When HR Philosophy is not just a 'philosophical issue'...

These days, many 'pragmatic' HR professionals seem to have an aversion to the term 'HR Philosophy'. They seem to think that paying attention to 'esoteric' things like this would be a needless diversion when they are busy with their HR initiatives and HR Transformation efforts. Some of them even seem to worry that paying too much attention to 'HR Philosophy' would come in the way of their 'business-orientation' and 'flexibility'. This often leads to a situation where organizations haven't given serious thought to crystallizing the basic tenets of their people management philosophy. 

There is nothing sacred about the term 'HR philosophy'. What is important is to make an attempt to reflect on, crystallize and leverage the key tenets of people management in the organization. It can very well be called the 'guiding principles of people management' instead of being called 'HR philosophy'. This term  'guiding principles of people management' also drives home the message that this is about an organization-wide aspect touching everyone in the organization and not particular to the HR function.  

The key problem with the aversion to 'HR Philosophy' is that no HR initiative or HR transformation effort can be effective if it goes against the basic nature of the employer-employee relationship in the organization. For example, no 'employee engagement' (in its original meaning of 'deep emotional connect with the organization leading to discretionary effort') is possible if employees are viewed primarily as costs. If employees are primarily as costs, then 'business-orientation' of HR should require that the primary job of HR is to control this cost - through downsizing, limiting development investment  and reducing the people related spend in general. So, an HR Transformation effort that aims to transform HR into a more developmental role would be irrelevant in that context. 

When it comes to HR initiatives, lack of a clearly articulated and consistently practiced HR Philosophy  can make the organization susceptible to 'taking up the latest fad in people management and discarding it soon after to take up the next one'. 

It can also result in highly inconsistent people management practices in the organization. For example, this can lead to the organization swinging wildly between

• high empowerment and high control

• large investment in employee development and no investment in employee development

• describing the organization as a 'family' and describing the organization as a 'talent market place driven purely by supply and demand'

• 'encouraging employees to form deep emotional bonds with the company' and ''downsizing at the first available opportunity' 

• high degree of differentiation for top talent and low degree of differentiation for top talent 

•  wanting to the 'career destination' for most of the employees  and wanting to look at employment relationship as a 'short-term contract to accomplish a particular task' 

• high degree of emphasis on organization values and no emphasis on organization values etc.

This, in turn, can cause a lot of avoidable suffering, confusion and waste! More importantly, the 'way the employees are managed' will influence how the employees respond to that/how the employees behave in the organizations. For example, 'Theory X' kind of assumptions/philosophy (i.e. that the employees are inherently lazy and will avoid work if they can) in people management will promote 'Theory X' kind of behavior among the employees. This makes people management a very dangerous domain, unless we pay close attention to the (unstated) assumptions that govern people management - which is exactly what is meant by the HR philosophy of the organization. 

Examining the unstated assumptions, similar to the ones mentioned above, can also help to avoid the strange 'new normal for HR' that has emerged in some companies in response to extraordinary situation created by the Covid crisis. It goes something like this : 'Make large contributions to Covid relief, fire a large number of employees in parallel to reduce cost and conduct mental health sessions for the remaining employees'!

Now let's look a bit more deeply at the paradoxical issue of 'business orientation of HR'. There are multiple possibilities here - each with its own advantages and disadvantages. For example, HR can agree to whatever the business leaders say on people related issues ('after all, we get paid to support the business'). HR can take this approach to the next level by trying to ‘guess’ what the business leaders will be comfortable with and advocating that ('business leaders are our primary customers and we should be anticipating customer needs'). HR can also avoid surfacing issues (or suggesting solutions) that they think the business leaders will not be comfortable with ('business leaders are already stretched, how can we risk annoying them at this point').

This approach might help in reducing the number/intensity of possible conflicts between HR and business leaders on these issues, leading to faster decision making and smoother relationships. In this case, business leaders might ‘like’ HR and hence they might be more likely to cooperate in the roll out of basic HR processes and less likely to come down heavily on HR when HR makes a mistake. Hence conflicts are avoided - making life easier for both the parties involved. However, this can also lead to HR becoming essentially an 'order-taker', to sub-optimal decisions (see 'Training the victim' for an example) and even to HR 'perpetuating the convenient collective delusions' in the company.

Of course. we have to be mindful of the possible conflict between the stated HR philosophy in an organization and the 'actual' HR philosophy practiced in the organization. What really matters is the HR philosophy (basic assumptions about people management) that emerges from/that can be inferred from (or that gets reflected in) in the decisions made by the organization. 

There is no conflict of opinion on whether HR should be business oriented. HR exists to support the business and hence it should be aligned to the business needs/goals/strategy. ‘HR for HR’ (‘I want to do some HR interventions and I will get the business to agree’) is definitely not a good idea. The paradox occurs when we look at how exactly should HR demonstrate this 'business orientation'.

