When I spoke about Easy Way Outosis I spoke about our sister organisation Strategic Dimensions. They raised another concern. They find people applying for senior jobs who lack real depth in their thinking about their roles. When interviewing for a Head of Comp and Ben role they asked one candidate if their organisation had an LTIP and if so why. The answer was ‘yes because everyone else has one’. This isn’t good enough. You need an understanding of the theory and practice that underpins HR. Good HR people are curious about their profession.
- This lack of depth is most critical in the most important area – HR’s understanding, not only of business in general, 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 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 worst 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 people- and H- 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, then they don’t join things up or see the implications of their actions on other aspects of HR. The result is that 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 even consulted on the important decisions where there are 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 for these people issues.
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.”
One Head of Talent at a utility had been reading an analyst’s reports on the business, which highlighted a major concern around succession cover for the CEO. 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.
I coached 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 cow, 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 HR 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. This has become a lot easier since I first wrote these articles. The internet, Google and social media have made it simple to keep up with the latest thinking. Every day I go on the internet and retweet articles about HR, strategy, leadership, the world of work and so on. It doesn’t only mean sitting in a classroom, but seeing learning as part of our daily lives. It’s about how we do our job, not something separate to it.