After HR…

Covid drove HR into a death spiral, so HR work must shift to the COO’s office. 

Warning: Be aware… normal is not ever coming back. Any questions?

HR is on track to go the way of the dodo bird, the secretarial pool, the fax machine, and the travel agency. So if you work in corporate HR, you must realize that it’s time to start planning for a new career. HR has been so painfully slow in reinventing itself over the decades that it will not likely be given another chance to avoid fading into history over the next few years. Because (to paraphrase Jack Welch) both now and in the future, “The speed of change in the company (and in the business world) will be so much faster than HR’s speed of change, that its end is in sight!”

Part I –Why HR’s Administrative / Overhead Model Can’t Be Fixed –The Top 5 Reasons

The human resource function will have to shut down in the future, and all talent management work will have to be shifted to the COO’s office. Here are the top five reasons why.

  1. For decades HR has been focused on the wrong things – it’s obvious to corporate executives that HR at the strategic level has been mostly focused on “political things.” Like “getting a seat at the table” and reporting to the highest-level executive. This “wrong focus” means that most current HR functions still don’t have independent and separately budgeted sub-functions for the most important talent output, workforce productivity. Unfortunately, it is also a goal that HR seldom sets or measures. Since the pandemic, I would also note that most organizations “have experienced a net reduction in productivity.” In most cases, there also needs to be a separate sub-function for increasing innovation through talent management practices. 
  2. HR has failed miserably in its critical business impact areas – for years, CEO’s have ranked \talent management as their #1 internal problem area. Yet HR in almost every company has failed to resolve their concerns. So in my view, it’s time for HR to admit defeat in numerous strategic talent areas, including; reaching diversity hiring and inclusion goals, fixing the performance appraisal and performance management processes, building leadership bench strength, directly impacting innovation, and acquiring and retaining enough quality talent. And the biggest failure of all has been in workforce planning, which is now even more critical in today’s continuously changing world.
  3. In a tech driven world, HR has maintained an exaggerated focus on full-time employees – in a modern world where literally more than half of all “work” is already being done by nonemployees (i.e., software applications, algorithms, hardware, robots, outsourcing and contractors). As silly as it might initially sound, for several years, it has been a huge mistake for HR only to focus “on people” as full-time employees for several years. There are now multiple ways to get work done. Unfortunately, it’s almost impossible for current HR leaders to finally admit that being “more human” and “an employee advocate” for full-time employees (which is the role of a union) is now a significant and costly mistake. We are now in a time when all “new work decisions” must now equally consider every possible employee, nonemployee, and technology solution. 
  4. The pandemic has softened HR and shifted its focus toward paternalism – One study, unfortunately, showed that for HR, “employee wellbeing is now roughly twice as important… as maintaining and optimizing performance and productivity.” Obviously, the pandemic has unhinged most in HR. So now, instead of focusing on corporate business goals like workforce productivity, speed, and innovation. The pandemic has pushed HR to make a clear shift toward what may eventually lead to a “Nanny Corporation.” This paternalistic “Big Brother” approach attempts to solve almost every employee problem inside and outside of work. So that rather than allowing company employees to become self-supporting and self-reliant, paternalism instead minimizes employee learning from adversity, stress, risk-taking, and failure. HR is now consciously “weakening its employees” and making them overly dependent by providing exaggerated levels of employee support in new areas that were previously avoided. Those areas now include financial health (do you want your employer to know about your financial status). Other recent paternalistic areas have included wellbeing, mental health, gender pronouns, obesity, cultural loads, happiness, and employee caregiver needs. Unfortunately, supporting every aspect of an employee’s life makes them less capable of handling the many upcoming complex and unpredictable problems that they will face in their job. I predict that these misguided attempts will backfire when they raise fears of excessive corporate control, golden handcuffs, and an invasion of employee privacy.
  5. Many HR professionals don’t have the capabilities needed for the post-pandemic world – because most of those now working in HR functions don’t have the necessary mindset, business experience, or the emerging required skills. All talent management work that must be done will soon have to be shifted over to the COO’s office. 
If you can only do one thing© – in the interim, have the CHRO ask the COO to designate a liaison person that will work with HR to ensure that the interests of the COO are known and fully considered whenever a strategic HR decision is made. 

Part II –Why The COO’s Office Must Own Talent Management –The Top 5 Reasons

In my view, it’s time to realize that HR has had at least four decades to get it right. And given the abundance of “why we hate HR” commentaries that can be easily found on the Internet. In my view, it’s time for HR professionals to be grateful for their opportunities. And then to graciously move out of the way without the expected resistance and whining. Below, you will find the top five key reasons the COO’s office will house new talent management functions. It’s also important to note that every other corporate overhead or administrative function will face similar pressure to prove its ROI. Or be eliminated, outsourced, or replaced with technology.