A more effective option is to work with the business leaders to crystallize the HR Philosophy/the basic tenets of people management in the organization. This would also enable HR to come with effective responses to various issues/situations – based on the people management philosophy of the organization, HR functional expertise and an assessment of the context/situation. 

This is not to say that the people management philosophy is cast in stone. The people management philosophy can be revisited as the organization and its environment evolves. Also, if there are extraordinary situations, extraordinary responses are required. The idea is to be as mindful as possible about the basic tenets of  people management in the organization (HR philosophy) while coming up with those responses. For example, some companies will have to downsize because of the headwinds created by the current Covid crisis. However, if the extent and manner of that downsizing should be in line with the basic tenets of people management in the organization. This would also help in reducing the 'survivor syndrome in organizations'.

While it is unpleasant (or even traumatic), employees understand that 'surgery' is sometime unavoidable in organizations. But they would also expect that that the organization uses it after exploring all non-surgical options, that the organization uses a surgeon's blade (and not a butcher's knife!) and that too with skill, sufficient post operative care and compassion! Of course, in a connected world, the organization's actions under a crisis situation would speak much more loudly than any employer branding efforts in the future!

Any comments/ideas? 

On what good looks like : HR policies and processes

This post is an attempt to come back to a topic that we had explored here 7 years ago. The topic is the implications of the unstated assumptions that organizations and individuals have on 'what good looks like'. 

In the the previous post (See 'On what good looks like') we had explored this mainly from the point of view of selection decisions and 'person-organization fit'. In this post, let's look at it from the point of view of the different options for running the HR function, especially from the point of view of HR policies and processes.  

Now, if you were to ask me what is the significance of 7 years, I can only say that the number 7 is considered to be a 'perfect number' in many cultures and that some even associate mystical qualities to it!

When it comes to the underlying (unstated) definition of 'what good looks like' we had identified two themes that can be conceptualized as two ends of a continuum. They were 'absence of variation'  and 'presence of value' . Let's see what this means from the point of HR policies and processes.

In 'absence of variation' kind of organizations (where the definition of quality is similar to the 'Six Sigma' definition of quality), consistency of implementation of HR processes/policies is of paramount importance. This ensures ‘procedural justice’. This is also largely in line with HR models that emphasize process stability and maturity. This would mean very few or no exceptions! The essential message to the employees in this way of working is something like  "If you are eligible for something you don't have to ask for it (because you will get it without asking). If you are not eligible for something, then also you don't have to ask for it (because you won't get it even if you ask)."

In 'presence of value' kind if organizations(where the definition of quality is more like 'fitness for purpose'), the emphasis is on what makes most sense (adds most value) in a particular situation. This approach leads to a lot of flexibility in running HR (subject to some broad principles/HR philosophy and the laws of the land, of course). But it also can lead to a lot of exceptions. This, in turn, can lead to perceived inconsistency unless the HR and Business leaders have deeply understood the broad principles/HR philosophy and also have extensively communicated the same to the employees. 

Most of the companies find their equilibrium point somewhere in the continuum between the two polar opposites. The state of evolution of the company, the state of evolution of the HR function in the company, the industry in which the company operates, the culture of the company and the personal preferences of the leaders are often the factors that impact the choice of the equilibrium point. 

It can be argued that when the size a company becomes very large, it tends to gravitate towards the 'absence of variation' kind of underlying definition of quality (See 'Paradox of HR systems' for a related discussion). 

It can also be said that in those contexts where 'the owner and the manager are the same person' (e.g. in the case of partnership firms and proprietor-driven companies) there is often an affinity towards the 'fitness for purpose' kind of underlying definition of quality (See 'HRM in partnership firms' and 'Of owning and belonging' for more details)

Again, it can be argued that as the HR function in a company evolves, the underlying definition of 'what good looks like' often follows a U-curve kind of pattern - starting with 'fitness of purpose' kind of definition (as HR policies and processes are yet to take root). moving towards the 'absence of variation kind of definition' (when there are very detailed policies and procedures in place) and then coming back to 'presence of value'  kind of definition (when the policies and procedures are perceived to be too restrictive/bureaucratic). This is especially significant in companies that are operating in rapidly changing industries, and hence requiring more agility in terms of people management also. By the way, this 'U-curve' is a concept is found in many of the social sciences (See 'U-curve and Simplicity @  the other side of Complexity' for more details). A similar argument can be made in the case of some of the key enablers in HR, like behavioral competency frameworks, that assume that 'there is one right way of doing things' and hence comes very close to the 'absence of variation' kind of underlying definition (See 'Competency frameworks : An intermediate stage?' for more details).  

