Judith M. Bardwick, Ph.D.
As the level of competition and the pressures to improve performance have increased by orders of magnitude in the last decade, organizations have scurried about, searching with unflagging energy to find the latest wisdom that would provide solutions to performance problems and a competitive edge. In many places and in a wide range of ways, paying more attention to people, managing and leading them more effectively, have been cited as the key solutions. But, while the words trip easily upon the tongue, relatively little of much magnitude has actually happened. Why might that be the case?
In most organizations, Human Resources rarely have the power it needs to be a major player because it is not in the business of the business. Human Resources are staff not line; it’s the purveyor of processes and not of business outcomes. While the practioners of Human Resources have argued the nature and magnitude of their contribution to organizations, their position is not strengthened until and unless the nature of their work can be demonstrated to impact the real business of any business.
I mean simply and concretely: Human Resources must justify its effectiveness by demonstrating that the processes it promulgates result in better business outcomes. Empowerment, for example may lead to more enthusiastic employee participation in decision making. But, it is critical that the decisions of empowered employees are closer to customer needs which are in turn produced with greater cost-effectiveness. In short, Human Resources must demonstrate that its practices lead greater efficiencies, market share of profits.
In this period of extraordinary national and global competition, many organizations are under unyielding pressure to increase their productivity. In these organizations, the levels of risk and anxiety are too high. Under these conditions, people strive to protect themselves. Instead of focusing on accomplishing better work, people are preoccupied with saving their jobs and making themselves safe. These people have developed a Psychology of Fear.
Psychology of Fear and a Psychology of Entitlement are equally detrimental to motivation and performance. Only a Psychology of Earning results in the highest levels of performance and productivity. That is the result of an organizational culture in which rewards cannot be taken for granted because rewards are earned when risk levels are medium.
A survey taken by AMA showed a very strong relationship between an organization having a Culture of Earning and its being very profitable. Organizations that were not Earning tended to be either unprofitable or a not-for-profit organization. Because there are so many steps between psychological attitudes or people’s behavior and profitability, I would never have thought to ask respondents whether their organizations were profitable or not.
Employees in profitable firms were more proactive, have higher morale and were held accountable for being productive. Communication, leadership and teamwork were more than twice as effective and common in those organizations than in those which were not profitable. In organizations with a Psychology of Earning the organization is flexible and people are confident enough to take risks. People are expected to deliver high performance and be successful; they’re highly motivated to do work that is excellent. And, by a ratio of more than two to one, profitable organizations provide high levels of service to their customers.
Organizations that are highly profitable are on the move. They’re filled with purposeful energy. They experiment and require real performance. Profitable organizations, or those that do the best work, are in Earning. Human Resources need to test the validity of its propositions by demonstrating their effectiveness in the business of that business.
I believe that the world has moved into an era of conditions we have never known before. Further, these conditions have created the moment when Human Resources should move into a great leadership role. Today, distance and time have largely disappeared. Many of our processes – computers, phones, have made distance irrelevant and time instantaneous. The result is that everyone, everywhere, has lost the protection of distance and time from competition. Competitors may arise anywhere in the world, in unexpected places. Time will no longer slow down because there’s a rhythm of product cycles. And, no one will be able to tell anyone what skills they will need, even in a medium-term future. Human Resource has the mandate to lead organizations in managing the high unremitting stress levels that will result from the loss of previous protections. This is the moment when Human Resources will help people and organizations to experiment and innovate with solutions to problems the world hasn’t imagined.
Many years ago I listened to the head of HR in a large corporation describe her team efforts to cut down on the high percentage of turn-overs in their Call Centers. She described what she and her team did: they went to the Call Centers and each person spoke to an employee for a full 15 minutes. At the end of that month there were no, not a single drop out from either Call Center. That was fantastic!
When the meeting was over I congratulated her on her innovated approach and wonderful effectiveness. Then I said “Your talk was great but it would have been even better if you had been able to tell the executives how much money was saved as a result of your intervention.” She looked at me blankly and said “How in the world could I have done that?!” Alas, that’s the typical of HR and its leaders. Too many don’t see that their business is to enhance the probability of the business they are a part of.
The language of business is money. That’s why every HR assertion and assumption, every practice and process must be expressed as having a financial outcome, measured in money.
Then and only then, does HR gain a place at the grown-up’s table.