CIPD Podcast 36 - Next generation HR

Date: 03/11/09 Duration: 00:18:12

In this high-level discussion about the future of HR, Lee Sears, CIPD Strategic Advisor, Jackie Orme, CIPD’s CEO, Gareth Jones from Creative Management Associates and Kevin Brady, HR Director at BT Operate talk about the challenges for the HR profession and focus on CIPD’s ground-breaking ‘Next generation’ research project.

Transcript

Philippa Lamb: Hello and welcome to the CIPD podcast. In this edition we’re going to be getting a sneak preview into the CIPD’s new research project on next generation HR. 

The Institute says it wants to use the project to unearth the kind of truly groundbreaking practice that will help give professionals a crystal ball style view of what HR will look like ten years from now. Initial findings from the work will be unveiled at the CIPD Annual Conference in Manchester on the 17th of November but joining me today, to give us a first look at the findings are CIPD’s Chief Executive Jackie Orme, Lee Sears who’s leading the research for the CIPD, Gareth Jones who moved from a successful HR career to a stellar academic one – currently taking in the leading business schools in London, Paris and Madrid – and finally still on the frontline, Kevin Brady BT Operate’s HR Director.

Now Jackie, we’ve all heard and read a great deal about the changing nature of HR in recent years, what is the CIPD hoping that the Next Generation HR Project will add to what we already know?

Jackie Orme: I think there are two big drivers for doing the work. The first one was as the result of the work we did last on the HR Map we saw a big shift in the purpose of HR and what we wanted to do was a piece of work that really captured the nature of that shift in purpose and linked to that the activities that HR people need to think about and undertake. Second of all what we were looking to do was just to stimulate debate in a positive way, particularly amongst senior leaders, about what that next generation of HR needed to look like and how they should be working.

PL: Okay, now Lee you’re leading this research and as I understand it rests broadly on three themes.

Lee Sears: Yes, firstly we’re asking the question ‘Is the purpose of HR changing; as the landscape changes how does the purpose need to reflect that change? Is HR today the same as it was 15/20 years ago?’ Once you pursue that particular line of logic you realise that actually there are a number of ways in which HR in some of the most progressive organisations are stepping up and making a massive contribution in some new strategic areas and there are three themes that we have been particularly interested in exploring.
 
Firstly is the whole question of how HR helps organisations basically keep ahead of the game, the question of organisational agility and this is more than simply running innovation workshops or trying to develop an agile culture, in all ways and across a whole range of different activities HR is playing a significant role at its best in keeping organisations awake, alive and adapting.
 
The second theme is, many of us and I guess particularly in light of what’s happened more recently in the economy I think people both inside and outside of organisation, you could argue that there’s been something of a kind of falling out of love with business and a pretty profound challenge to our belief about the trustworthiness and integrity of organisations. HR at its best is doing some fantastic work in supporting organisations to basically be authentic, to be real, essentially to deliver on their promise to the customer and actually be places that genuinely people enjoy working.

PL: So to be who they say they are.

LS: Be who they say they are so that is a second theme we’ve been really interested in exploring and we’ve found some fabulous work there, it goes beyond the conventions of normal employee engagement I think.
 
The third area, and I guess something of a kind of controversial subject is if we look at the recent financial crisis, what role was HR playing in trying to support the organisations to have a balanced approach to future risk? We’ve been looking at the whole question of what we’re calling balanced risk management. So what’s HR’s role in supporting an organisation? To look at a broad category of risks from, financial, through just daily business practice that HR almost by virtue of being in the bosom in many organisations can run a pertinent and at times powerful commentary to support organisations to be good now but also to survive in the future?

PL: Kevin this is all about HR learning to take a much broader view, would you agree that perhaps HR has in the past been too focused on internal people issues?

Kevin Brady: I think certainly if you’re looking at a commercial HR organisation and the HR organisation of the future it’s really got to be focused around the commercial external perspective and that’s where I think we’re beginning to see some of the leading organisations focus really, on aligning the internal brand values with the external brand values so what people experience really brings to life the brand for people externally. I think as an HR function it’s probably clearer now, as we’re in a recession, that we do need to be aware of what’s going on externally.   We do need to reflect that and that plays into this whole piece around agility, both around culture but also around resourcing and flexibility on skills and I think that’s critical for an HR function to be thinking about.

PL: But if HR is to operate in the way that Lee has described it does mean that HR needs to stray into territory which currently belongs to other departments – marketing, sales, corporate governance – doesn’t it?

