When compliance is king you’ll get more than your fingers burned

The annual CEO Briefing released earlier this month by the Economist Intelligence Unit (Personnel Today, 7 March) had three significant messages for HR.

First, in terms of the greatest challenges facing organisations trying to be successful, three of the top four were people related (teams, talent, communication).

Second, in terms of the greatest risks, two out of the top four were people related (innovation and talent).

Third, of the 11 business areas, HR was ranked bottom in terms of performance, and next to bottom for importance – evidence that the HR function is still seen as the poor relation inside most organisations, and once again raising the question of HR effectiveness.

Handy assessment

A few decades ago, Charles Handy, writing about organisations, illustrated the boiling frog syndrome. This is a metaphor for (comfortably) reacting to slow changes in the environment – in this case, the temperature (as the frog sits in the pan on the stove, which heats up slowly and the frog doesn’t realise how hot it is getting), which eventually leads to the death of the frog.

This could be interpreted as a ‘coping strategy’, which does not lead to a satisfactory outcome.

This analogy can be related to the HR function. The CEO Briefing echoes the results of the VB-HR Rating study – a global rating system for human capital management (HCM) – conducted last year by Valuentis. The study focused on HCM across the organisation as well as HR.

What we noticed in HR – despite the apparent ‘busy-ness’ of activity and feeling of satisfaction – was an increasing (and unhealthy) focus on compliance-related activities. Most in HR would argue that this reflects the increase in organisational drivers. We would argue that it is yet another example of the boiling frog syndrome and, at the current rate, HR will become a sub-unit of internal audit within 10 years.

To illustrate the point, HR benchmarking (measuring irrelevance), accreditation from Investors in People, and Chartered Institute of Personnel and Development qualifications provide an illusion of competency and thus comfort. In fact, all three can be viewed as part-manifestations of box-ticking exercises.

HCM is all about value and risk – compliance is just a small part of this. HR needs to understand what its value proposition is… or should be.
This article is not meant to bash HR – it’s more a reality check and a call to arms. To back this up, in the past 12 months, we have released a management evaluation tool, human capital reporting standards and a university dedicated to HCM.

In an updated metaphor, in the film The Matrix, the protagonist, Neo, is offered a choice of pill. The red one denotes reality and a tough challenge, but with support. A blue one denotes comfort, but he will ultimately be doomed to a subservient and irrelevant life.

Organisations deserve the employees and the talent they get (ie, you get what you deserve). Increasingly, I believe that this has far more resonance with the HR function.

Challenging HR

So, I would challenge all HR executives and their teams to ask themselves the question: ‘Do I want to take the red or the blue pill?’.
There’s an old adage in business that states: “If you’re not part of the solution, you’re part of the problem.” The question to ask, therefore, is: “What part of the solution is HR trying to provide?”

If the answer is confused or uncertain, or is overwhelmingly compliance-related, then perhaps HR needs to realise that it is part of the problem.
The great news is that there is still time to do something about it.

Nicholas Higgins, chief executive, Valuentis

Comments are closed.