Hey all .Time for a fun ride down Management Practices .This is a purely personal reflection on the role of the HR function .I have experienced it from Unilever to Smaller Startups starting to scale to Lala companies like ZEEL .So my reflections have data behind it with insights and not opinion alone. I have also been captain of the Ship for 28 Years with several new startups ,divisions and unchartered markets ,product and territory .More led armies of 2000 directly or indirectly to create revenue or spend and account money.I can smell the MOJO the loser ,the winner ,the talker,the slave,prostitute and mercenary.As a sales manager I have been divorce councillor, girlfriend wingman ,what’s my future forecaster and dumb,mute ,helpless listener. The shit my HR colleague never had to go through because he is paid to stand in judgement. You don’t pray to Yamha, you pray for intervention from Shiva or Vishnu. Unfortunately the average employee thinks his boss is Brahma,Vishnu and Shiva when Yamaha calls the shots on increments. Eventually you respect the hand that writes the cheque.
A great leader is above all a great reader of people ,their motivations hidden or open. He manipulates or makes them aligned to his cause. Most organisations with a strong HR have a dead CEO . HR is the proxy leader .He creates the yearly objectives and vision by Proxy signed by the great leader . He scripts his speech. Does an organisation satisfaction survey .All great yet the business Metrics don’t respond.I have never seen an HR Head’s compensation tied to Growth and P&L . What the hell does attrition mean?.
Should attrition matter ? It should to HR ,because it makes hiring difficult I think its an overrated metric and has 100% to do with the boss, external environment and compensation than any HR practise. Any strategy is directly or indirectly linked to compensation
- Stock Options
- Double increment
- Deferred Bonus
- A Lister
Bottom Line any Business should be shaped and Live the way an Entrepreneur will think.
Has it created or preserved Economic Value ? Has the hire at twice the salary of my Employees increased my Sales 5 X ? Why because if I do not increase sales ,I will have to lay off 25% to match my OPEX. Anyway Preserving wage parity is a mechanical and computer decision and does not need a department .Any analytics software can compute impact.The Chief Executive has to take a Judgmental and Situational call. Its liking bidding in an IPL Team. He has to get the best strike squad from the manpower budget .Not the most balanced by Grade and Function .Manpower budgets are not measured by P&L ROI whereas Advertising is .Why ? Its a factor of customer acquisition .One Media does not cost the same as the other ? Why try and artificially homogenise manpower?
The HR head will not take these calls ,because he is measured by attrition and not P& L. Homogenous manpower salaries are good to reduce attrition..Sure a few good men will leave ,but the trade off the P& L Head has to take. Does he ? Will he ? Can he ?
HR is organisationally a staffing function . Yet they overweight functional leadership decisions.
Few functional heads with better domain hiring competence challenge them. This results in dysfunctional decisions. It makes them the dinosaurs of Big Business and rapidly erode the entrepreneurial edge through disincentivizing risk and mediocre hires. Alternately Big Companies take lots of outstanding achievers and then strip their MOJO with potential loss of big salary and bonus’s and put them all in a risk averse mode. HR systems are based on granny rules. Lets take a typical example. The ERP system of an HR function will have the record of an interviewee failing an interview in some earlier year and context .This system will label him as an undesirable whenever he comes up even if he is an ideal candidate. It does not recognise that he has grown or changed. I know so many Functional Head who are stumped by this. You can’t get the right man because of a dumb system. HR is a process that is Optimised to minimise RISK and not to take RISK .
You can run HR with Mother’s wisdom. Steve Jobs is a bad boy. He smokes Grass. It has no instinct ,gut, leadership.Its designed in Bertrand Russel’s words to put a ,penalty on Genius and a Premium on Mediocrity”
Take the case of IPL auctions ,the Legendary Ricky Ponting did not get any bids and was placed in the unsold list in the 2013 IPL auctions. This was the right thing to do. Its a format for which at his age and temperament he was unsuited. How many HR heads would have hired him at the Best Salaries? I can bet all . Safe bet after all. That call was made by leaders and team coaches. Look at the organisations around you. How many Dinosaurs have they hired at the risk of company P&L. If the leaders abdicate the hiring to HR they will get yesterdays stars and today’s dinosaurs . HR people have the least people insights. They are never directly impacted with the people they hire. Often the last to go in an under performing division. The Sales Head will indirectly get fired for the wrong hire ,but never the HR head. He is not responsible for Sales but only responsible for people satisfaction. He will capture this guys angst because he cannot meet his quota His job is not to fill the Quota.This goes for all Organisational functional heads. They will all act dysfunctionally to arrest sales to promote functional metrics. HR will measure ,the CEO has to act. Entrepreneurial CEO’s will Kill for Sales.Lazy CEO’s will delegate to HR. HR will shuffle to metrics ,research ,crowdsourcing for straight calls. The business will regress or stop growing. Even if the CEO wants to act ,why should he go by someone else’s measurement .That in itself is delegating to someone under competent assuming he understands his business best. A 1% Growth in a tough market may be more valuable than 10% in a category growing at 10%. A Stack Bell Curve appraisal system will not understand this .A hands on CEO will .
