August 15, 2008

In many studies in many countries over the last five years, CEOs have declared their single biggest problem is employees.  It’s hard to know from the data what “biggest problem” means:  is it recruitment, retention, morale, satisfaction, skill sets, leadership style…or my current personal favorite commitment and engagement?  We don’t know.

But we do know that the great majority of CEOs are not turning to their Human Resources Department for help.  Wow.

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Now we have a choice in how we interpret this state of affairs.  We can return to the tired argument that HR is ignored and belittled by ignorant executives – or – we can view this current state of affairs as a wonderful opportunity for HR to earn the recognition it desires and needs in order to be significant and therefore, effective.

I choose the latter.

Sometimes it takes a while to realize we’re learning a lot since that learning is a byproduct of the situation and not the focus:

• We know that communication is always vital and when we work within our profession, the pressure is to be professional and we naturally communicate using our professional language.  I well remember the remark made by a colleague when he read a book I’d written.  For several decades I’d trained myself to use plain English and I was pretty proud of myself but he said, Judy, It’s easy to read! and that was not a complement.  Professionalism can make it hard to give up the jargon that doesn’t communicate with people who are not in that field. 
• My first consulting client was IBM and I worked there for twenty-five years.  At first I didn’t realize the importance of two facts:  one, HR was a real business partner and had a seat at that table and two, everyone who was in HR had been a line manager.
• For more than a decade I was on the board of two financial institutions.  I was the only one who was not a financial expert.  I didn’t know and was not quick to realize that their language does not refer to (in my case) English. 

“Their language” means you must communicate in whatever terms they use.  Every other board member and every executive of the two institutions thought in terms of…and measured results in terms of…money.

All staff, HR, IT, Legal, Quality…share the problem of thinking and speaking in their professional language.  IT talks about faster processes and Legal counts cases pending, or won or lost.  HR counts the number of people who have taken training and Quality counts the decline in do-overs.  But the language of the decision makers is always money.  With the exception of staying within budget, staff is usually not responsible for financial results.  As a result, staff doesn’t usually think in terms of business – financial – results.

At a recent meeting, for example, the head of HR described a very successful intervention in a call center.  She, and some of her staff, had gone to the call center and had spoken briefly with everyone who worked there.  That simple intervention had a startling outcome:  the retention rate in the next month was 100%, a very dramatic change from the norm which had been less than 50%.

I congratulated her on the success and added, “It would be great if you could document the cost savings that resulted from that.”  On hearing that, she looked confused and asked, “How could I do that?”

In business, staff gains respect and a seat at the table when it becomes clear that their work adds to profits.  For a long time IT, for example, described its work as doing things faster using big machines that cost a lot of money.  It wasn’t until it became clear that IT cut time and errors and therefore reduced costs, and at the same time identified sectors of profitability that increased strategic effectiveness that IT became a business partner.

To become a business partner, HR must demonstrate its positive financial impact.  In the large body of data about the financial outcomes of commitment and engagement, HR has a great model for measuring its outcomes in terms of money.

HR needs to shift its thinking from professional services to business outcomes: it needs to achieve respect by showing the money.