not about HCM or HR winning. It is acknowledging the difference, hopefully to clarify and avoid confusion, and more to the point an evolution.

It can also act as a checklist for those who call themselves HCM but perhaps are really only HR in disguise. The problem being that if left unchecked this will just perpetuate the same problem as evidenced in the Personnel-HR migration. This causes ourselves many problems in getting the HCM message across.

HR as Personnel in disguise
I pointed out some weeks ago that many HR functions, when dissected are really Personnel functions in disguise, in terms of their contribution. And let me be clear, the Personnel function is a viable organisation option if that is what the organisation wants, i.e. the basics (effectively this includes all transactional activities that can be outsourced).

One of the problems that has plagued the 'HR function' is that there has never really been any discernible differentiation made which has caused confusion to this day . Many managers are and still deeply suspicious of it being a rebadging execise. Even a number of practitioners steadfastly refuse to call themselves HR preferring to Personnel. To that end I cannot disagree if Personnel is what they are doing.

But in evaluating, one comes to an interesting premise - that there will be ultimately no 'HR'. Either HR is actually Personnel in disguise and therefore unnecessary to rebadge or it is evolving into an HCM function.

You're either Personnel or HCM. You're either CIPD or HCMI (actually with HCMI you can be both). Full stop. Of course this is the Hippo in the corner for many.........

The other problem with the term Human Resources
I have also stated before that I find the term Human Resources rather demeaning as resources implies use/expendability of people, like raw materials rather than assets to be utilised - human capital. I have no problem with the verb/adverb (act of) resourcing related to people. But the term unfortunately has the connotation of reinforcing that which we are trying to change in managerial terms in organisations.

The acronym 'HR' has also become common parlance, partly because its easy to say ('catchy') and in many ways this is deflecting from its actual meaning. This reminds me of the children's rhyme 'Ring-a-ring o'roses' the theme of which relates to that of the 'Black Death' (though acknolwedging that this is disputed in some quarters).

Given this, it does seem quite bizarre that, in fact, many have actually questioned the term 'human capital' (and its management thereof). The term human capital (HC) has in fact a positive connotation, is technically correct and has been around for over 50 years (see previous mutliple blog comments on this). For me the term human resources maintains the wrong organisation focus and has to change.

The questionable current HR role interpretation and the future
I've been most concerned at some recent self-preservative statements emanating from the HR community regarding HR's role in a downturn, in having a major role in resizing. This rather facile argument misses the point that you don't actually need an HR function for this role as it can be outsourced. Secondly, it's a pretty limited view of the function's role - though this doesn't seem to have been picked up.

What is becoming clear to the School's HCMI class of 08 is that the HR era is in need of change (perhaps coming to a close?!) with that a retrospective judgment, from a professional standpoint, views the last fifteen years plus of HR having been too often associated with failure. (This will attract criticism as some observers will point to higher salaries/rewards/press/acknowledgement but these are actaully erroneous attributes).

It would seem that Personnel or HCM would be the more natural choice as HR polarises (and fades) between the two.

Last week, I read a recent HR publication that confirmed my worst fears that 'HR' as a collective when it comes to thinking is indeed bankrupt. Actually, at first glance, you would have mistaken it as a wind-up but no it was the bona fide contents of an article.

So a choice for us practitioners. A time to cut loose? Also an invitation to those reading this blog to directly e-mail your thoughts (and no I'm not going to let on what this published article was!).

If you're wondering about the future of 'HR' then the future might just be that 'HR' as a term is consigned to history...............you heard it here first.............

All aboard 'The Perisher' - The real life 'You're fired'

2008-06-02T05:28:14Z

Some of you may have come across the current daily reports on Sky News from Geoff Meade, Sky Reporter aboard the Navy's HMS Trenchant (aka 'The Perisher') - the real live 'You're fired' for aspiring Captains of UK's nuclear submarines. Geoff Meade is the first journalist to be let aboard a nuclear submarine.

Though Geoff's main focus is on conditions aboard HMS Trenchant the real drama is the real live simulation happening as a cadre of 'would-be captains' are put through the 'mill' to see if they have what it takes - for some it will be the end of the career...........

