In businesses throughout the world, the function and role of human resources departments have developed significantly in the last 30-35 years. Job descriptions for employees working in these departments have diversified, resulting in more active and effective responsibilities within a range of organizations. However, despite their on-going development, human resources departments continue to be perceived as unpopular units whose existence and importance are often questioned.
In defense of the important and necessary work they do, many human resources departments have worked to disseminate these criticisms. Unfortunately, many corporate employees still disrespect the functions and the people working human resources jobs, going so far as to make defamatory charges individuals in these positions are trying to create their own tasks as the control units of the boss(es). Interestingly, in a recent survey conducted at a major, multinational company, it was revealed that many participants defined human resources as “the department protecting the company from the employees.”
This not-so-nice picture is likely the result of an insufficient development of human resources departments since their inception, not only in local/national organizations but also in many global companies. Human resources departments became the target of these criticisms after being stuck in strictly functional areas, such as recruiting, salary management, union relations and procedure management, among others. Tasked as a company’s watchdog, a great deal of employees outside of this department have come to view HR as a “hire and fire” unit.
Historically, most companies were formed with only three main departments—production, sales and accounting made up the sine qua non of an organization. But as businesses grew, in part due to an increase in competition, a number of support departments were established to aid in the success of these three main units. From these departments, marketing and information technology sectors have flourished, rising to the top as two of the most vital functions of many organizations. The rest, which include departments like HR, fail to exhibit the same growth and for that reason are subject to harsher scrutiny. Throughout this time, HR departments have functioned largely as task forces established to seek out problems, establish authority, enforce rules and head disciplinary teams. Though the model for strict disciplinary committees feels outdated, units like this are still active in many corporations.
In our current economic environment, in which most companies are forced to tighten their belts, human resources departments that fail to keep up with the times, that do not reflect the needs of modern workers and that are unable foster a more open, communicative relationship with other departments will continue to see a decrease in their power, breadth and role.
A SOLUTION: MODERNIZING HR DEPARTMENTS
To fix this potential downgrade, human resources departments should turn themselves into proactive and strategic units immediately. Current human resources roles appear to cover less than a quarter of the positions that would more comprehensively contribute to a corporation’s success.
One possible evolution of human resources positions would be to modernize their role within a business and make them responsible for the management of more strategic areas—such as goal setting, development and deployment of new systems, organization restructuring, streamlining, planning, management change and crisis management. In light of this growth, ancient and outdated systems, procedures and rules could be left behind, and these newly designed strategic human resources departments would be on course to become one of the most indispensable and respected units of any organization.
It would not be too difficult to reappropriate the administrative tasks that most human resources departments currently cover. Salary management any payroll could be shifted to a finance or accounting department, union relations and legal issues could be absorbed by law firms or the legal aid on retainer and recruitment could be handed off to outside companies. To avoid rendering themselves obsolete, human resources departments should focus on ways to turn this problem into an opportunity and grow into a new, more adaptable role.
I once knew a Fortune 500 CEO who completed hundred-million-dollar deals without signing a contract, because, he told me, “If trust breaks down to the point where we have to rely on the fine print to enforce the agreement, then it’s a losing deal anyway. I’d rather count on the goodwill of my partner and me to work things out than try to write and enforce an agreement that anticipates all possibilities.”
Some companies create burdensome regimes of rules and contracts to control every possible risk and contingency. They leave their employees no discretion, create a culture of inflexibility and bureaucracy, and slow the whole organization down. Unfortunately for them, business is a realm where superior judgment and personal relationships, and not faux-deterministic legalities, are what create winning companies.
Sign fewer contracts. Create fewer inflexible rules. Dismantle bureaucracy. Empower and encourage your people to use their judgment to build profitable relationships that grow and improve your company. Do so, and you’ll make far more money than you ever will by kowtowing to your lawyers.
The stereotype we often have of great leadership is of the brilliant and glib charmer whom people can’t resist following. Those pied pipers do come along from time to time, but they’re rare, and even when they do show up they often flame out relatively quickly, with their followers disillusioned.
