S2E2: Dark Side: It’s resources, human resources

Nearly all companies I know would subscribe to the statement that theirs is the people business. There is a consistent flow of messages via corporate websites, recruitment processes, company townhalls, strategy documents or HR materials, which emphasises the pivotal role of human resources. It is not uncommon to see that staff cost constitutes more than half of company bottomline and despite the omnipresent digitalisation this relation stays stubbornly stable. So we have resources and they are valuable as well as expensive and therefore we have to control them with utmost vigilance. Right?

1/4 Human Resources manage human resources

Since each domain needs specialised expertise we do have a department called HR and true to its name it is taking care of human resources. As business we are way too busy anyway working on top line with new revenue lines or focussing on efficiency to keep the bottomline inflation at bay. So up to HR to do all recruitment, retention, growth and all the soft discussions. We are to be served properly.

2/4 We set crystal-clear rules

In order to control human resources, we need to setup black’n’white system that specifies career framework, job descriptions, pay bands, appraisal process and make sure everybody adheres to this. After all our resources shall be all treated equally and we ensure fairness by maximum standardising of HR processes. So we make sure there are policies and procedures for all situations, each employee learns them and acknowledge in writing and we spend ample time to train everyone to make sure there is no room for misinterpretation. Rules shall be imposed.

3/4 Then we gather data and measure the trends

Just like in other areas of the firm, especially finance, risk or operations, we need to collect statistic data and HR is obliged to produce “people dashboard” to track trends. Hence, good metrics would be to track statistical data and make sure it is all normal distribution curve and deviations do not occur. Typical examples would include attrition rate, age pyramid, gender diversity, geographic distribution and job seniority. The more the better and we need to make sure there are indisputable thresholds and RAG indicators. That way we can hold each line manager accountable for the “health" status of his/her employees. After all, what isn’t measured, isn’t controlled.?

4/4 Finally we need a strict appraisal system

Once we master the big numbers and have comprehensive dashboard, there is a time to get on the individual level. So from the control of all human resources into a scrutiny of each human resource. This is where yearly performance appraisal process kicks in and it shall be a very elaborative one. Luckily there are many templates available and software vendors eager to equip you with sophisticated systems to carefully asses the overall competence, adherence to company values, the soft skills, the hard skills, the company objectives, the team objectives, the individual bonus targets, the key risk indicators, the obligatory trainings, the exact level of loaded salary including all the perks and the holy grail of all so the yearly bonus. As employee you shall not take anything for granted and it’s part of the process to ensure company hierarchy is adhered to. Anyway, certain level of stress keeps us in shape. Doesn’t it?

If it’s all so good then why it is so bad?

This is the dark side way and it’s bound to be successful. The only disturbing factor is that the recent Gallup study shows that only 34% of employees in U.S. fall into category of “engaged” so “those who are involved in, enthusiastic about and committed to their work and workplace”. Similarly only 14% of employees in the study would agree that “appraisal system inspire them to improve.” Employee burnout, depression and anxiety is assessed by WHO at some 615 million people worldwide, while Stanford University estimates related health cost at nearly 190 billion USD in US alone. How come that we make all these efforts to manage our human resources and they are still not appreciated this to the point of being ungrateful?

You shall build great team, yes you

One of the interesting thoughts I recently read is coming from Patty McCord, the former head of talent management at Netflix, and goes like this” “Business leader’s job is to create great teams that do amazing work on time”. In a book “Powerful” Patty makes an observation, and remember she’s head of HR, that?management very often focusses great deal of energy on employee performance, but fails to explain to employees what their business is. This goes hand in hand with violating Simon Sinek’s principle that we should always start with “why” before the “what” and the “how” follows. So how about teams are the secret to modern leadership and HR domain is to be disrupted forever?

Do not be afraid to link emotion and moral motivation to employees’ roles since it can radically improve their performance. This is what Laszlo Bock describes in his true masterpiece “Work Rules!” as the practice he used to run while at the helm of Google’s people practice. The much cited Project Aristotle of Google gave us very in-depth insights into the necessary success factors. And the bedrock is psychological safety so creation of the work environment, where people can be truly themselves, speak up, show vulnerabilities and admit mistakes.

Run zero HumanDebt

Once this is secured the rest follows quite automatically since we gain trust, clarity, unconditional cooperation and great results. The combined effect of sense of purpose (company’s mission and vision explained) amplified by personal safety acts as a magnet to attract and retain talent. I found a great concept by Duena Blostrom and it is about quantifying the stress accumulated by people that ultimately will backfire (https://www.dhirubhai.net/pulse/reducing-humandebt-duena-blomstrom/ ). Duena coined the term HumanDebt and explains how the lack of psychological safety generates a debt that create interest and ultimate needs to paid back. Pretty much the way we express technology debt in IT and it is becoming even more relevant in covid-19 circumstances, where ever prolonged teleworking impacts our social interactions, sense of belonging and sometimes physical health. So be kind and reach out as human being.

It is smart to be non-egalitarian

A recent study of Bain, the consultancy, for HBR shows that only 15% of employees are stars and?best companies are intentionally non-egalitarian with 95% of top jobs filled with A-talents. This is why many successful leaders emphasise the leader’s obligation to focus on getting best possible talent. This principle is very well captured in Netflix Culture Deck that was made available to all of us and illustrates the culture of this highly acclaimed company. One of the highlights is that Nextlix values behaviours and skills that are recognised by fellow colleagues. So it is great to have a decent CV, proven track of records, suitable education and certificates, but we recruit based on who you are and what is the impact you will bring to the team. Netflix CEO Reed Hastings in “No rules rules” goes even more brutal on both sides. So Netflix does not pay attention to your previous remuneration or market pay bands, but will consciously overpay top talent based on their perceived value to given team. On the flip side, it is Netflix to come up with “keeper test” and be equally quick to fire people that do not bring value. By the same token, people that generate average results, but work very hard (long hours) are getting … generous severance package.

Offer radical candor

So it’s all about leaders first duty to build great teams and ensure close to zero HumanDebt. In such case you can actually scrap a lot of rigid HR processes and policies and instead making sure you are always available to you employees, be fair and super transparent, encourage low hierarchy and create space for all to speak up and constantly increase talent intensity. You will feel a relief that the heavy admin burden is gone, the cumbersome low-value appraisal process kept to minimum and instead you will free up a lot of time to ensure your employees are energised and successful. Since we are building a winning team and not raising a family, you shall be strict and decisive where needed. However, remember that we employ technology to automate all delivery and have people for the sole purpose of creative problem solving to address business issues. So true value comes from behaviours and skills, while a good leader is the one that puts them in best combination.

Make sure you do not steal the power

Let me close with Patty McCord again: “A company’s job isn’t to empower people; it is to remind people that they walk in the door with power and to create conditions for them to exercise it.” And to add my Netflix Culture Deck’s favourite “Responsible people thrive on freedom, and are worthy of freedom”.