]]> The Pass/fail course is called 'The Perisher' as this group of student-captains get put through the paces of leadership competency above a nuclear submarine. It's interesting that the crewmen try to suss out who will last and who won't - sound familiar?

As the Captain of HMS Trenchant states it's all about '.......leading under demanding circumstances for a period of months'...' and 'not coming second.....'

They're all assessed by 'The Teacher', an experienced officer and assessor with feedback being pretty instantaneous and at times fairly brutal. For HR, note that there are no on-hand coaches and mentors other than 'The Teacher'. As it should be.....

But back to HMS Trenchant. No deodorants are allowed aboard due to their interfering with the air purification system and there are only 3 bathrooms for 130 men and little sleeping room. I have yet to hear of the first woman applicant but I'm sure it will be soon but there are certain obvious constraints to overcome....

The cost is put at some £2 million per 'Perisher' which sounds costly but not everybody gets to run a nuclear submarine and the weight of responsibility that goes with it.

An exercise perhaps for budding CEOs

Sounds like the requisite course for any potential public Plc CEO to undergo and earn the spurs to earning all that dough. It wouldn't go amiss in the public sector either. Just maybe we might avoid some of the poor leadership that seems to be so prevalent. And the cost certainly doesn't need to be anywhere near of that of the Navy's.

In an interesting parallel, Some 20 odd years ago I was involved in the design and participation of a similar type assessment exercise though for managers in a realistic operational setting which involved trained actors and simulated events which was to be later repeated in another organisation. Those who were involved all say the same thing. They never forget it. The question is why don't organisations use more of this type of assessment? And it doesn't have to be a pure Pass/Fail thing.

Because let's face it running some of these private and public sector organisations is infinitely more expensive. When it comes to leadership there seems to be far too much industry 'talk' and too little assessment 'walk'. Testing is a great way of assessing leadership capabilities and of course gauging talent (or lack of it).

I have remarked before how organisations appear to have like many other things put the cart before the horse when it comes to management.

Rather than pre-assess and ensure competency before placement it would seem that wider practice is to promote and then coach - a very expensive endeavour if there is no short limit placed on the coaching time.

There is also one of those classic sport-business cross-overs which has been misinterpreted. At organisational level, coaching should really be about enhancing/maintaining superior performance (talent) similar to top sports-people, not trying to coach out deficiences that should have been spotted 'a priori'.

In other words too much of coaching at management level is reactive, rather than proactive in an organisational setting - it's also rather costly. But we should always remember that to be a manager of people requires the manager to be a competent coach as it is a fundamental part of a manager's role.

If its not what are you paying managers for?

Back to HMS Trenchant

As Geoff Meade comments, exercises demand each Perisher to 'perform a mind-numbing mental calculation of the course and range of the pursuer. It's the only way of simulating the mental workload of command ........... The strain reduces some candidates to their knees as they buckle under the effort.'

Sounds like this would have been particularly useful in the banking world of late........

And whilst we're on the subject of silliness......

2008-05-30T08:13:14Z

I was glad to see at least one HR Director writing in to suggest that the new fangled joint studies linking HR with.....snake-charming, Maypole-dancing, cake-making, sewing, cocktail bar serving etc (where will it end) might be somewhat questionable?

Quite right...

May I suggest that if people want to study something of use that linking HR with maybe economics? behavioural economics? financial economics? accounting? marketing? measurement? decision-making science? Organisation dynamics? would be a good place to start. Oh I've just realised there's always our HCMI in the first place.........

But of course, much better to be led by universities trying to maximise revenue on new 'frothy' courses - of course, targeted at some gullible HR practitioners........not HCM professionals

More proof of the fallacies around Generation X,Y and any other silly generalisations

2008-05-30T08:04:25Z

More survey analysis reported today 'Generation Y assumptions flawed' that shows the silliness of labelling everybody in a particular age range the same. Though there are no doubt commonalities across age ranges they are nothing like the generalisations that we get to see.

But, hey - its catchy and it sells books and of course its a great conversation piece - in pubs that is but not in professional ones. I'm amazed that people still go on about X/Y in HR circles.

