In "the good old days," many P&O managers acted as part of the management team to bridge the regular problems that came up between top management and labor people. They relied on their experience as troubleshooters and promoted the basic feeling among both parties that everything was under control; "Im OK youre OK" was in vogue.
It was not easy to gain trust from both labor and management, but with enough expertise in and knowledge about payroll systems, labor/tax regulations, training and recruitment, it was not very difficult to survive. When a conflict arose, the P&O manager could always say that it was his boss' decision. That was the situation in the old business model.
In his book, HR Champions , Dave Ulrich, one of the most famous HR professors and consultants in the world says,"The deliverable from the management of strategic human resources is strategic execution." That is a much more powerful statement than ever before. HR always exceeded, even in the old days, the importance of the P&O function, but many HR officers in global companies did little more than improve on the P&O's work. Times have changed drastically and now, because we are in the middle of the digital revolution with a substantial paradigm shift in values, markets and cultures, we have to be conscious of those changes that are a result of the new E-Business model.
The most dominating change of the new model in the market approach is in essence that the customer is more and more the master of his own destiny. To promote this shift, customers need the freedom to communicate interactively everywhere and without time limits. There are no narrow borders anymore. We need new competencies especially in marketing and communication based on a fundamental insight of information technology. (See my article "Vision on Management in the Digital Age" in M@n@gement .) Most European companies lack this know-how and compared to their US counterparts, certainly those on the West Coast, are at least three years behind.
The result is that the modern HR manager is increasingly becoming the key for managing change, especially as he gains greater understanding of what is going on. He has to take great care in the recruitment and training of talents to bridge the strategic gap. Unfortunately, a top-quality manager of this type is a rare phenomenon and this scarcity is one of the reasons that many global companies in the coming years are heading for an acute crisis. In addition, many executives supervising HR managers dont see the need for drastic change either. These bosses think that there is no revolution. They may end up having the same experience as the last King Louis XVI of France who was still enjoying his great parties, unaware that the revolt of the people was already in progress. As result, he lost his head under the guillotine.
"Contributions of HR divisions as strategic partner: avoid strategic plans on the top shelf, create a balanced score card, align HR plans to business plans, watch out for quick fixes, and create a capability focus within the firm," is another quote of Dave Ulrich,followed by his recommendations: "Focus on the integration of business and HR planning; Line managers and HR professionals work as partners to ensure integration. Outcome: plan to highlight HR practices that are priorities." And indeed, the modern HR officer has to think fundamentally how he and his crew can contribute to necessary change in the company. He has to be proactive, has to take part in discussions about innovations, and has to figure out how he can make his people aware of unavoidable change.
Management training is the ideal match not only to achieve awareness but also to "marry" strategic thinking with implementation. It is a requirement for all large companies as employees cope with new ways of doing business. Management should be confronted with the new issues of their business; they should select the critical success factors and work in teams to realize at least a few of the numerous opportunities. If we add modern communication systems into a global company, exclusively through Intranet or Internet, we force management into modern interactions. Companies like Cisco have been practicing this for years. By using modern technology, costs can be reduced substantially especially in marketing and sales, accounting, and order intake.
Training has to facilitate the merger of all these processes. Nevertheless, insufficient training or no training can never be an alibi for a lack of innovation; that remains the pre-eminent responsibility of top management.
Most companies with the old business model are apt to hire personnel from technology and marketing backgrounds to acquire new competencies. Soon they will ask a basic question: Are we on the shortlist of talented people? And the answer most of the time is "no." There are at least two reasons for this:
Many managers of companies with the old business model talk impressively about change but they remain bureaucrats with little or no innovation capability. Top management prefers control and often kills any form of creativity, perhaps without realizing it.
Many young talented people from business schools and other advanced educational institutions prefer to work for a promising incubator rather than an established company because they like the entrepreneurial challenge and tremendous career opportunities.
The problem of being an unattractive company must be solved in order for the company to survive, especially given the huge scarcity of skilled people. Attractive means that the company will need to be profiled more and more as an E-Business, which then becomes "normal business". To achieve the level of the most admired companies, Fortune (October 1997) produced the following shortlist:
The last element is an important precondition for innovation. "Intellectual curiosity, the desire to understand, is derived from an urge as basic as hunger or sex: the exploratory drive," urge Robinson and Stern in their book, Corporate Creativity. It is clear that a company has to seed, harvest and retain talents: be as attractive as possible with a new business model.
