HR Roundtable: HR and corporate culture: Take risks, create value

Canadian HR Reporter’s editorial staff joined members of the Canadian Human Resource Planners (CHRP) to discuss the creation of organizational cultures that promote entrepreneurship. The roundtable took an in-depth look at corporate culture issues facing senior HR executives.

Ian Hendry, president of CHRP, and managing director of HR, RBC Dominion Securities; Ezra Rosen, principal of Ezra Rosen Consulting Inc., and program chair of CHRP’s Toronto chapter; Linda McRae, vice-president, field human resources, Ontario Power Generation; Barry Barnes, regional human resources manager, northern region, Otis Canada Inc.; Helen Bozinovski, vice-president of HR, Heart and Stroke Foundation of Ontario; and Iain Scott, chief human resources officer, William M. Mercer Ltd.

Ian Hendry got things started by asking, ‘What is it about the culture of an organization that will enable an entrepreneurial spirit to thrive, encouraging people to contribute all they can?’ You need to give people the ability to grow. People won't tolerate mindless non-rewarding work.

Barnes: Thinking in most organizations is not conceived as work.

Bozinovski: Entrepreneurial thinking by definition is creating value by spotting opportunities or needs that have not been fulfilled. The question is how are organizations shifting their mindset and their systems to enable individuals, teams and units to focus on creating value, identifying unmet needs and rapidly orchestrating whatever it takes to deliver value-added solutions to those unmet needs. I think large corporations have a hard time doing that because they are disabled by systems that are more about approvals, processes and analysis than they are about creating value, and it is why I think that smaller organizations, or larger organizations that break themselves up, are much better at orienting themselves to entrepreneurial thinking.

Hendry: So the less encumbered the organization is by its processes, the more people are allowed to change the nature of what they do, opening the door to improved productivity.

Bozinovski: Yes, especially where there is a shared focus on rapidly working together to seize the moment. Organizations have to really get people to coalesce around an opportunity and a shared goal. Because entrepreneurialism is about rapidly coalescing around an opportunity.

McRae: It’s important to get employees and management to look and see how they can work together to make things better at their local site. Creating a partnership with unions can help achieve this. At Ontario Power Generation, we’re preparing for competition and we just waste a lot of energy and time if we continue to fight amongst ourselves as opposed to all pulling together because the success of the company is in the best interest of both the unions and management. So the logic is there for both of the groups to do this and luckily both of the groups recognize that. So what we’ve got now is partnership steering committees at each of our plants. They are looking for things that need to be fixed or addressed or made better. One group is looking for ways our equipment can use less energy, looking at how if they use their equipment in different times and different ways, they can actually save some of the energy that we use.

Scott: Entrepreneurialism is an amalgam of a whole series of different semantics. Within society at large, entrepreneurs are a very small minority. Most of us who work for corporate institutions are by definition not entrepreneurs; we do not have that very unique skill set. What I think we are talking about here is not turning every single employee, in every single aspect of our business, into the paragon of all things entrepreneurial. But to take some elements of the entrepreneur skill set, potentially the business consciousness, the external orientation, and perhaps the innovation dimensions of it. I think it is unreasonable to expect all people to turn into ballet dancers, all people to turn into marathon runners, all people to turn into entrepreneurs. For some people it is very important for all those elements to be there, but we have to be quite selective about just how far we are casting our net.

Barnes: I think, Iain, that one of the things you are describing is that we really want people to become less risk averse as a corporate culture. I remember the definition of an entrepreneur given to me some years ago. An entrepreneur is someone who has a Jaguar and a Rolls Royce and enough money to spend on anything one week, and then the next week the wife comes home and finds all the furniture sold and the clothes gone and he says ‘don’t worry I’ve got a good deal going.’ That's the entrepreneur, and I don’t think we really want people doing that with our corporations. But we want them taking a little more risk and a little more accountability than in the past.