KB: I think you know actually if you’re looking at HR functions and HR practitioners the best tend to not stick to the people agenda and I think that’s the challenge that we actually get the whole of the function and all of our professionals really beginning to take an active interest, almost a curious interest in what goes on elsewhere and I would hope that the best practitioners really aren’t insulated in the terms of the way they act.

PL: Jackie, you’ve got a lot of personal experience at the coal face of HR, how do you think CEOs and senior executives are going to respond to the idea that their HR team should have an authoritative voice in discussions that perhaps are nothing to do with the core people function?

JO: What CEOs and business leaders are looking for are HR functions that can add the greatest value that they can so I think they will welcome it.

PL: You don’t think they’ll see it as mission-creep?

JO: No I don’t think they’ll see it that way at all. What they’re interested in is what are the outputs? What’s the value that the function’s bringing? I don’t think they’re interested at all in where the boundaries sit between functions. They’re interested in the outputs, they’re interested in the results and the impact that HR can make on the organisation, with all of the perspective that it brings, with everything that it sees and everything that it knows, that’s what they’re interested in.

PL: Gareth Jones, what do you make of all this?
 
Gareth Jones: I think it’s really interesting and I’m sceptical of your view that people will regard this as a kind of mission-creep. If we looked at this for example from the perspective of marketing you could argue that the last 20 years have seen marketing departments make brand promises which they can’t keep and what’s that’s produced is a rather sceptical customer base and what I think our role is to say that brand is an external manifestation of culture so we’re interested in the joined up nature of brand promises – what we say to the external world – and the way people experience our organisation. Now clearly HR professionals have a huge insight into this though I think I’m very persuaded of the view that it’s not always healthy just to have a career in HR, that perhaps the best senior HR professionals are people who’ve worked in other functions and that’s as true by the way for a Chief Financial Officer as it is for an HR Director.
 
When I first became an HR Director in the music business at Polygram I was a little shocked by how little my colleagues knew about music. So it started as a joke, I would walk into the office and say “What’s the number one album in America?” and they would say, “Don’t know I’m a comp and ben expert.” and I’d say “Well tough, you’re in the music business”. Of course the joke backfired on me because six weeks later I walked into the office and they said “What’s number one in Finland?” and I didn’t know but it made us very curious about the business and we’re back I think to the observation about influence. If you want to have influence in the business you’ve got to know a lot about it, you’ve got to be really curious about it and in addition you need to be curious about the competition. Again I’m rather surprised I think, not just HR professionals, but senior executives are remarkably insular in many, many organisations and there is huge competitive advantage to be derived from being endlessly curious about the competition.

PL: Kevin, what’s your experience been at BT?

KB: I think again it varies between individuals and capability but one of the things that I’ve always encouraged in my teams is that people do take that healthy interest in the business, understand the business, but also the impact on customers. I think it’s quite scary at times the lack of commercialism that I’ve seen in HR practitioners and I think there’s a lack of understanding of what makes the business tick, understanding how it works and how the business makes money and how we create margin and how we create benefit for our customers and I think that’s the big challenge with HR not to have a blinkered view of life that actually it’s just about the people because fundamentally if we don’t make money, if we’re not commercial as an organisation guess what? People don’t have jobs and I think that’s the real challenge about making sure that people are grounded in understanding the fundamentals of the business.

GJ: I do think that in these rather difficult recessionary times and my own view is this is much more than a trade cycle recession it’s a paradigm shifting recession – the trouble is we don’t know which paradigm we’re shifting to – that we don’t retreat into a kind of relentless focus on cost control and so on, important though that may be because if we’re not careful the HR department will become the nasty department and we’ll be in charge of job cuts and downsizing and cutting the training budget and so on. 

PL: As we have been in previous recessions. 

GJ: Exactly and I think on this occasion we really, really need to be focused on how we build organisations that will thrive post recession and for me that absolutely involves focusing on creativity and innovation otherwise we won’t build a sustainable recovery.

PL: Jackie?

JO: I completely agree. The emphasis on the word sustainable and that’s what we’re talking about all the way through. Even if you are in the difficult position, as Gareth says, of having to devote a large chunk of your time to restructuring, the other part of your job is to look to the future and to figure out what is going to make performance more sustainable perhaps than it has been in the last few years and to do that we’re going to have to ask some difficult questions of the way that we lead, the reward practices that we have, the values that we set in organisations.

PL: Lee, it’s something of a balancing act isn’t it because perhaps I think it’s fair to say that in the past HR was seen very much of the voice of the employee, would you say that there’s an argument for claiming that the profession’s perhaps gone too far down the other end of the road and lost sight of the bigger picture by partnering too much with management in recent years?

