The Emergence of Strategic HR Risk Management … Finally

HR Risk Management, as a functional area within the broader Human Capital Management domain, seems poised to evolve beyond defensive (i.e., mostly compliance-related) strategies, programs and capabilities. This might actually be a major untapped source of strategic or competitive advantage for many organizations.

Proactively managing the Human Capital risks inherent in building, running, re-structuring and/or transforming a business is arguably as important to having a successful enterprise as having winning products and services, the best sales and marketing machines, highly efficient back-office operations etc.

So here is a list of 4 "Strategic HR Risk Management" opportunities that most organizations can still focus more attention and resources on to drive improved business results:

1. Advanced Human Capital Due Diligence … in the context of hiring new business leaders, M&A transactions (pre and post deal closing), corporate re-structurings around key executives, investing in businesses largely due to key personnel or people capabilities, etc. As two concrete examples:

· Confirming previous accomplishments or the scope of former positions that a key employee decision is partially or largely being made on … since the average person exaggerates at least to a modest extent when promoting themselves, and some embellish in ways that place personal integrity (and possibly the health of the business) in question. A type of claim such as … “grew the business from $10M to over $50M” is often made by multiple people talking about the same company during the same time period!

· Assessing degree of culture or “work style” fit, as well as the fit with a direct manager’s style or particular team dynamics … while most people intuitively recognize these issues to be legitimate areas to think about, many organizations simply do not make a serious attempt to evaluate these factors – PARTICULARLY when other factors such as revenue production history or impressive credentials are creating a “halo effect.” Moreover, while validated assessment tests can be employed to identify some of these potential risks or gain assurances that there’s no major cause for concern, proven techniques and processes which look at work history patterns using the right analytical models/ frameworks can often serve the same purpose as sophisticated assessment tests while perhaps covering a broader area of potential risk.

2. Leadership Risk Management … including ensuring an adequate bench of future leaders and successors from both inside and outside the company, since externals bring new perspectives, internals should ideally measure up to the best people the external market has to offer, and very few organizations have enough “potential successor coverage” for all key positions relying exclusively on internals – particularly when unplanned vacancies occur in critical roles at the same time. Leadership continuity issues = business continuity issues.

3. Ensuring that all major sources or indications of “actual or potential business value” associated with each employee are known, catalogued on an appropriate system (e.g., as “Employee Value Indicators”) and considered when making employment or career-impacting decisions about that employee.  As an example, an employee may only be a “slightly above average” performer in a non-mission critical role but (a) could be a much better performer if they could bring some of their other competencies to bear in a different job; or (b) is perhaps a major contributor in non job-specific ways such as referring many new employees each year who are ‘A’ players, or is considered a mentor by many younger employees, or is a key ‘connecting node’ within that organization’s internal social network.

4. And finally, not just identifying key employee retention risks, but predicting key employee retention risks and taking appropriate steps to mitigate. Similarly… not just identifying employee engagement downturns, but predicting employee engagement downturns. Both retention risks and engagement downturns are typically triggered by a workforce-related event -- such as changes in Comp and Benefits plans, the announcement or aftermath of an M&A transaction (which might result in staff redundancies in particular areas of the business), change in HR policy (e.g., eliminating a work from home policy), payout of deferred bonuses, etc. Some organizations have the analytical models ready before the event so that risks can be appropriately mitigated.

Steve Goldberg

The Basis of Highly Effective HR Work – The 3 (Not So Obvious) C’s

As more and more corporate HR functions and their stewards leave behind that vague and vexing notion of “deserving a seat at the table” and tangibly demonstrate why and how strategic HR work is vital, it’s perhaps useful to examine three key underpinnings of highly effective HR work.  Let’s call these the “3 C’s” -- and for the purposes of this post, we’ll set aside the referencing of more obvious “C” topics like key Competencies or promoting a culture of Collaboration.   

