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Human Resources: Sometimes excellent, sometimes a train wreck, often in the middle

The top-rated article on HBR’s blog right now is called “How Netflix Reinvented HR.” It talks broadly about the “Netflix Culture: Freedom and Responsibility” PowerPoint created by Reed Hastings and Patty McCord (who wrote the HBR article), that Sheryl Sandberg (of Facebook/Lean In fame) has called “one of the most important documents ever to come out of Silicon Valley.” Here’s one anecdote from the HBR article that stands out:

One day I was talking with one of our best engineers, an employee I’ll call John. Before the layoffs, he’d managed three engineers, but now he was a one-man department working very long hours. I told John I hoped to hire some help for him soon. His response surprised me. “There’s no rush—I’m happier now,” he said. It turned out that the engineers we’d laid off weren’t spectacular—they were merely adequate. John realized that he’d spent too much time riding herd on them and fixing their mistakes. “I’ve learned that I’d rather work by myself than with subpar performers,” he said. His words echo in my mind whenever I describe the most basic element of Netflix’s talent philosophy: The best thing you can do for employees—a perk better than foosball or free sushi—is hire only “A” players to work alongside them. Excellent colleagues trump everything else.

And also, this:

Many years ago we eliminated formal reviews. We had held them for a while but came to realize they didn’t make sense—they were too ritualistic and too infrequent. So we asked managers and employees to have conversations about performance as an organic part of their work. In many functions—sales, engineering, product development—it’s fairly obvious how well people are doing. (As companies develop better analytics to measure performance, this becomes even truer.) Building a bureaucracy and elaborate rituals around measuring performance usually doesn’t improve it.

I was pretty interested in reading this article. I came to business school with an HR focus in mind; I was more interested in working on the people-development side of a business than the finance-facing, per se. I quickly realized two things in my own travels, though: first off, and I’ll spend more on this in a second, HR isn’t as people-facing as it should be. Second-off, although I’ve seen a couple of people do it, it’s hard to break into things like “organizational effectiveness” and “recruiting” if your background wasn’t there; probably because of the litigation fear that surrounds a lot of HR functionality, people key in on experience for those roles (also, HR tends to hire HR, so hiring someone with limited direct HR experience who then performed well would be kind of a mess situationally).

I do think the current situation in American business is kinda like this — HR has tried to grow into something different over the years (the term you hear a lot is “get a seat at the table”), but the problem is, the people currently running big businesses in America are in their 50s and 60s (this varies by industry), which means they started coming up 25-35 years ago, at a time when HR was more secretarial/personnel/administrative. Often, they still see it like that. I worked at a Fortune 15 company this summer and sat in a meeting between a chief marketing exec and a mid-to-high-level HR business partner; the former basically told the latter to fill out forms for him, even though the conversation was about 12-15 people on his team and the next steps in their career. It was kind of interesting to observe first-hand.

As you get more current 20/30-somethings rising up to C-Suite, I think you might see HR emerge as more of a business partner. People like to talk about “the war for talent,” which is a pretty real thing. I’d like to think HR could become the central element of the business that drives how talent is acquired and developed, but I think it might take multiple generations for things like the old boys’ network and the referral from the right person to die out. So I’m not sure HR is going to become a business partner specifically in the talent sense; I think it’s more likely, unfortunately, that HR at bigger companies will continue to invest in ATS (applicant tracking systems) that basically reject everyone under the sun. The idea of recruiting should be a really tangible, valuable thing in a business — how to find the right people, how to woo them, how to get them in and develop them, etc. — but too often, the side of it that HR is doing is the first-round interview, or the phone screen, or the tracking side of it (time to hire, etc.). They’re not really doing the heavy lifting (again, this is based on a range of experiences I’ve had and not necessarily true at every level).

I actually think it’s more likely that the next wave of HR will involve HR as a “Big Data” center. If you think about it, it makes sense: HR has information on hire date, how hired, time to hire, opening salary, performance reviews (if they do those), etc. They basically have a full rundown of company cradle to company grave, so shouldn’t key data on what’s happening be coming out of that division? That would seem to make sense — but it can only work if HR can freed up from its more admin tasks to do more far-reaching, analytical tasks such as figuring out where the gaps in talent strategy are, etc. And that latter portion is probably the hardest part of the equation.

I’ve met a couple of people along the way who tried to do HR because it’s an easier way to make money, and/or there’s less pressure in some aspects (some call it “social work with a better salary”). If you read this interview with a University of Michigan business professor, though, there’s one key takeaway:

We have spent 25 years studying the competencies of HR professionals.  In that time, we have data from over 60,000 HR professionals and line managers about what HR competencies will increase personal reputation and business performance. In our most recent round of global research, we found that HR professionals are more personally credible when they are credible activists who build relationships of trust with business leaders and who take positions about how business can be more successful.

Again, the whole notion of having an MBA or a Masters-HR or a Masters-Accounting or whatever it may be comes back to the same idea: you have to be able to enter a place and build relationships. The whole idea of business is really building relationships and trying to make new ideas work.

I think the Netflix model is cool, although obviously I’ve never worked there, so I don’t know what it’s like in day-to-day practice. I do think the future of HR as a concept is interesting, though — companies can’t sit back and do the same things they’ve always done as the business world gets more tiered and competitive while resources (and talent) becomes more scarce. The idea behind HR needs to be empowered more to do things that can benefit the business side, as opposed to being simply an admin/personnel hub. It’s going to take a while at some places — often HR is viewed as more an impediment or internal police than it is viewed as a potential partner in a deal — but whether the future is more about talent strategy or analytical breakdowns, the redefinition of it needs to speed along here. The actual human side of a business is too important to be left completely to those more focused on projects or finances.

Ted Bauer

10 Comments

  1. “Again, the whole notion of having an MBA or a Masters-HR or a Masters-Accounting or whatever it may be comes back to the same idea: you have to be able to enter a place and build relationships.”

    I like that, and that’ll be something to consider for me as I move forward with my grad school plans. I’ve been admitted to a well-regarded program at the U of MN in a field strongly connected to HR, which is a great opportunity but given how hard it’s been as a “transplant” in Minnesota to connect with people I’m very concerned of the possibility of dumping $50k into a degree that won’t help me advance my career plans because I’m at a disadvantage for networking opportunities. If that seems perplexing to people reading this, consider that Minnesota is a highly insular place that’s notorious for keeping newcomers at arm’s length.

    One thing I think ought to be taken into consideration more often when considering a grad program is the cohort you’ll be studying with and the location you’ll be pursuing your program in. Getting into a prestigious university is great, but I wonder if it means bupkus if you know no one in the area and the people you’ll be studying with are all native to the region.

    Thanks as always for sharing your thoughts.

    • That was what I should have thought more about, I believe now … doing that program was OK, but I think it kind of ‘set me back’ career arc wise in a lot of ways.

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