Tuesday, February 21, 2006

Mismanagement of Human Resources

Rant source: Why we hate HR?

One of my favorite quote that a friend of mine uses is: "People aren't your company's most important resource, the right people are" as taken from Good to Great by Jim Collins. This puts the right focus in front of any HR person who wants to be more involved in the strategic decisions of a company. In fact, nothing will impact your knowledge centric company more than acquiring talented, driven individuals to work in your company and then keep them there.

At some point, I have noticed that Human Resources continues to add processes to measure their people from year to year on their performance. This process adds a overhead to every single employee in your organization. Now, I am not saying that we should not measure the effectiveness of people or of the HR department, as continual measurement and measurement improvement is the only way to optimize performance. However, why is it the job of a Human Resource department or representative to determine a process to measure the individual contributor? There seems to be this universal need to list your weaknesses and strengths. The strengths are there for feel good factor while the weaknesses are a thing to used as a driving whip in the backs of the employees. Another standard question concerns the accomplishment of goals that were set out at the beginning of the year. Specific task oriented items that can be accomplished by a certain time limiter with little wiggle room is a poor way to measure an employee that has the ability to take initiative and put thought into finding the things that will make the most impact and work on those.

First off Human Resources does have a part to play in the Performance Review process, just not the creation, but instead the documentation. To begin, the goals set forth should be derived from the goals of leadership. This belief was instilled in my by Jay, and has been reinforced by the operation of the team he ran. If the company goal is to creat $7 billion in free cash flow or increase diluted eps by $.20, these things can be translated down to individuals, but can only be done some one org layer (or layer to the corporate onion) at a time. The leadership team involving the C class executives are responsible for splitting that goal up among their individuals orgs as some teams are not created equally. A VP of PR can't contribute much in the way of dollars to free cash floor, but could do more with less by creating value in interviews and product demos that cost nothing to the corporation but generate media buzz. A VP of IT, can contribute to efficiency that are needed by other orgs. All parts and pieces must contribute to the end goal, but not all contributions need be equal, but all must be related to the overall all goal and those pieces of the goal must relate to the company's vision and mission statement.

Within a given org, the departments can now look at those high level goals (that are now closer to their company view) and break those down into goals that are to be worked on. Our group will contribute $50 million in buzz worthy demos. Our group will contribute $50 million to Apparel revenue. At no point do you want to limit the individual to where they are just working on set goals and afraid to go blaze new trails.

The next step is reaffirmation of the goal at each quarterly analyst call. The goals of each org and person should still reflect the goals of company at all times of the year. The process by which it should be done is subjective, but one that is engaging to the members who actually have to contibute and accomplish the goals is probably the best case as there is now more ownership of the companies performance.

The final step in performance is meeting the goals which should be again measured at the top and trickled down. If the company met goals, then great. Next is to allocated kudos (whatever those may be) to the departments based on their relationship to the goal and this flows down through the org. The amount of kudos in the pool is defined by the scale of eps or free cash flow or whatever.

So where does that leave HR? What do they do again? It is easier to look at their functions in terms of architecture. There are main functions that need to be accomplished to aid the company and then some underlying services that all functions need to use to accomplish their goals. The only function of HR is Talent Management (aquisition, retainment, removal, classification). This means that we need a way to hire individual (how does a manager set up the requisition? how is that req communicated to the job seeking public? etc.), a way to identify individuals that can contribute (standardized tests of personality, IQ, functional knowledge?), a way to create incentives for people to join (dogs at work, 401(k) matching, medical insurance, etc). This is just a drop in the bucket, but the core is creating an environment that allows for the company to accomplish its goals. When those goals are inhibited due to talent, that is a failing in HR.

I know that this is just the tip of the iceberg, as each part of HR's mission needs to be explored out, mapped, measured, and enacted but it is time for dinner. HR principles today seem to be driven out of the old America, when employees were of little skill and could be replaced easily. These were environments of system driven results as opposed to many industries rely on people driven results. Maybe product engineering and software development companies will find systems to remove the need for talent, but until then HR has a strategic place in the corporation regardless if they feel it or not.


Mike A. said...

Saw this quote on slashdot a while back:

Hint: When ever you hear somebody say "Our employees are our greatest asset" they're lying, or they don't understand basic accounting, or they're slavers and illegal after-market organ transplanters.

Jay Heuer said...

Could not help but post these: :-)

Remember, "Who recognises a problem, and does nothing to fix it, is most probably part of it."

Milton Friedman, Nobel Laureat for Economics, once said: "The best intentions can cause the worst conditions."

oh, and "When there is a piano to be moved, there will always be one that grabs the chair."