HRXformation II

On August 22, 2010, in John Sumser, More2Know, by John Sumser

HRXformation | Great HR Makes MoneyHRXformation II

The problem you are trying to solve is not the problem you have.

At the very core, this is the issue facing HR operations around the planet. Focused on internal measures, cost efficiencies and process improvements, the generic HR operation looks straight at the question of value creation. More often than not, the distinction seems either too subtle or impossible to achieve.

Before you write this off as yet another whiny, negative piece on the failings of HR, let’s get a couple of things straight.

  1. The tendency to confuse improving your processes with making a difference is a normal part of being human. In a way, it’s what organizations are good at doing.
  2. That HR seems to specialize in solving problems that don’t make a difference is mostly caused by a lack of examples for tying the function to business results.
  3. There are solid examples of how to move the ball forward; not best practices but insight generating stories. Best practices, as you might guess, doom the function to irrelevance.
  4. The question of HR’s essential value is critical. Knowing what to outsource and what to keep is the primary decision being made in HR organizations today.

There is an old Sufi story about solving the right problem:

A man was walking home late one night when he saw the Mullah Nasrudin searching under a street light on hands and knees for something on the ground.

"Mullah, what have you lost?" he asked.

"The key to my house," Nasrudin said.

"I’ll help you look," the man said.

Soon, both men were down on their knees, looking for the key. After a number of minutes, the man asked, "Where exactly did you drop it?"

Nasrudin waved his arm back toward the darkness. "Over there, in my house."

The first man jumped up. "Then why are you looking for it here?"

"Because there is more light here than inside my house."

It is normal and very human to look for the keys where there is the most light. In HR, we know all about retention, time to hire, cost per hire, and a thousand other measures of our work. What we lose sight of is the business impact.

In a few really visionary companies, HR leaders are assigned real business objectives. One really large and innovative Silicon Valley firm measures recruiting performance for the director with "revenue per employee" (RPE). There is a single RPE goal and bonuses and performance begin with that objective.

So, when faced with a choice between hiring 30 people in a declining subset of the business with low margins and a trend towards commoditization (which would improve overall cost to hire and cycle time measures) and finding two really difficult positions in a fast growth high margin operation, the prioritization is obvious.

Far too often, HR Leaders who express their objectives in the few things that they can control lose sight of the rest of the business. It doesn’t matter how fast or slow you hire people if you are hiring the wrong people or even the right people for the wrong business segment.

There are many, many ways that HR can be the generator of massive transformation and huge economic success. It’s just that none of those things involve doing HR faster, better or cheaper. They all involve applying smart Human Capital planning and practice to the business.

Great HR makes money.

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