You don’t need to be supremely charismatic, or great with one-liners, to be a strong and valuable leader. What you do need is:
• Solid and compelling business logic behind what you’re trying to do
• Candor and honesty
• Open, frequent, unambiguous and consistent communication
• The willingness to be make difficult decisions and to be selective — about investments, and about people
• The resolve to stick to these principles in the face of myriad, never-ending opportunities to be de-railed
The good news is that many more people can achieve this list than can develop extraordinary charm or charisma. And you can train yourself to do it.
Go for it.
When you’re interviewing for a key position at your company, you’ll obviously check for relevant expertise, attitude, and any number of other things. Yet you may neglect the most important question of all: What makes them tick?
People do what they enjoy doing, which is driven more by their heart than their brain. Is where their heart leads them aligned with your most urgent priorities?
Do you most need them to drive more revenue growth? Improved profitability? A culture change? Upgraded systems and processes? It isn’t enough for them to agree with your goal on an intellectual level: They have to truly love doing what’s required to achieve the goal.
If they don’t, you’ll spend far too much of your time cajoling, coaching, and hounding them to do it. Conversely, when the fit is right far less of your time and energy is required, and you’ll be coasting downhill. You’ll never enjoy that luxury with everyone who works for you, but the hiring process is your best chance to increase the downhill percent of your mix.
What they love doing is not overly difficult to ascertain in a good interview. Simply ask good, open-ended questions, sit back, and listen: They’ll talk about what they love (we all do) and then you’ll know what makes them tick. Don’t hire them until you do.
When you’re on the phone with someone who works in a call center, the service philosophy of his or her employer is immediately evident. Some companies hire low-skilled people and train them to mindlessly follow a tightly controlled script. Others employ better people and encourage them to act intelligently and to apply their best judgment. The first approach frustrates and sometimes infuriates customers, while the latter is a breath of fresh air. While I believe in minimizing cost as much as the next guy (more, actually), it’s hard to believe that the mindless approach truly makes money for the companies that employ it.
This choice is even more important for companies on a broader scale. Across your company you can hire, train, and incent top performers and give them wide latitude to apply their intelligence, judgment, skill, and ambition. Or you can invest heavily in processes and insist that your people comply with them as precisely and consistently as humanly possible. By selecting the first approach, you communicate that you value finding the right answer and producing results; with the latter, that you reward falling in line.
Of course processes, and sometimes heavily prescribed and precise ones, are necessary in any organization. However, at too many companies spending time and money on processes becomes the pursued end in and of itself, rather than customer satisfaction, profits and growth. To excel as a leader you need to question all processes in your organization, as well as any proposed new one: Do they truly lower cost and raise quality, or do they stifle initiative and promote mediocrity, while actually lowering quality and adding cost?
Over-investment in process is the refuge of managers who haven’t figured out how to produce superb results. Excellent leaders invest in process judiciously, and insist that those processes exist in the service of strong performers with large amounts of discretion.
A recent issue of The Economist described how the head of Sales for Boeing once woke up CEO Alan Mulally in the middle of the night to speak with a customer who was backing off a purchase. Knowing Mulally, I’m sure the sales head was praised (and not fired) for doing so.
Yet I’m often surprised by the things that CEOs don’t do for their company’s top customers. Why isn’t it the rule at all companies that whenever a key existing or prospective customer is at stake, the CEO spends as much time and attention as needed to secure a winning outcome? Can there possibly be enough things on the CEO’s schedule, all of which have a greater impact, to not leave time to win or keep a key account?
Of course, you don’t want to undermine the authority or skill of your account executives or division leaders. Sometimes the smart move for you as CEO is to keep your distance. But for each of your biggest customers or potential customers, you should rigorously ask and answer the following question: What are all the smart ways you could help win or keep the customer? Then it’s your job to make the time for it.
- Ask the right questions
- Conduct due diligence
- Assess value
The same advice applies when looking for employees, professional service providers, and contractors. You need to get to know the people you’ll be working with to ensure synergy. Do your business philosophies align? Will they care as much about your success as you do? Are processes compatible?
Perhaps most importantly, are personalities compatible? You’re looking for shared values, diversity, experience, talent—and people who will sometimes disagree with you. The ability to challenge one another’s thinking in an environment based on respect and trust can prove to be an invaluable asset.
