During PageUp's event last Tuesday (21 February), Syed Ali Abbas, group HR director at Global Fashion Group mentioned that HR is a big barrier to innovation as HR professionals are typically uncomfortable having their processes questioned by people.
However, with driving innovation being an organisational priority for 64% of companies, HR will have a big part to play - from innovating processes to encouraging creativity among employees. Hence, during the Q&A session at the event, Human Resources asked Abbas for some tips on how HR can encourage innovation by being more accepting of feedback on their processes from staff.
You mentioned that HR professionals are often uncomfortable with people questioning their processes. So how do you think you can encourage employees to give feedback on the HR processes to help innovate them?
It’s a common problem and the answer is a complex one. On one hand, a lot of HR people protect their turf fiercely and come across as bureaucratic. On the other hand, a lot of times the reason for this is because many HR people are not empowered to take charge of their own function and are hence reduced to defending an agenda that is not their own.
Let’s explore this important area a bit more and I’ll speak from personal experience. Despite always having had a very open and customer-focused mindset, I was very defensive as an HR person early in my career whenever it came to people questioning HR policies and decisions. I learnt over the years – sometimes the hard way! - that this approach is not a good one. But the real turning point for me was a few years ago as I was sitting in a roundtable sharing session with other HR professionals in Singapore.
We were talking about employee engagement, talent management and how to reset the HR relationship with employees; and one of the participants said something that was so wonderful and simple, it has stuck with me till now. She said: “if you want to change the relationship between HR and employees, why don’t you just ask the employees what they want?” And it’s so true, why would employees open up to us and give us the best of the ideas when we shut them down as soon as they question any policy or practice we’ve got in place – even if it’s a deeply flawed one like forced ranking of performance ratings etc?
That concept really stuck with me and I started trying to things differently since then. Interestingly enough, I had limited success in doing so until I was in my Pacnet role. The reason for that – in my opinion – is that another major reason why so many HR people are often so defensive about their turf is that they are not truly masters of their own destiny.
For the people running HR in the local or regional offices of multinationals, most decisions ultimately have to cleared with HQ. For people running HR in startups and even large tech companies, HR is often a tier 2 function reporting to the CFO or COO or some such direct report of the CEO and therefore is not even in the leadership team to truly take charge of the people agenda of the company.
So when I took the Pacnet CHRO role and started reporting directly to the CEO, I could finally run my own show from an HR perspective for the first time and that was a massive change for the better in my career. This is important to note because I believe the majority of HR people want to add value to the businesses and employees they serve, they just aren’t empowered to do so.
Let me give you an example of something I did in Pacnet that I could never have dreamed of doing earlier in my career. We were going through a major transformation and a key driver of our success was going to be having a motivated and high-performing workforce. You can’t get to that goal by just firing poor performers and hiring high performers. You need everyone in the organisation, and I mean every single employee rather than just “A players” or “high potentials” or whatever other niche category people tell you to focus on, to do their jobs and to do them 100% every single day.
We needed the right HR strategy to be able to achieve that and for that we decided to just ask the employees what they wanted. So we went out to our employees, did a series of surveys to ask them what they felt was most important to them in the company and what they would like to see HR do to support those areas.
Crucially, we validated and implemented many of the suggestions provided in each survey before rolling out the next one so that the entire process became a virtuous circle. While we could only do a few iterations of this because Pacnet was subsequently acquired by Telstra, it was a wonderful experiment.
Quite frankly, it was a liberating experience for me as an HR professional because I didn’t have to anticipate what employees wanted – I didn’t have to think about the best practices and benchmarks either – my team and I just did what the employees wanted every quarter as long as we had the budget to do so.
We got to the point where we literally had data on what specific training programs employees in every city wanted to see brought to them as classroom training in the office. Employees actually came and told us that they felt for the first time ever that HR was actually working for them as well. With all this came the rewards for the business: employee attrition dropped dramatically, our ability to attract top talent improved, and our employee productivity levels soared on every metric ranging from customer experience to revenue generated per salesperson.
How can the HR function stop being a barrier to innovation and start contributing?
HR can contribute significantly more to innovation than a lot of other functions in companies, but I think the problem is – and I’m not the most popular speaker when I say this at forums – that we are just not that professional as a function yet.
Think about it. Have we brought that rigour and high level of subject matter expertise into our work where the CEO always assumes, “Yes, you’re going to say something and I’m not going to question whether I know more than you about this or the business context in which we’re having this conversation. You have access to a consistent body of knowledge in your profession, you have the same credibility as any other leaders in the business and everyone knows the value you bring to the organisation.”
I’ll give you the short answer: we haven’t. There are plenty of amazing individual HR people who are as good as anyone else in the companies they work for. However, as a function, we’re still a second tier player and that holds back a lot of HR people from truly fulfilling their potential.
How do we progress? The answer is in front of us with some of the colleagues we work with from other functions. If you look at the finance function, they have gone through a process of professionalisation in the 1970s and 80s, when they evolved from being Financial Controllers to CFOs. If you look at IT, they have gone through a similar professionalisation in the 90s and 2000s, when they went from that IT guy sitting in a dark room with a couple of servers to being the CTO or CIO. Where are we as HR? Have we really professionalized in the last 2-3 decades? Yes we have but definitely not as much as we should.
So, for me, HR is potentially the single biggest contributor to innovation especially in knowledge-based indsitries, but the profession overall has to up its game to realise that potential. That is the first step in my view and everyone needs to contribute to it: HR people, business leaders, companies, HR associations, educational institutions, financial investors and governments.
You mentioned a bit about measuring ROI and how a lot of HR professionals are still measuring the number of hours in training and things like that, so how do you think HR should measure the ROI instead of in terms of hours?
Indeed! A lot of HR people are still measuring transactional activities such as number of training hours, number of people hired and cost per hire. I’m not saying don’t measure cost per hire, because it is a good metric… but it’s a good metric for budgeting, not for measuring the ROI of HR and contributions to business success. So you have to know how to pick and choose what defines HR success and ROI. I generally base my approach on being driven by the stakeholders we serve.
It’s not a simple answer either – for example, that a strategic definition of ROI for HR is revenue per employee and profit per employee. Those metrics are not very smart – good CFOs will tell you that even though they have to use these metrics in financial results – because they are very simplistic even for their stated purpose of measuring the financial impact of the workforce. There are other more advanced financial metrics you can use that measure employee contribution to the business top line and bottom line like ROI of Human Capital. But even this is not the complete answer because ROI for an employee you are serving as HR is quite different from ROI for a people manager leading a big team or a business leader who is managing a P&L, or the CEO and board of directors managing enterprise strategy and risks.
Ultimately, you need to pick different metrics and ROI measures for each of these stakeholders and, by the way if you are a large company, then your investors and your host communities are additional important stakeholders. The list of the right metrics for each of these stakeholders will differ significantly based on what type of company or institutions one works for, but the end goal for every truly strategic HR team should be having a dashboard of core metrics that convey the value of HR to each of these key constituencies.
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