Why Rename HR or HC to HI (Human Investment)?

After all, what is in a word change?

1. Perception.
1. Instead of using others up, you are building others up.
2. Instead of being a cost center, there is an expectation that you will create a ROI (Return on Investment).
3. Instead of being tactical and operational, you are expected to deliver strategic results
2. New Paradigm
1. The HI employee team will realize that instead of “managing” people and processes, they now have to “create value” (a return on investment) with people and processes. That includes being willing to outsource part of their function if that decision creates a greater value, lower cost, and frees up staff to focus on higher value activities.
2. HI internal clients (other functions and departments) and their employees can now be shown how they need to consider investing in themselves, making personal changes, and adding value in order to survive and thrive in tomorrow’s company. It also fires a warning shot to Bloodsuckers and Selfers to start aligning with the company and adding company value.
3. New Value Proposition to the C-Level
1. Instead of a cost center, a true HI organization will create, measure, and report how the new model creates a contribution to profit, productivity, client service, innovation, etc. These are the key words that C-Level executives will be interested in hearing. The HI organization’s value is in serving other organizations to help them add value to the company’s success. Therefore these metrics are cross-functional team metrics that senior management can use in their company performance dashboard.
2. The value proposition becomes part of your departments internal branding and positions you as a value contributor, not merely staff who handles “stuff no one else wants to handle.”
3. Signals to line managers how, if you can live up to your new name, you need to become part of their team to help them create Value Workers in Value Teams contributing Value to the company – resulting in the line manager getting recognized for their value contribution. This process integrates you into the product and go-to-market process – which is where the C-Level is focused.

Now, if you like our word change, there is a catch. Before you try to sell management on your new role, you have to create and demonstrate the model within your own organization. So, I recommend holding off going to the C-Suite until you are hearing their subordinates taking notice and talking about the value, ROI, and changes that you implemented. In other words, you need to create yourself as a product demonstration before trying to market yourself and sell yourself internally.

However, if you are serious about wanting to make a difference, help the right employees to get on the bus, in the right seats, aligned for company success, and adding recognized value then you need to start with a vision of where you are going. I suggest that vision is as a Human Investment Manager.

The next several weeks we will be discussing concepts and steps you can take to become successful – and recognized as successful by top management.

Next week, we will start by explaining, “Why CEOs should Develop Strategic Human Investment Organizations.”

 

Redefining HR into HI (Human Investment)

You probably think I have gone mad! How dare I suggest redefining an entire function.

Please hear me out – then call me crazy. If you read my background, I usually redefine functions from a business and CEO perspective. I am not trying to impact best practices except to add a strategic viewpoint and, later, suggest additional best practices that you may not yet have in your tool bag.

First, what does HR mean? Obviously, it stands for Human Resources. Great! What does the word “resources” mean? The dictionary defines it as a source of supply or support. So, a human resource professional refers to the people who supply or support the processes in business.

What is wrong with using the phrase “Human Resources?” A resource is something to be used up and then discarded or to be refined/developed for a higher value use. Take mineral resources, the resources are found, mined, and then used in other processes such as manufacturing or jewelry.

People resources are often viewed as either a commodity (tactical worker who is easily replaced with another tactical worker) or a Valued Worker (someone who strategically adds value, knows how to communicate their value, and develops relationships with decision makers to understand how they can add more value…). Commodity workers are often viewed by senior management as dispensable, easily replaced, easily outsourced, and easily taken advantage of or mistreated.

The typical experience is that hiring quality people who want to work is a hit and miss experience. Many executives, with significant hiring experience, have agreed with me that a 50% success rate is quite good. That means that at least 50% of hired employees are either dragging down the company or need to be trained or replaced. Good companies emotionally often keep them as non-performers and eliminate only the worst offenders. The result is often a misaligned, dysfunctional, sub-optimized, and non-competitive organization. The only good news is if your competitors have a higher percentage of dysfunction.

Recently, I have seen some HR organizations change their name to HC (Human Capital).

Essentially, capital is merely one form of a resource. Capital can be defined as “the amount of cash and other assets owned by a business. These business assets include accounts receivable, equipment, and land/buildings of the business. Capital can also represent the accumulated wealth of a business, represented by its assets less liabilities.” (Source: http://biztaxlaw.about.com/od/glossaryc/g/capital.htm). In other words, people are still seen as items to be used.

Instead, I am recommending a rethink of the entire process beginning with a new naming paradigm. Instead of HR or HC, I recommend HI or Human Investment. Titles would be Human Investment VP, Director, Manager, etc. Separately, we have created a new leadership model called the Human Investment Leadership™ model.