Another nail in another fallacy. At least it might stop a few more 'case studies' on how we.........zzzzzzzzzzzzzz. PERIOD.

Human Capital Management and why 'HR' is no longer de rigeur

2008-05-27T07:36:50Z

Let's start with the definition of HCM (ISHCM 2006):

"Human Capital Management is the term which is used to describe an organisation's multi-disciplined and integrated approach to optimising the capabilities and performance of its management and employees."

Dependent upon the organisation this definition therefore defines the overall context for thew HR function's value proposition.

HCM can be seen as a natural evolution of yesterday's HR practice. It can be viewed as a philisophy toward people as much as to the hands-on understanding of people supported with the appropriate (social) sciences.

]]> The current issue of the Journal of AHCM (announced last Friday) for me encapsulates what HCM is about.

The articles are a quick 360 view:

A strategic evaluative framework that puts human capital management on a par with marketing and finance (Strategic Human Capital Management: Closing the Hole in the Ozone Layer which links back to the major article form last year).

A propensity to utilise measurement frameworks to provide organisation intelligence on human capital, human capital management and organisation dynamics related to performance (The Enterprise-wide Application of Human Capital Management Intelligence - HCMi).

Talent management in its proper context describing the duality between the individual and the organisation in getting the balance right across the various processes and activities (Managing the Talent Equation: The seven fundamentals of Talent Management).

Employee Engagement - the concept (covered in earlier Journal articles) and measurement and the way in which embed practice of monitoring provides organisations with the right intelligence (Employee Engagement: 'Factors' of successful implementation).

Organisation leadership from the perspective of collective day-to-day decision-making not heroic individualism. Effective becoming the operative word as a move to embed Evidence-based Management (EbM) principles gains ground for all management practice (Effective Organisation Leadership: A Case of Adopting Evidence-based Management).

The evaluation and effectiveness of well thought-through reward-performance-decision-making alignment in the achieving of organisational objectives and goals at any level. Or of course not......(On the Folly of Rewarding A, Not Penalising for B and Gettiing C).

And also providing a framework that encapsulates what HCM is to an organisation and its subsequent evaluation using qualitative and quantitative analysis to provide an evaluation to direct startegy and tactics at ground level (Reprint of Organisation Enagagement: Evaluating your Human Capital Management Signature - see Volume 1 Number 2 2007).

What Human Capital Management isn't

Human Capital Management isn't about automating processes through use of software. That's just clever marketing by software companies and HR professionals should know better.

It isn't just a new fancy name - see above section if not sure...

It's not a way for the current HR function to rebadge itself without some shift in capability unlike it did last time (from Personnel to HR)

It's not designed to be trendy - merely the correct use of technical terms to denote the mangement of people as assets (nothing to do with the accounting definition) and their utilisation (not useage which is derogatory). It is thus a difference in philosophy from the term human resources.

The HR function - I was wrong

Sometime ago I blogged on the emergence of HCM would see the dropping of either HR or Personnel related to the naming of the function. My initial default was that Personnel would go being the earliest version. But I think I'm wrong. I think HR will go.

You see many HR functions are really Personnel functions in disguise its just that they rebadged but without any real change in remit or capability.

As for those functions who are making the new journey - well they will eventually be HCM functions. You see there is no place for HR functions - you're either Personnel or HCM.

At least in the UK the qualifications will match (HCMI for HCM, CIPD for Personnel). I suspect that a lot of functions will be happy - indeed a number have never changed to HR they have continued to provide administration and baseline ER services and will probably continue to do so.

The term Human Resources is actually derogatory as Resources in this context implies expendability (think oil, coal, metal, gas etc and should not be applied to people). I presume that is why people tend to say HR. It's also snappy. The only reason I say or quote it is that it has become accepted common language and therefore easy to communicate (forget issues over actual meaning for a moment).

That doesn't mean to say however that I acknowledge or accept human resources as a bona fide term. This is unlike many others who refuse to countenance the term human capital and not even acknowledge its existence which has been around for over 50 years, in some bizarre denial pursuit.