A negative case
A big and very successful multinational company had never invested systematically in HR approaches or in PR connected to new talents e.g. campus presentations. They judged that a newly offered innovative training program would be very useful, since it could help their people to become more aware of the basic trends in the new digital developments that might be interesting for them. Finally, they brought forward budget reasons to implement only the new knowledge part- university education- but without a guideline for the process approach. The money, as a consequence, was merely thrown away and the program became contra-productive because the attendees were aware of the new developments but had no follow up whatsoever. As a result, the real talents are now quitting the company.
Clayton Christensen in The Innovator's Dilemma, the 1997 Book of the Year for the Financial Times, has a warning for bureaucrats: "Great Companies can fail precisely because they do everything right". The new generation has to be more entrepreneurial than ever before. Selection criteria are creativity, risk taking, courage, and convincing power. In his new book, HR Tomorrow Management, Dave Ulrich stresses the point that the employee is acting beyond this description, more and more as a "volunteer."
Employability is a given issue, and as the employees take more and more responsibility for their own career, the shift is away from the command and control structure. (See table 1.)
Talents in the digital age
MegaconcernsA positive case
A CEO from another very successful multinational company committed, from the very beginning, his professional HR people together with a few very experienced senior management representatives to necessary strategic change. He ordered to setup a strategic agenda with the most important strategic spearheads and the connected conditions for success. The line managers became aware that HR could benefit their bottom line by helping to create: another culture, better connected training, and recruitment programs. The HR people realized that they had to deliver measurable results. Both categories learned to own the process and the CEO acted as facilatator to that. As a result, talents feel greatly attracted by this approach.
It is difficult to understand a company that puts a zero investment into HR training and argues that, in these days of self-rule, the responsibility for training is that of the managers themselves, rather than that of the company. A big company, without strong HR people who feel obliged to stimulate strategic change, can hardly survive. In the service business and in nearly all industries, everything is people business.
We might recruit future HR managers from the best innovative general managers so that they are part of management development. This is preferable to looking for the latest fashion in HR skills. HR managers have to be more entrepreneurial and superior strategists than in the past. They have to understand the constraint of change and the influence of technology. A top HR person is certainly a potential CEO, and at least, a Board member.
In the digital age, a new culture has to be created in which the new marketing and technology competencies have their place. This has to be mixed with valuable elements of the old culture. It is a highly complex and long-term process with many chances for breakdown. Geert Hofstede designed his "Onion Model" in his book Cultures and Organizations, a famous analysis to investigate cultural differences. The model also can be used to determine which cultural climate generally has to be obtained. The picture might be as follows:
Change in culture
The backbone of the new culture consists of five different values.
First, there is leadership. The growth potential of many businesses in the digital age is overwhelming, but choices are difficult and complex, and the connecting risks are huge. So we request more leadership in order to make the right decisions.
Second, nobody can act alone, not even mega companies. All of them need partnerships (see my article with colleague Westphal, "Without Partnering, No Effective Web Strategy" ). Therefore, alliances are unavoidable.
Third, time is moving fast and many inventions are constantly changing the world; innovation is a continuous event.
Fourth, in the digital age everything is driven by technology about communication.
Finally fifth, with all these different interests, partnerships and uncertainties, we need a close look at balanced value creation, because many people want their share.
If we really want to mobilize the HR function, we will have to do a lot. First the HR managers must act as strategists and contribute to the bottom line. They have to develop a pro-active approach and take an active role within management teams. They will benchmark their own HR policy with the best high-tech companies, not necessarily those in their own industry. They will constantly check customer and market focus not only from front-runners but also from all their people. They will measure employee satisfaction, develop new recruiting criteria, and launch new compensation models. Finally, they will introduce cross-discipline job rotation (including HR). The HR staff will be smaller and smaller because systems are part of the knowledge base, but this small expert team will be very influential in taking care of the most valuable asset of a company: management.
The contributions in managementsite of our correspondence clerk in SiliconValley harvest much appreciation. Burt Rost van Tonningen has processed its contributions and has joined in an integrated vision on e commerce, e organization and e strategy with as title:
PREPARING FOR THE E-TORNADO:
Observations from a European in Silicon Valley
In November 2000 the Netherlands business Publications has publishedthis book. You can order it on-line.