In ancient times, the philosopher and mathematician, Diogenes, went wandering the streets of Athens, armed only with a candlelit lamp to seek an “honest man.” He would have little luck today, as most people in our politically correct world do not actually say what they are thinking. (He would have never attempted to pull that stunt at a political convention.) However, we had one person that was willing to speak their mind at the HRO Today Forum Europe in Dublin in November. Unfortunately, while this intrepid soul said exactly what he was thinking, it was, to my ears, an admission of an attitude that should and could lead to the extinction of HR.
Don’t get me wrong, I am a big fan of HR. I think that HR has yet to fully recognize the potential it can represent to the value of companies. The value of the committed, engaged workforce and supporting linkage research are critical. The value of a fully staffed organization is critical. The value of employees “undistracted” by payroll and benefit issues is critical. The value of compensation programs that promote the best behaviors is critical. The value of proper employee and manager training is critical, and the strategic advice potentially offered by HR is critical. So what is the issue?
Measurement of impact, that’s the issue.
Let me set the stage for you. At our Dublin event, David Andrews, former CEO of British-based enterprise HRO provider Xchanging, was leading a panel on the future of HR and HRO. At one point, to liven things up I suppose, he stepped into the audience and asked me how I thought he was doing. I replied that I was disappointed that he had not asked about business outcomes. Could any of the leaders of the panel tie HR operations back to business outcomes? I also asked the audience how many of them had a system or algorithm to tie HR metrics to business outcomes. Only a few raised their hands. I went on to say that if the ultimate goal is to show the impact of a better HR practices to an organization, HR leadership should be able to tie HR programs to, at least, one metric that a CEO would cite on an earnings call. I think that is how HR will ultimately measure and demonstrate value. I gave the example of a CHRO I know at a Philadelphia-based benefits provider who has a dashboard system designed to do exactly that. Still, few raised their hands.
That is when Diogenes would have clapped with joy, because one of the audience members spoke out. That HR executive said that “he really did not want to be held to that standard” and “that many HR practices have an impact that cannot be measured,” so having any algorithm to tie HR to sales, expense control (ever heard of “shrinkage” in retail?), or profitability would be a false calculation.
A debate raged for the next several minutes among audience members, most of whom agreed with my position and a few who agreed with his. I admit I might be wrong about a great many things, but I would defend this thesis to the death. HR will be more valuable when it can tie itself to a metric that a CEO would use on an earnings call.
I realized, even then, that many of the people who were arguing against this were doomed to extinction as adaptation is critical to survival. If HR cannot develop a logical system for this calculation, it can talk about its value but not capture the mindshare of the CEO and CFO. To be fair, the best CHROs can make this case but not all. The current and next generations of HR need to be able to do show better HR practices impact the bottom line.
These are the kinds of topics and arguments that we’ll be covering in our HRO Today Forum North America in Philadelphia, April 30 to May 2, 2013. This is the kind of work that we are helping companies rationalize with some of the work of the HRO Today Institute in our consultation and research agenda (members are getting next year’s research list in January 2013).
If you care about something, you can measure it. If you can measure it, you can improve it. If you cannot do either of these, then it does not exist—at least, it is hard to convince the C-suite, or me, it does.
For more information on the Forum, please go to www.HroTodayForum.com or contact me at Elliot.Clark@Sharedxpertise.com for information on the HRO Today Institute.
–Elliot Clark
Dublin, Dodos, and Diogenes
Tags: Contributors
