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Apple of his eye

Nick Henley

“I’ve never met one of you who didn’t suck. I’ve never known an HR person who had anything but a mediocre mentality”. Steve Jobs.

An assessment of the future of HR has to start with an assessment of exactly where we are today, and firstly to address Steve Jobs’ point-of-view – do people in HR have a mediocre mentality? And, is HR, as it currently operates, fit for purpose? Article by Nick Henley, MD, Talent, Learning & Engagement Specialist – Talent Technologies.

A future vision of HR should be one of optimism, with exciting possibilities. I would like to write of such things, but I would be dreaming if I did. Not dreaming in the way Steve Jobs might have dreamt, on the innovating we could do to create our tomorrows, but dreaming in a more delusional way – when HR as a function isn’t embracing reality and can’t even get through our todays. To answer this, it would make sense to start by hearing what our CEOs and business leaders have to say. And it doesn’t make very encouraging reading. We could start with the 2014 Deloitte survey of 2,500 global business leaders. HR achieved an overall rating of ‘C-‘ from business leaders in terms of their overall performance, and not a single function within HR was seen to be ready for the challenges the business faced. Moving forward to last year’s update of the report, a third of business leaders still saw HR’s overall performance as inadequate. Another survey conducted by Nick Holley of Henley Business School later in 2014 addressed the question ‘What CEOs want from HR’. As part of the survey, CEOs were asked to rate the importance and performance of HR in a number of areas. The highest score out of ten obtained was for ‘Getting the Basics right’ at 5.3, with more strategic areas such as Engaging People, Building a Talent Pipeline, Driving Change and Building Capability all coming in below five. Some of the verbatim comments in this survey were particularly scathing, with one CEO saying that he couldn’t understand why his HRD was in HR, because he didn’t even understand HR, let alone the business.

Pullquote: “This is worth emphasising; skills gaps, not access to finance or markets, was the main thing business leaders said was holding them back. And among these skills gaps, the two most critical were identified was not technical skills, but business and management skills. Is the message landing?

In discussions on the future of HR, there is a temptation to dismiss findings such as these as ‘yesterday’s news’. But that’s the point. They are also today’s news, and by not embracing them, they are tomorrow’s news too. Those who have been in HR for some time will be all too aware of this. These issues go round and around, and if they can’t be solved they get rebranded, so ‘management development’ becomes ‘leadership development’ becomes ‘nextgen leader development’ and so on in an elaborate attempt to pretend the original problem has been solved, when in truth we have little more than an exercise of putting old wine in new wineskins. The fundamental issue is rarely being grasped, and HR professionals mostly find themselves aboard a hamster wheel where the next step is really just a step that has already been taken by someone else sometime back. It’s only the whirl of motion that makes it seem different. A great example of this comes from The Henley Business School survey. The lowest score given to HR by numerous CEOs at the time of the report was for Building Capability, averaging 4.4/10. Fast forward to today and guess what 2016’s number one challenge for CEOs is? You’ve got it, building capability and overcoming skills gaps –  including the quality of leadership. Skills and capability gaps are now so acute at that within SMEs at the sharp end of things last November’s Report published by the Scaleup Institute found that 82 percent of business leaders had identified these skills gaps to be their main barrier to business growth. This is worth emphasising: skills gaps, not access to finance or markets, was the main thing business leaders said was holding them back. And among these skills gaps the two most critical were identified not as technical skills, but business and management skills – the province most would agree of HR. Is the message landing, we wonder?

The picture is no rosier at big company level. Last month’s Conference Board’s survey of 555 Global CEOs identified the risk of a Global Recession as the #1 challenge critical to business success. In number two was, wait for it, Developing Next Generation Leaders (which was also number two in 2016). Putting this into perspective, risks like global political uncertainty (including Brexit and the breakup of the EU), competitors gaining market share, cyber security and digital disruption all were ranked lower in importance by the CEOs asked. Current ‘hot button’ topics in HR like Big Data, Diversity and Inclusion, Predictive Analytics and Wellness did not even feature in the top 30. And I’m not being selective here. Last year’s PWC Annual Global CEO Survey discovered exactly the same among their cohort of over 1,400 Global CEOs. Nearly half said their number one priority was developing future leaders, and placed ‘a skilled, adaptable and educated workforce’ as their top priority by far. In the face of this, you might reasonably expect a robust and proactive response from HR. To be clear, it’s difficult for me to ascertain how much of a priority this has been in most HR Departments, but I can share with the data gathered by the IMD last year. As critical as the issue of employee skills development is for CEOs, UK HR was ranked a lowly 38th in seeing employee training as being of any importance at all, below such leading lights as Kazakhstan, Slovenia and Mongolia. There are of course bright spots. But if we were to be honest as opposed to seeking balance for its own sake, the overall state of HR today is one where it is very disconnected from serving the needs of the company as a whole, and where it is slow and perhaps even negligent in implementing critical initiatives.

This inevitably leads us to the debate as to whether HR in its current form is fit for purpose. For those HR functions still struggling to score ‘seven’ on Getting the Basics Right, what lays ahead of them now can only be described as downright scary. That’s because ‘Building Capability’ is already yesterday, even if it is in reality for HR still ‘tomorrow’ – please forgive me if you’re losing track of where exactly the future is here – I appreciate we seem to be on two separate time systems. Looming large on CEOs’ radars now is Innovation, as identified by the latest KPMG Global CEO outlook, IBM’s latest Global C-Suite study, and PWC 20th Global Leaders’ survey. What’s driving that is a change of focus from identifying cost savings, to one of promoting growth. This change, should it happen, is going to be seismic for HR. It is going to demand a skill set very different from the existing one of simply chopping and changing headcount, offshoring payroll and conducting performance appraisals. Instead HR will need to have an intimate understanding of diverse talent and skill sets, be able to grasp how business outputs relate to capabilities, know how to change behaviours rapidly and, wait for it, enable failure.

When asked how Apple had risen from the ashes so quickly to replace Microsoft as Tech’s top dog, Steve Jobs had a pithy description for the difference. ‘Microsoft you know,’ he said, ‘is about private successes and public failures, whereas Apple is about private failures and public successes.’ Jeff Bezos is another person who describes failure as a key element of the innovation culture that has driven Amazon’s incredible transformation to the world’s 5th largest company: ‘You’re going to be wrong nine times out of ten.’ He tells us, ‘We all know that if you swing for the fences, you’re going to strike out a lot, but you’re also going to hit some home runs.’ Given the current state of HR, this shift from the relatively safe world of cutting costs and minimising risks to promoting a culture that embraces risk and ‘swings for the fences’ is simply not HR in its current format appears ready for. HR has, to be fair, a broad remit, and it often has to perform its role under cost and time restraints. It would be helpful to hear more regularly from HR professionals where they think their own capabilities lie. To answer the question whether HR can rise to the challenges of the future (as well as the postponed ones of the present) the next article looks at how HR is defined and practised as a whole, with especial attention to ‘the experts’, as well as the HR talent and skill set.

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