It is also possible to create some sort of a ‘synthesis’ of these two definitions of 'what good looks like' ('absence of variation' and 'presence of value') that act like the 'thesis' and the  'antithesis'. One pragmatic option could be to define the policies/procedures very clearly/in detail, and also define an exception process that is very tough!

Any comments/ideas? 

A linguistic expedition to the core of HR!?

It is said that the importance of a particular thing for a group is often reflected in the number of words they have for it. For example, Eskimos have many words for 'snow' (the number of words for snow  ranges from about 12 to 52, depending on which Anthropologist you want to listen to) to bring out the finer nuances in various types of snow.

I was wondering if we can adopt a similar approach to ‘reverse-engineer’ that is really important in the field of Human Resources (HR). So, let’s see what we can infer by looking at the various areas in HR and examining how many terms are there to describe each of them.

To avoid, ‘false positives’, let’s consider only the ‘technical terms’('jargon', if you prefer) that are widely used in HR and not just synonyms in English! Yes, this classification is not a very precise one as some of these terms have significantly different connotations (though they are related to the same concept) and as these terms go in and out of fashion! Of course, the 'core of HR' is also not static and it keeps on shifting and evolving!

These are the areas and the terms to describe them that come to mind immediately.

• The work that the employees are supposed to do : Job, Role, Responsibilities, KRAs/Key Result Areas, Tasks, Objectives, Goals, Deliverables, Targets, OKRs/Objectives & Key Results (10)
• The employees’ state of mind : Employee Engagement, Employees Satisfaction, Employee commitment, Employee motivation, Employee Happiness, Employee morale, Employee Experience, Employee mindsets, Employees attitudes, Employee perceptions (10)
• What is in it for the employees : Compensation, Salary, Benefits, Rewards, Recognition, Total Rewards (6)
• Building capability : Training, Learning, Competency development, Capability building, Learning & Development, Accelerated Learning (6)
• Getting employees into the organization : Recruitment, Selection, Hiring, Talent Acquisition, Fulfillment (5)
• Getting employees out of the organization : Termination, Retrenchment, Staff reduction, Staff optimization (4)
• Patterns of behavior : Culture, Climate, Values, Norms (4) 
• Managing unionized staff : Industrial Relations, Industrial Discipline, Employee Relations, Employment Relations (4)
• Partnering with business leaders : HR Business partners, HR Relationship Managers, Business HR Managers (3)
• The 'first line of defense' : HR Help-desk, HR Services, HR Operations
• Managing performance : Performance Management, Performance Enablement, Performance Acceleration (3)
• Employees getting out of the organization : Exit, Attrition, Turnover (3)
• Managing careers : Career Planning, Career development, Mass Career Customization (3)
• Career trajectory : Career paths, career ladders, career lattices (3)
• The 'analytical' part : HR Analytics, Workforce Analytics, HRIS Reports (3)
• The 'mystical' part : Organization Development, Organization Effectiveness, Organization Transformation (3) 

So, prima facie it appears that ‘what the employees are supposed to do’ and ‘what is there in the minds of the employees’ seem to be the key preoccupations in HR! While the first one is obvious (else, why do we need employees) the second one could be because of its ‘mysterious nature’ and because of the foundations of HR in psychology!

What do you think? Also, please let me know if you can add any more areas in HR (that has a large number of terms associated with them) and/or more terms related to an area that has already been listed!

The OD Quest : Part 1 - Mapping the terrain!

"I don’t have an opening in my OD team now. But, you can join our recruitment team and do recruitment in the OD way”, I heard the Senior HR Leader telling a candidate who was hell-bent on joining the OD team. This was my fifth ‘encounter’ with this gentleman (See 'Passion for work and anasakti ‘, 'Appropriate metaphors for organizational commitment ‘ ,‘To name or not to name, that is the question’ and ‘A Mathematical approach to HR’ for the outcomes of my previous interactions with him). I was a bit taken aback by what I just heard. I knew that often these kind of ‘solutions’ will end in tears or worse. However, similar to what had happened during my previous encounters with him, this interaction prompted me to think a bit more deeply about the underlying issue - the application of OD(Organization Development) to the various functional areas in HR (Human Resource Management). That, in turn, has promoted me to write this series of posts on 'The OD Quest' where we will look at the possibilities that arise when OD ventures into other parts of the people management terrain. 

In the first post, we will begin by doing some cartography (that is, mapping out the currently known world inhabited by HR and OD). This cartography is not only of the world (terrain). At a more fundamental level, it a also a cartography of the worldviews (ways of looking at the terrain). So we will look at the various 'countries' in the HR world - like Recruitment, Training, Performance Management, Talent Management, Rewards etc. and see what happens when the OD quest reaches those countries. Of course, OD quest will explore the land of OD also,! But we will reach there towards the end of this journey because, as T S Eliot said, "We shall not cease from exploration, and the end of all our exploring will be to arrive where we started and know the place for the first time."  Of course, as soon as we make some progress with the cartography, we will venture out into the land of recruitment (in the next post in this series)!