Rosen: It's very much a function of the company and where it is at the time. A client of mine started off being very entrepreneurial because it was a family business that succeeded because of the entrepreneurial spirit of the owners. It has now grown in size and the entrepreneurs have gotten to an age where they’re not as influential in the business on a day-to-day basis. But what they are trying to do is bring back the entrepreneurial approach…to get more risk taking and to engage employees in a way that used to be pervasive in the past. They are going at it on two levels. One is corporate programs — that recognize, reward and encourage such behaviour — and then also at the front-line level, where each manager is learning skills about how to engage employees. The bigger challenge is not the corporate programs, it’s getting their managers to engage their employees.

Bozinovski: Many organizations say they want entrepreneurial thinking but their language, business plans, role descriptions and accountabilities statements are not about entrepreneurialism or innovation or creating value. They are about processing, controlling, monitoring and analyzing. And those are quite different from what entrepreneurs do. They don’t spend a lot of time working up the numbers. They don’t worry about making mistakes. They know that if they are down today, they will be up tomorrow. And that is not what is bred in systems. Corporations almost breed out that degree of dynamics and willingness to be spontaneous. Why? Because corporations need to be able to rely on a certain amount of revenue and a certain number of customer relationships and they’re not willing to put at risk what entrepreneurs do every day. So I think it is unrealistic to imagine an organization that is wholly entrepreneurial. But I also think that you can create entrepreneurial cultures by being more thoughtful and consistent in the use of language and how that language articulates the accountabilities that you have of the people that work in that organization.

Barnes: In my experience one of the most difficult things in developing entrepreneurial spirit is every time you try to do something you find the system will not let you. Whether it is a computer system or a people design system. Somewhere there is this legacy system that says ‘No, you need five signatures in seven days.’

Bozinovski: But I think an entrepreneur would find their way around that. They spot a shortcut, work out a deal, and identify an alternative. They wouldn’t get stopped by that.

Rosen: But they could be fired.

Bozinovski: Okay, but is that a myth or is that real? I think some people hide behind that and say ‘I can’t take risks because you know what will happen.’ And everybody nods and says, ‘Yeah you know what will happen.’ But has that ever really happened.

Hendry: You can answer that in a different way, Helen — does the organization pull the trigger first or does the entrepreneur just get too frustrated and say enough is enough?

Bozinovski: I think you’re right and I think the frustration builds when they spot those alternatives and shortcuts, there aren’t people in the system willing to work with them to coalesce around that opportunity. I don’t think people step out of their boxes enough.

Rosen: I worked with a large manufacturing company and their motto was ‘ask for forgiveness and not permission.’ They found ways around the system. But ultimately if you take that to the extreme it would bankrupt the company. Because they’re not following policies, they’re not following dictates, there are certain spending limits and they found ways around that and if everybody took it to the extreme that company would go out of business.

Scott: There are certain areas of business in which entrepreneurialism is entirely inappropriate. I do not want my airline pilot to be entrepreneurial, I do not want my nuclear plant engineer to be entrepreneurial, I do not want my pension administrator to be entrepreneurial. However, there are many areas of business where one does require an outward looking and innovative view of the world and willingness to destroy the current method of operation in order to create a new one. It is a leadership skill more than anything else. It is less required amongst the ground troops in the army but it is very much required nowadays for leadership roles.

McRae: How do you allow employees to contribute their best ideas? Feedback, rewards, forums? One way is just the supervisor-employee relationship. If the supervisor has the right people skills and we develop the right people skills, they are just automatically tapping the ideas of their employees. But there are other mechanisms, (at Ontario Power Generation) we have partnership committees where people are working on things together so it is more likely ideas are going to come up to solve problems.

Hendry: Entrepreneurs are the small minority, but I believe that every employee within the organization can add some value. The issue is how to get everybody in a large organization to do that one per cent more. Because that one per cent more has an enormous effect on the bottom line. But then somebody says ‘No no, no, that takes too long. We need the radical breakthrough.’

Barnes: The pressure on leaders is to get the giant gain rather than the incremental improvement across the board. While we have been attempting to flatten organizations substantially, the top people really don’t understand what the real world is like in the trenches for their troops.

