In "Memo to CFOs: Don’t Trust HR", the author summarizes a presentation by Rutgers University’s Richard Beatty at the CFO Rising conference (for those of you in the HR world, think of it as like SHRM, IHRIM, or the HR Technology Conference — it is a major conference for CFOs). It is a pretty harsh indictment of the HR profession. I think some of it is certainly justified (and self-inflicted), but I think it misses the mark on a few things as well. So, here is my take:
- HR is "unable to provide analytics that are useful in making workforce decisions that build economic value"
Unfortunately, this is true in most HR organizations. However, it is not universal and the trend I see is that more HR organizations want to build a competence here. There is a lot of work to do though.
- "HR people try to perpetuate the idea that job satisfaction is critical … But there is no evidence that engaging employees impacts financial returns."
There is a difference between being an engaged employee and being satisfied with your job. I can be satisfied with doing the minimum to collect my paycheck, but that is hardly an engaged employee. There are plenty of studies (for example, from Gallup and Watson Wyatt) that show that there is a link between employee engagement and financial results). So, I disagree with this notion.
- "Beatty pointed out that … performance variability means there is an opportunity to build a more valuable work force. Usually in such a situation, HR professionals try to figure out what the top performers are doing right, then train the others accordingly. That is faulty thinking, insisted Beatty, who asserted that selection is a more powerful predictor of performance than training. In addition, training may not be the problem – some employees may know what to do, but choose not to do it, opined the professor."
This is an important point. I agree with Beatty on this, but he does not go far enough (or at least the article did not go far enough, he may have done so in the presentation). HR organizations need to use analytics to find out the right mix of interventions. He may be right that training of low performers may not be the optimal investment and selection might be a better investment. However, it may be the other way around too. The point is that HR organizations should use analytics to figure it what (or what combination) is going to have the biggest impact on the desired business outcome in their environment (Gartner clients should look at Defining Workforce Analytics — especially the link to the Case Study: Workforce Analytics at Sun" — for more information).
- "HR wants to treat most employees the same way, and they spend considerable time trying to defend or fix poor performers, taking on the St. Bernard role," he said. "Low turnover isn’t necessarily a good thing. Think about where you might want to disinvest."
I will not argue that most organizations (this is not just an HR problem) want to fix performance and get all employees to a certain level of competence. Gallup research on focusing on strengths has provided ample evidence that this may not be an optimal approach. However, I think most HR organizations today recognize overall turnover rate is a bad metric. At a minimum, most look at voluntary vs. involuntary turnover. I agree that a more granular view is more valuable, but I do not think there is a singular focus on low overall turnover. Having said that, I do not think HR has taken as much of a leadership role as it should in rightsizing the workforce (in good times as well as bad).
- "Human resources is also behind what Beatty called the "silly" idea that a company should try to be the "employer of choice."
Being an employer of choice is a means to an end. If you want the top talent, they have to want to work in your organization vs. competitors. So, I would tell organizations that they want to be an employer of choice — for top talent. I agree with Beatty that that may mean there are a lot of people who are not top talent that also will want to work for you, but that is what good recruiting processes and systems should help you do — find the best fit candidate for the particular job without spending lots of money.
- "Beatty said that it is most important to think outside the HR department box when it comes to filling strategic position that create the bulk of a company’s value. To that end, he suggested that companies might be better off appointing someone from outside the HR department to manage strategic talent."
I have found that many of the organizations most progressive in workforce analytics have HR leaders that come from outside of HR. So, I would not argue this point. I would just add that it would be good for the development plans of HR professionals to include rotations outside of HR so that they can better learn the business.
- "Such tactics are warranted because while "the language of organizations is numbers, HR isn’t very good at data analytics," Beatty said. "They don’t think like business people. Many of them entered human resources because they wanted to help people, which I’m all for, but I’m also for building winning organizations."
I agree with this, but HR leaders need to get over it. We have written about the skills challenge with workforce analytics (Gartner subscription required) too. Either bring in people with the quantitative skills and teach them HR or work with other parts of the organization that have those skills (like Finance or Operations).
- "It’s the CFO’s job to make sure that the work of analyzing and, as necessary, reconstituting the work force gets done by someone qualified to do the job, added Beatty, and there has never been more at stake than there is now."
Actually, I think it is the CEO’s job. It is that important. The CFO has a vested interest to be sure and should partner with the HR leadership to make sure that it is making intelligent decisions about workforce composition and investments. However, too few HR leaders are stepping up to the plate to build the necessary competence in the HR organization. This has to change. Investments in talent management applications and social software alone will not get us there (not even close). Workforce planning and analytics are the "secret sauce" to get the value from these investments.
What is your take? Do you agree that the CFO should not trust HR? What do you think needs to change so that HR gets more respect?