Any HR will put everything in a Bell Curve .Including a stable of ,”A” Listers .
That’s not the real world . Its the world you want to see. A Growth company has to have 80% performers not 5%. A typical appraisal system will smoothen this to 5% . Growth companies mean growth markets and you will lose your unhappy 75% bell curved standard performers within 6 months of appraisal. God help you now ,if you are part of a Traditional Group with a 5% yearly growth rate .Your compensation cannot be structured differently from the Parent. Not more than 8% of the people should be promoted ? Why ? Group Policy ? Yet you want to build a company bigger than a decade old company in two Years. Limit the growth of the growth team because of the group .That’s the reason Kodak is dead. HR ,poor recognition for Growth and poor Board Mentorship not Innovation . After all resources and knowledge are easily available to the rich and powerful ? Why has an established company always lost a new market or innovation battle. Take the case of SnapDeal and Flipkart they have whipped the Poster Boy of the Internet 2000 Rediff. Do they lack talent or executive MOJO ! Yes MOJO all neutered. Now Flipkart and SnapDeal will also head this way. Lots of new overpaid A Listers . Next Year will be slower.Old team is safe ,all options vested. Bottom line as the Organisation gets bigger .HR gets thicker .It should be the other way round.
The effective Leader should only CXO HR himself ,delegating this is like organisation plaque.
It will weaken circulation and lead to a cardiac arrest. You have to be the Organic CEO. If you don’t feel the heart, know the wives ,children and partners of your CXO leadership team you have lost your edge ,however large or big your empire.
Let take a lIve case of Real Life Delegation of Leadership .Modi abdicated the Delhi Elections to his Amit Shah an Executive Role he should have commanded. He got trounced. The local leadership voice was unheard. Even ordinary people outside Delhi could feel the discontent, But was Narendra Modi Listening?. He had to delegate to Scale. Can you delegate people Leadership ? is the Question .This is a Good Leader ,but is he a Leader of Leaders ? A Ghengis Khan or Alexander. Can he change India Change the World ?
But this is not one Brush for all HR People. There are great HR Heads because they are great Leaders. Its just a role that comes with so much power and if enacted irresponsibly can lead to great organisational damage that will take years to correct .In my extensive experience Unilever had the best balance possibly because they are steady state companies. The functional heads understood their roles and gave space to each other .In the Indian Multinational Nationals or Major its a Turf War steady state or growth. The Family CEO’s have not come from a corporate pool and cannot manage the nuances of a system alien to them. Its a best practise without the Spirit. More feel good than real good.
As CEO in large Group companies. I have always hated the stacking system. I can see it killing morale and productivity.Stack ranking, also referred to as forced ranking, where managers across a company are required to rank all of their employees on a bell curve. For some idiot CXO HR’s vision I kill performance of my company .That’s when you wonder how a staffing function got this powerful and organisation that stupid. Fortunately from almost an ubiquitous usage the bell curve stack ranking system was down to 6% in 2011 in High Performance companies .Yet my Indian HR colleagues continued to Flag this as the panacea for employee performance. In 2013 Microsoft ditched the stack ranking system attributing it to their decade long under performance. Now Marissa at Yahoo is at it with a modified bell curve. God help Yahoo. It will soon be Nahoon
Good lessons for all my HR colleagues. Emotionally and Rationally this is Jack Welch’s great contribution to management science of the 1980’s but not for the world today. KIll the Bell curve today. Its easy to hide behind a potentially right system and say Human resource decisions have been taken objectively. The fact is that its not a Human decision and the evidence is in failed companies all round.