 For some context, let’s look at the Technology sector for a moment.  If we think about the HR professionals who were critical to successfully integrating dozens of acquisitions at Cisco and Microsoft in the 90’s … or those at Google in more recent years … or those at IBM who have architected that company’s internal social networking juggernaut (a key to business transformation there) … or current HR leadership at HP achieving fairly low turnover among key employees during a major corporate turnaround (highly unusual), these “3 C’s” are likely part of the mix in all these success stories:

• Connecting cross-functional business indicators / analytics
• Calibrating and re-calibrating (people) strategies / tactics as needed
• Executing “best fit” Change Management

Regarding the first of the 3 C’s, one could easily defend the position that people / talent management within organizations is a core element of nearly every significant business problem - or business solution.  Problems such as customer retention and satisfaction issues, or product/service quality issues, or declining sales or profits, or inability to sustain innovation can all be intuitively tied to people issues.  That said, going from intuitively tying these problems to human capital management (“HCM”) issues or factors, to systematically and empirically linking them – and then developing and implementing targeted HCM programs to remediate the situation, clearly influences which companies can successfully execute transformational or turnaround initiatives. 

An HR function that is effective at connecting cross-functional indicators can determine, for example, that – accompanying a decline in profits, productivity is also trending downward, AND it is tied to a poorly conceived (or communicated) change in Benefits or Comp Plans. There might also be a tie-in with a recent scaling-back on specific employee development programs.  Broadening this analysis to include a time-to-productivity (“TTP”) metric might result in determining TTP is trending unfavorable largely due to incenting early retirements.  What’s the connection?  This business decision might have resulted in losing many mentors around the organization who helped keep time-to-productivity for inexperienced new hires within acceptable ranges.

The second “C” – the ability and willingness to calibrate and re-calibrate (people) strategies / tactics based on evolving insights or events – is certainly another foundational plank in highly effective HR work.  We operate in very fast, very fluid times, with many organizations undertaking a major restructuring every 2-3 years – often in response to volatile markets, new competitive threats, or perceived new opportunities (e.g., involving globalization or technology-related factors).  These changes are often occurring while also dealing with demographic shifts within the organization and the talent management implications of those shifts.  A highly unpredictable operating environment demands that HR professionals and departments almost continually validate (and if necessary, re-calibrate) people strategies and tactics to ensure they reflect what is going on within and outside the organization.

Finally, the ability to leverage “best-fit” change management practices and formal programs before, during and after any major organizational change occurs -- whether the program is developed internally or through a trusted partnership -- is undoubtedly another hallmark of a highly effective HR function.  Countless industry studies have highlighted the fact that inadequate attention to change management (including change readiness up-front and change sustainability at the backend) usually results in major / complex corporate initiatives being compromised, or outright failing.  These can range from expensive IT initiatives, to rolling out a new product line, to transitioning to an outsourcing-based service delivery model.  

The change management arena is also perhaps the #1 place where HR professionals and leaders get to be strategic consultants and advisors.  Case-in-point is the HR executive wanting to change the mindset (and culture) of certain strategic business units in regards to spending money on training and development.  When the business unit leader asks … “what happens if we invest in training and then the people leave?” … the astute HR professional (and change consultant) responds with … “what happens if we don’t invest in training and then they stay?”

Steve Goldberg
April 2013

Why some critical HR / HR Technology projects under-perform – or outright fail

As some of my blog followers have commented to me about my reduced blogging frequency the last few months, “blogger guilt” has clearly set in.  The result is to write about an important and relevant topic I’ve been thinking about for a long time – namely, why some critical HR and HR Technology projects under-perform against expectations – or outright fail.

Yes, the unfortunate facts from leading research, consulting and advisory firms over the last 20 years are that MANY complex or broader-scope systems implementations (including HR / Talent Management systems), M&A deals (including addressing people and HR-related issues), and corporate restructurings to support business transformations eventually wind-up in a post-mortem or “what went wrong” discussion.