LS: I think there’s certainly evidence. You can’t deny the fact that in many HR functions their mandate has been defined by their wishes and wills of strong executive teams and the incessant desire to get the place at the top table has often meant that at worst it’s a case of essentially pursuing an agenda which is defined by that group of people.
 
Again more recently, if we hold ourselves up to scrutiny, HR basically going to sleep on its own watch and it’s a difficult position to play and I wonder about who does HR see itself effectively reporting to. If we’re going to take this question of sustainable performance seriously I think HR has to do a couple of things and first of all it has to run a commentary on not just the organisation’s fitness for purpose today but it has to focus on its ability to adapt and be fit for purpose tomorrow and I think HR can run a meaningful commentary in that territory.
 
I think the second thing is that it needs to start looking beyond just the interests of either employees or the executive team and actually looking in the round at the broader range of stakeholders so the kind of broader community, the broader employee base and actually running a much more balanced score card of issues that HR focuses on and there’s relatively little evidence out there at the moment that HR acts as that kind of balancing force, in many ways that’s the role currently of the non-execs but the extent to which that’s done well I think is questionable.

PL: Yes it’s really pushing the boundaries, that isn’t it? It’s a difficult role to take on because as you say who then is HR accountable to first and foremost?

LS: Absolutely. I mean it’s really interesting, I know in conversation years ago with John and Forrest Mars they used to put it very simply, they’d say that they saw their chief execs in their different businesses being responsible for making them rich today and HR was responsible for keeping them rich tomorrow.

PL: And that is what most chief exec’s want isn’t it, even now?

GJ: I think in a way you see this is continuous with something that’s always been true of HR which I’ve previously called a schizophrenia of HR. Senior HR people need to be the organisation’s most passionate advocate at the same time as they are its most severe critic and that sort of inside-out role is a difficult role to play. You need to embody and live the values at the same time as being able to say ‘Mm I’m not quite sure these are quite right’. Now I think some very progressive organisations have really grasped this when they think about long-term sustainable businesses, if I give a quick example. I’m currently working with a pharmaceutical company Novo Nordisk who are one the world’s largest suppliers of insulin and they have a function represented at the Board called Corporate Communications, which doesn’t sound that grand but actually has HR reporting to it, it has risk management reporting to it, it has quality reporting to it and the woman who does that job sees her role as having a 20 year time perspective and I think that’s really interesting because she sees herself as the guardian of reputational capital for example, which in a pharmaceutical business is absolutely critical to profitability. I think that these are incredibly interesting roles and if they are represented at board level it gives HR a real licence to do some very interesting things.

PL: I mean, as you say, it’s all about what the thinking is at board level though, isn’t it because in the midst of a recession a lot of board directors are happy to talk about taking a longer-term view and sustainability, once we’re out the other side do you really think we’re still going to see that focus on the longer view or will we be back to short-termism as we were before both in terms of the broader organisation and what they want from HR?

GJ: Well I think we’d better be interested in sustainability because the lessons of recent economic history, never mind the recession, are that capitalism remains a pretty aggressive social system so if you’re just going to be focused on short-term targets you probably won’t survive very long. If you don’t make your customers like what you do, whether that’s a product or a service, you probably don’t have a sustainable business.

PL: What do you think, Kevin?

KB: I think actually as we come out of the recession I think there is a short-term focus at the moment and to me I would hope that the agenda actually shifts quite significantly and I think the most enlightened CEOs and businesses tend to be looking to HR to fulfil that role and that challenge and are very open to that challenge. At the moment for instance we’re probably investing more in leadership in BT than I’ve seen in a very long time because at the moment things are tough in the economy and I think it’s at that point that actually you make the investment around leadership so that you actually get better leaders rather than tackling the training budgets cutting things back because it will cause you issues both in the short-term, the mid-term and the long-term.

PL: Jackie?

JO: I’m probably a bit more optimistic than Kevin I think in terms of the way that many business leaders are responding so we have a lot of evidence that employee engagement has gone up in this recession rather than down. 

PL: Isn’t that fear?
 
JO: Well you can look at it in lots of ways but the fact of the matter is, it’s still gone up, so whether or not that’s a greater appreciation of what you’ve got, or the grass looking less green on the other side, nonetheless it’s still gone up. But the other evidence that we also see is that CEOs are not letting go of people as easily as they have done in past recessions and they’re not cutting training budgets in the same way as they have done in the past.

PL: They did learn that lesson from last time didn’t they?