18 responses so far ↓
1 Naomi Bloom // Mar 11, 2009 at 7:03 pm
Jim, in fairness the HR profession is making slow (way too slow?) progress toward a more strategic, disciplined, analytical approach to ensuring that the business of human resource management is the driver it should be of excellent business outcomes, but it’s taking far too long in spite of our collective efforts. The HR technology to support HRM has come a lot farther than the average effectiveness in the use of that technology, and it’s as good as the technology supporting most other business domains. So, why are we still talking about “seats at the table” and “don’t trust HR” in 2009? Why are we still looking at core HRMS implementations that don’t get the difference between job and position, let alone have decent coding structures for either? It’s impossible to do analytics when the underlying data is old, poorly structured, lacking in granularity, scattered across myriad disparate systems, incomprehensible by anyone but the guy who left, etc. What will it take to make HRM the truly durable source of competitive advantage that we know it is and must be? Guess we’ll just have to keep on keeping on and not give up the fight. The good news is that there are truly great HR leaders and professionals, and we’re counting on them to take their colleagues to the next level.
2 Jon Ingham // Mar 11, 2009 at 8:59 pm
I just think it was a completely bizarre article. Perhaps he’s just trying to get publicity for the Differentiated Workforce (I guess fairly successfully if so!).
3 Don’t Trust HR, Professor Tells CFO Gathering : ERE.net // Mar 11, 2009 at 8:59 pm
[...] 10 took umbrage with at least some of what Beatty said. Within hours of the article being published Gartner’s Jim Holincheck published his own take on the [...]
4 How HR Can Build Trust with the CFO « The Staffing Advisor // Mar 12, 2009 at 12:14 am
[...] forth, I recommend you read the post from Jim Holincheck at Gartner. His post, called “CFO’s Should Trust HR, but Do Have Reasons to Be Wary“ dissects the less compelling arguments Professor Beatty made, but notably, he left [...]
5 Ravi // Mar 12, 2009 at 1:38 am
Cool it guys, he is just a professor who has spent his life in universities writing lots of papers and giving lots of lectures. Corporates like these guys to go around and talk and do some training kind of thing. Makes one feel like money well spent. Once he works in a real company as an insider (not as a fancy high profile guest) having to deal with all the politics, pressures, etc. then we can go and do this all over in more detail.
6 Todd Larson // Mar 12, 2009 at 11:40 am
Odd that Dr. Beatty is the Director, Master in HR Leadership Program.
http://smlr.rutgers.edu/faculty/Beatty_R.htm
Although he does have a resemblance to Rush Limbaugh
7 HR Guy // Mar 12, 2009 at 12:19 pm
Completely agree with Ravi – take a look at Professor Beatty’s CV and tell me where you can find ANY experience working in corporate America: http://smlr.rutgers.edu/faculty/Vita/CVBeatty.pdf
Don’t you just love professors who like to sell books?
8 Richard Melrose // Mar 12, 2009 at 12:29 pm
In most companies, large gaps still exist between HR contributions and the talent management demands of the strategic missions designed to systematically build enterprise health and value.
The C-suite, which typically does not include HR representation, deserves a sizable share of the responsibility for this prevailing condition, especially if the CEO, CFO, COO, CIO, etc. have failed to take the lead in making HR more strategic.
Few C-suite executives would disagree with the assertion that to manage, we must measure. Well, why not lead by helping to define a set of metrics and measurement methods that better align HR initiatives and outcomes with enterprise objectives.
We can measure to avoid hiring mistakes. We can measure to predict job performance. We can measure employee engagement. We can measure team strengths (weaknesses), balance and leadership needs. We can measure to determine learning and development opportunities. We can reliably, validly, compliantly and profitably measure these things and much, much more. We have all the necessary tools at our disposal, 24/7/365.
But most C-suites still indulge selection processes that start with resume screens and end with unstructured interviews. Most companies do not have up-to-date job analyses that properly document what it takes to perform in each position. How can those companies expect to identify talent that “has what it takes”? Such poor practices degrade the quality of hiring and promotion decisions and create compliance exposures.
When it comes to making HR more strategic, CEOs should lead, set priorities and enable. CFOs should leverage their facility with metrics. COOs should identify mission-critical positions and, with the help of their CIOs, start there to build a complete and current library of job analyses. Perhaps, the newly appointed Chief Talent Officer should steward the entire process.
As a former international industrial CEO, I say: “better to fix it than play the blame game”.
9 Derek Irvine, Globoforce // Mar 12, 2009 at 3:24 pm
We’ve done our own research on bridging the gap between HR and Finance, finding:
* Human Resources Must Take a More Strategic Role in the Business
* Employee Recognition Drives Engagement and Therefore Impacts Retention, Productivity and the Bottom Line
* Creating a Universal Recognition Platform for Global Companies Is Difficult
* CFOs Are Not Aware of How Much They Are Spending on Recognition Programs
* Talent Officers and the CFO Must Work Together to Chart the Course for the Future
We did another study of CEO perceptions of recognition programs as they relate to corporate objectives within their organizations, as well as the human resources reality of these programs. The survey revealed organizations still have a long way to go in aligning recognition programs with their company’s mission, values, strategic objectives and goals.
Key findings included:
* 88% HR respondents their recognition programs need improvement and that their CEO would agree.