To proceed further with our cartography (map making), we need to have some sort of working definitions of HR and OD. This is a difficult task as there are so many definitions. For the purpose of our discussion, we will use the following simplified definitions. Organization Development is a planned effort to increase organization effectiveness using behavioral-science knowledge. OD deals with a total system or with a subsystem in the context of the total system. Human Resource Management is about systems and processes aimed to enable the management of people within an organization so as to maximize employee performance (and engagement) in alignment with the strategic objectives of  the organization (See 'Towards a Philosophy of HR' for a deeper discussion).

So, there is an obvious overlaps in terms of overall objectives. However, when it came to actual tasks, there wasn't much of an  overlap initially, as HR was primarily focused on the basic processes related to people management (like Recruitment, Training, Performance Management, Career Planning, Compensation and Benefits etc.) whereas OD was focused on more 'ethereal' stuff like inter-team and intra-team collaboration, mission/vision/values, culture building, sensitivity training, action research etc. So, HR was mainly a set of regular activities whereas OD was a set of interventions that happened once in a while. But, this has changed quite a lot now.

These days, HR functions in most of the companies are gravitating towards some variation of the Dave Ulrich model with HR Business Partners(HRBPs), Centres of Excellence (CoEs), HR Shared Services etc. The overlap with OD happens mainly in the HRBP roles - especially when they are supposed to be 'Strategic HR Business Partners' (though what they actually end up doing varies considerably - see  'In the wonderland of HR Business Partners' for more details). Outsourcing of transactional activities in HR is also meant to prompt HR to be more strategic (though it might not always work out like that - see 'Nature abhors vacuum' for more details)

OD has also evolved from sensitivity training (in 'stranger groups' outside the organization) to sense-making (in 'intact teams' within the organization). Also, the tradition 'Diagnostic OD' (that used the 'action research' methodology to enable organizations to solve their problems) has been supplemented (not replaced!) by 'Dialogic OD' (that takes the organization reality to be 'socially constructed' and uses 'generative metaphors and images' to shape that reality).

More importantly, the worldviews (of HR and OD) are also converging with HR taking a more 'systemic view' and OD becoming more sensitive to and accountable for the sustainable value added by the OD interventions (as opposed to 'hit and run' OD interventions). Actually, the term 'intervention' no longer seems appropriate for OD work, as OD  work is currently viewed more as a 'dance involving the consultant and the client' as opposed to being some sort of an 'operation' done on (or done to) the client! 

Hence, there is a growing overlap between HR and OD. A more fundamental question is whether OD should be a CoE within HR or a separate function reporting directly to the CEO. There is no clear answer to this. Metaphorically speaking, whether OD is 'a country in the HR Union' or it is a 'completely independent entity' is a political question on which a referendum needs to be called for (again and again)! The first (OD being part of HR) is the more common scenario as of now, though it creates quite a few tricky challenges for both HR and OD (see 'OD Managers and Court Jesters'). One easy solution is to hire OD expertise from outside. But the question will come back to haunt us in another way - who will take the decision on hiring OD expertise- the HR Head or the CEO!

So,how should HR and OD respond to this overlap? Obviously,fighting over the disputed territory (however tempting that might be) is not the most effective solution. To me, one solution is for OD to remain a bit of an 'outsider' so that HR can fully be an 'insider'. Being a bit of an outsider helps the OD professional to be more objective (or at least not to have any vested interests) or even to be a bit provocative when required (see 'OD Managers and Court Jesters'). Being an insider allows HR to be fully part of the solution design and implementation. Of course, this calls for a very high level of mutual trust and respect between HR and OD. Also, remaining as an outsider while being a full member of the organization in all aspects is a very tricky 'tightrope walk' for internal OD consultants! Anyway, OD leveraging its marginality and HR leveraging its centrality to add value to the business seems the best possible solution to me. We must keep in mind that the concept of  'Business-orientation of HR' per se is quite paradoxical!

The above discussion does not complete our cartography. But we have done enough to start our 'OD quest'. It is important to remember that OD can be defined at many the levels (e.g. underlying philosophy and principles, process, tools/techniques, outcomes, skills etc.) and the quest can be done at any/all of these levels. While the story of this quest has been written from the point of view of OD, I have tried very hard not to take sides (I have done both HR and OD roles and I have the highest degree respect for HR professionals - see 'In praise of HR generalists' for more). The objective of the quest is to explore the various domains in HR with the twin objectives of (a) determining what value (if any) can OD add to the domain and (b) figuring out what OD can learn from the domain. Remember, it is a quest and not a conquest!!!

 Any comments/suggestions at this stage before we start our quest (starting with the land of recruitment in the next post)? Please let me know!