The rationale for dropping HR would also consign much that has been written on this in the last ten years to the BIN (other than those pieces that were clearly talking about HCM but just with the wrong heading).

Because let's be honest I'm not sure what HR has actually 'done for us' - save an extraordinary focus on internal functional operations of limited impact and around fifty varieties of derogatory acronym alternatives.

In fact I think a number of professionals will become more at ease. Choose HCM or Personnel. That's the debate.....You heard it here first............

The Journal (of AHCM) Volume 2 Number 1 is now here......

2008-05-23T11:02:56Z

Finally, Volume 2 Number 1 Journal of Applied Human Capital Management is here.

A little later than scheduled but just in time for the holidays (if in the UK)!

Leading articles include:

]]>

Strategic HCM: Closing the hole in the HR Ozone Layer

The Enterprise-wide Application of Human Capital Management Intelligence (HCMi)

Managing The Talent Equation: The Seven Fundamentals of Talent Management

Employee Engagement: Factors of Successful Implementation

Effective Organisational Leadership: A Case of Evidence-based Management

OnThe Folly of Rewarding A, Not Penalising for B and Getting C

Also reprint of Organisation Engagement: Evaluating your Human Capital Management Signature (Volume 1 Number 2 2007)

Available to download from VALUENTiS, ISHCM or VBHR websites.

Enjoy!

HR Transformation: Have we lost the plot?

2008-05-19T07:31:04Z

There's been a lot on offer regarding HR transformation over the past few years. Magazine articles, conferences, network events, publications, case studies etc.

But there is very little evidence that real HR transformation has gone on at all. For those who want to know what I am talking about and compare then reading Real HR Transformation may help.

As I have stated a number of times, HR transformation isn't just employing a bit of automation or outsourcing or shared services or any other part of the 'three-legged stool' or Ulrich's 2x2 conceptual model for that matter. And it certainly isn't only about cost reduction.....

]]> Because if the answer was 'to reduce costs or headcount' - the question we should be asking is 'what was your prior value proposition beforehand? And, more importantly, what is your value proposition going forward? (the answer more strategic I am afraid is on dodgy ground)

What is very, very disturbing is the way that HR transformation is being presented in the news/PR. HR Directors are lining up to trumpet the latest HR transformation that reduces costs by cutting heads. In Finance and Marketing journals, I don't seem to come across that 'X Director is transforming Finance/Marketing by reducing costs/staff' to one iota of that we see in HR.

Thus why is it being reported as a badge of achievement? Why are we queuing up to present case after case of the above? To see HR transformation's output as reducing costs only suggests that the HR function has been failing whether through inefficiency or ineffectiveness or both. FULL STOP. PERIOD. DEFINITIVE.

My questions:

How has it come to this in the HR profession?
How is it possibly a positive message for the HR function?

What are we doing? There is more to HR transformation than this. If the profession doesn't see it then the HR function will get what it deserves, i.e. atomised to the point of insignificance.

Also - Dave Ulrich has left the (HR function) building

For a number of HR practitioners, just to remark that if you hadn't noticed, Dave's last book was about leadership (Leadership Brand) not about the HR function. I suspect that he's given up with people asking him the same wrong question for the last ten years (and still doing it even now!). So can we please move on.....

It was very noticeable in our recent ISHCM HCMI module on HR Operational Excellence last week how bankrupt the literature on HR functional operation has become. Pages and pages of published text saying the same old thing providing very little worthwhile - more and more on less and less (not the first time I've used that phrase).

The 'three legged stool' - the most over-hyped and over-used term in the English Language. It's meaningless. If you want to know something useful with regard to HR functions read the Journal of Applied Human Capital Management - more specifically Brave New HR World parts I and II.

The HR profession when it comes to the function's proposition is showing itself to be intellectually bankrupt. And yet there is so much opportunity to do so much more contributive work to the organisation as evidenced in different quarters. See our work and others.

It starts with seeing HR transformation as it should be - not being milked for PR purposes, which seems to be driven more by ego than any professional or functional rationale.

Organisations are very reluctant nowadays to mention headcount reductions because it is an admittance of failure.

