How HR departments fail companies from inside and outside

Let’s start by analysing how HR departments sometimes “wrack havoc” on human resources of a company.

The infamous Fast Company article of 2005 “Why We Hate HR” is as discussed and relevant as before. It trashes HR people as dull-witted pen pushers, “The human-resources trade long ago proved itself, at best, a necessary evil — and at worst, a dark bureaucratic force that blindly enforces nonsensical rules, resists creativity, and impedes constructive change. HR is the corporate function with the greatest potential — the key driver, in theory, of business performance — and also the one that most consistently underdelivers.”

Opsss.

According to the same article, “a 2005 survey by consultancy Hay Group, just 40% of employees commended their companies for retaining high-quality workers. 41% agreed that performance evaluations were fair. 58% rated their job training as favorable…. Most telling, only about half of workers below the manager level believed their companies took a genuine interest in their well-being.” Only half of employees think HR cares about them?

HR staff are either perceived as harbingers of bad news or in “best case scenario” of doing a ‘useful’ activity, they are still a bureaucratic and legal bottleneck, usually slowing down operations and generating much negativity and pessimism among employees. Then I guess it shouldn’t surprise us that more and more companies observe more direct and stronger connections between employees and their managers as a result of eliminating the HR function. And one company – perhaps jaded from its previous HR department’s debilitating effect, hired one HR staff, but agreed on not calling her that – she goes without a title. Business is moving the other way, to reduce HR departments by outsourcing its paper-pushing functions; PriceWaterhouseCoopers estimates it can shave 15 to 25 percent off your HR costs. These humans are simply not resourceful enough.

Wow. Can it get any worse for the HR staff?

In one very public scandal, BBC’s HR manager Lucy Adams “was accused of presiding over ‘corporate fraud and cronyism’ over huge pay-offs to former executives” add a further insult to injury. Some of most notorious HR strategies such as PTOs, PIPs and performance reviews may even destroy a company.

It thus seems that existence of many HR departments defeats their very raison d’être as far ‘internal’ (i.e. inside a company) activities and corporate goals are concerned.

What about an HR department’s ‘external’ role, that of scouting for the best and the brightest? Company’s strategy is its culture (created by its employees), and its culture is its strategy, which is of course true and goes to say how essential it is to find the right people who would not only have skills-experience match but more importantly have a cultural fit for the company. Zappos, Pixar, Cirque du Soleil and others successful companies attribute their success primarily to their people.

Yet, despite the known and accepted fact that many applicants forge and offer polished cover letters and CVs, HR departments – the bigger/more famous the company, the bigger number of applicants apply for the company – continue to commit two essential mistakes:

overly rely on data on CV/cover letter;
look for as close a “literal” (as opposed to “big picture“) match to the job vacancy as possible.

In most cases, the first mistake yields much redundant work (for and by HR departments), disappointment (when, once accepted, it turns out the candidate didn’t have either good enough/pre-requisite skills or experience or was not a cultural fit), or lose (employee being fired or resigning shortly after joining the company).

The second mistake, equally or even more widespread, not only causes all the same problems, but, more importantly, discards candidates with profiles that are wider or somewhat different from the vacancy scope. In the modern age in which present and future belong to generalists, HR departments’ tunnel vision – the same tunnel vision that discredits HR as a department unable to see the big picture (company’s vision) nor assess or understand well enough business vision as to deserve a decision-making power inside the company – turns off many a qualified generalists (i.e. multidisciplinary people) or candidates with a wide cross-section of skills and experiences, who would have otherwise been (significantly) useful and thrived within the company.

Thus the conjunction of the two above-mentioned mistakes and standard HR internal practices end up costing the HR not only their reputation, but in a longer run, dissuade companies from the idea of having a dedicated HR department. Or, as my generalist friend Arnold suggested, given how standard matching algorithms work in general, it ain’t no big stretch to imagine that if HR continues on its current path, it will inevitably lead to HR function being automated via a software program with one of standard programs specially designed for that purpose.

Lastly, erroneous hire usually ends up being a waste of monetary, time and emotional investment both for a company and an (erroneously hired) employee, all the while as HR department is being paid to ‘recruit’ talent.

Modern saga “The Fox and the Hedgehog”: generalists vs. specialists

About 2,700 years ago, Archilochus wrote that “The fox knows many things, but the hedgehog knows one big thing.” Taking that as a starting point, Isaiah Berlin’s 1953 essay “The Fox and the Hedgehog” contrasts hedgehogs that “relate everything to a single, central vision” with foxes who “pursue many ends connected … if at all, only in some de facto way.”

And so we have become a society of specialists with much heralded “learn more about your function, acquire ‘expert’ status, and you’ll go further in your career” considered the corporate Holy Grail. But is it?

The modern corporation has grown out of the Industrial Revolution (IR). The IR started in 1712 when an Englishman named Thomas Newcomen invented a steam-driven pump, to pump water out of a mine, so the English miners could get more coal to mine, rather than hauling buckets of water out of the mine. That was the dawn of the IR. It was all about productivity, more coal per man-hour; and then it became more steel per man-hour, more textiles per man-hour, etc.

