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HCM A depressing blast from the past

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Nothing says “past it” than a term that I came across yesterday for the first time in a long while. Human Capital Management. The words in themselves are enough to make my stomach turn. I know that linguistically it isn’t a million miles away from Human Resource Management, but the latter is a broad church, where as HCM has connotations that I find really quite disturbing.

Whereas the origins of the term date back to economic theory, it has been hijacked by the over willing, over eager consultants as a means of trying to squeeze metrics and measurement into everything. Thus driving “economic value” of the “human capital”. I’m not against measurement per se, but I do think we are on a hiding to nothing with it.

“You can’t manage what you can’t measure”

True, but also not so.

Because in the end, we are dealing with people, not buttons or levers and therefore we have to understand that much of our measurement will be qualitative. The example given yesterday was recruitment. I know quite a bit about recruitment metrics, I wrestled with them for years. Measure time to fill? Ok that tells you something….but what do you really want to know? My guess is the questions are more,

– Are we easily attracting the right people?

– If not why not?

Does time to fill answer that? No,but it is harder to measure what we want to know and therefore we measure the process, because that is easier and as HR people we are happier in the process than in nebulous concepts.

The other piece that rankles with the whole issue of HCM is the view that labour costs are just that….costs. As I said yesterday in the conversation, flip it around and it becomes investment. As you could buy a very cheap computer system or a very expensive one, you can also have cheap or expensive labour. Without knowing the effectiveness or the performance of both, you know nothing (and measuring that is almost impossible). If the cheaper computer system is causing employees to be less productive or is crashing then the actually cost of it could be higher.

I’ve said it before and I’ll say it again, humans are wonderfully unique and unpredictable. We should be embracing that and looking at a more humanistic approach to managing and understanding them, not trying to convert them into something they are nor – measurable assets.

For me that’s why HCM deserves to be confined to the garbage can of failed approaches to people management…if there is still any room left in there.

Fair pay, fair play

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I read this article at the weekend by Will Hutton talking about his work on public sector pay.  I had a meeting with Will a few weeks ago, alongside with a couple of other private sector HR people, to discuss the issues of fairness in pay and particularly the use of performance related pay in his work for the coalition government.

Unlike the comic stereotypes that get bandied around in the press, the general consensus was that the Government should not look to performance related pay as the silver bullet that would solve all of the ills.  And that is certainly shouldn’t be a replacement for a living wage.  At the end of the session I made the point that you couldn’t look at pay structures in isolation.  That pay only becomes a media topic, when people feel it doesn’t equate to worth.

There was hardly ever any discussion of Sir Terry Leahy’s remuneration, although it was of a magnitude that a cashier or shelf stacker would find hard to imagine, but what about Andy Hornby?   No-one would discuss the level of financial reward that Sir Alex Ferguson receives, but compare that to their reaction to Fabio Capello?

People will accept top people being paid good money, even in the public sector, if they can see it is justified

Perhaps unsurprisingly then, Will’s comments really resonate with me.  Levels of pay in the public and private sector are sensitive issues, but only when they feel out of proportion to the experience of the end-user.  But of course that is easier to do in some circumstances than others, a Head Teacher’s pay could be linked to the performance of a school and that would be visible and arguable to the public. But would that be as easy for the Head of the Environment Agency?

Will’s conclusion is a bonus-malus system could and should be introduced for certain senior roles. It is brave thinking and likely to be hugely unpopular with those senior individuals and the management associations, but constructed properly it could go a long way to convincing a sceptical public that reward is earned. 

Every small business person knows that if they do well they get the benefits, but if they don’t it hits them directly in the pocket.  As a principle, that can’t be bad.

Light touch HR

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I was interviewing  for HR business partners not so long ago, when I realised that throughout the interviews I’d used the phrase “light touch” on numerous occasions.  I wasn’t making a point of returning to this phrase nor using it in the same context each time, but I kept on coming back to the same sentiment.

What is light touch HR? Let me use a metaphor.

Anyone who has ever been to a really good restaurant and experienced really good service will understand.  The waiters are present, they anticipate your needs, they provide you with the things that you want but they also delight you. However, they do it without ever being over bearing or conspicuous. There are no steadfast “rules” but there is an attention to individual need.   Everything is controlled, organised, well thought through and impeccably delivered.

At the other end of the scale, you have fast food. And actually the offer here is no bad thing either, delivering basics in a quick, efficient and timely manner.  What you see is what you get.  There are HR departments working on these lines across the country and they are hugely successful within their businesses in providing the level of service and support that people need.

Somewhere in the middle, you have a glut of offerings that range in their quality,

  • Those that try to be in the top-tier but over-engineer their service delivery and become intrusive, inflexible and unwelcoming
  • Those that promise exquisite treasures but cannot provide the basic infrastructure to support it
  • Those are both mediocre in terms of service and product

I don’t know of many, if any, HR teams that are delivering a level of “light touch” perfection on a regular basis, I’m sure they exist.  But it is achievable, as long as we get the right focus, the right skill sets and the right approach to our customers then we can make sure that we delight each and every one.

Create value

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If you had to rank the professions on their level of creativity, where would you rank the HR profession? Probably somewhere on the continuum between accounting and marketing, probably closer to the former and further from the latter.  Creativity doesn’t figure highly in any core competencies I have ever seen and the nearest that we get is the more “business acceptable” innovation.  Somehow creativity feels soft, it raises images of artists and writers and nebulous concepts, whereas we of course want to look hard and mean and commercial and worthy of the much vaunted “seat at the top table”.

Of course, we deal in a world full of commercial imperatives that cannot be denied.  Most of us work in businesses that either need to make a profit, balance the books, or make savings regardless of the sector.  The question is not the what, but the how and creativity is a much undervalued tool in the drive for commercial solutions.  We need an answer, we look to past experience, to other businesses and to the HR press seldom do we look at our business, look inside ourselves and search for a new or different way. A way that is bespoke to our business and provides a competitive edge.

I’d suggest the first step any HR professional should ever take in considering a solution is to ask what the real problem is and only then to consider whether a solution is actually required and why? What value will it add? Is this driven by business need or by some other force.  What is the least intervention that would solve the problem and how does it fit culturally with the way that the business behaves?

Creativity requires you to be brave. It requires confidence and self belief and a willingness to plot a unique course.  But it also requires a closeness and in-depth understanding of your business and a desire to make a difference. Being creative isn’t the antithesis of being commercial. It is the start.