American management education guru Dave Ulrich says in his latest book Why the Bottom Line Isn’t, that the HR profession “has been on journey toward impact for many decades”. But it has never really made it to the organisational sharp end, into the domain of strategic management, the boardroom and “real” leadership role.
Urlich now predicts an extended role for HR managers. But the profession needs to recognise that it has leadership role to fulfil in building capable organisations and engaging employees while providing management with quality HR services. This, he suggests, requires strategic HR focus.
HR’s changing fortunes may simply be reflection of the changing organisation. As former Carter Holt HR manager and now NZIM Auckland’s chief operating officer Kevin Gaunt puts it; “traditional employment relationships are changing and people are major source of competitive advantage”.
For Gaunt, the three most important issues facing the HR industry are adequate leadership, delivering on “managing for performance” and building “capable” organisations. “There are lot of HR practitioners out there but not many true HR leaders,” he says. HR leaders need to bring the strategic view to the management table, explaining how to create and maintain an organisation that can deliver the business strategy and plan.”
To be effective however, HR managers must be seen as “credible” by other business managers. They need to be more than HR experts. They must have an excellent knowledge of how the business works and know what the key internal and external drivers of the business are.
Delivering on managing for performance means being able to deliver “actual performance improvement from performance management systems that truly impact the bottom line”, says Gaunt. HR has seen itself as business partner, working with management to effectively link people with the strategy and business plan by using performance management systems. “However, these systems often fail to deliver performance improvements because managers focus on implementation and assume that the system will deliver the required results. It doesn’t happen unless everyone involved has the skills and the understanding to give good performance feedback and to coach for improvement. Organisations have to build coaching skills into their culture.”
By drawing all this together HR managers can help create an organisation that has the capability to deliver the business strategy and plan. An effective HR leader will communicate the needs and influence the management team on the required development direction. The HR leaders need to know how to help identify the organisational capabilities required and then embed the behaviours into the culture.
“This requires focus not only on measuring performance of people against business objectives but also on measuring how aligned they are with the core behaviours the organisation needs to be capable of achieving its objectives,” says Gaunt. “Adequate HR leadership is critical because these issues are not understood by many managers and there needs to be competent voice on the management team to articulate the need.”
Performance management
Shaun McCarthy, Wellington-based chairman of Human Synergistic International in New Zealand and Australia, is unequivocal that the three most important issues facing HR right now are the interrelated ones of leadership, culture and performance. “In practical terms this means HR must focus on performance management and leadership development and on understanding how these are either drivers or barriers to performance within the organisation’s culture,” he says.
He ranks performance management as his top priority explaining that done well it has the potential to impact dramatically on leadership and culture. “True leadership is about managing performance – or more importantly, improving performance, and good performance management system can provide managers with the tools to lead,” he adds. “A focus on improving performance will have positive impact on culture.”
McCarthy bases his argument for performance management as the most important issue facing HR on recent survey conducted by Human Synergistic into the cultures of more than 900 organisations in New Zealand and Australia and the leadership styles of more than 35,000 individual managers (see “The Executive Disconnect,” Management September 2003).
The data, says McCarthy, “clearly shows” the average organisation culture encourages avoidance of blame, fear of failure, opposition to ideas and (internal) competition rather than cooperation. The average leader is likely to be overly “interpersonally passive or aggressive, risk-averse, fault-finding and concerned with the ‘appearances’ of performance”.
This might sound little harsh but McCarthy says the latest survey data that he is about to release on more than 8000 organisations is equally, if not more, disturbing. The survey found that:
1. In terms of the context for performance management:
• 42 percent do not believe their organisation’s objectives are clear and well understood
• 45 percent do not understand their organisation’s mission and role
• 57 percent do not believe their top executive groups have shared philosophy on what their organisation stands for.
2. In terms of the process of performance management:
• 47 percent do not genuinely believe their evaluations are based on real measures of performance and instead believe they are based on favouritism.
3. In terms of leadership in managing performance:
• 49 percent say their manager would not even notice when they do good work
• 63 percent report their manager takes little or no corrective action when someone is under-performing
• 36 percent say they get praised when they perform particularly well
• 60 percent report their managers do not show them how to improve their performance
• 71 percent report their managers do not help them plan how to get their work done at high level.
“Clearly we need to put management back into performance management,” says McCarthy. HR managers have, it seems, focused on the process of performance planning and performance appraisal at the expense of the execution of performance management. “No one is giving individuals the help they need to achieve their performance goals.”
McCarthy thinks it is time for “a revolution in thinking” about performance management. “In recent survey of 1000 CEOs we asked if they had problems with their organisation’s performance management systems. Just about every one of them said they did,” he says in support of his call for change. “We need to stop thinking about ‘performance management’ and think instead about ‘performance improvement’.”
Informal feedback
If the issue is really improving individual performance then “research right around the world” suggests the current HR management approach is not achieving that. According to McCarthy, research released by the Corporate Leadership Council in Washington confirms that many of the traditional elements of performance management contribute to “a reduction in performance”. For instance, the more formal reviews an individual has, the more likely this will result in reduced performance.
“Their research also pointed out that most appraisal sessions end up focusing on individual weaknesses and this too results in lower performance levels,” he adds. “So practitioners need to shift their focus from planning and appraisal to execution in the hands of everyday managers.”
McCarthy says it is time to focus on informal feedback. Research shows that the aspect of performance management that has the strongest impact on improving performance is informal feedback. He suggests putting more effort into helping individuals in management positions learn about how their behaviour impacts those they lead and how they can use informal feedback as way of improving performance.
“Whilst managers may intellectually agree they should focus on what is going well rather t
