Getting beyond bureaucracy in human resources
By becoming more strategic and operating with an
edge, corporate HR departments can boost their effectiveness and shed their
bureaucratic reputation.
At big corporations, human-resource organizations frequently
conjure up images of bureaucratic weight and paper pushing. Need that be true?
This question comes into sharp relief in McKinsey alumnus Peter L. Allen’s
description of HR approaches at his company, Agoda, which has been trying, with
some success, to minimize the need for many traditional HR processes while
transferring others to business leaders. Although it’s easiest to see how some
of Agoda’s human-resource initiatives apply to start-ups, our experience shows
that it’s also possible to right the balance in large organizations without
going too far. Getting more strategic and operating with an edge often are two
keys to success.
Getting more strategic
One reason large organizations end up with a
supersized human-resource infrastructure is that the business rationale for HR
processes has been lost. But there’s an antidote to massive HR systems,
questionnaire overload, and multipage templates: stimulating a dialogue about
the underlying strategic purpose of those tools—a dialogue that often helps
management realize that they can be controlled and applied more effectively. A
global healthcare company, for example, realized that its performance-review
process gave it only a superficial understanding of who its high performers
were and what feedback helped them to develop. It decided to deemphasize a
time-honored nine-box calibration grid in its evaluation procedures and
radically simplified employee reviews. We also know a senior leader who reduced
his company’s performance-review form from four pages to four questions—but who
rightly insisted that those four questions had to be answered and tracked more
rigorously.
In the latter case, the leader was a chief human
resources officer (CHRO) with the insight to identify core business issues and
the discipline to eliminate redundancies. Strategic leadership can come from
outside HR, too. A financial-services company recently charged its
second-highest-ranking executive with personally directing talent-review
procedures for top professionals across the firm. That required him to take a
step back and assess the business’s most significant talent indicators, which
turned out to be poorly reflected in its HR systems. The company’s leaders,
previously stuck in a process-oriented rut, have now articulated the strategic
rationale for what they are doing and why it’s important—in this case, to
understand the company’s people, help fill talent gaps, and thereby improve
returns. It is now building a database and infrastructure to capture those
results and make the highest performers more visible. HR might have had a
difficult time, on its own, committing the company to new performance criteria
and gaining the resources to update its systems, but collaboration with a major
leader gave the effort teeth.
Operating with an edge
It’s easy to say, “HR
needs to let go and get out of the way,” but the pendulum can easily swing too
far in the other direction: granting managers unlimited freedom in making HR
decisions can generate too much variability, potential liability exposure, and
cost creep. Moreover, when HR pulls back too far, it misses opportunities for
using rigor and facts to gain predictive insights, whose potential is growing with
big data and advanced analytics.
Talent pools and gaps
High-quality, timely
information about talent pools and gaps represents a competitive advantage that
HR is uniquely positioned to provide. For example, a grocery line manager in a
global retail organization may have proved herself in Argentina just as a gap
opened up in Mexico. An oil and gas organization may have a budding leader who
is running out of growth headroom in the Middle East and a need for similar
expertise in a bigger role in Houston. HR should ensure that these critical
connections get made and then help line managers seize opportunities. The best
HR organizations also offer a perspective on emerging gaps. For example, as
digitization becomes more critical to cars, leading automakers need to put
more emphasis on recruiting computer engineers—a challenge for organizations
accustomed to recruiting mechanical engineers.
Compliance
Compliance efforts in areas such as labor and
antidiscrimination obligations can easily make forms and layers of bureaucracy
proliferate. But while an overly assertive HR department can constrain the
smooth functioning of a business, companies are no better served by a
“wallflower” department that misses red flags or neglects to enforce
discipline. A rigorous HR function—an “adviser with an edge”—should track and
interpret data and assert a point of view: “yes, we are doing well realizing
internal goals or meeting industry benchmarks” or “no, we may be beginning to
run off the rails.”
One leading consumer-packaged-goods
manufacturer and distributor, where onsite generalists had previously taken the
lead, recently created a “SWAT team” for labor relations and compliance. The
team discreetly monitors metrics for proven warning signs and moves in when the
company needs subject-matter expertise. Oversight has improved and line
managers have clear incentives to get compliance right—without forcing HR
professionals to become omnipresent process police. Rather, their mission is to
interpret events and respond rapidly to potentially significant breakdowns.
Leadership development
Many
leadership-development efforts don’t achieve their goals, because they ignore
the business context and offer insufficient opportunities for personal
reflection and individualization. While it would be easy to conclude that
corporate HR can add little value to leadership development, the reality is
more complicated. Letting “a thousand flowers bloom” often means that
leadership gets ignored in some corners of a company and that others reinvent the
wheel too often. An assertive HR department clarifies expectations for
leadership development across the company, provides a baseline backbone of
proven tools and methodologies, and flags priorities to adapt them to the needs
of businesses and individuals. HR and business-unit leaders then collaborate to
fine-tune programs.
Managers must lead, and HR must help them to do so. But the
well-founded inclination to swing the HR-process pendulum away from bureaucracy
and toward a freer hand for management should not lead organizations to veer
from “ditch to ditch.” Shifting too drastically is plainly a bad idea; in many
cases, a complete HR overhaul is unnecessary. At all events, HR has
opportunities to assert its expertise and strategic thinking in a low-profile,
nonintrusive way. That requires both rigor and restraint—but, we’ve found,
provides the sort of insights about talent, leadership, and performance
management that all companies need, regardless of their size.
byNeel Gandhi and Bryan Hancock
http://www.mckinsey.com/Insights/Organization/Getting_beyond_bureaucracy_in_human_resources?cid=other-eml-alt-mkq-mck-oth-1504
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