HR Governance: A Deloitte Point of View

Deloitte and Queen’s IRC are co-delivering an HR Governance Symposium to be held on December 1, 2011. In preparation for this event, Queen’s IRC Research Associate, Alison Hill, sat down with Ian Cullwick from Deloitte to discuss HR governance, its meaning, constituents, and implications for organizations. This article provides an overview of that conversation.

1. How does Deloitte define HR governance?

Broadly speaking, HR governance encompasses the oversight and leadership of HR strategy, related policy, and program results. More specifically, HR governance is comprised of two components: formal governance and internal HR governance. Formal governance involves the Board of Directors, and ideally, a standing HR or Compensation Committee. Internal HR governance consists of the CEO and management team’s approach and strategy to HR management and program efficiency and effectiveness.

2. In what ways does HR governance differ from corporate governance?

I would say that HR governance is not distinct from, but rather a core component of, good corporate governance – in the same way that financial governance or risk governance are also core components. Formal HR governance includes risk management, as well as policy and program governance. Indeed, HR governance also includes the internal oversight and management of an organization’s HR strategy, programs, practices, and outcomes, through clearly defined roles, responsibilities, and accountabilities both down and across the enterprise. In addition, HR governance involves the HR business model, and the organization, measurement and management of the HR function, along with the related implications for its management and employees.

3. According to Deloitte’s research, what are the critical components that constitute successful HR governance?

Deloitte recently concluded a major research project (2011 CHRO Public Sector Study) on public sector HR governance and management. According to our findings, the majority of respondents from both public and private sector organizations think that organizations are doing a good job in articulating corporate vision and values. Moreover, organizations are now implementing HR planning and questioning the efficiency of their HR business models. Areas of priority, however, include developing formal HR governance structures and practices, HR performance measurement metrics, and clarity of accountabilities for all stakeholders, including Board, line management, and employees.

Based on our experience, a critical component of HR governance is clarity of the organization’s desired HR strategy, scope of HR policies and programs, and its enabling HR business model, including clarity of roles, responsibilities, and accountabilities for all stakeholders. HR Governance also requires clarity of formal roles and accountabilities between the Board, the Chief Executive Officer, Chief Human Resources Officer, and line management.

4. What is the role of HR governance in organizations today?

Given our Canadian demographic profile, there is a pending wave of baby boomer retirements with huge implications for talent management. In addition, there are several factors that are elevating the importance of HR governance, such as a dynamic economic climate and labour market demand for specialized skillsets, coupled with HR challenges and crises that we’ve continued to witness over the past five to ten years. Furthermore, because of regulatory change we’ve witnessed over the past five years, the HR agenda and its effective governance have now become profound priorities for the vast majority of organizations.

Good HR governance in this day and age needs to balance the need for effective oversight and confidence with the need for focused HR strategy execution to differentiate and enhance competitive position over the longer term.

5. What role do Boards play in supporting HR governance?

Boards need to ensure that contemporary HR governance is formally embedded in existing structures and practices, such as an HR/compensation standing committee, or in its absence, through another standing committee such as an executive or governance committee.  Boards must also ensure that the CEO has implemented an effective internal HR governance framework and strategies that reflect relevant industry economics, desired culture, workforce dynamics, and leadership preferences. Another important role for Boards is understanding the various HR risks facing the organization, and being satisfied that management priorities, policies, and practices effectively respond to strategic, regulatory, and operational needs. Successful execution would generally require effective risk management and performance measurement practices, combined with effective dialogue with the CEO and CHRO.

As noted above, and as suggested in related research by Deloitte (2011 CHRO Public Sector Study), HR risk management and performance measurement are generally not well done by most public and private sector enterprises. For organizations without formal HR governance structures, practices, and skillsets (i.e., qualified HR practitioners on their Board), the time is now to rethink those key organizational requirements. Optimizing labour and human performance is necessary. Knowledge-intensive organizations must implement more formal corporate governance HR practices and strengthen internal HR governance practices.

6. What are some key resources that individuals could access to learn more about implementing effective HR governance?

Several organizations have released research on HR governance. I would recommend the Canadian Coalition for Good Governance (, or the Ontario Securities Commission ( The Globe and Mail also released a study of private sector organizations recognized for good governance. Accordingly, I would suggest a review of the HR governance practices that these organizations have adopted.