So let’s look at a dozen (project derailment) causal factors, but break them into 3 groups:

- Four causal factors that were probably more of an issue in past years

- Four still relevant causal factors, even though they likely get ample attention, and

- Four causal factors that should probably be garnering more attention

4 causal factors that were probably more of an issue in past years:

(1) Visible executive sponsorship … after decades of many thousands of people identifying this as a major causal factor in derailed strategic initiatives, this issue seems to be getting addressed in most key initiatives at this point.

(2) Competent project management … due to so much attention in recent years being paid to the need for professional project management, including certifying people as capable project managers, this ‘top 3’ consideration in planning key initiatives is now somewhat less of an issue in derailing or compromising strategic HR / HR Technology initiatives.

(3) The “don’t boil the ocean” mindset … the number of senior people uttering these words has seemingly reached critical mass in recent years. This idiom essentially translates as “break larger initiatives into smaller, more controllable initiatives to minimize risk and unforeseen threats to project success.”

(4) Rounding out this group of 4 is the growing recognition that successful project management - at senior levels - requires solid leadership skills; and that leadership is much more than keeping team members on-task, accountable and hitting their deliverable targets on-time. It also involves sustaining the motivation, commitment and energy level of all team resources needed to achieve project success over a long stretch of what will likely include several bumps in the road, possibly team or inter-personal conflicts (small or large ones), etc.

4 still relevant causal factors, even though they likely get ample attention:

(1) Competing initiatives (for project resources, management support, necessary behavioral or process changes, etc.) is perhaps the area where project risk is most fluid – and therefore what is going on within the organization that can potentially impact the project must be monitored (and coordinated with) very closely.

(2) Communication is absolutely the key to successfully implementing new programs requiring operating or perhaps behavioral changes; and it is especially critical to communicate effectively during periods of de-stabilization (e.g., right after an M&A, major re-structuring or new technology rollout is announced) … EVEN IF all there is to communicate is ‘when’ and ‘what’ leaders will be communicating. Honest communication builds trust, even when all the answers or details are not known.

(3) Lagging indicators and metrics are important, but probably not as important as leading indicators in terms of monitoring the need to make course corrections in projects. One key leading indicator is the result of periodically surveying impacted employees and managers on how they think the changes are going, what they expect, how they believe their lives will change or benefit, etc.

(4) Finally, while change management programs and models continue to get more attention (e.g., Change Management is a large part of the $350-400 billion dollar management consulting market), there are at least 2 key elements of change management that typically get neglected: Change Readiness – and Change Sustainability!

4 causal factors that should probably be garnering more attention:

(1) “Critical competency integration at the project governance level" … All competencies needed to drive successful initiatives must be present in those leading (or even advising) key projects or undertakings – INCLUDING the competency to ensure that all key competencies are somehow brought to bear – and well integrated. This is particularly true if the project or initiative leader gets high marks on some but not all critical project leadership competencies. These include but are not limited to effective project planning, risk management, cost management, change management, project communications at all levels, vendor management and key subject matter expertise -- at least enough to corroborate or question what the official SME’s on the project team are representing.

(2) Speaking of project risk management … not being absolutely vigilant in regards to surfacing and mitigating both direct and indirect project risks, continues to plague many key projects, certainly including within the HR / HR technology domain.  The best project and program managers combine experience in a broad range of project contexts -- ALONG WITH "productive thinking" about what can possibly go wrong – something broad experience allows.

(3) The false notion that the successful implementation of a new program, new technology, new set of processes or new org structure occurs when the implementation goes “live” and is very stable. This mindset totally short-changes the need for follow-on programs to continuously drive user adoption of what has changed or been implemented.

(4) Finally, project leaders – like all leaders in general -- MUST have the confidence to course-correct when necessary, and as soon as deemed necessary. First of all, course corrections don’t necessarily reflect poor decisions or strategies. As we often hear politicians say, and they are sometimes even right in saying it, the decision was made based on what we knew at the time. And if that rationale can’t be invoked to explain a project course correction, it’s probably ok just to say that the project is complex, not everything can be anticipated -- and unlike sophisticated computers, humans sometimes make mistakes.

Steve Goldberg
HR Technology & Transformation Advisor
February 2013