So why are HR function professionals (the 'guardian' of all things people) so keen to do the opposite?

There's Evidenced based management and then there's...........

2008-05-12T13:48:58Z

(With regard to people):

'Hearsay management' where management argues on the basis of the corridor/watercooler conversation

'Heard it at the last conference management' where management sees a presentation without due diligence but it sounds good and has been implemented at XYZ co but there's nothing to relate from an evidence based perspective

'Talked to the next-door neighbour management' where management is privileged to have a conversation with their next door neighbour who happens to be very knowledgeable in the chosen specialist subject (Phone-a-friend)

'My experience last time management' where whatever the circumstance last time, the same decision-making takes place whether the same factors/variables are now present with the current situation

'XYZ Consulting's research' where executives take verbatim the results/ conclusions of some very dodgy output. The market is inundated with them.

'No time for any real research evidence-based management' where executives reject any notion of informed results/opinion in favour of their own opinion

'They do it down the road management' - a real favourite with many executives where the organisation next door or closest competitor has done it so therefore it must be right.

'I can find something else to occupy my mind from the real important things management' - a perennial favourite for some HR Directors who can find any potential internal distraction (think HR restructuring) to avoid attacking the real organisational issues

And 'I listened to somebody famous and they said..... management' another favourite with some HR fraternity.

Recognise any of these in your day to day experiences?

I noticed that Gerry Robinson at the latest HR jamboree (fresh from the CIPD stand-up) calling for HR to stop waffling re change management. As much as I might agree with Gerry's assertion re change management its hardly HR's fault.

Seriously, HR's waffle is blown away in comparison with management's ability for hot air - think 'People are our greatest assets', 'Talent management is our real focus', 'Performance is key' and like any other CD marketing comment, 'and many many more'...... Perhaps we can come up with the top or (best) 100 jokey management phrases that are hollow and vacuous. Send them in.....

I've mentioned before about inane comment being printed. There's a new game in town which is called 'Gerry says' .....'put your hands on your heads' and how all the flag-waving HR fraternity clapped and then put their hands on their heads..............

'Back to basics' - now there's a good one for starters...........followed by Evidence-based management.

This song goes (to 2 Unlimited's 'There's no limits, No-No)

Evidence based management
repeated 71 times as in the song..........

No, no....no, no, no, no, no, no, no, no, no, no, Evidence based management

No no limits, we'll reach for the sky!
No gutter to deep. No ignorance too high.
No no limits, we'll give up the fight
Why EbM when we do it with amateur pride.

No, no....no, no, no, no, no, no, no, no, no, no,
No, no....no, no, no, no, no, no, no, no, no, no,
No, no....no, no, no, no, no, no, no, no, no, no,
No, no....no, no, no, no, no, no, no, no, no, no...........(take a breath)

The future of HR: Which HR are we talking about?

2008-05-07T07:43:48Z

There has been recent furore over the raised question regarding the future of HR following the article on PwC's report in PT. In the ensuing melee of comment it would seem that we’ve overlooked the real question which is ‘Are we talking about the HR function or the HR profession?’ Because the two are not necessarily the same.

If we are referring to the HR function, then its future is reasonably safe – the only question then being as to what type of HR function is it, i.e. one that is operationally compliant focused and mainly outsourced or one that adds strategic value optimising people and management contribution? (And, of course, the hybrid versions in between).

If we are referring to the HR profession then I would say that the future is far from certain and here are three reasons why:

]]>

1 Quasi-professionality
In reality, the HR profession in definitional terms, has only ever reached quasi-professional status and at some point we’re going to have to accept this. Somebody senior at the CIPD needs to acknowledge that in the race to become ‘Chartered’ the fundamentals of comprehensive subject matter supported with an infrastructure to provide standardisation of practice took second place. Even the latest objectives of CIPD seem to be more on generating more members rather than the standing of the profession.

The embracing of evidence-based management in people management has been very slow to the extent that HR practitioners’ and line managers’ approach is not to synthesise related research and empirical evidence in their decision-making but more a reliance on gut and the latest fad/experience, rejecting any scientific methodology in the process.

