UPFRONT How to walk and chew gum

Some leaders instinctively know that treating their people well is source of competitive advantage. Others need to be persuaded of the link – and there’s now heap of empirical evidence to convince them.
That’s according to Roger Collins, the Australian Graduate School of Management professor who chairs the best employer awards both in Australia and in Australasia, and was in New Zealand recently to run seminars on human resource strategy.
“We have compelling data to show that those organisations that do actually think about the value proposition to their people are the ones that do well. There is now strong empirical evidence of relationship between how you manage your people and your financial performance. That’s not just in terms of current performance but your sustainability as an organisation – your ability to adapt and change.”
When you look at how leaders add value, the stability and renewal aspects of the equation are equally important, says Collins.
“The phrase I use is that the value comes through being able to both walk and chew gum. It’s being able to manage current performance but also know when to reinvent the organisation to sustain its competitive relevance and success.”
And those skills don’t necessarily come in the same package.
“Some people are very good at managing performance because it’s about using rational thinking to solve problems. The adaption/renewal part is more difficult because it’s about intuition, pattern recognition, imagination – seeing possibilities. It’s more about divergent, associated thinking.
“So when you’re thinking about leadership capability, you need to think about combination of skills and contributions from leaders at all levels to be able to both manage the performance part (the walking) and renewal bit (chewing gum) and at various stages in the organisation’s development, that balance will shift.”
The issue for many organisations is thinking about leadership as an individual rather than collective strength, says Collins.
“It tends to be seen in terms of personal achievement rather than organisational capability. One of the reasons we need to think about leadership as collective behaviours is that only rarely do we find leader who can both walk and chew gum – it’s more to do with the CEO getting together team of people who have the necessary skills to get that balance right.”
The human resource function is vital to both leadership aspects, says Collins.
“If you are trying to enhance the performance of your current business model then your people’s engagement is primary determinant of how well you do. Again, if you are trying to adapt the organisation to maintain its long-term relevance and success then that is also very heavily people-oriented process.
“So both elements of how leaders add value are contingent or dependent upon the people side of the business and if they are not focused on developing that then they’re constrained in their ability to deliver and sustain organisational success in the long term.”
However, in most companies CFOs still outrank HR specialists and Collins says one problem is the failure to shift occupational categories to fit changing organisational needs. To merit place in the top team, HR people need to understand their organisation’s financial issues and strategic direction.
“I think in future, we’ll see hybrid roles where HR and finance are combined because there’ll be greater emphasis on the cost benefit analysis of investment in people development. If you spend $12 million on learning, how do you know that it leads to behaviour change – how do we know that behaviour change leads to performance improvement?”
And while more companies are seeing their people as source of value, there are many others whose primary focus for performance improvement is taking out costs and inefficiencies. It’s not just matter of having more effective HR leaders, adds Collins.
“You need CEO for whom these things are important and that is then manifested in what they give priority to. If they say we don’t know much about this HR stuff but we have good people who are handling it – then that’s copout.
“The rules of the game have changed as industry structures have changed. There are now more people working in knowledge or service industries where people are source of high competitive advantage. That makes it imperative that people are more central to the consideration of the CEO and leadership team.”