The time has come to End Human Resources.
I am not talking about abolishing policies to avoid litigation or processes for implementing benefits, pay, and employee downtime. I am calling for the end of HR in the sense that we can no longer view people as company "resources" to be catalogued, attributed a value, and leveraged as replaceable cogs in the company machine.
The July/August 2015 edition of the Harvard Business Review published 3 articles that suggest blowing up HR and replacing it with something else. (I just wanted to end it, but apparently these experts want to obliterate it.)
Below is an analysis of all 3 articles in the context of improving communication and feedback within a company, and putting people-management back in the hands of people managers. Managers who own these relationships can create spaces where employees bring their whole selves to work every day to be more innovative, productive, and engaged.
Why We Love to Hate HR ... And What HR Can Do About It by Peter Cappelli.
Remember that show The Office? Michael Scott, played by Steve Carrell, is the manager of Dunder Mifflin and his arch-enemy is Toby, the meek and oft-maligned HR guy. This is how many managers feel about HR professionals. They are seen as paper-pushers who have little to offer strategically in the realm of performance management.
According to Cappelli, the popularity of HR ebbs and flows with the economic tide. During the Great Depression when jobs were in extremely high demand, workers were threatened and even abused verbally and physically. Human Resources is seen as an inconvenience whenever the economy and the job market are experiencing downturn. But when talent is in short-supply (like software engineering jobs in Silicon Valley over the last few years), HR is seen as a valuable and strategic partner.
Cappelli discusses his experience participating on a panel with other HR leaders where someone posed the question, "Is HR doing more harm than good by prompting line managers to take their responsibilities as supervisors more seriously?"
The consensus was that problems with performance will continue until executives prioritize talent issues for managers. "Supervisors need the training, the time, and the incentives to have serious conversations with subordinates about performance and growth", says Cappelli.
One of the trends that we are seeing in the last couple of years is that companies are shifting away from traditional performance reviews, getting rid of them altogether or only using them as part of an overall performance management strategy. In an HBR issue published earlier this year, Deloitte announced that they would reinvent performance reviews based on findings that "the best team leaders revealed that they conduct regular check-ins with each team member about near-term work." This is the practice that Cappelli suggests above, "serious conversations" needing to take place regularly.
This article presents the case studies of PwC and Juniper Networks who have also abandoned traditional performance appraisals, what Cappelli refers to as "perhaps the most reviled standard practice in all of management". These successful organizations have moved towards a model of ongoing conversation designed to improve skills and results, instead of relying on yearly check-ins that managers and employees hate for a multitude of reasons.
But business leaders don't always make the connection between treating people like people and experiencing improved business outcomes. Cappelli offers the example of Sears Roebuck's shift over 20 years ago. They discovered that improved morale led to a better customer experience, and in turn, to higher store profits.
As managers continue with outdated practices like once-a-year performance reviews, they are extending the timeline for improving their companies. They could be building a better infrastructure of performance management instead of patching up deteriorating staples of corporate procedure.
Employee engagement and productivity are unsustainably low, and businesses in every industry are seeking ways to retain their best talent. In this modern business environment, managers must focus more on "people and culture" and stop treating employees like resources. This more sustainable system of people management will be immune to the economic fluctuations at the heart of Cappelli's argument.
People Before Strategy: A New Role for the CHRO by Ram Charan, Dominic Barton, and Dennis Carey
The authors of this article posit that it's time for companies to create a core group of leaders comprised of CEO, CFO, and CHRO. For starters, they claim that this will improve communication between executives. According to the authors, "Motorola might have been able to anticipate the iPhone if the company's CHRO had alerted the CEO when Apple began trying to recruit Motorola's technical people".
Secondly, adding the CHRO into the mix is designed to make people-management a top priority. Research by McKinsey, Deloitte and other such groups see "human capital" as a top challenge. Yet HR is currently ranked fairly low in terms of importance. (As an aside, I object to this categorization of people, as they are so much more than capital.)
The authors state that "most problems are people problems" and call on HR to examine the cause of misses in an organization. There are technological solutions to these people problems. Employee feedback and culture management software allows managers to be aware of the problems and to quickly address them.
Another positive impact of weekly check-ins is the discovery of what the authors call energy creators:
[They] may not directly be charged with producing results, but they get to the heart of issues, reframe ideas, create informal bonds that encourage collaboration, and make the org healthier and more productive.
Leaders like these energy creators exists at all levels of an organization regardless of title. Regular feedback allows managers to discover and nurture these hidden proclivities in their talent, utilizing existing employee traits to enhance company culture.
Human Resource managers (or managers and executives who own relationships with their employees) have to look at their company ecosystem and see how people work together:
Behaviors such as withholding information, failing to express disagreement but refusing to take action, and undermining peers often go unnoticed... CHROs who bring dysfunctional relationships to the surface are worth their weight in gold.
