Note to CFO: play nice with HR

A post in CFO.com by Rutgers University's Richard Beatty entitled:Memo to CFOs: Don't Trust HR, followed by a post at Gartner blogs: CFOs Should Trust HR, But Do Have Reasons To Be Wary was my cue to renew acquaintance with Gartner analyst and post author Jim Holincheck.

I'm sure Jim won't mind too much if I describe him as 'old school Gartner' the kind which makes a virtue of an extraordinary attention to detail and an encyclopedic knowledge of his chosen specialty. These days, Jim concentrates on HR, along with Thomas Otter, an Irregular alumnus.

Given the general feeling of doom and gloom in the economy, I wanted to get a more upbeat view of what business needs to do and the place that technology can play. That bad news is that posts of the kind offered in CFO.com do very little to foster what I see as a need for both HR and finance to be in lock step. Prof Beatty claims:

...that typical human resources activities have no relevance to an organization's success. "HR people try to perpetuate the idea that job satisfaction is critical," Beatty said. "But there is no evidence that engaging employees impacts financial returns."

Beatty based this conclusion on employee surveys done at IBM and other companies that found little relationship between job satisfaction and performance ratings. Not only is employee engagement very expensive, but "how do you know you're not satisfying a lot of people you really wish weren't there?"

Prof Beatty backs up his claims with some interesting stats that took me by surprise. More broadly, his conclusions fly in the face of all that we hear as a basis for rationalizing the introduction of social computing software as the pathway towards meaningful collaboration.  Where I draw the line though is in Beatty's assertion that:

...while "the language of organizations is numbers, HR isn't very good at data analytics," Beatty said. "They don't think like business people. Many of them entered human resources because they wanted to help people, which I'm all for, but I'm also for building winning organizations."

It's the CFO's job to make sure that the work of analyzing and, as necessary, reconstituting the work force gets done by someone qualified to do the job, added Beatty, and there has never been more at stake than there is now.

This is problematic at several levels. Some years back I did some HR analysis research for the then PeopleSoft. When the results were produced to HR, there was an uproar because in the eyes of those people I had taken the accountant's view. That is what I am by training so it should not have been a surprise. Even so, I was taken aback at the hostility coming from HR. It was one of those 'What we have here is a communications problem' moments. However, when pressed to provide examples of what HR wanted, there was an eerie silence. It was clear that while I may not have met their criteria, HR had little to offer in return. We eventually worked through the problem but it taught me a valuable lesson. Don't presume that others will understand or accept your approach. It would seem that little has changed in the intervening years.

Jim Holincheck argues:

Unfortunately, this is true in most HR organizations.  However, it is not universal and the trend I see is that more HR organizations want to build a competence [analytics] here.  There is a lot of work to do though.

and...

There is a difference between being an engaged employee and being satisfied with your job.  I can be satisfied with doing the minimum to collect my paycheck, but that is hardly an engaged employee.  There are plenty of studies (for example, from Gallup and Watson Wyatt) that show that there is a link between employee engagement and financial results).  So, I disagree with this notion.

Aaah - now we're back to something that will help the social computing crowd.

But more generally, I wanted to test my theory that HR and finance should be in lockstep. Sure, the numbers matter but HR brings a human dimension that finance lacks. While the vision of the steely eyed bean counter may not be entirely dead, finance is not a place where you'll find much sentiment. Having HR alongside acts as an essential counterweight to ensure that attention is paid to managing the right people well. The problem as I see it is the tendency to panic.

I've said on a few occasions recently that the sometimes lemming approach of 20% cuts across the board is both futile and damaging. Jim agrees: "It is crazy out there but to be honest we don't yet have great tools for workforce planning. That doesn't help but yes - I agree -indiscriminate headcount reductions is not the way forward for businesses looking beyond current conditions."

I asked Jim whether he agreed we seem short on innovation and smart thinking about how to take the enterprise forward. He agrees noting that: "I am seeing a lot of back to basics thinking in many sectors. That's OK but it would help if people thought forward. These conditions are not going to last forever and organizations should be thinking about how fit they will be when the day comes."

I wanted to end our conversation on an upbeat note. Goodness knows industry needs encouragement. "HR may not have great tools but there are opportunities to partner. There are a number of technology vendors who are making good strides towards providing the kinds of solution that help make informed decisions. Headcount is an issue but managed carefully, it will help strengthen - which you can equate to talent. But to your point - HR and finance can be good buddies provided they put their perceived differences aside. I won't claim it is easy but solid results are possible."

Jim told me that Gartner will be publishing some research on this area in the near future. For those looking towards the future rather than gloomily at the present, this could represent a much needed incentive to consider alternatives to those swingeing cuts.