7. Why has Deloitte partnered with the Queen’s IRC to host an HR Governance Symposium?

I think that we all recognize the fact that good HR governance will be absolutely critically important to the execution of good HR strategy and delivery of optimal business results. There is a need to respond to very dynamic and complex regulatory and compliance changes. HR governance is particularly needed for organizations where people and knowledge are the competitive difference.

8. What are the intended learning objectives and outcomes of the HR Governance Symposium?

The purpose of the Symposium is to shine a light on the topic of HR governance. The premise of the event is that if HR governance is not done well, optimal strategy and business results will not be achieved. Good HR governance is effectively the key to HR success and organizational performance, which in turn, impacts Canada’s broader economic prosperity. Participants will engage with contemporary thinkers on the topic of HR governance, and have the opportunity to share and discuss emerging practices. As well, through lectures from subject matter experts, participants will explore different contextual perspectives and scenarios for HR governance. The event is designed to stimulate discussion on the topic across sectors and thought leaders.

Good, formal HR governance and strengthened internal HR governance and management will enable more efficient and transparent HR decision-making and processes, such as corporate compensation, executive compensation, workforce planning, and organization restructuring.

To learn more about upcoming HR Governance Symposiums, please visit the IRC’s website.

SwitchPoints: Culture Change on the Fast Track to Business Success

When it comes to leading organizational change, Peter Edwards and his team at the Canadian National Railway walk their talk. In their publication SwitchPoints, Edwards and co-authors Les Dakens of CN, and Judy Johnson and Ned Morse of the Continuous Learning Group (CLG), describe how CN advanced from good to great in a few short years, becoming North America’s top performing railroad with both corporate customers and investors.

With a highly accessible and down-to-earth approach, the authors share their journey through applying behavioural science to the culture change at CN, and offer leadership principles and practices that are applicable to any organization seeking to enhance productivity, change attitudes, and ultimately, improve culture.

In 2009, Hilary Sirman of Queen’s IRC spoke with Peter about critical switch points in engaging employees at CN. This publication provides a synopsis of the conversation, including the challenges and opportunities of implementing and sustaining cultural change.

SwitchPoints: Culture Change on the Fast Track to Business Success

When it comes to leading organizational change, Peter Edwards and his team at the Canadian National Railway walk their talk. In their publication SwitchPoints, Edwards and co-authors Les Dakens of CN, and Judy Johnson and Ned Morse of the Continuous Learning Group (CLG), describe how CN advanced from good to great in a few short years, becoming North America’s top performing railroad with both corporate customers and investors.

With a highly accessible and down-to-earth approach, the authors share their journey through applying behavioural science to the culture change at CN, and offer leadership principles and practices that are applicable to any organization seeking to enhance productivity, change attitudes, and ultimately, improve culture.

In 2009, Hilary Sirman of Queen’s IRC spoke with Peter about critical switch points in engaging employees at CN. This publication provides a synopsis of the conversation, including the challenges and opportunities of implementing and sustaining cultural change.

The Current and Future State of Human Resources Leadership

In December 2008, Hilary Sirman of Queen’s IRC spoke with Antoinette Blunt, President of Ironside Consulting Services Inc. and President of the Human Resources Professional Association of Ontario, about the current and future state of the Human Resources profession.

Amidst increasing global competition, wars for talent, economic uncertainty and generational differences in the workforce, human resources professionals today face escalating pressures. Nonetheless, Antoinette provides a thoughtful and optimistic outlook for the function and future of HR leaders, commenting on the need to develop innovative talent management strategies, focus on recruitment and training, remain committed to lifelong learning, and actively engage in professional associations.

Accommodating Disability in the wake of Keays v. Honda Canada

Employers may be relieved now that the Supreme Court of Canada has reversed steep punitive damages in a high-profile wrongful dismissal case involving a disabled worker. But accommodating the needs of employees who have disabilities – in particular depression – is not getting any easier, says Queen’s IRC Facilitator Anthony Griffin. Griffin is counsel for the Ontario Human Rights Commission, which intervened in Keays v. Honda Canada, a case that has been watched closely by Canadian employers for the past four years. (The views expressed are his and do not purport to be the views of the Commission.)