A Mathematical Approach to HR?! : Promoting Responsible Use of Numbers in People Management

"If we must apply a Mathematical approach to HR, let us go beyond Arithmetic. Human Resource Management is more like a differential equation that can have multiple solutions!” I heard myself telling the Senior HR Leader. This was my fourth ‘encounter’ with this gentleman (See 'Passion for work and anasakti ‘, 'Appropriate metaphors for organizational commitment ‘ and ‘To name or not to name, that is the question’ for the outcomes of my previous interactions with him). This time, we were discussing the point of view that HR can get the elusive ‘seat at the table’ by being more data-driven, quantitative, objective and mathematical in its approach. Similar to what had happened during my previous encounters with him, this interaction also prompted me to think a bit more deeply about the underlying issues.

Mathematics and logic are immensely useful tools. The five and a half years of engineering education that I have received, my pre-MBA job as an Aerospace Engineer, the Social Research Methods related studies during my MBA and the initial years of my HR career spent in Compensation Consulting & Research Based HR Products  have made me very comfortable with quantitative and mathematical approaches to diagnosis and solution design.  Having practiced Six Sigma, I have experience in the process improvement approach of converting a physical problem into a mathematical problem, finding a mathematical solution and converting the mathematical solution into a physical solution.  I have also used quite a bit of statistics especially during the best practice & benchmarking studies during my five years in HR consulting. However, there was still something that was bothering me regarding my conversation with the Senior HR Leader.

Once I stayed with that feeling of discomfort for a while, things began to crystallize in my mind. The first thing that came to mind was an incident that happened a few years ago when my son was about 5 years old. I had bought him his first calculator and he was very excited.  For the next couple of days he was chasing me saying that “Tell me all your problems; I can solve them”.  It was an interesting task to convince him that most of the problems can’t be expressed in numerical terms and that even those problems that can be expressed in numerical terms can’t always be solved using the functions available in the calculator! When I thought about the matter a bit more, many other aspects came tumbling out:

• Perfect Logic coupled with Questionable Assumptions : Logic is a great tool for reasoning. The problem is just that any system of logic is only as good as its assumptions. Great logical reasoning skills with wrong assumptions will just lead to a wrong inference faster. While this would hold good for any field, the risk is higher in HR, as the domain has quite a few unsubstantiated assumptions. Yes, over the last couple of decades a significant amount of research has been done in the Human Resources Management (HRM) domain. But the very nature of the domain imposes severe limitations on validating the assumptions underlying  HR related decision-making (See  ‘Research and a three-year old’ and ‘Truths stretched too far’ for a more detailed discussion)

• Lost in conversion : When we look at applying the Six Sigma approach mentioned above (physical problem - mathematical problem - mathematical solution - physical solution) to HR, the difficulty is in ensuring that while converting the physical problem to mathematical problem the essence of the matter is not lost. Otherwise we might end up solving the quantifiable but peripheral aspects of the problem while the core of the problem (which is difficult to quantify) goes unattended. We must remember that many of the things that really count can’t be counted!

• Misuse of Mathematical Induction: This occurs when one tries to apply a purely mathematical type of reasoning to a human process where it doesn't apply. I came across an excellent example of this in a HR Shared Service Centre (HRSSC). The Head of this HRSSC was a firm believer of setting 100% accuracy (zero error) as the performance target. His strategy for making this happen included a motivational talk to the employees with the following line of reasoning: "Can't you do one transaction without error? If you can do that what prevents you from repeating the same 12,000 times? This is all that is needed to make an 'error-free' year and meet your performance target”.  While the above approach seemed to be perfectly logical it was completely unrealistic from a performance management point of view. The transactions involved a large amount of manual intervention making it highly error prone. The ‘zero-error target' ended up de-motivating the employees (instead of motivating them) as they were highly unlikely to achieve it. This brings to mind a Zen Proverb - "Water that is too pure has no fish"!

• Chasing the numbers: A related problem, that comes up especially when we try to quantify (because quantification is required for further processing) things that are difficult to quantify is that of making simplistic or overly optimistic assumptions to enable quantification and even to get the numbers that we want to get. For example, when we try to calculate the time required for doing a particular non-mechanical task (as the first step in estimating the required staffing levels), we often don’t take into account ‘invisible work’.  The invisible work arises from factors like complexity of the situation (that can’t be quantified easily) and the difference between ‘the process map’ and ‘the way things actually get done’. While in the case of the latter, it can be argued that the solution is to fix the process, it might be difficult in a situation when complex interfacing/influencing is required to do the task or in a situation where fixing the process is difficult at the level of the jobholder (as it involves fixing the ‘ecosystem’ around the process in addition to the process). Emerson was not too far off the mark when he said "The results of life are uncalculated and uncalculable. The years teach much which days never know"!