Bozinovski: The reality is there is very little capacity left in the system to participate and support other people’s initiatives because people are so focused on what they think is expected of them. As their teams shrink and the demands on them grow, leaders are caught in a real bind. They want to be good coaches and be catalysts for other people’s development but they’ve got mounting pressures on them to deliver being placed on them from elsewhere. I think leaders themselves are getting a raw deal. I’m surprised anyone wants to be a leader in this day and age. I’m not sure systems enable true leadership if we are saying part of being an entrepreneurial organization is having good leadership.

McRae: When we talk about entrepreneurship, what is the definition we are using?

Barnes: Part of it is thinking about entrepreneurialism not as it existed, but meaning some way of improving the productivity of organizations by releasing the power of the people. So it is getting a better return on people without being exploitative.

Hendry: In return, the individual (internalizes) the notion that they are valued and that they are in fact making a real contribution.

Rosen: How is the move to entrepreneurialism different from the 1980s? Then we talked about empowerment. And how about the mantra of the '90s, which was engagement?

Barnes: Some of them may have common elements. But in the '80s you talked about empowerment, but we also talked about conglomerates. And the idea was you owned everything but now we are saying smaller is better.

Rosen: But look at the mergers and acquisitions, consolidation is huge.

Barnes: We’re going in both directions simultaneously. What I’m saying is the old rules are gone, we don’t know what the new rules are.

McRae: There is a need for leaders to articulate what is expected of their employees. One of the ways you get the best out of your people is to clearly explain what is expected of them. I contribute my best when I know exactly what is expected from me.

Bozinovski: I like the way you’ve simplified the terminology -- getting the best of our people. But I would merge that with the idea that getting the best out of people has to be in the context of that business. I think without the link back to the business, it is rampant entrepreneurialism without an objective.

McRae: Exactly, it's goals, it's results, how an organization wants to get there. It is strategies, knowing as an individual what is expected of me. People need to feel aligned. Some people feel aligned if their values are aligned with those of the organization.

Rosen: The first step in the process is clarity around what the objective of the business.

Bozinovski: I’m not even sure it is the objective, I think it is the mission of the business. I’ve come to Heart and Stroke and the mission is clear. But I was with a bank and before that an insurance company, and what I found is that organizations actually lose their sense of purpose and mission to their business plan. Every company needs a business plan but every company also needs a higher purpose that is serves. Banks have a higher purpose and that is to secure the wealth and well-being of their customers. But they don’t talk in those terms. Employees can rally around higher purpose; they can’t rally around shareholder value. The contribution doesn't have to be tied to the business plan. People have to feel tied to the mission that is served by that business. And that can be very simple but it has got to be powerful. And that is what fuels growth, that is what fuels ambition and creativity, causing people to want to be their best. It is that sense of 'I serve a purpose here and it is not about delivering "x" amount in new revenue.'

Rosen: In an idealistic sense, I agree with you but it is just so rare. Maybe in your organization, Helen, it is easier to define that.

Bozinovski: It is easier, but with a bank, they could define that also. I don’t buy that is not possible. It is harder. It takes ideas and it takes values.

Hendry: But I can think of countless people that are turned on in the jobs that they are doing because it is stimulating and intellectually challenging, and yet it has absolutely nothing to do with the vision statement of the organization.

Bozinovski: So something about their values has been turned on by what they are doing?

Hendry: Yes, but I don’t think that necessarily connects them to the organization. And I think more people today operate that way than they do on the basis of the mission of the organization.

Bozinovski: I would agree but that is because they don’t have an alternative. There hasn’t been anything other than that. And so what is created is a culture where you need to be employed and you want to thrive in that culture so you figure out a way to thrive or you leave.

McRae: Some people feel aligned if their values are similar to the values of the company. You need to understand your place in the context of an organization.

Hendry: I agree, but doesn’t that come back to the importance of the leader. A values-driven person needs to be talked to differently than somebody who is driven by the content of the job. They are all going to be motivated in different ways.

Rosen: Let’s address the role of HR and maybe I’ll start with a part of an answer. Hopefully we have more insight into the link between the processes for getting the best out of our people, and linking that to the purpose of the organization, than maybe some of our leaders do. Maybe our role is to educate and coax them and push them and whatever it takes to get them thinking this way. Because maybe we have greater sensitivity to the value that this process creates.