Is the status of employees with disabilities in the Canadian workplace being transformed?

Overwhelmingly, yes. Twenty years ago, if you looked at the percentage of people with disabilities who were unemployed, it was embarrassing. If you look now, it is saddening but not embarrassing.

A huge level of understanding has developed since disability was included in the Charter of Rights and Freedoms. Also, disability was included in the Human Rights Code in 1985. So until 1984, an employer in Ontario could say, ‘I’m not hiring you because you have a disability,’ and you’d have no recourse.In addition there is the duty to accommodate, which was added in 1988. The Supreme Court has wrestled with what that means, but now pretty much everybody understands that you have to really go to the mat in terms of protecting the rights of people with disabilities when it comes to employment.As a result of these factors, the status of employees with disabilities has been transformed significantly.

Why did the case of Keays versus Honda Canada generate so much interest among Canadian employers?

In June 2008, the Supreme Court decision reversed decisions that had been made in the lower courts relating to the highest punitive damage award ever against an employer in a wrongful-dismissal case – originally set at $500,000.

In 2000, Kevin Keays, an employee of Honda Canada who had chronic fatigue syndrome, was fired after he refused to attend a medical assessment with the company’s doctor. The trial judge, Mr. Justice John McIsaac of the Ontario Superior Court, found in 2005 that Honda wanted to fire Keays, so it wouldn’t have to accommodate his needs.

If that’s your conclusion, you have a sense that Honda did a really bad thing – and that’s why Justice McIsaac went way over to one side and ordered $500,000 in punitive damages, in addition to extending the wrongful dismissal period from the usual 15 months to 24 months in lieu of notice because of the abusive actions that Honda had taken.

This decision created shock waves among employers across the country.

Absolutely. Then the case went up on appeal, and in late 2006 the Ontario Court of Appeal upheld McIsaac’s conclusion that there was wrongful dismissal; it upheld the extension of the notice period from 15 to 24 months; and it said, yes, punitive damages should be awarded. However, it said the number should be reduced from $500,000 to $100,000 in damages.

Then Honda appealed to the Supreme Court of Canada. This case was remarkable: typically on appeal, cases do not get retried. Honda v. Keays got retried in the Court of Appeal, and it got retried in the Supreme Court of Canada. And the Supreme Court took a very different view of Honda’s actions.

So does this latest ruling mean employers may now breathe a collective sigh of relief?

In the Supreme Court, Honda didn’t challenge wrongful dismissal. One of the biggest things in this case is that the Supreme Court set aside the extension from 15 to 24 months in lieu of notice, and also concluded that punitive damages would not be awarded.

Employers are reassured to see that as a result of this decision, the original, high punitive damages are unlikely to become the norm.

They are also relieved because, before, all you had to prove was that the manner of dismissal was nasty. Now you have to prove that it caused mental distress. So employers for the past 10 years have faced so-called Wallace damage claims in almost every wrongful dismissal case – and I assure you, almost every plaintiff’s lawyer pleaded it. Now the plaintiff will have to come up with a doctor’s opinion relating the plaintiff’s mental anguish to the manner of dismissal.

How did the Supreme Court view Honda’s actions?

The court looked at it this way. Honda has an employee with chronic fatigue syndrome. Honda has been told to expect he’ll be off in the neighbourhood of, say, four times in a month. Then he’s away eight times a month. So Honda says, ‘We’d like you to come in and talk to one of our doctors,’ – and he refuses. If you look at it from that perspective, you might think Honda is trying to help manage his absenteeism, and didn’t do anything wrong.

Honda’s program that permitted people to be absent required them to produce a doctor’s note. The court said it’s okay to ask for medical validation of a leave of absence.

So has a new precedent been set, or are any issues still up in the air for managers?

You asked me whether employers can now breathe a sigh of collective relief. The answer is an overwhelming yes.

One of the biggest things in the Supreme Court decision is that it says it’s okay to ask for doctor’s notes when you are excusing absences from what would otherwise be progressive discipline.