What is the difference? Resources and capital are typically commodities to be used up except for high performers, high potentials, or political favorites. Commodities are often paid commodity wages, think like commodities, and act like commodities. That is, you can train them until the cows come home but while the trainer is speaking they are daydreaming, updating Facebook, checking emails, or other activities because they don’t really want to change. Of course, a popular alternative is to find a highly entertaining trainer. At least now the commodities may pay attention but often subject interest, retention, and application into their daily work is little to none. All of us have seen examples. Unless the employee is internally motivated to change, change will only happen under stress and reversion often occurs when the stress is relieved.

So why rename the function Human Investment? I will explain in next week’s blog.

The HR Paradox, Part 4 – The Solution

What we are about to describe is theoretical. Few companies will have internal staff and resources to implement the solution. Most companies will need assistance from qualified advisors, consultants, coaches, and third party knowledge resources.

We will paint the strategic picture but every company will need to decide whether to pursue as a company-wide strategy or as a tactical piecemeal process. In every case, how it is implemented within your unique company, industry, culture, value-system, structure, and political environment will differ. That is why we are teaming with advisors, consultants, coaches, and best of breed partners who can apply the solution within your unique situation.

So, what is the solution?

Step One: Decide strategically, at the CEO level, whether having the right structure with the right roles, the right people in the right seats, helping those people add personal and team value, and developing the right culture of innovation and value add with organizational alignment is worth his or her personal attention. If not, consider tactical piecemeal steps for tactical improvements co-sponsored by a line decision maker and HR.

Step Two: Analyze and Evaluate the existing organization for weaknesses and HR Paradox gaps.

Step Three: Diagnose and Prescribe what actions, tools, and resources would be recommended for strategic and tactical improvements. The C-Level team should decide whether to self-treat with existing resources or to engage professional assistance.

Step Four: Implement the treatment plan utilizing the recommended resources and tools. This will take time, will impact people (especially blood-suckers and selfers), and will take an investment of money and management resources. However, the ROI impact will be obvious:

Studies have shown that:

1. Actively engaged employees make up less than 1/3 of the workforce. Source: Gabriel Institute
2. 60% of failures are due to people problems. Source: VC Industry / Gabriel Institute
3. Nearly 80% of job turnover is due to hiring mistakes. Source: Harvard University
4. The cost of a bad hire can range from 1.4 to 10 times (or more) of the annual salary. Source: Right Path Resources

This list does not include the additional costs of internal conflicts, lack of alignment, and a host of other HR Paradox symptoms.

What impact do these examples have on your business? 

What impact could reducing the HR Paradox have on your business? 

The HR Paradox, Part 3 – The Value Worker Model

At the end of every day, company success is dependent upon every employee adding value in the area where they work. Otherwise, why pay them?

We believe that there are several types of employees. These differences are discrimination neutral and quite simple. Either they want to work and contribute to company success or they want to be paid without working or they are want to work but are so self-focused that company teams and other employees are adversely impacted. I call those who want to work and contribute to company success as “Value Workers.”

Those who want to be paid without really working, I call “Loafers” or “Blood-Suckers” (they suck the life blood out of companies). Those who are self-focused may appear to be highly successful but result in sub-optimizing long term results. I call this group the “Selfers.” They create a highly inefficient company that is usually inward focused, slow moving, and often bureaucratic.

Which group would you want in your company? Value Workers, Bloodsuckers, or Selfers?

Yet in most companies, all three profiles exist. What is that costing your company? How is that impacting client sales, client satisfaction, product quality, company branding / image, profit, response times, employee turnover, employee development, and company teamwork? How is it impacting your company alignment and leverage?

Yet somehow HR is expected to have a magic wand to “fix the problem.” Top management is busy focused on growing the business and assumes that just hiring a HR team will transform the organization, or just spending more money internally will fix the problem, or outsourcing HR will fix the problem. Unfortunately, even the best HR team in the world cannot “fix the problem.” That is part of the HR Paradox.

Just as finance does not create the money it helps to manage. Just as technology does not create the business requirements it seeks to automate. Just as procurement does not specify the products or services it seeks to purchase. HR is only one out of four components to “fixing the problem.”

Unfortunately, unless HR has the right team in place there is no one else in the company whose job it is to coordinate the solution. Executive management does not have time. Managers do the best they can but are time pressed and do not have the tools or training. Even if the rare manager “fixes her department,” that does not fix the entire company. The individual employee has the least personal impact, responsibility, authority, skills, time, or ability to help. Even Value Workers are impacted when Bloodsuckers and Selfers exist throughout the company.