• Banning complexity and complex motivations : Another problem comes out of a definition of rationality (a mental model) that is too narrow. As Mencken says, "to every complex problem there is an answer that is clear, simple and wrong"! In many areas related to people management, there are deep psychological factors operating that render purely ‘logical’ approaches ineffective.  See ‘Performance ratings and the above average effect’ for an example.  Similarly, when we consider only the (visible) employment contract and ignore the (invisible) psychological contract another set of problems arise (See the series on ‘Salary negotiations and psychological contract’ for more details). Another example could be viewing the interactions with the labour unions (say in the context of arriving at a Long Term Settlement) as a purely economic negotiation exercise. The reality here is that a union is a political entity with a constituency to satisfy. Hence, even if the management offers a ‘competitive deal’ (by industry standards), the union leaders might have (internal) compulsions not to accept it and resort to various pressure tactics (including demonstrations and stoppage of work) - just to convince their constituency (members) that they have done all they can to force the management to offer a better deal (or the best possible deal). 

• House built on sand : We also have the interesting problem of processing/computing data without paying adequate attention to the ‘level of measurement’ that generated the data.  Typical problems involve taking ‘ordinal’ or ‘interval’ data and apply computing methods that are valid only for ‘ratio’ level data. This could be more of a problem in HR, since many of the HR professionals are not well-versed in quantitative methods. The numbers can give us a false sense of surety and doing Arithmetic operations with those numbers to derive inferences can give us a false sense of confidence on the decisions based on those inferences.  There is a huge difference between being able to calculate something and being able to understand it. If our objective is to influence that 'something', being able to calculate it without being able to understand it can create more harm than good. It often becomes very difficult to convince HR leaders who are ‘too sure of their numbers and calculations’ that HR process maturity takes time or even that ‘It takes 9 months to make a baby regardless of how many couples you put on the job’. This becomes very pertinent especially in those situations where a business leader or the CFO (without any HR background) has been moved into the HR Head role! This brings us to a more fundamental issue. The over-reliance on numbers sometimes indicates a (stated or unstated)  shift in the underlying paradigm for people management in the organization- from a relational paradigm to a transactional one. This is something that we must watch out for (See 'Towards a Philosophy of HR' for more details).   

• Wishing away the paradoxes and dilemmas : People Management, by its very nature, is a field that is full of paradoxes.  A paradox occurs when there are multiple perspectives/opinions (doxa) that exist alongside (para)- each of which is true - but they appear to contradict/to be in conflict with one another. A paradox can’t be resolved in the same way a problem can be solved. To effectively deal with a paradox, we must wrestle with it till we reach a level of understanding (or wisdom) that enables us to see the paradox in a new light and arrive at the most appropriate solution in that particular context. Often, there are multiple solutions -making HR more like a differential equation (that has multiple solutions) and not like Arithmetic (where there is one right answer)! It can also be argued that dealing with some of the issues HR is even more complex than dealing with differential equations because in some of those paradoxical situations, the choosing from multiple ‘correct’ solutions is a matter of Aesthetics and not Logic! One can develop a keen sense of this 'Aesthetics' only through years of struggle with the paradoxes and dilemmas  in HR(See 'Truth and Beauty : Elegance and Motivations in HR' for more details)

So where does this leave us?  To me, best approach is that of ‘triangulation’, that combines qualitative methods with quantitative methods to develop a more comprehensive understanding of the reality. We should make an effort to figure out if the particular HR issue that we are dealing with is more like a ‘problem’ or more like a ‘paradox’ and deal with it accordingly (See ‘Making problems disappear’ for details). Data and analysis are very useful. But they are not substitutes for understanding and wisdom. Even when it comes to the matter of strategy making, it has been argued that the core strategy making process is essentially intuitive, with data & analysis being useful as an input/trigger for strategy making and also as tool for doing a reality check on the strategy created.  The same holds in the case of HR strategy also! We must also remember that in the physical world (outside Mathematics) there are 'singularities' where 'normal rules/algorithms' no longer work!

Similarly, benchmarking is definitely a very useful tool. But benchmarking should be done with the context also included (and not just the numbers).  For example, benchmarking a ratio like the ‘ratio of the total number of employees to the number of employees in HR’  can be misleading without the understanding of context specific factors like the mandate/deliverables of the HR function, the HR operating model, the degree of outsourcing, the degree of automation (degree of Employee and Manager Self-Service), profile of the workforce etc. Casual benchmarking, like casual sex, is easy but dangerous!  We must also ensure that HR processes and practices follow from the HR Philosophy of the company and not the other way around (a common problem that arises from the obsession with 'best practice benchmarking'). Yes, we must leverage numbers and the power of numbers in HR. However, let’s use them responsibly - by ensuring that the numbers and the calculations accurately reflect the underlying reality!

Any thoughts/ideas on promoting more responsible use of numbers in people management?