Asking the right questions helps you get to know people and deliberately build chemistry inside and outside of the company. Not only will you improve your company’s success rate, the journey will be a whole lot more rewarding for everyone involved.
An article in TechCrunch provides a reminder that companies need to update performance metrics and adjust their strategies as industries evolve. Those slow to measure and respond to what’s important become less relevant and lose market share—sometimes very quickly. Unmeasured downward trends lead to massive reorgs and life-or-death situations when taken to the extreme.
Rovio’s decision to stay off of the Windows platform not only hurts Microsoft, it has a trickle down effect on device partners. Consumers downloaded Angry Birds Space 10 million times within the first three days of release. This clue signals the need for those in the app/game/mobile space to understand and respond to driving forces in their ecosystem.
If you measure success by market share and perceived value, then Microsoft is barely even playing the app game. Apple has more than 700,000 apps for the iPhone and iPad. Google takes second place. The Android platform has more than 410,000 apps. Microsoft weighs in at a mere 70,000 apps.
Google also needs to note trends beyond the platform-based app ratio. The number of developers interested in supporting the Android platform has begun to dwindle. As beneficial as open source systems are, the platform has become too fragmented. Developers want an effective, efficient means to monetize their products. Ease and scope of distribution play critical roles in determining where they’ll put their development efforts. We’ll see some tighter controls associated with the platform if Google pays attention to this key business indicator.
This week’s CEO Briefing highlights 8 lessons learned by eBay’s CEO, John Donahoe. You’ve heard most of them before including, “Enduring companies have a strong corporate culture and values.” The lesson that really stood apart from the rest: “Winning is important, but how you win is equally as important.”
Dig a little deeper and you’ll discover that Donahoe has serious courage. He did a turnaround while eBay still delivered strong financial results. Yet, key indicators were trending down because the company had not stepped up to meet significant new demands in the marketplace. eBay would not be the powerhouse we know today without Donahoe’s intervention.
Along the way, Donahoe introduced an interesting core metric called the Net Promoter Score (NPS)*. The company uses a scale of 1 – 10 to measure customer satisfaction. A score of 8 or higher identifies a promoter; 5 or less marks a detractor. Here’s the kicker. eBay ties 10% of senior management’s compensation to NPS improvements.
To take a closer look at how Donahoe turned eBay around, please read the story on ChiefExecutive.
*The idea for NPS originally came from Bain & Company consultant, Fred Reichheld.
According to this week’s CEO Briefing, more than 1/2 of CEOs discover the job is harder than expected. A feeling of isolation compounds their challenges. This situation brings an adage to mind: Two heads are better than one.
The article reports that admitting doubts to the board leaves one vulnerable because the CEO is supposed to have all the answers. Wow. Isn’t offering administrative guidance one of the board’s responsibilities? We do CEOs a huge disservice by turning their corner offices into isolation booths.
I think the ‘isolation booth’ is a symptom caused by command and control corporate structures. Companies with a predominantly authoritarian management style severely limit their potential. People nearly always stop offering feedback when you reach the top box of the org chart. In fact, sincerity and quality of feedback drop off proportionately to your place on the corporate ladder in this environment.
Isolating the CEO means that you limit the organization to a single individual’s strengths and hamstring it with their weaknesses. Without feedback and connectedness, the CEO loses his or her grip on reality and the company wallows in suboptimal performance.
A better approach involves building a close-knit executive team. Trusted members of this team can hash through issues and problem solve to develop solutions that go far beyond the CEO’s capabilities. In addition to fulfilling a fundamental human need for social interaction, your team becomes the sanity check.
Meaningful relationships with other people in the company shouldn’t stop here. The most successful CEOs know employees across all aspects and levels of the organization—and encourage those people to play an integral part in achieving the company’s mission.
Taking this concept full cycle, then, it’s primarily the CEO and his or her leadership style that constructs the isolation booth. If you’re feeling lonely at the top, then perhaps you solitary confinement is self-inflicted and it’s time to change your approach. If you don’t, no one else will.