Barnes: I don’t think it is really greater sensitivity but we have a different perspective because we’re not involved in a line function. One of the problems in today’s business environment is that you are so involved with what you are doing that you can’t see the forest for the trees.

Hendry: I think we are interpreters. Invariably we are interpreters for the people that have that vision, that have the strategic direction and interpret for the people that actually make it happen. You have a sense of what the organization is trying to strive for and then when you get down to the field and hear how that is being interpreted, there is often a huge disconnect. And it is a question of whether the language is clear. There is often a disconnect between the message versus the interpretation at the lower end. Somewhere there has to be a way of interpreting that.

Barnes: I think the challenge is that HR is no longer an administrative function. In many organizations, HR is labelled HR but it is not human resources. It is still personnel administration or industrial relations. HR can work to help employees mitigate their risks. People need to explore how much room they have. Everybody is controlled in some kind of environment and you run up against the wall that is absolutely solid at some point. What people have to recognize is that within those four walls they have more freedom than they thought they had, because most of the limitations we have, when we look at what people are doing, are self-imposed.

Rosen: A couple of experiences make me think differently about the traditional role of HR and its support of the business objective. I had a client that kept the administrative personnel function and they got rid of the HR function. They nuked it basically. The rational of the COO was that HR introduced a third agenda into the dialogue between the manager and the employee, and that in a lot of cases because the manager saw that there was this third agenda, or there was somebody that he or she could rely on, that a lot of times they would back off of things that they would ordinarily do as a manager because HR was there to act as their conscience, their spiritual advisor, so it relieved them of that responsibility.

Barnes: It might surprise you, but I agree with you. I think HR is a very senior strategic role at the highest executive level and if managers were doing the things they need to, there wouldn’t need to be a role for HR, but there would still need to be some personnel administration being done.

Hendry: Absolutely. There are people who don’t need HR because they run a brilliant shop.

McRae: We do a lot of forecasting supply and demand to get a sense of what we will need; we have a very good workforce planning model. You could give that to line managers but they’d be doing HR work.

Barnes: The best recruiters are the line managers. If that guy is on it, he doesn’t need any help from HR to select people. And if he comes along and says 'I interviewed this kid we ought to hire him,' it drives my boss nuts but I say 'fine just have him report to work here.' My boss asks 'aren’t you going to talk to him?" I say 'what for, this guy knows far better what the organization needs than I ever will.'

McRae: The real issue is making sure HR doesn’t usurp line managers responsibility. Something like health and safety, just because HR does some things around health and safety they shouldn’t be taking ownership of it, managers still have to be responsible for it.

Hendry: That often becomes the issue because people abdicate it.

Barnes: There is another question -- management presumes that people want to be in teams and self-empowered and self managing and a lot of people just want to show up get paid and go home. As management we put expectations on their performance and how they might like to work, without living in their shoes and looking at it and saying 'not everybody wants to be a manager.' A whole bunch of people don’t want to be empowered they want somebody to come and tell them 'I want you to do this and do this and do this.' And they go home at night and their mind stops worrying about work when they walk out the door.

Hendry: One of the problems with empowerment was the interpretation that employees would take greater individual responsibility for results and the supervisor said 'That is great. I’m not on the hook for this anymore.' But then management turned around and said, 'No, you’re still accountable.' And that’s where the confusion was. There was a real lack of clarity around who was going to take responsibility.

Barnes: You see that with teams. We’re going to reward you individually but we’re going to tell you you're on teams. And if you reward a team and there have been some players on the team that haven’t contributed -- if there isn’t a process to take care of that -- you have destroyed the team.

Rosen: That comes back to role of HR -- if leadership says one thing and yet the reality is that it is not happening. Hopefully we in HR see that discrepancy. Is that part of our role: to challenge leadership on that because if we see it probably 90 per cent of the employees see it and that doesn’t really do the organization any good?

Barnes: Reward programs are important but very rarely do you see an award given to a manager for developing a person.

McRae: All the rewards we had up to two years ago were all technical. But now we are giving leadership awards.