Of Rewards, OD and passing the buck

“Compensation decisions are based entirely on the market and business situations. Our objective is to achieve the right balance between ‘need to pay’ which is based on the market scenario and the ‘ability to pay’ which is based on the company scenario”, said the Rewards Manager. “Wouldn’t that make the Rewards function very transactional? Shouldn’t you look at the ‘want to pay’ aspect which is based on the overall people management philosophy of the organization, in addition to the ‘need to pay’ and ‘ability to pay’ aspects that you have mentioned?”, asked the Organization Development(OD) Manager. “We can’t create competitive advantage through compensation strategy as it can easily be copied. Hence, the compensation function has to be transactional and business oriented.While I agree that 'Total Rewards' is our approach, I am only the 'Rewards Manager'. Executing parts of the Total Rewards framework that are not related to compensation and benefits should be the job of the OD function as it is the mandate of the OD function to build a deeper engagement with the employees.”, replied the Rewards Manager. “OD function is also business aligned – it is not about charity and feel good initiatives. Creating deeper engagement with the organization requires a multi-pronged approach and that includes Rewards related dimensions also. Rewards is a very important tool to shape employee behavior. If our Rewards strategy is only about ‘paying the employees the lowest compensation that we can get away with’, we are not only not leveraging the full potential of Rewards, but also creating irreparable damage to the psychological contract between the employee and the employer. Managing the psychological contract is key to building deeper engagement with the employees”, said the OD Manager.

During the first few years of my career, I did a lot of HR consulting work related to Rewards – benchmarking, policies, benefits, compensation structuring, variable pay schemes, employee stock option plans, voluntary retirement schemes, job evaluation etc. Apart from developing functional expertise in the Rewards domain, I also developed an affinity/feel for compensation related numbers. When I look at a data sheet with a lot of compensation related information it (say the compensation data from various companies/units), the figures 'talk to me' (i.e. the patterns in the data and the actionable inferences based on the same automatically pop up in my mind). Later in my career, I gravitated towards OD, though I did get involved in Reward related matters when I have handled HR Business Partner roles. Anyway, Rewards has remained close to my heart though I have been making a living mostly out of OD for the last ten years. Of late, I have been making an attempt to stand at the intersection of Rewards and OD (Please see the six posts in the series on 'Salary negotiations and Psychological contract' for details). Also, I don’t miss any opportunity to interact with fellow Rewards and OD Managers. The conversation at the beginning of this post is derived from those interactions.

My opinion is that both the Rewards and OD Managers here are 'correct' - from the point of view of their respective sub-functions. They are just articulating the mandates given to them. However, while being 'technically correct' they are also missing the essential point here! Please note that one can be 'completely correct' and 'completely irrelevant' at the same time!

During the last 15 years, in the context of organizations that I am familiar with, I have seen ‘Compensation & Benefits’ evolving into ‘Rewards’ and then into ‘Total Rewards’. Similarly, I have seen OD evolving from ‘Process OD’, to ‘Process and Structural OD’ and then to ‘Organization Effectiveness’. That is where the 'trouble' begins. You see, when Reward Managers were just looking after compensation and benefits (providing 'money and goodies') and OD Managers were just doing OD interventions (the kind where you get people into a room and facilitate collaboration, better decision making or creation of a shared vision) these domains did not have much in common and they required very different skill sets. Now if we look at the ‘Total Reward Frameworks’ of many of the organizations, they will have dimensions like culture, learning opportunities, career development, empowerment, work environment etc. Similarly, Organization Effectiveness (OE) is essentially about enabling the organization to achieve its goals by ensuring alignment between the various dimensions/components of the organization and by facilitating positive change. This makes OE/OD more business aligned. This also calls for structural interventions (interventions at the structure, norms, policy & work process levels) in addition to interventions at the human process level. This creates an overlap between the Reward and OD domains, especially when it comes to policies and reinforcement mechanisms to encourage and institutionalize particular actions/behaviors/changes.

When there is an overlap, there are three basic possibilities. The first is that the parties find a way to work together effectively and help each other in the areas of overlap. Obviously, this leads to the best possible outcome. The second possibility is that there is a war over territory and the winning party captures some or all of the overlapping area. While this is often a wasteful process, things usually get done (i.e. they don’t fall through the cracks). The third possibility is that none of the parties take ownership for the overlapping area (and things fall through the cracks). Unfortunately, when it comes to the overlap between Rewards and OD, the third possibility is the one that often actualizes! May be, Rewards and OD Managers are basically ‘nice’ people who don’t want to step on the toes of others! So this creates a situation where the overlapping areas exist in the ‘Frameworks’ and Power Point Presentations of both the parties but nothing much gets done!!! This is what leads to the ‘passing the buck’ phenomenon that this post talks about.

So, what should be done? The important thing here (apart from seeing to it that things don’t fall through the cracks) is to ensure that there is alignment between what Rewards is driving and what OD is driving.