I have found that organizations do not need HR departments to act as relationship cops. This is abdicating responsibility. Instead, leadership can train managers to raise their emotional intelligence. Start with books like Emotional Intelligence 2.0 or for an entry-level introduction watch the latest Pixar movie, Inside Out. Provide managers with the resources to foster their own healthy relationships with employees and solve their own disagreements.
This article also revived the discussion of increasing the frequency of performance reviews suggesting that Human Resources leads could work with different departments to conduct monthly reviews:
Reducing the time lag between actions and feedback increases motivation and improves operations.
The authors discuss how people-management impacts desired business outcomes like increased innovation and revenue, recognizing that in the modern workplace, "people are the ultimate source of sustainable competitive differentiation". They argue for the creation of new career paths for HR leaders to become more business savvy and for managers and executives to become more people savvy.
There is clearly a deficit in people management and it does not by any means have to be localized around HR. Managers must learn how to ask better questions and respond more effectively to the answers they receive. The ominous message in this article is that leaders who lack skills in people management are "unlikely to succeed for long in high-level jobs".
Bright Shiny Objects and the Future of HR: How Juniper Networks Tests and Integrates the Most Valuable New Approaches by John Boudreau and Steven Rice.
As its title implies, this article deals with ideas for HR innovation. The authors recommend loving your problems, not the solutions. The kernel of truth here is that you can't embrace the newest fads based on popular talks and articles, you have to (1) get the big picture (2) seize the fundamental insights, (3) apply them wisely, and (4) ensure the impact is useful.
You guessed it, Rice and Boudreau also take a swing at performance reviews, especially stack ranking. This practice involves grading employees along a bell-curve and often terminating the lowest percentile rank. The article introduces research by David Rock to explain why this process is detrimental:
When people realize that they are being compared with others, a 'threat response' in their brain sends cortisol levels skyrocketing and makes it hard for them to take in other information.
Many successful companies have designed a culture of trust. People are encouraged to work together, collaborate and take risks. Forced rankings creates a competitive environment that stifles these behaviors. Juniper replaced their annual reviews with regular "conversation days" so that managers can aid performance, align employees around goals and help people achieve their career aspirations.
Technology has created an environment where innovation is now a major differentiating factor for businesses. Basic tasks can be streamlined via software or delegated completely, leaving space for people to contribute primarily via innovation. In the world of software, companies are either innovating and leading or falling behind.
The regular cadence of communication that is replacing the annual review process, has tremendous value. Innovation surfaces through question-asking, through stimulating thought processes or inviting people to contribute. Over time, this process creates a management environment where innovation can flourish. According to the authors, creating this environment is not a shiny thing. It is a well thought-out sustainable practice.
Innovation flows through the creation of trusting environments, where people don't feel that they will be fired for poor performance. Rather, they will know that issues will be surfaced via communication and that they will be given support and training around challenges. In these supportive workplaces, people contribute their best ideas because they are naturally having more of them.
Asking questions every week or every month is indeed a powerful process. Juniper's HR team started this process by asking every senior leader at the company four questions:
- What are the key external environmental challenges currently facing Jupiter?
This seems highly intuitive. Why wouldn't leaders ask questions of each other and their teams? Seems like the best way to improve performance at the individual, team, and company levels. The authors of this article argue that people are afraid to open Pandora's Box with questions they don't know how to answer, and are worried to raise issues that they are not equipped or prepared to resolve.
Uncomfortable truths at Juniper surfaced about complexity, silos, top-heaviness, and conflict avoidance. But Juniper's leadership was equipped to resolve the issues. They broke down P&Ls, ripped out business units, and eventually simplified to a system where now only six people can make any decision across the entire company.
Here is another way that questions helped indicate the pulse of the company and triggered leadership to affect rapid change. In 2014 Juniper sent out a short employee survey:
- Do you know our strategy?
Over half of the respondents answered in the negative. Executives realized that an alignment tour was necessary and they hit the road to share strategy with teams worldwide for the next four months. After group conversations, "yes" responses to all three indicators rose to above 80%.
I lead a relatively small team (less than twenty people), and have implemented automated weekly feedback to uncover challenges, support employees, and create a culture where people feel safe and supported. It was interesting to read these articles and learn that these practices are just as valuable at massive scale.
In the end Juniper was saved because they asked the right questions at the right frequency. Companies cannot end their efforts there, but effective discovery is the first step. I believe that this process is the responsibility of every people manager. We don't necessarily need to blow up HR, but we need to blow up any business system or institution that no longer works and replace it with something that does. The alternatives are just too costly.
David Hassell is the founder and CEO of 15Five, performance software that creates an open weekly dialogue about what's most important, so that managers can react quickly to employee challenges to increase employee engagement, productivity, and morale.