So can employers ask someone to see the company doctor? Yes, but only when the information provided by the employee’s doctor is insufficient to let the employer answer this question: ‘Can this person do this job; can we modify this job so this person with this disability can do it.’ The Keays case was simple on one level. When he was there he could do his job and the only need associated with his disability was periodic absences. The tougher cases are the ones in which the questions above need to be answered.

So we all agree that an employer can manage absenteeism with progressive discipline. If you are away too often, we are going to have you in for a talk, give you a verbal warning, give you a written warning, suspend you, and if you keep not coming in regularly, we will fire you. That’s perfectly fine. That’s Column A: those are absences that can lead to discipline.

Column B has got to be absences that can’t lead to discipline. Those are absences caused by a disability. So employers are always trying to figure out, ‘How do I determine which absence goes in Column A and which into Column B?’

And now they can say, ‘The absences in Column B go there as long as they are supported by a doctor’s note, and won’t be subject to progressive discipline.’ This has certainly clarified things quite a bit.

What is the remaining difficulty?

Part of the difficulty when you have someone like Mr. Keays, who has chronic fatigue syndrome – and it’s going to be similar if someone has fibromyalgia or depression – is that the absences are essentially self-reporting.

Say Mr. Keays wakes up one day and says, ‘I feel so rotten today I can’t drag myself in to work,’ so he has to go to his doctor. The doctor knows he has CFS, he goes in and says, ‘I feel so dragged out today I can’t go to work,’ so the doctor basically says, ‘He’s not going to work today as he has CFS.’

That’s not really much more information than Keays had to begin with. What is the doctor adding to it? Similarly, if someone has depression and says, ‘I feel so down today I can’t go to work,’ and he or she goes to get a doctor’s note, what does it add for the doctor to say, ‘He’s feeling so down he can’t go to work’?

Are there better alternatives employers can adopt for monitoring absences?

The minority in the Supreme Court referred to this. They wrote: ‘While monitoring employee absences certainly remains a valid objective, this can be done in a variety of ways. Requiring a doctor’s note for each absence is only one alternative. Others include seeking semi-regular updates from an employee’s physician or requiring doctors’ notes only when the number of absences exceeds the expected number within a particular time frame.’

So there are some disabilities – and I think CFS, depression and fibromyalgia fall into the category – for which there are other ways for employers besides saying ‘You must get a note’ every time.

When you think about it in context, Mr. Keays worked at Honda in Alliston, and lived in a rural area an hour and a half or two hours north of Toronto. Access to doctors is just presumed in all of this. If you phone your doctor and say, ‘I’d like to come in and see you,’ and they say, ‘What’s it for, are you critically injured?’ and you say, ‘No, I need a note,’ you probably aren’t going to get an appointment today. And so you then have to take another day off to go see the doctor. And many people don’t have regular doctors.

So I can understand what the employer is doing: the employer is delegating responsibility over to the medical profession – ‘You tell me he couldn’t come in because of his depression and I’ll say ok.’

But we have to start looking at this from a societal level. Is that a good use of our medical resources, our physicians’ time? And what kind of obligation is this putting on employees – which is going to be onerous? None of that is reflected in the court’s thinking, as they were only looking at the one case.

However, with this decision employers can breathe a collective sigh of relief because if they have a plan that says get a doctor’s note for your absences that are associated with your disability and then we won’t count those absences against you – this decision says that’s okay.

Where do employers most need to improve how they handle accommodation?

Do you know what’s the number one cause of lost time from work in North America? It’s depression. With this employers do a terrible job, and that’s because they have viewed depression as an on/off switch. We’ll give you two weeks away and you’ll be fine. You’ll come back and we’ll throw you right back into the deep end.

This is going to be the most difficult thing for employers over the coming decade, because people who have depression are often not the same as they used to be. And if you give employees two weeks off and then give them the same kind of work they had before, it’s not going to workout.

They’re going to wind up going on long-term disability, and ultimately, on the Ontario Disability Support Program. Employers have this template that says, ‘We expect you to do this amount of work, this is our standard.’ They have to give different standards to employees who are depressed, and they don’t.

This reflects the difficulty that accommodation means you have to treat people differently. That’s always been a problem for employers, for unions, who like to have a methodology where everyone is treated the same way. The accommodation analysis turns that on its head.