* While an encouraging 58% of HR leaders believe their CEO would say their recognition programs reinforce the strategy, values and appropriate behaviors of the organization, an alarming 42% say their programs offer no strategic benefit to their organizations, indicating a tremendous waste of resources and misappropriated recognition investment that have no effect on employee engagement and motivation.
* Overall, HR leaders (45 percent) feel their programs fall short in driving bottom line results. Why? Not only are companies clearly not building their recognition programs to ‘CEO code’ – a program that is aligned with the organization’s strategy, mission, values and behaviors – but also a staggering 38 percent of all organizations surveyed are not measuring their program’s results in any way, leaving CEOs in the dark on the effectiveness and true value of their recognition programs.
All of this points back to analytics. Measurement for measurement’s sake will never prove the value of HR initiatives. Metrics that show HR initiatives impact on factors CEOs (and CFOs — I agree with Jim that the CEO needs to step up here, too) care about such as productivity against strategic objectives, customer satisfaction and engagement, will prove the value.
Far more on this topic of measurement and engagement is available on my own blog here: http://globoforce.blogspot.com/search/label/measuring%20recognition%20and%20engagement.
10 Irregular Enterprise mobile edition // Mar 12, 2009 at 3:38 pm
[...] Richard Beatty entitled:Memo to CFOs: Don’t Trust HR, followed by a post at Gartner blogs: CFOs Should Trust HR, But Do Have Reasons To Be Wary was my cue to renew acquaintance with Gartner analyst and post author Jim Holincheck. I’m sure Jim [...]
11 Joseph P. Murphy // Mar 12, 2009 at 5:32 pm
Leave it to recruiters to make evaluations of talent based upon the resume.
If one takes the time to read the HR Scorecard, the Workforce Scorecard and the Differentiated Workforce, the evidence of in-depth work with major corporations is revealed.
Yes Dick Beatty has given a yelp that stirs the soul.
Jim has done a thoughtful job of point-by-point response, seeking to find the seeds of truth versus the knee jerk rejection some offer.
Stop and ask: How much data does your organization have that documents the link and the strength of the link between HR practices and competitive differentiation. Survey results normed against outside populations are not indicators of competitive advantage. Too many CEOs and CFOs rely on anecdotal versus empirical evidence when it comes to the role of talent management practices and competitive advantage.
What data analysis has your organization conducted that establishes the link between candidate evaluation and on-the-job performance? Only 15% of companies indicated they have done so in a survey I conducted with SHRM (write for a copy joe.murphy@shakercg.com) What data do you have that documents the relationship between human factors and market performance? Before you condemn, hold up the mirror.
Change agents cause some to revolt and some to evolve.
What is your response? Think about it.
Joseph P. Murphy
Shaker Consulting Group
Developers of the Virtual Job Tryout®
12 Don’t trust HR « Marenated // Mar 16, 2009 at 12:14 pm
[...] Gartner’s Jim Hollincheck says: (regarding the slam on analytics provision by corp HR) Unfortunately, this is true in most HR organizations. However, it is not universal and the trend I see is that more HR organizations want to build a competence here. There is a lot of work to do though. [...]
13 HRM Today - Blog Archive » Don’t trust HR // Mar 16, 2009 at 9:10 pm
[...] Gartner’s Jim Hollincheck says: (regarding the slam on analytics provision by corp HR) Unfortunately, this is true in most HR organizations. However, it is not universal and the trend I see is that more HR organizations want to build a competence here. There is a lot of work to do though. [...]
14 Talent Makes Headlines » Hancorp Technologies // Mar 17, 2009 at 2:49 pm
[...] made a presentation leading to this headline: Memo to CFOs: Don’t Trust HR. Responses from Gartner’s Jim Holincheck, The HR Capitalist, and ZDNet blogger Dennis Howlett are notable in their attention to detail, call [...]
15 Breathing Space HR » Blog Archive » Memo to CFO’s: Don’t Trust HR // Mar 25, 2009 at 12:21 pm
[...] Captial, who relates Beatty’s comments back to 2005 article “why we hate HR” and Jim Holincheck who breaks down the article into sections and comments well on each – particularly on the analytics [...]
16 HRMblogs.com // Mar 29, 2009 at 8:05 am
[...] made a presentation leading to this headline: Memo to CFOs: Don’t Trust HR. Responses from Gartner’s Jim Holincheck, The HR Capitalist, and ZDNet blogger Dennis Howlett are notable in their attention to detail, call [...]
17 090406 Workforce Analytics Links | johnsumser.com: Recruiting News and Views // Apr 6, 2009 at 10:35 am
[...] CFOs Should Trust HR, But Do Have Reasons To Be WaryJim Holincheck fundamentally agrees with Beatty. His point by point analysis is thoughtful and points out some bright spots. [...]
18 Jim // May 4, 2009 at 2:56 pm
It’s people like Mr. Beatty that keeps highly skilled HR Business Partners out of the boardroom to begin with. I will agree that in our profession there are a lot of unqualified HR practitioners however that can be said of the finance role as well. I think it’s time for the boardroom to stand up and invite HR to the table and begin a business partnership with a department that desperately wants to have an impact on the bottom line.
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