So strategically, how can a company resolve the HR Paradox?

Next week we will discuss the HR Paradox Solution.

The HR Paradox, Part 2 – A Top Management Opportunity

C-Level Management is usually focused on three areas: product development, marketing, and sales. Everything else is in support of those three functions, unless the goal is to grow and flip (sell or go public) the company. Then strategic finance is added to the decision making table. Every other function is in support of or part of those areas. For example, R&D is part of product development. So are manufacturing, product outsourcing, and product management. But at the end of the day, if you have no product to take to market, no marketing effort to communicate that you have a product, and no sales effort, then you have no company.

In some cases the product is HR, Finance, IT, Consulting or other product/solution. However, even in those companies there is usually a distinction between what they productize for clients from what they run internally.

Of course you can outsource some product development (e.g. license from others), outsource portions of marketing, and even tactical sales but the strategic decisions of what products/services to develop, how to market, and how to sell is usually the primary focus of top management.

Support functions that are integral to the product or go-to-market process usually become part of the strategic trusted advisor team. Examples would be IT and Finance. However, HR is usually not integral in product development, marketing, or sales daily discussions and often becomes an afterthought.

We believe it is up to senior management to understand how HR could become a competitive differentiator and contribute to company profit. The challenge is that most HR organizations do not know how to cross that bridge and communicate the value that world-class HR organizations provide to the C-Level executive team. This gap is one of the reasons why we created Integrated Success™. We have strategic processes to help management include strategic HR solutions that add company value while providing a tactical umbrella to align HR support with the business and company direction.

Our model allows us to help top executives, support strategic HR executives, help HR learn how to become more strategic, and provide tactical processes and resources that add value to the company. 

If the company goal is to design the right structure with the right roles, hire the right people and put them in the right seats, help those people develop personal and team value, set up a culture of innovation and value add, and align with the current direction of the C-Level team while still fulfilling the daily tactical duties of HR, then we believe our Integrated Success™ model can help.

 

The HR Paradox

HR is a critical function in every company. However, not all HR organizations are fully appreciated, viewed positively by executive teams, and safe from being outsourced. From a HR perspective, their members are often overworked, focused on helping employees, and satisfying company and legal demands. So, where is the paradox?

There are often gaps between the CEO strategic focus and many HR teams who are tactically focused. For example:

• Many HR functions (and other support functions) do not have strategic minded people on their team. I define strategic as understanding the business, understanding executive needs and wants, and knowing how to create the vision, strategy, innovation, implementation plans and communication skills necessary to talk to and advise decision makers at the C-Level (CEO, COO, CFO, CTO…).
• HR can be seen as too employee focused, similar to a union or government bureaucracy mentality. Few support functions, including HR, realize that they are, at best, a trusted advisor to decision makers. They are to represent the company’s interests, which includes alignment of individual and team success toward creating value for company success. This misunderstanding often results in senior management assuming that HR may secretly be a union representative whose answer to employee turnover and productivity is spending more money on more programs.
• HR has so many laws and regulations to follow that the risk is to become a watchdog who says, “you can’t do that” instead of a trusted business advisor who says, “I understand what you want to do but to follow what I believe is the law/regulation means _____ in order to get what you want without legal exposure. We may also need to seek a legal opinion to be sure.”
• Many senior decision makers intuitively know that some HR theory is merely theory and not helpful to their unique business. By not learning the business of the company and what the executives need and want, HR’s value to the company is often perceived as tactical and subject to being outsourced.
• It is not uncommon to hear a CEO define HR success as keeping them out of jail, eliminating lawsuits, and taking care of the daily (tactical) work. The result is that most HR teams are not included at the decision making table.

So what happens? Management often assumes that they will handle the strategic and the management of employees while holding HR accountable for turnover rates, hiring right, motivating the workforce, keeping salaries and costs down, training without budgets, and a host of expectations that are often not realistic. Not only is HR undervalued but also the executive management team misses out on what could be a secret weapon for greater company profit and competitive advantage.

So, where is the gap? The gap is that while management may devalue, rightly or wrongly, their HR team it is the C-Level management team itself that is to blame. The solution starts at the top.

Next week we will discuss the other side of the paradox – why C-Level management is missing a tremendous opportunity. Later, in following blogs, we will suggest steps that C-Level management and HR can take to eliminate the HR Paradox for their company.