Take, for example, Hertzberg’s two-factor theory of motivation. It is still very prevalent in the HR profession and likely that it is something that many managers may know to some degree. But how many HR practitioners are aware of the published criticism and limitations of this theory?

Also, terms like leadership, talent, engagement are bounded around like ‘candy floss’ at a fare rather than be treated to the technical appreciation they need.

2 Comfort-zone
Nobody can deny that the last ten years economically has provided ‘big’ opportunities for people management to take centre stage and yet one could be mistaking for thinking that the HR function has been busy reengineering itself endlessly. There has been an extensive over-focus on HR functional structure, driven by certain academic reverence. There is little evidence that organisations generally are much further forward at all in terms of effective people management practice.

In particular, many HR practitioners prefer to ask for the ‘same-old’ topics at conferences listening to ‘pack & go’ presentations for adoption with little professional due diligence. The profession is often accused of ‘navel-gazing’. The point is that focus on the HR function, expecting to listen to the same-old, same-old and navel gazing are all connected – they’re all comfort-zone activities.

3 The rejection of evolution
Too many HR practitioners refuse to countenance or, indeed, deny the existence of human capital and human capital management despite the fact that the term is over 50 years old and provides fantastic opportunities for the profession to ‘up its game’. It is the same as accountants ignoring or rejecting the concept of economic profit (which coincidentally is as old a concept as human capital).

Embracing the terms HC and HCM does not mean that we are ‘junking’ previous HR learning. On the contrary it is an evolution designed to enhance professional capability and incorporate the large body of knowledge that has built over time in the people management domain.

And I pay tribute to those practitioners who are embracing the evolution and challenge.

Of CEOs, salt and accountability
When I read reports using information gleaned from CEO or equivalent senior management I accept the information with a pinch a salt. After all, these are the people you’d like to think understand the benefits of effective people management. But why do many people management initiatives seem to be public relations exercises? Who is kidding whom?

I have no problem with public acknowledgement of good practice but that should not be the default reason which seems to be so common nowadays. And it’s all too easy to ‘kick’ HR without any accountability in management terms by this same management cadre.

From a professional standpoint, it sits with those in HR/HCM to be the guardian of effective people management. It is a continual challenge to educate and contribute.
If not, then we end up in a ‘vicious hamster-wheel’ of our own making which limits the functional role and its contribution. In this scenario, even with the best of intentions it is hard to see how the ‘profession’ can play a ‘bigger and more accountable role’.

Of course, the HR function and the HR profession are connected. A strong profession begets a strong function. A weak profession begets a weak function. There is no such thing as a strong function with a weak profession.

One argument is that there is little opportunity to reconcile some of these differences and the profession may well eventually split – one part going on to achieve fully fledged professional status, the other to remain at quasi/amateur status. I hope not because only one of these has a real future.

Announcing the ISHCM Collaboration..........the most significant innovation in HCM to date

2008-05-02T08:32:49Z

Yes - Today I am announcing that The International School will later this year launch the ISHCM Collaboration - a practitioner library to assist the decision-making and application of human capital management practice through an evidence-based management approach.

This will parallel existing structures in medicine (Cochrane Collaboration) and social policy (Campbell Collaboration). Visiting these websites will give you an idea of what I'm talking about and the potential awesome capability that could be built with defined communities of practice.

The International School of HCM and VaLUENTiS are both advocates of evidence based management and evaluation based management, the appropriate use of science, interpretation and application to assist in the proper implementation of human capital management practice.

For those of you who are not familiar with the concept of evidence based management and evaluation based management then a quick google/wiki reference may help (click on links).

Truly an exciting development but as ever in the HCM space I'm sure it will be met with general indifference and abjectivity, particularly by some organisations who, shall we say, should have done something in this space some time ago.

I'm also sure that there will be a few 'practitioners' who will positively abhor it since it brings accountability into the equation. (For more on this see April 24 blog - HR Profession: Are you an 'Idealist', 'Committed Professional' or 'Rentseeker'?)

We're still working on its exact form but we will keep you posted of developments. This is a big step.

BUT YOU HEARD IT HERE FIRST..........