Hendry: HR needs to separate the fads from the good HR practices.

Barnes: Empowerment was the fad. TQM, CQI -- it's all empowerment by a different word. We shouldn't get hung up on the word 'entrepreneurialism.'

Rosen: Entrepreneurialism may very well be a fad, but not if it is about getting the best from your people, then no it isn’t. That is the issue that is part of the joy and the pain of having been around for such a long time. You see these things coming back at you time and time again using different words but really the intention is the same. It may be slightly different, adapted to a new era, but getting the best out of your people has been around since I started in HR.

Hendry: Let’s not get hung up on the term entrepreneurship. (The idea of entrepreneurship) comes from the dotcom mentality, which means getting things done quickly, you’ve got creativity, you’ve got everyone turned on. Perhaps, it is empowerment by a different word.

Canadian HR Reporter: Rather than about entrepreneurship maybe this is about engagement.

All: Everyone can be engaged.

Canadian HR Reporter: What about that group that just wants to come to work?

Barnes: They can still be engaged, you have to be able to recognize that some of your best contributors do not fit the pattern you like. Different management styles will be necessary. The problem is to take one set of policies and rules to make them fit and it is much easier for a manager to say “this is the policy, these are the rules, no variation and that is it.”

Hendry: Which brings us back to radical versus incremental change. I would say there is a much larger percentage where you get incremental improvement.

Barnes: I think what the dotcom companies have recognized is that people can choose their work. Organizational design is important and it is not as simple as organization design experts have made it appear. Chaos theory has a lot to offer.

Rosen: I can quote some statistics. A study was done in the U.S. that said one out of every four people felt that he or she regularly worked up to his or her potential. Half of the people surveyed felt they do not do more than is strictly required to keep their jobs. A significant majority about 75 per cent said they could be much more efficient and six out of 10 said they are not working as hard as they used to. If we believe that these stats are maybe partially correct, the opportunity is there. It is a huge upside.

Barnes: The problem is once we find an answer that works we try to duplicate it. What we should do is replicate it, not duplicate it. It should be no surprise that people are all unique and different but somehow we seem to consistently seem to be surprised by that.

Case study: Ontario Power Generation

Encouraging employees to contribute their best is the motivation behind Ontario Power Generation's "Power Within" recognition program.

At Ontario Power Generation, a formal program was created to both reward and encourage the spirit of innovation. The Power Within acknowledges and celebrates those employees, as individuals and teams, who merit special recognition for their contributions to the organization’s success.

Last year about 25 employees from across the organization of 15,000 were recognized for their achievements with a dinner and award that included bronze statues, as well as a small monetary reward.

“It is about initiative,” says Linda McRae, vice-president of field human resources at OPG, a successor to Ontario Hydro. “These people are taking initiative beyond the strict letter of the job.”

Following the distribution of goal-sharing and annual incentive payments to staff, employees can nominate their co-workers in several different categories:

•business innovators;

•customer service excellence;

•environmentally friendly initiatives;

•health and safety;

•performance excellence;

•production; and

•leadership.

The award for leadership was introduced last year, and this year an award for best local achievement will be presented to recognize outstanding employee ideas that significantly improve the business at the local level.

“By the choice of the categories you are giving a message to the employees about the areas you value,” says McRae.

“If you see your colleagues being recognized at a special night, where they’re honoured with awards and a dinner and there are a lot of senior people attending, and the employee is brought up to the front and everyone is told about their accomplishments and they are given an award, that starts to encourage other people to see that what these people have done is really valued and maybe encourages them to do the same thing.”

Aside from the awards dinner, achievements are recognized through e-mail and OPG’s monthly magazine.

Last year employees, recognized included:

•An employee awarded for leading a group that went more than 900 days without a lost time injury and average sick time usage was less than two days per person.

•A staff nurse noticed muskuloskeletal injuries were the largest cause of lost-time accidents. She completed an awareness program and gave presentations to educate workers. The number of injuries went way down. “Just through noticing the problem and then putting something in place, she made a huge difference,” says McRae.

•Last year’s recipient in the business innovators category, found a solution to a problem in generation facilities that saved the company about $52 million.

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