Human resources should be more business-oriented and strategic! We’ve all heard that before. I would even say it is starting to sound worn out. I remember the end of the 1990s when I was doing a master’s degree, and the professors had drummed it into our heads that we had to think “business”—that we were not in sociology, teaching but in HR economics. Strangely enough, that memory recently came to mind during a management meeting with a company where the topic of discussion was various strategies to attract younger workers and retain older ones. Actually, we were talking about economic / sociology / human resources issues. The key players of the company were going to retire in three years’ time, and there was no one ready to take over. Wow, what a surprise! Despite the fact that for the past 15 years we have known that this was coming, no one had enough guts to take or to force the decisions that were required, e.g. hiring massively upstream to train potential successors, assigning high potentials to strategic functions, giving them responsibilities and making baby boomers responsible for coaching and mentoring them when comes the time to head off to Florida. . . What’s that, you say—oh, right, you DID speak up, but not loudly and forcefully enough, and without quantifying the risk of doing nothing.
I may come across as a bit naive and simplistic—fair enough. Nevertheless, what I have just described is a good example of the lack of corporate courage or “corporate engagement.” What it takes is a member of the management committee to act as the “troublemaker.” You know who I mean, the one who sees a little further and who has enough tools to modelize scenarios and present irrefutable numbers in management committee or board meetings. Hello earth. . . in five years there will be no one left to operate our machines, which, by the way, will be obsolete, along with our processes and our moribund procedures. The key, you’ll agree, is to take a long-term approach.
In short, before HR becomes a “business” function, it needs to become closer to operations. It needs to know what’s coming and how the needs of customers are changing, be familiar with sociodemographic and economic trends, and be able to draw a picture of the competition. It would have to turn to outside data to compare it to internal data. Once the HR function has enough information for an outside diagnosis supported by numbers and dashboards, then it will be able to focus internally and highlight gaps. Everything will suddenly appear clearer. In a blink, we will see the gaps between market data and our current situation.
Human resources departments should invest in their own human capital by harnessing a variety of types of expertise and hiring specialists from operations as well as economists, marketing professionals (the ones who conduct market studies), sociologists and modelling experts. What the HR function is lacking are dashboards and quantitative data that support demographic, sociological and social trend data. If all the graduates at the bachelor’s level in the discipline you’re recruiting for are women, you perhaps need to prepare a recruiting model that takes their biological reality over the next few years into account (i.e. they will be busy making babies between 28 and 35), their socioeconomic backgrounds, diversity and economic factors and work this into your corporate business plan. Perhaps you will need an expert in econometrics—ever thought of that?
Crying wolf is not enough—you have to prove what you’re advancing. Management committees and boards of directors are like St. Thomas—they only believe what they see! They want quantifiable, documented answers. The problem with HR is that the people they are facing are accountants, engineers, actuaries or worse yet, entrepreneurs! Entrepreneurs are unbelievers X 10. They only believe what they see, so they want proof and results, and correlations between what you are presenting and the resulting actions. An example, you ask?
Dear Mr. Entrepreneur:
If you invest $X thousand today in training program Y in cooperation with University Z, in five years we will be able to recruit as many XXs and XYs as we need, which will balance our internal demographics and support a productivity increase of 15%. This will give us a +5% return on EBITDA (by the way, you have just guaranteed yourself a 20% salary increase, so thrilled will the entrepreneur be to hear about the +% return on EBITDA !). The HR Department can deliver this result with an estimated budget of $XX thousand, generating a return on investment of 3% over eight years.
The training program in this example can be replaced by a diversity recruiting policy, revised benefits programs or union renegotiations. It’s up to you to choose the right battles. Happy number crunching!
Nathalie Francisci, Adma, CRHA
Executive Vice-president
at Mandrake Groupe Conseil