Optimizing human capital during change

Three SCNetwork members discuss Maria Forbes’ presentation on CHREATE

Optimizing human capital during change
Canadian HR Reporter

Paul Pittman: I once had a boss who famously said if we hire a communications specialist, it means we have to communicate. It’s a bit like change. Change consultants want to change. So it begs the question: Should we anticipate change or respond to it? And if we choose to anticipate, what do we do in the interim?

Should we worry about categorizing the reasons for change? Is it important to know what is causing it? The effects are what matters, and these are going to be unique for each organization and arrive at varying times and degrees.

The causes may be different but the challenges we face today with people management are no different from those we have always faced: How do we optimize human capital in the face of change?

For the most part, we have allowed HR to be defined in a way that does not position or empower it to respond strategically and, consequently, in many organizations no one expects it to. 

Business consultant Ram Charan advises us to scrap it and start again with two functions, but the folks from Root don’t agree and would like us to reinvent ourselves with a passionate call to strategic involvement. It may be too late — we may have sunk too deep into compliance and administration.

To differentiate in the market, employers need to be unlike each other, and that makes it much harder to sell generic change models. When asked how we plan to prepare for yet another HR tipping point, the correct response is “We are going to be different from everyone else.” 

Change is constant. The five factors referred to have been around for decades, ebbing and flowing in importance. Unlike the past, the optimization of talent and the sustainable workforce are key management topics today. Boards are building talent governance processes agendas and accountants are spending more time understanding the impact of engagement as it becomes “tangible.”

Does this mean HR is losing the agenda? Is this just one more shovel of mud on the coffin of HR or — as Root would like to see — the opportunity for resurrection? I wonder if senior leadership and boards actually see business transformation as HR’s role anymore — it may be just too important.

I was really looking forward to this session but left feeling flat, not because of the presenters but the conclusions their research arrived at. What am I missing, colleagues?

Responding to change through people should be the role of HR, not the cause for reinventing it. Sustainability is relentless.

Sandi Channing: Change should be the role of HR — and there also continues to be a need for reinvention. 

HR leaders are sitting on boards and deemed to be strategic partners, but are they really? It was concerning to hear the comments doubting that organizations would commit the financial resources to develop or implement the appropriate strategies required — referred to as the reality versus the wish list. There are few organizations that equally value their human resources as they do their financial.

Even if there was no further change in the business world, HR would need to reinvent itself until it effectively created the shift in organizations perceiving employees as their most important asset. This means starting strategic conversations, providing the tools for managers to effectively manage within the current and emerging world, and demonstrating the impact of great people practices on business results.

HR understands the importance of people and culture on business outcomes but a measure of HR’s success will be when employers willingly invest in people and culture because of the ROI.  

I agree that the world in which we conduct business has always been in a state of change, however, the “five forces of change” we are faced with today are impacting all facets of business, and quickly. The question for me isn’t “Is HR ready?” but “Are we too late?”

Maria Forbes stated that the five factors are business issues in which HR plays an important role. For CHREATE to provide a tool for HR leaders is a good step.

The diversity in the summaries of the breakout groups was refreshing — a great example of how the same tool can come to different outcomes depending on the organization. Having said that, the tool is just a starting point. 

The impact on the HR function is clear — we need to lead organizations to shift their thinking to be successful in this new world. Those that recognize this and move quickly will be the winners.

This is nothing new, however. The speed at which these changes are occurring means those who anticipate will be ahead of the game. So I’m for anticipating, not responding.

Jan van der Hoop: Oh. My. God. Can we please stop the infernal navel-gazing and chin-quivering, and pull on our big-boy (or big-girl) pants? Enough anguish about the role of HR and wanting to be this or that.

Full participation on any team is earned through leadership, engagement, courage, partnership, understanding and supporting others, and — well — full participation. No one is going to just hand it to you, and nothing comes with a title except business cards.

Any HR leader or function that thinks of herself or itself as separate and distinct from the business operation (and a great many do, in my experience) will never be able to integrate as a business partner, and will disintegrate.

HR professionals need to be business generalists, first and foremost. They need to be able to read a profit and loss (P&L) statement, understand how they contribute to it, and have a keen understanding of all the moving parts and how the enterprise makes money (and where it loses it).

If they can’t pitch a business case to their peers or aren’t able to hold their own in a conversation about sales, distribution or marketing strategy, they are destined to be ignored — relegated to their lonely silo. That is self-destruction at HR’s own hand, not reinvention.

So, here’s my take on this event and the shifting sands we face: True HR leaders who are engaged in their business will take up the challenge and maybe use these tools to provoke reflection and discussion within the leadership team. Most won’t.

And, yes, it is an important, strategic, urgent conversation to be engaged in, which carries both opportunity and risk. The world is changing, as it always has and will continue to. To Paul’s point, for some individuals and organizations, that will mean more mud on the coffin; for others, it will spell new life.

Evolutionist Charles Darwin nailed it — it’s not the survival of the fittest, it’s the survival of those most adaptable. We’d best stop navel-gazing and start leading.

Pittman: You nailed it, Jan — I hear there are a gaggle of HR folks living on the Galapagos Islands.

To circle back on the accountants and your point about P&Ls, I met recently with professional accounting groups and they recognize that the science has now won and engagement does affect profitability. The trouble is they say the P&L and the balance sheet are rearview mirrors, and they are missing the moose in the headlamps. The ask was: How do we become more predictive about the financial impact of influences that negatively affect engagement? Do you hear the mud landing on the lid?

Van der Hoop: Gallup made the point about leading and trailing indicators two decades ago. It long ago established — unequivocally — that engagement is a leading indicator of business performance. Some organizations have gone so far as to build remarkably accurate predictive models where future sales projections are based on customer satisfaction and employee engagement.

Accountants, HR folk, humans… some choose to act when presented with data, even if it challenges conventional thinking, and the majority carry on.


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