This article won’t make me popular. A high proportion of the clients we work with engage us to help with people and culture opportunities and therefore, Chief People Officers are a critical stakeholder group for us. I am not going to win a lot of friends by stating that our HR leaders are failing us… but they are.
The challenge
Much of that failure is put down to the times that we live in.
There are heightened expectations around working conditions within the younger workforce (considered unrealistic by many).
Most organisations face challenges around culture where a large proportion of employees no longer want to come into a physical office, and
There has been an irrevocable change in the mental models around what a job and employer loyalty actually means in one’s life.
Today, if an employer doesn’t quite meet my lofty standards, I simply leave and try to find one that does. Zara and H&M helped pioneer fast fashion, and a similar mindset seems to have permeated its way into the employment space. Yes, it is easy to blame the current times for the great resignation, cultural dislocation, and the inevitable talent gap that nearly every organisation experiences but only a few openly admit to. I see this as a convenient cop out.
Gone are the days when the Head of HR sat on the kids stool at the executive table. People are rightly seen as a competitive differentiator and therefore our HR leaders are highly experienced, articulate, emotionally intelligent and politically savvy. I’ll tell you what they are not however… they are typically not risk-taking entrepreneurs who chase after unlimited upside at the risk of downside failure. No…most CEOs want their Head of People to be a safe set of hands and not a swashbuckling cowboy or cowgirl that gets excited at the next big trend and chases after dreams of windmills.
Having met with some of the most senior people leaders across some of our biggest corporate institutions, the part I struggle with is that every one of them has spoken to me about significant people aspirations. Not one has said that everything is great and that they are looking for small, incremental tweaks to keep them at the top of the heap. No, our conversations have all been about radical shifts and step change. Some have even identified that their organisations are facing existential crises that can only be addressed by a fundamental change to their talent environment.
What it might take
I am sure you can see my concern. You don’t get fundamental change by taking the safe path that minimises downside. You also don’t achieve step change via experience and intellect – something that all the HR leaders I have met have plenty of. All of our experience and intellect is what brought us to where we are today.
Rather, our HR leaders need to embrace a much more experimental mindset. If we want to truly transform our people environments, we need to think in terms of Probe-Sense-Respond which underpins problem solving for complex challenges, instead of Sense-Analyse-Respond which is how we approach complicated challenges. So many of our corporate leaders struggle to change up their toolkit to adapt to complex instead of complicated problems, and yet it is ironic that our HR leaders struggle in the same way given that nothing better fits into the category of complex than do human beings. Dollars don’t have feelings and I am therefore more accepting that CFOs will be better equipped to solve complicated challenges instead of complex ones. I am not sure our HR leaders can offer up the same excuse.
If we want to really shift the dial on people, we need a portfolio of bold people initiatives and we need to approach them the way that a VC approaches their portfolio which is geared to provide high levels of growth. We need to accept that the majority of those bold initiatives will fail, and that we have little way in advance to pick the winners. And yet, the winners will provide disproportional returns. This line of thinking made me really depressed. HR leaders are often as far away from entrepreneurial profiles as are Chief Risk Officers.
Our HR executives are well placed to lead us
I had an epiphany just last week (why do they always happen in the shower?) Perhaps we don’t need our CHRO to be that swashbuckling entrepreneur. After all, when we help our clients set up ‘at scale innovation engines’, we preach that innovation is an output of a repeatable and disciplined process and not one of creative brilliance. Surely it is the same for our HR leaders. If we can help them think like venture capitalists, then they don’t have to deliver the radical step change that they are desperate for. Rather they simply need to oversee the system that – based on real data and evidence – will quickly kill off the people initiatives that won’t deliver (hence saving both time and cost) and double down on those that will.
I am not suggesting that our people leaders are failing us because they have spots when they should have stripes. No, our HR leaders are perhaps not natural entrepreneurs. But there is no reason why they can’t oversee a people and culture led transformation that delivers massive change as long as they embrace a different operating model when it comes to HR initiatives.
What frustrates me is that so many of our people leaders at our largest incumbents talk about the need for step change. And then they pull the same levers that have been pulled countless times before - e.g. an Employee Value Proposition review, REM benchmarking or embarrassingly, investing in some hackathons to try to appeal to new digital and data profiles. Or, they commission a report from the usual advisory gurus and watch as their talent environment continues to deteriorate.
Maybe it wouldn’t hurt for our people leaders to chase after a windmill or two. At the very least, they should create an environment where windmills can be quickly built, torn down, and re-imagined. As the talent environment and expectation of the younger worker continues to massively shift, a failure to adapt and try new things and the propensity to rely on what HR leaders know well may precipitate the downfall of the modern organisation. Sound alarmist? Maybe. And yet, many of the HR leaders I know well are feeling uneasy. They tend to have excellent intuition, yet something has changed and in their quiet moments of honesty, they can’t quite put their finger on it. They champion the need for a bold and adaptive organisation – and I say this as someone who counts several senior HR leaders as friends – but perhaps the most important tool I can offer them is a mirror.
Am I optimistic? Strangely, I am. If anyone can role model the adaptive leader, question all their assumptions, and reimagine their operating model to inspire change in an adaptive organisation, surely it is our HR leaders, irrespective of their entrepreneurial DNA.
Sahil Merchant
A proven entrepreneur, an innovator, and an expert in agility, growth and new talent. Founded and built McKinsey's digital and data practice in Australia and New Zealand.
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