Allow me to use creative licence. If HR were accused of being business people, a ‘‘not guilty’’ verdict is likely to be passed for lack of evidence.
‘‘Not guilty’’ HR serving solely the employee and the line manager is what we will call 180 degree HR. Torn between juggling vested and largely conflicting interests of these internal customers, such an HR often receives blows intended for the gods, leaving HR yaw-yawing between being labour activists and hatchet men for the line managers. This is the HR we are for the most part familiar with, what we know it for, in short, the HR brand that business despises.
What can HR do to be found ‘‘guilty’’? Wrong question. It’s about what HR delivers not what it does.
To become ‘‘guilty’’, HR must begin with the external customer. When HR is shaped to deliver value for the purchasers of goods and services, investors, suppliers, community, regulators and strategic partners, we move from 180 degree to 720 degrees HR. We shall sample how HR can deliver value for the buyers of the firm’s products.
Purchasers are wallet-holders, who provide finance. If cash is king, then the customer is king of kings. If HR’s work is not geared to excite the ‘‘king of kings’’ to keep reaching for their wallet then such work is not worth pursuing, period.
HR has no option but to intimately know the ‘customer’ as much as marketing does. Are we advocating turning HR into marketers? No, we are saying HR must thoroughly know what makes purchasers take money from their wallets and give it to competitors instead of their firm so that HR practices can be aligned to directly deliver value to the purchaser. To deconstruct the anatomy of the purchaser, HR must spend at least two hours a week with their marketing peers sharing notes. Better still, when HR actually takes part in sales efforts. My friend, Dave Ulrich, voted HR’s most influential thinker in 2007, 2008 and 2009 by a respected magazine, HR Magazine, narrates how HR led one multi-national firm in recapturing lost market share.
Sounds utopian? Read on.
The multi-national in the oil industry saw its market share drop from 24% to 19% in a US$15 billion market. Fortunately, HR sat on the executive committee (Exco). HR suggested a large scale survey to measure the customers’ pulse. Marketing bemoaned budgetary constraints, opening the way for HR to take the lead. A team comprising HR, the CEO and a consultant designed a questionnaire which was to be sent to key customers world-wide. A key question asked customers to allocate 100 points over a number of purchasing criteria, including price. HR leaders in this company are quite smart. Before feeding back the results each Exco member was asked to give their estimation of the customers’ buying criteria. This was done to shut space for Exco members to claim ‘‘we knew this already’’. Turned out, Exco views varied widely from customers’ responses. Exco members were more worried about price than customers were. Sensing that they knew not the customer, Exco demanded to see all the questionnaires. HR, having anticipated this, had brought all the 1 200 questionnaires. Rigorous scrutiny followed and finding no fault, Exco was ready to soak the implications. Using a low price strategy, the firm had been hiring sales people with no customer service skills. It was agreed to tighten recruitment criteria and increase the budget for customer service training. Two years down the line, market share that had plummeted from 24% to 19% recovered and surged bullishly to 31%, adding US$1, 8 billion in revenue.
Anchored on a deep understanding of what the external customers value, HR was able to realign its practices in recruitment and training which when implemented contributed directly to the bottom line. HR does not begin with HR. It begins with the wallet-holder. In their latest book, HR Competences: Mastery at the Intersection of Business and People, Ulrich and others recommend that HR professionals invite key customers to actively contribute in designing HR practices. One suggestion is giving key customers sample employee performance appraisal forms to validate. When the customer says “For the standards you are measuring and the behaviours you are rewarding, I would be crazy to buy elsewhere”, you know your performance management practices are aligned to deliver what the customer values. If not, then the appraisal form must be torn and thrown away until your key customers approve. Some forward-thinking HR professionals are involving customers in designing and delivering training.
To deliver value, business knowledge is a must. Shockingly, the latest global survey shows that business knowledge has dropped as a differentiating HR competence. Sounds ironic, doesn’t it? One reason offered, is that business knowledge has become a core requirement expected of HR, the table-stakes, as Ulrich and others word-paint. Business knowledge gives HR the right to play. The bar has been raised. Application of business knowledge by HR is now the differentiator between respected and despised HR. I am impressed by the growing number of HR professionals getting the MBA qualification.
A senior professor at the University of Cape Town pointed out at a recent graduation that failure to responsibly apply MBA knowledge will turn MBA holders into Masters of Business Apocalypse, Me Before Anyone, My Big Attitude, Mediocre But Arrogant. Creative licence allows me to add, Mistaken But Adamant. Masters of Business Losses, or is it Masters of Business Liquidation, for your MBLs?
The antidote to the MBA/MBL complex lies in a concept called credible activism.
HR professionals that do administrative work well, are approachable, are respectful, have integrity, are excellent communicators and have a strong and informed business point of view. They are called credible activists. Credible activists are not scared to confront and offer an alternative business view though it is contrary to what other business leaders think. This is called doing HR with an attitude.
A large bank wanted to cut costs by turning some of the bank employees into part time workers to provide additional staff during the peak hour and reduced staff during off-peak times. One lady HR executive, during an Exco meeting, opposed the move on purely business grounds. She made an analysis detailing how envisaged cost savings would be outweighed by declining revenue occasioned by loss of key customers. She brought the executive committee to see how probable deterioration in employee-morale would compromise customer service (a key driver of competition in their market). The plan was abandoned.
HR are business people first and HR professionals second. Such is the HR the business cannot resist since it keeps customers rushing for their wallets.
Recently, one credible activist (HR) argued for some rare-skill employees to earn a basic salary bigger than the CEO. The board approved!
Spending time with the customer, is it asking too much of HR? Share at email@example.com.