For example, if OD is working on creating an emotional connect between the employer and the employee (that goes beyond rational commitment) and the Rewards approach is that ‘compensation is purely a matter of supply and demand’, then it will send conflicting signals to the employees and also create a violation of the ‘psychological contract’.

Let us look at this in a bit more detail. The situation here can be traced back to fundamentals of the compensation philosophy of the organization – does the organization pay the employees based on what they deserve (within the constraints of what the organization can afford) or does the organization pay the employees as little as it can get away with? This comes into play in a situation where there is an industry downturn (making it difficult for the employees to change jobs) but the particular organization is doing well (growing reasonably fast with healthy profits). In such a scenario, the organization can afford to give the employees good salary hikes. But it can choose not to do so (or choose to give a very low salary hike) because even without the salary hike it can retain the employees. This certainly provides short term gains. It can also be explained away in terms of salaries being market benchmarked. However, this will violate the psychological contract and will lead to a situation in which the employees (especially very valuable employees) leave the organization as soon as the job market improves (Going by the same logic that the organization had used, the employees should leave the organization when the market will pay more!!). A similar situation occurs in the case of hiring also. When the company hires a person (internal or external hire) into a job what salary will be offered? Will the company offer the lowest salary that the candidate will accept or will it offer the salary corresponding to the worth of the job in the company? These are the situations where the 'want to pay' aspect comes in. If the company drives a hard bargain because the employee was not in position to negotiate at that time, no amount of talk later about ‘employees being the biggest asset’ and ‘building a great organization together’ will undo the damage that happened earlier because of the  loss of trust. Some of the IT organizations in India have learned this lesson the hard way!

At the core, people management (of which Rewards and OD are parts) is about understanding, predicting and influencing human behavior. Now, 'human motivation' is a complex phenomenon (See 'The power of carrot and stick' for a detailed discussion). Complex phenomena are usually 'over determined' - that is they have multiple (interrelated) causal/input factors. Some of these factors are in the OD domain and some of the factors are in the Rewards domain. Hence an integrated approach combining Rewards and OD is required. For example, the recent research findings in behavioral economics have created serious doubts on whether many of the performance linked pay schemes have any positive impact on performance. Hence, a combined effort from Rewards and OD is required to ensure a positive return on investment (in monetary and non-monetary terms) from such schemes. Otherwise, such schemes will just be 'tools to match the payout with the ability to pay' - without any useful impact on performance levels. In a way, our problem (Rewards and OD working in silos) has similarities with ‘Multiple Personality Disorder’ (see ‘HR Professionals and Multiple Personality Disorder’ for details). The most important thing in such a scenario is to get the two parts of the personality (Rewards and OD in this case) to talk to each other. This is not something that can be accomplished in one big meeting. This involves a different way of looking at things and joint exploration and solution design.

One approach to make this happen is to get the Rewards and OD teams to work together in crystallizing, articulating and delivering (in terms of specific HR processes and initiatives) the ‘Employee Value Proposition’ (EVP) of the organization. EVPs (that specifies the total employee deal offered by the organization) usually have both Rewards and OD related components and the EVP should inform both the OD and Rewards strategy of the organization. Also, jointly thinking through the implementation details of the various initiatives to deliver the EVP will help professionals in the Rewards and OD sub-functions to develop a better appreciation of challenges the other sub-function is facing. For example, it is very easy for OD managers to talk about 'correcting the salaries' or about 'standardizing benefits'. Similarly, it is very easy for Rewards managers to talk about 'changing the culture' or about 'creating intrinsic motivation by providing employees opportunities for self-actualization'. However, to make these happen in a reasonably short time period within the constraints of the organization is incredibly difficult.

May be, it would also be a good idea to integrate Rewards and OD domains more tightly in terms of the structure of the HR function.

There is also a larger issue here. As I had mentioned in ‘Paradox of business orientation of HR’, while there is no doubt that the HR function (and hence the Rewards and OD sub-functions) exists to support the business, the exact nature of the ‘business orientation’ that is required to support the business most effectively is a complex one. This becomes especially important, if HRM has to mean something more than ‘making people do more work without paying them too much and without risking disruptions to the business operations’. Please note that this problem is not confined to the Rewards domain. For example, if the OD/OE function goes about actively deskilling the jobs so as to manage the process risk and to reduce skill requirement (and hence the time and investment required in hiring/training and of course the salaries that need to be paid), it would take away from the richness and hence the motivation and learning potential of the jobs. In the specialist functions like Rewards and OD we should also be careful to ensure that in our obsession with tools and techniques (see 'Daydreams of an OD mechanic') we don’t miss the broader picture – that is alignment with the core values and the basic people management philosophy (see ‘Towards a philosophy of HR') of the organization.

Any comments/thoughts?