  1. Some COO’s already run talent management – there is already some precedent and lessons to learn because 14% of HR functions already report to the COO/GM. And obviously, many small businesses are faster and more agile because they don’t even have a separate HR function.
  2. The COO may own the table – when you operate with the COO, you already have a seat at the table. The COO is often the second or third in command on the organizational chart. So they already have the ear of and constant access to both senior executives and all general managers. And of course, the COO will be the first to realize that talent management is often the single highest corporate expense area. Organizations can spend up to 70% of all corporate variable costs on the combined costs of HR and labor. So it makes no sense for the highest corporate expense area to be owned and run by administrative staff with a cost-cutting mentality. Another advantage of operating under the COO is that they control huge budgets, so extra money can easily be found for new talent initiatives. Incidentally, the CFO’s office isn’t an appropriate place for talent to be housed because it is also focused on cost-cutting and not improving business results through great talent management.
  3. The COO’s office directly experiences the pain of weak talent management – if you look at talent problems with an open mind. You will find those talent management problems are primarily operational problems and not administrative or overhead ones. And because the COO is responsible for operations, they will pay closer attention to these talent management problems. Also, the COO’s staff and those who manage to experience the direct unfiltered pain of weak talent management daily (they have skin in the game) will have a greater sense of urgency and a lower tolerance for delay or failure. And finally, because the COO’s staff are “closer to the problem” than HR, they are more likely to find talent solutions that closely fit the situation. 
  4. The COO’s staff already relies on data to make strategic decisions – every area within the COO’s office has been using data to make important decisions for years. In addition, because they are already forward-looking, you can be assured that they will utilize predictive metrics, which will allow them to completely avoid or minimize some talent problems before they get out of hand. In addition, because most of the COO’s staff have business or technical degrees, they will already know (much more than HR) advanced approaches for using data to improve talent management processes. 
  5. The COO’s office routinely utilizes effective business tools – because they deal with multimillion-dollar complex operational problems every day. These operational professionals have access to and experience utilizing advanced business tools that are seldom used in HR. Those powerful tools include failure and root cause analysis to identify causal factors. Most COOs also already have a formal best practice sharing process, which HR does not have. They also will have a competitive analysis process, and they already routinely forecast as much as 18 months out. And because they have extensive CRM and supply chain experience and tools, they can be easily adapted for building talent pipelines.

Part III – Defining the Elements Of “Productivity Consulting” – The Top 5 Elements

This new talent management area under the COO will likely be called “productivity consulting” (a.k.a. PC). The name productivity consulting will emphasize its primary role of providing advice and tools that will allow each manager to increase their team’s productivity. This advanced advice will likely focus on recruiting, retention, development, internal movement, and talent performance metrics. PC will offer every manager talent advice from humans and access to various talent management self-service phone apps (that will walk users through each step). Some key characteristics of the new Productivity Consulting function will likely include.

  1. PC will focus exclusively on business results – under the PC function; talent success will not be measured based on effort, expenditures, or steady progress. Instead, the success of the various recruiting, retention, development, etc., components will be measured by the economic value of the business impacts and the produced results. And, of course, the PC function will be both 100% accountable and transparent.
  2. Adaptability and speed will be essential capabilities – because the world of business and talent management will continue to be so volatile. Every individual productivity consulting program and process will be required to have each of these critical strategic capabilities. Those foundation capabilities will start with speed. So rather than using the traditional ready/aim/fire approach that is used in HR. The favored PC approach for increasing speed will be ready/fire/and then quickly adjust to maintain speed within the talent functions. There will be a special emphasis on collaboration and eliminating silos, politics, and the building of relationships solely to gain support for a position that is not supported by data. Additional PC foundation capabilities include adaptability, agility, global capability, resilience, employee capability building, and competitive advantage. 
  3. PC will actively prioritize – rather than treating everyone in every program equally. The PC will use data to prioritize. This means focusing the most resources and the best consultants on high-impact jobs, managers, employees, and top performers and innovators. Directly helping managers, employees, customers, and shareholders will be the primary focus of the PC function. The old HR focus on interim progress indicators like employee engagement and happiness will purposely be reduced to focus on improved productivity and business results. Legal compliance won’t be ignored, but a greater number of acceptable calculated risks will be taken.
  4. The PC team will provide advice using Talent Advisors – the human productivity consulting advice provided to managers will be through “Talent Advisors.” Who will have broader skill sets and tools than those provided by HR functional staff that operated exclusively in only one functional area. Their capability and experience will allow them to consider the broadest array of talent solutions before providing their final recommendations. These talent Advisors will make all decisions based on data. They will also have access to an array of technology tools, including AI, correlations, and predictive and prescriptive metrics. Together these tools will provide the PC team with the capability of alerting individual managers before an emerging problem spreads. And it becomes a major problem. 
  5. Equal consideration will be given to nonemployee solutions – the PC team will emphasize doing new work with few additional permanent employees. This means that whenever a decision on how new work must be done, the Talent Advisor will use objective and data-driven criteria for determining when software, robotic, or outsourcing options are a superior long-term choice to replacing or hiring new full-time employees.

Final Thoughts

Like it or not, those in HR must realize that the curtain is slowly closing on HR as an overhead function. This demise will further accelerate as more senior executives realize that they can no longer apply a “20th Century Solution” (the current HR) to the unique talent management problems of the 21st century. And finally, those in HR need to be especially aware that the time has passed for attempting to reinvent or transform HR. So they should immediately begin preparing for this transition because most of them will not even be considered for a job in the COO’s team.

This “think piece” was designed to stimulate your thinking about the future of HR. 

Author’s Note 

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About Dr John Sullivan

Dr John Sullivan is an internationally known HR thought-leader from the Silicon Valley who specializes in providing bold and high business impact; strategic Talent Management solutions to large corporations.

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