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Is HR fighting a losing battle?

Scan of international headlines shows various business scandals

By Ian Hendry

It might not surprise many of you that business revelations across the other side of the Atlantic Ocean bear a striking similarity to our experiences in North America. A brief overnight stopover at Heathrow Airport gave me the opportunity to quickly skim through a couple of editions of the Financial Times.

Here is a sampling:

  • Credit Suisse is set to face charges of improperly inflating the assets of its private bank.
  • Toshiba is facing a $60-million fine for a $1.3 billion accounting scandal.
  • A whistleblower at British American Tobacco alleges the company engaged in bribing a Ugandan government official.
  • More claims emerged from Volkswagen's emissions test-rigging scandal affecting 11 million diesel vehicles worldwide.
  • A raucous oil cartel meeting where various accusations were made which revealed a growing discord between Saudi Arabia and Iran over production levels.

I am sure it was purely co-incidental that the International Anti-Corruption Day fell on Dec. 9 , but as one thinks about the actions of leaders in these organizations and countries, it should not be surprising that English commentators claim that public trust in leaders has never been so low. In fact, they remind us that the greed of leaders was a significant cause of the financial crash of 2008. 

The Centre for Creative leadership (CCL) is quoted as saying that, based on numerous research studies, one-half of all leaders are seen as “a disappointment, incompetent, a mishire, or a complete failure in their current role.”

In another study, 35 per cent of U.S. employees would actually forego a pay raise to see their direct supervisors fired.

Insofar as a belated 2012 study found that American companies spend almost $14 billion annually on leadership development training, Stanford University’s professor Jeffrey Pfeffer succinctly sums it up by saying, “The leadership industry has failed.” 

Is this not an indictment that HR has failed also?

I am quite certain that most of us would want to work for CEOs who are led by a strong moral compass and who possess a character that is to be admired. Such leaders use their inherent position of power for good but, in all our collective experiences, are the leaders with whom we have worked driven by the desire to create a just world where goodness reaps its own reward?

It is my conclusion that Pfeffer may, sadly, be correct when he says, “The ability to distort reality is a crucial —maybe the most crucial — leadership skill.” 

If this is indeed the case, Simon Caulkin poses an interesting dilemma — “If good leaders are so rare, the solution is organizations that need them less.” 

The inference here is that we need less of an expectation on leaders, but more structure, discipline and process whereby, as Caulkin muses, ”over time, resilient systems outperform collections of individualistic stars.” 

Take Toyota, for example, where it was once said the company’s purpose and operation were so stable that changing the CEO was as simple as changing a light bulb. Contrast that with most CEO upheaval today where boards are demanding organizational transformation.

I feel quite certain that the stories appearing in the Financial Times will unearth situations where the CEOs will claim they were hoodwinked by employees, and boards caught by surprise by CEOs who failed to disclose pertinent information or facts. Either way, organizational culture and ethics will be painstakingly examined, with a determination of whether executives were implicit, or complicit, with questionable practices. 

But it also makes one wonder whether boards place far too much reliance on the word of the CEO or whether they choose to make the effort to peel down into the layers of the organization in search of the real truths within the structure and the practices within it.

If nothing else, it should leave us with the troubling, yet compelling question — if good leaders are so rare, is HR fighting a losing battle?

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Ian Hendry

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