The largest impact of the IR was the “socialization” of labor. Prior to the IR, people were largely self-sufficient, but the IR brought increased division of labor, and this division of labor brought specialisation, which brought increased productivity. This specialisation, though, decreased self-sufficiency and people became increasingly inter-dependent on one another, thus socialised more. Also, with the division of labor the individual needed only to know how to do a specific task and nothing more. Specialization also caused compartmentalization of responsibility and awareness. On a national level, it has allowed nations to become increasingly successful while the citizens become increasingly ignorant. Think an average American. You can be totally wrong about almost everything in life, but as long as you know how to do one thing good you can be a success, and in fact in a society such as this increased specialization becomes advantageous due to the extreme competition of our society. Environments with more competition breed more specialists.

But is the formula that ushered humanity in 20th century of rapid technological industrialisation and economic development still valid or as impactful in 21st century as it was for last 300 years? In our modern VUCA world, who (specialist OR generalists) have a better chance of not only surviving but thriving?

According to a number of independent research papers, employees most likely to come out on top of companies and becoming successful in long term are generalists—but not just because of their innate ability to adapt to new workplaces, job descriptions or cultural shifts. For example, according Carter Phipps (author of Evolutionaries) generalists (will) thrive in a culture where it’s becoming increasingly valuable to know “a little bit about a lot.” More than half of employees with specialist skills now consider their job to be mostly generalist despite the fact that they were employed for their niche skills, according to another survey. Among the survey respondents, 60% thought their boss was a good generalist, and transferable skills – such as people skills and leadership – are often associated with more senior roles.

We’ve become a society that’s data (from all various specialisation, industries and technologies) rich and meaning poor. A rise in specialists in all areas — science, math, history, psychology — has left us with huge amount of data/info/knowledge but how valuable is it without context? Context in a data-rich world can only be provided by generalists whose breadth of knowledge can serve as the link between various disciplines/contexts/frameworks.

A good generalist, David Christian gave his 2011 TED talk called “Big History” of the entire universe from the big bang to present in 18 mins, using principals of physics, chemistry, biology, information architecture and human psychology.

To conclude, it seems that specialisation is becoming less and less relevant due to 1) increasing, interconnected and overlapping data and information that permeates all aspects of our lives, 2) increasing VUCA-ness of social, political and economic situations of individuals and nations, 3) need to envision and derive from a bigger context or connect few contexts/disciplines/frameworks. All points seem to be better addressed by generalists.

21st century: lose of silence and humanness

Years 1982, 1989, 1994, 1999 are not notable but for fact that some of redefining moments of recent technological breakthrough, especially in the realm of mobile and Internet technologies, happened during those years.

Now an average American teen sends or receives around 2,200 text messages per month, but one 13-year-old managed to handle 24,000.

We are more and more in a hurry. Time blurs because Internet and technologies bring us means that make us connected ever faster and ever more seamlessly. We want to have more done and achieved in less and less time. Competition is fierce. What we don’t realize that in these times of accelerated realities our perceived effectiveness or success based on doing more rapidly or in less time is illusionary. Once we come to that realization, it is usually too late. We become disconnected from our friends, families and even teh very realities with which we were trying to keep abreast of.

In trying to stay ahead of our lives in the accelerated 21st century, we all start feeling the strain of our pace, personal and professional, in our everyday lives. We start feeling the need to unplug. In one generation we have moved from exulting in and worshiping time-saving devices and gadgets that have so expanded our lives to trying to get away from them — often in order to make more time.

In 21st century, we have more and more ways to communicate but less and less to say. We don’t have time to think. We need to say as much as we can in as little a time, assuming otherwise to stay behind. Facebook, Twitter and plethora of means of communication, while admittedly helping us to receive, create and share more information, also take out of us our innate ability to reflect, ponder and consider, all of which require focus and time, of which we have less and less.

However, the urgency of slowing down — to find the time and space to think — is nothing new, of course, and wiser men have always reminded us that the more attention we pay to the moment, the less time and energy we have to place it in some larger context. “Distraction is the only thing that consoles us for our miseries,” Blaise Pascal wrote in the 17th century, “and yet it is itself the greatest of our miseries.” He also remarked that all of man’s problems come from his inability to sit quietly in a room alone. Famous American writer Thomas Merton noted that “Man was made for the highest activity, which is, in fact, his rest,” stepping out of the rat race and into a Cistercian cloister.

Well-known New Style designer Philippe Starck claims that he stays consistently ahead of the curve by never following news or watching TV. Highlysuccessful Malaysian businessman Vijay Eswaran attributes his success, taking his company QI Group from launch to the billion dollar mark in 10 years, to his practice of reflecting in silence for one hour everyday. Even in negotiations and sales, silence is the ultimate key to success.

