Today’s approach for improving workforce performance is failing. There are three reasons:1. No one is accountable for year-over-year human capital performance.
2. Results require a system, not world-class programs.
3. Today’s HR model is misaligned to deliver business results.
Let’s look at each of these reasons.
No One Is Accountable
The head of manufacturing is accountable for year-over-year improvements in manufacturing productivity. The head of marketing is ac- countable for year-over-year changes in brand equity. The head of sales is responsible for revenue growth. But who is responsible for year-over- year improvements in the company’s most valuable asset—its people? Nobody. Line managers see HR as accountable, but HR sees itself ac- countable for programs that must be converted into business results by line managers. No one is in charge of human capital performance.
Systems, Not Programs
The HR profession is very adept at program development. Success is most often defined as creating and/or adopting best-practice programs, and HR is organized and managed accordingly. HR consulting firms align their practices with the way their clients are organized: They de- liver products and programs for HR subprofessions (such as training, staffing, and compensation). But the data is indisputable: Decades of new and better programs have not delivered great results. The reason is that “world-class programs” cannot deliver performance results. Only systems deliver results.An automobile engine is a system that requires great parts. All parts must be fully integrated and aligned to the purpose of the engine, whether that be high performance or a fuel economy. A well-built en- gine uses just the right parts and no more. Likewise, succession plan- ning, training, and appraisal can be viewed as parts. Just as throwing pistons and spark plugs into an engine compartment will not deliver a satisfactory engine, neither will “world-class” HR programs deliver acceptable customer results. More and better HR programs will de- liver no better performance in the future than they have in the past. Performance results require a system.
A Misaligned Model
There is plentiful data demonstrating that HR is not delivering to expectations. The Economist’s “2006 CEO Briefing” cited HR as tied for the least important corporate function, the worst performing of all corporate functions, and second to last in importance for achieving business results for the next three years.4 In addition, the consulting company Accenture’s 2006 High Performance Workforce study found that only 5 percent of CEOs and 4 percent of CFOs are very satisfied with their human resource function.5 The same study indicated that 3 percent of CEOs and 4 percent of CFOs are very satisfied with their corporate learning function.6 The most important variable for business success is being managed by the least effective corporate function.
HR is not getting better. From 1995 to 2006, USC’s Center for Effective Organizations has monitored changes in the HR profession. Since 1995, each time participants were asked, how much time they spend on strategic activities today versus 5–7 years ago, the participants answered 9 to 10 percent. When the participants were asked how much time they currently spent on these activities, they answered 20 to 23 percent. Each time, participants said they spend twice as much time on strategic activities today than 5–7 years ago—to many, it feels like their job has changed, but it hasn’t. According to the data, they spent 21.9 percent of their time on strategic activities in 1995 and 23.5 percent in 2004—no significant change. The profession has talked about being strategic, trained for it, and outsourced administration to make room for more strategic work., but there has been very little change in the time spent on strategic activities or the perceived business added value of the function. What’s going on?
For decades, HR has claimed to be on a path to a more value- added function and has asked business leaders for time as it builds new capabilities. There is little convincing data to indicate that the profession’s current path is delivering more business value than in the past, and more time will not solve the problem.
Many line executives place the blame on a lack of accountability or substandard people. I disagree on both accounts. Neither more accountability nor different people will fix the problem. The problem is HR’s model—the structure, shared values, systems, and skills. Sure, HR programs are better, administration is being outsourced, and e-learning is replacing classroom learning. But these are all parts that fit the old engine. Today’s model has never changed, and it continues to produce precisely what it was originally designed to produce—good policies, programs, administration—but that’s not what today’s business leaders need. The solution is a new approach—a new Human Capital Strategy (HCS)—that delivers performance improvements that produce a sustained competitive advantage.
Source : Bradley W Hall, PhD. The new human capital strategy : improving the value of your most important investment—year after year.AMACOM. 2008
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