Compliance is killing our organizations, and the function in which this is most painfully obvious is Human Resources. People are among the many living things which cannot practically be reduced to ordered systems processes–at least not without destroying the very qualities like intelligence, passion, motivation and creativity that make us what we are, and which are the prerequisites for success in the knowledge and creative economy we are fast moving into.
In the quest to be seen as relevant business partners in corporate strategy, HR has attempted to take over the mantel of efficiency which is at home in the technical processes of production, and to gain a position of influence at the top mangement table by making a demonstrable financial contribution to the bottom line.
Much in the tradition of Kaplan and Norton of balanced scorecard fame, who see the main challenge of management as that of aligning the organisation to the mission/vision and strategy of top management along the lines of financal kpi’s, HR has tried to deliver value by aligning human resources to strategy. The result has been what Robert Bolten of KPMG HR has called the “doom loop” in the 2012 KPMG Rethinking Human Resources in a Changing World study, where the implementation of “…the latest best practice generic models… result(s) in a diversion of attention away from where the real value lies–in pursuing solutions tailored to the unique circumstances and requirements of any given business.”
By giving top management what top management thinks it wants, HR merely confirms its credibility gap. Henry Ford is said to have commented that had he asked his customers what they wanted, they would have said a faster horse-drawn carriage. HR’s dilemma is that compliance in terms of the ordered systems paradigm of production and finance does not give top management the agile, flexible and motivated workforce it needs, but quite the opposite.
(As a side-note on the origins of the HR-dilemma, whether the simple systems planning approach applied in Finance makes a productive contribution even to financial results is a question I leave to finance experts like Bjarte Bogsnes from Statoil, who questions the strategic planning paradigm of Finance most convincingly in Implementing Beyond Budgeting, but that is another story. Applying the principles of what doesn’t work in Finance to HR merely compounds the problem down the organisation.)
To make a strategic contribution to value in the knowledge and creative economy, HR will need to break with the ordered systems paradigm still governing the thinking of many Boards, to treat its subject matter on its own terms. People are living organisms, not trivial machines, and so belong to the domain of complex adaptive systems. A teaching metaphor by David Snowden at Cognitive Edge, a colleague from the field of knowledge management, helps to illustrate the difference between the three kinds of order that exist in nature (chaos, order and complexity), and their implications for managing people in this short video called How to Organise a Children’s Party.
The complexity solution to people management, which Dave describes as “managing the emergence of beneficial coherence within attractors, within boundaries,” provides an alternative to current ordered systems management and HR approaches which is based on self-organisation. But it is one which also requires a shift from the attempt to manage talent by establishing bureaucratic processes, to one of engagement with talent on an operational level, where solutions can be tailored to the unique circumstances and requirements of the actual business.
What Robert Bolton recommends for HR in the summary to the KPMG study is a shift in the operations of HR from cenralized planning and control (“the doom loop”) to a transitional role as a shared services organization staffed by “people agenda architects” reporting to a “Chief Change Officer:” Ultimately, “Some organisations could go even further and have leadership taking direct control of people programs…” HR responsibility would radically decentralize, and HR would morph into a change management organization driving strategic initiatives through its interaction with people.
What this would likely mean is that talent recruiting and development would no longer be managed, but fall within the domain of entrepreneurial decision-making and trial-and-error experimentation. As such, the Board would take a direct interest in its high potentials, as Brin and Page have famously done at Google (and which Eric Schmidt describes in this interview at 1:50 as “smart people want to work with smart people and want to be informed…” in an empowerment model of governance), even as the organisation has grown exponentially to corporate dimensions.
Like at Google, talent management would become “disintermediated,” meaning that decisions about talent would no longer be filtered through HR evaluation processes to be reported up the hierarchy in the form of metrics for final approval, but would be made directly by managers responsible for results. Unlike Google, however, whose top-down talent model of the start-up years cannot be replicated by established companies, decisions about talent would be decentralized and made at the operational level, where the practical knowledge about what is needed, combined with the social sense to know what works is located. What it would also mean is that “talent” in all its facets would stop being the focal point of an annual management ritual, but would be the primary focus of daily work. Talent development would become less an exercise in evaluation and training, and more one in experiential learning rooted in actual change management projects triggered by market challenges, where “talent” would have the opportunity to take responsibility for achieving business priorities, learn through trial-and-error, and show through performance what results it is capable of achieving.
Management would need to provide their people with the priorities around which they could self-organize, with the resources they would need to power their efforts, and with the ethical, legal and risk frameworks which would define the boundaries of their self-organization.
HR–to the extent that it would carry such a name or even exist in a recognizable form–would provide the tools (IT and processes) to enable transparency and communication, and do the mentoring and coaching the managers would need to keep their focus on their people and to do a good job of challenging and fostering them in their evolution and growth.