A series of tests in recent years has shown, according to Nicholas Carr’s “The Shallows“, that after spending time in quiet rural settings, subjects “exhibit greater attentiveness, stronger memory and generally improved cognition. Their brains become both calmer and sharper.” According to neuroscientist Antonio Damasio “deep thought and empathy that are essential in our love lives are inherently slow and not in concert with our speedy lives.“

There is an irony to our story of becoming the most advanced in terms of tehcnology. As we created trains, machines, robots and programs, designed to address every type of needs we have, we were only able to do so, by creating and guiding those technologies and machines. Machines and technologies that have made our lives so much brighter, quicker, longer and healthier cannot teach us how to make the best use of themselves. There is no meta level to technological revolution.

How do some of us try unplug from the information overflow?

Recent trend is mushrooming of Internet rescue camps in South Korea and China, which save kids addicted to the screen.

Another fashionable trend, especially among business professionals of all types, is yoga or meditation. Yet others go for long weekend walks in forests or hike their way up hills or mountains.

With an ever-increasing amounts of information, connectedness and speed, our innate faculty of regenerating ourselves, re-creating our inner serenity and reconnecting with nature, friends and family intuitively leads us back to many an old and well-trodden paths of our forefathers. And this is to be expected.

I just wish that with all the noise, technology and gadgets, popping up around us and affecting every aspect of our lives in more ways we would like to admit or imagine we don’t forget what we are. We are humans and all the technology in the world cannot make us any more human than we already are. If anything, it has been turning us into the very machines we have striven to create.

Does your business need a model to be successful?

What is business model?

Many people assume that as long as they have a great product or amazing service, success is a guarantee. This is an illusion, especially in the rat-race of the 21st century. Without a solid and well-thought business model, organizations/firms struggle to grow or even to survive.

Let’s define few terms, before continuing. Traditional business model has six components: value proposition, market segment, value chain structure, revenue generation/margins, position in value network and competitive strategy. The successful ones, however, tend to have the following three common features: offer a unique value, are difficult to imitate, and meet/create an (untapped) market demand. For the Internet, online business models became essential for online companies and traditional ones expanding their reach into the online. Online business models form an ecosystem comprising of four parts: company, customer, product and experience.

Some, Dot-com bust exposed an armada of good “look-and-feel” online companies, which had no working/sustainable business model and were a mere fluff in the market. But it is not only dot-coms that fail to conceive a deeper value in their offer. Some traditional businesses (such as newspapers), which branch out into online, blur their existing business models (by charging for access to obituaries while charging fee from those who choose to put them in the paper).

Is there a “right” business model for a company?

Some companies, both purely online or traditional, finding a business model that works, try to protect it as as Netflix did when it filed and was granted a patent for its business models (subsequently suing Blockbuster for patent infringement). An example of a very successful business model was at Xerox. It created the world’s first automatic paper copier. Xerox saw that with the high expense for each machine, there was no room for a substantial profit by simply selling machines. Their initial business model was based on the idea of leasing the machines and charging a fee per copy made. Because of its innovative and strong marketing activities, Xerox brand-name gradually became a verb “Xerox” which stands for copying paper (like Google stands for search). Recently, by incorporating environment-friendly concepts into their business model, Xerox started producing earth friendly designs that helped it save USD 2 billions in last 2 years.

On the Internet, where some social networks take a gigantic chunk of users’ online “time” are not, generally speaking, a commercial success and the investors are generally apprehensive about the business model they pursue – Facebook (which makes money from brand ads, partnerships, paid applications like virtual goods and performance ads) and Twitter that are still with us contrary to countless others that did not survive. Some suggested Twitter – it recently debuted its promoted tweets – to build business models around data mining and performing trend analysis, feed advertising, SMS ads, and subscriptions, integrating contextual ads, apps, and pages or even selling/suggesting friends. Lastly, few envision a tiered/freemium model whereby “basic” Twitter remains free but a premium service (a version of promoted tweets with more flexibility, options and cost structures) is offered for online brand builders and commercial businesses. Indeed, the whole business model/monetization topic for Twitter (and for Facebook) are so hot a topic that there are few dedicated topical channels as this one on Business Exchange.

Society + business = ?

Few days ago, the US state of Maryland has become the first state in America to recognize a new type of socially responsible corporation that can consider the public good in addition to shareholder obligations in business decisions. Until now the term “corporate social responsibility” was a badge for innovative, brave and socially conscious businesses such as Ben & Jerry’s whose social activism is well-known. There was no law supporting what they did. From now on, businesses that become (by amending their charters) “benefit corporations” may consider factors like employee interests, the environment and promoting arts and sciences, as well as shareholder interest.

And last but not least, what have you heard of a company called TOMS? Even if you have not, you will, very soon because they just completed giving away a million shoes. Their business model is simple: for every pair of shoes bought, they give one pair away. TOMS calls their model – unsurprisingly – One for One. Their name, TOMS, is taken from the word “tomorrow,” being part of the idea that if you buy a pair of TOMS shoes today, a pair is given away tomorrow.

What is the business model you currently operate in? Is your business model in-line with trends and values of your society, your target market and in the 21st century?