JO: Yes, so there are some lessons learnt, and I’m not saying it’s perfect, but I do think that there are good healthy signs that many business leaders are looking both at their people as being a source of competitive advantage going forward, but also that they have both got one eye on the future and the future needs, as well as dealing with the difficulties of today.

GJ: Could I add a slightly maybe subversive thought to this? You see I think this HR focus on the word ‘engagement’ is rather continuing with a long line of sort of personnel and HR thinking. You know, we can think of words like ‘raising morale’, ‘empowerment’, we’ve had them all (engagement’s the new word to describe it) and I’d kind of like to turn the question on its head and say that the HR task is not to extract more from their employees but to make their organisation attractive to people who are really valuable. In a sense we’ve been working inside an almost Marxian paradigm which says what HR does is get stuff out of workers. Well, I think the task actually is to make your organisation attractive to people who are valuable and that’s how you become a beacon for talent and that’s how you build long-term competitive advantage.

PL: Jackie?

JO: Absolutely. I don’t know about the Marxian bit, but what we saw in all the work that we did was a shift in the best HR functions recognising that their client is the organisation, that’s what they are there to look and to safeguard and when you go and say ‘What do marketers do?’ They represent the consumer in the Board room. Well HR people represent a healthy organisation in the Board room, that’s what they’re there to do. I completely agree with Gareth, that is where HR people need to start and they need to work back from that to say what drives a healthy organisation and what makes it healthy today and tomorrow?

PL: Well Lee, obviously as part of this research you’re talking to a lot of organisations who are doing HR right now, are you seeing much of this ground breaking practice coming through or is it really still limited to a handful of organisations?

LS: No, I think there’s definite evidence of HR playing significantly in territory that previously would have been considered the realm of others and actually forging some very active partnerships and I think the research will show that. To the point around the capability needs for the profession moving forward I think there’s a bit of a chicken and egg here. In some ways organisations get the HR they deserve so if the organisation has a sense of how HR can add value what it will tend to do is it will find some of its brightest and best from within the organisation who understand that HR fundamentally is like an applied business discipline it’s not a pure people discipline and they have zigzag paths. You’ll get some very commercially orientated people who spend a time in HR making a significant difference to the organisation’s current and future performance and then HR looks like a very, very different and a very attractive path, both to new entrants and those within the organisation itself. The depicting and positioning of HR as a people discipline is actually one of the main reasons that we have such a problem with the whole positioning of the HR career. It has to be seen as fundamentally an applied business discipline.

PL: Gareth?

GJ: I’m actually rather optimistic about this by the way because when I’m in a room with younger HR people and I compare them with perhaps some of my colleagues in previous jobs I’m rather pleased with the people I see and I always find that they ask brilliant, hard questions and that they have pretty good knowledge of their businesses and I think that’s rather optimistic, you just have to be careful that we don’t crush that in them and that we really set out an agenda which says this is an absolutely vital function for preparing organisations that can propel our societies into the future. It’s a rather noble thing when it’s done well.

PL: Jackie, this is a very different way of looking at HR careers, is it the way forward? Is this the key to everything we’ve been talking about?

JO: It’s about breadth of perspective and breadth of experience and I think, again as Gareth said, that’s true for all professions and for all leaders. You know, the broader your perspective, the broader your experience, the chances are………. the better understanding you have, the better you’ll be. I think it also breeds a curiosity to find out more, so yes, I think it’s a really healthy way to look at HR careers. A really healthy way which is that you broaden your perspective, you don’t just know about one or two things, you don’t just understand what the employees want, you understand what the customers want or you know what the investor community thinks, or you know what your local community thinks, that’s what will drive the best HR practice.

GJ: When I joined the music business I have to say I didn’t know much about HR and some people say I still don’t, but I had some great advice from the Global Marketing Director and he said whenever you go to visit a record company get there three hours early and go to some record shops and go and watch the customers and see where our records are and where the point of sales material is and so on and of course that was fantastic advice because you actually saw people consuming and inquiring about products. So when you went to the record company and people didn’t always tell you the whole truth you knew they weren’t telling them the whole truth because you’d seen the customers and I think that degree of curiosity that Jackie’s mentioned is absolutely critical. It’s a bit of a one liner but I think the future belongs to the curious.

PL: You can hear more about the initial stage of the research at the CIPD Annual Conference in Manchester between 17th and 19th November, go to http://www.cipd.co.uk/ace You’ll hear from the Next Generation HR team over the next year and you can explore the issues we’ve covered in the show notes at http://www.cipd.co.uk/podcasts. 

For now though, thanks very much indeed to Jackie, Lee, Gareth and Kevin for joining me; I hope you’ve enjoyed the programme. Join us again next time. 

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