Personnel Today’s HR doctor Nick Holley diagnoses some diseases common to HR and suggests the cures that might restore it to health.
Lack of depth malady
- This lack of depth is most critical in the most important area, HR’s understanding, not only of business, but of their business. It is pretty cheeky to call yourself an HR business partner if you don’t understand the business you are supposed to be partnering with.
- This lack of commercial acumen often results in HR being intimidated by the numbers. As a result some HR people see finance as the enemy as opposed to their key ally.
- In the worse cases HR lacks depth in the source of its expertise. They don’t know the basic HR models and don’t philosophise about HR.
- As a result when challenged there’s no depth. This is becoming a bigger problem as more and more books are published on HR related topics so that many line managers believe they are experts.
- Complications can really set in when HR suffers an attack of ‘compartmentalisation’ at the same time. If HR people lack technical expertise across the full breadth of HR they don’t join up the things or see the implications of their actions on other aspects of HR. The result being they don’t connect or work together with other parts of HR.
- ‘Lack of depth malady’ can result in a severe dose of ‘oversimplificationitis’. There are many occasions when HR overcomplicates things but there are also times when HR oversimplifies things through a lack of understanding. As Einstein said “Make it simple enough but no simpler.”
- All of this leaves HR looking amateurish and lacking in credibility.
- As with many of the diseases we have studied to date ‘Lack of depth malady’ can have a serious impact on HR’s credibility. As a result HR is kept in its ‘box’ and is never ever consulted on the important decisions where there serious people implications. The danger is heightened by the presence of managers who have read a book and think they are experts resulting in the wrong diagnosis and the wrong cure of these people issues
1 I was working with one management team in a bank and their Chief Financial Officer told me about his HR Director colleague. At a meeting looking at a major investment decision the project was about to be nodded through when the HR Director who had been pretty quiet piped up: “Hang on a minute I’ve just been running through these numbers and this NPV (net present value) calculation is out. The denominator is wrong and when I’ve fed in what I think is the right number this is a negative NPV. Why are we agreeing to this?”
When the CFO checked the numbers the HR Director was correct. As he said: “It was a bit embarrassing for me but he was dead right and I and the rest of the board have looked at him in a different light ever since.”
2 One head of talent at a major utility had been reading an analyst’s reports on the business, which highlighted a major concern around succession cover for the CFO. She worked with the investor relations team to create a business case for a serious investment in talent management, which the board signed off because they could see the impact on the share price.
3 I coach an HR Director who had a strategy review with his non-execs. He recognised that they didn’t actually care about HR and what it did, but cared about the delivery of the business strategy. Rather than presenting an HR-centric report to them he focused on the key people capability issues underpinning the business strategy and gave them confidence in the business’s ability to address them. He realised that for most people it’s not about HR but about the business.
- If you have no understanding of business it is critical to go through a crash course, understanding critical concepts such as cash flow, break even, fixed and variable costs, net and gross margins, net present value, PE ratios and shareholder value, etc. If any of these concepts either have no meaning, or even worse you see them as irrelevant to your role as an HR person, you really need to get real.
- Spend time in the business understanding the business. Look at the numbers, read the annual report and management accounts and if necessary get a friend in finance to explain them to you. How do you make money? What are the critical numbers in your business? What is critical to your shareholders?
- Develop systemic ways of thinking: don’t think in a linear way but look at how the different elements of the business and the HR mix link together.
- Invest time in your own professional development, read around the subject, go to conferences, and reflect deeply on the nature of HR, the art, the craft and the science. It always impresses me when I work with HR people in Sub-Saharan Africa how many of them have not only undergraduate qualifications but also Masters degrees in HR-related subjects.
By Nick Holley, director of the HR Centre of Excellence at Henley Business School. The centre works with members from the private, public and third sectors to change the debate around HR; carrying out applied research aimed at advancing current thinking, and delivering programmes to enhance the quality of business and partnering skills for senior and high-potential HR professionals.