Leadership and the Invisible Fence

Do you want to be an enlightened leader? Then actively coach and mentor employees, pay attention to rewards and recognition, and make sure the fence you build for your colleague is far enough away that it cannot be seen, says IRC Facilitator Jean-François Pinsonnault.

How does one become an enlightened leader who nurtures leadership in others?

I am still working toward being an enlightened leader. It is a journey, and each day I make new discoveries. Nurturing leadership in others means creating an environment that enables everyone within your scope of influence to learn, grow, and develop the capacity to inspire others to achieve excellence. In the words of the Roman philosopher and poet Seneca the Younger, “Even while men teach, men learn.”

I compare a leader to an actor on stage or on the big screen. A leader also plays a role: leadership. The difference is that it is very interactive.

An enlightened leader demonstrates leadership by paying attention to a number of key areas, each of which I’ll discuss in turn.

Coaching and mentoring

Through conversation and dialogue, it’s important that a leader encourage individuals to explore possibilities, to go beyond ‘good enough’ and move toward ‘excellent’ and ‘outstanding’. This is accomplished by giving direction on fundamental skills to help the person develop mastery in analyzing situations and making decisions.

I’ve been fortunate throughout my career: I’ve had coaches who taught me how to analyze context, to explore problems or challenges, and to do risk assessments. I would get a clear understanding of what happened, what the results were, what solutions were available to me, and what impact those solutions would have. When I made a decision, whether it worked or not, I was able to defend it later on.

I have to say I’ve been involved in a few blunders! But no matter what the outcome, every one of these coaches would provide guidance in expanding my risk assessment for the next time. When it worked out well, we’d still consider how it could have been even better.

Acquiring insight through reflection

During the various coaching opportunities, it’s valuable to engage your employees and protégés and help them gain a clearer understanding of what transpired. This furthers their appreciation of the situation or circumstances.

Rewards and recognition

Know when to recognize and appreciate your employees’ accomplishments and achievements. Discussing shortcomings is expected, however a good leader must also balance this out with recognition for incremental accomplishments. Doing this once a year during the performance evaluation period is totally insufficient. Don’t wait: “see it, say it” — otherwise, it will be forgotten.

A study of over 200,000 employees and their managers around the globe, conducted over a 10-year period by the Jackson Organization, showed that 79% of employees who quit their jobs cite a lack of appreciation as a key reason for leaving. Further, the study found that 65% of North Americans said that they received no recognition in the previous year.

Similarly, research firm Watson Wyatt in a recent study asked employees to identify “very significant” motivators of performance, and 66 percent said “appreciation.” These conclusions come as no surprise. Recognition and praise for achievement contributes greatly to employee involvement, engagement and motivation.

Opportunities to learn by doing

Know that mistakes will occur. Leadership is helping the individual to understand and learn from mistakes — to explore alternatives in order to achieve goals. So ask, what do we learn from this? You need to coach and mentor to help individuals to be ready for the next time: you have to prepare them.

Guidance through observation

Take the time to talk about what you are observing, and share those observations with employees and protégés. There will be times when people might not see and be aware of their behaviours.

Providing space for action

Keeping a promising individual on a short leash and within your grasp will limit creativity and innovation, the lifeline of continued success and growth. So set boundaries that are clear yet not limiting.

What has been most important to your development as a leader?

Over my 30-plus-year career, I’ve worked with exceptional people whose leadership permitted me to grow, and be comfortable in using my leadership skills.

Of particular note, back in the early 80s when I was a young consultant, I was hired by the dean of social studies at a major university. He was also president of a consulting firm dedicated to enhancing employee participation, thus maximizing the effectiveness of the organization. I had been retained to support a major project. Within a short period of time, he had taken me under his wing, nurturing me to achieve my full potential.

During the course of this project, as well as for several years after, he would bring me with him to attend high-level meetings with senior leaders in order to expose me to various situations. I would observe and listen in on the exchanges. After each meeting, we would have a conversation on my thoughts concerning the exchanges.

He would challenge me to go beyond the obvious and learn how to read between the lines, pick up on various non-verbal cues and better analyze and understand what was happening — including the needs and expectations of a potential client. This provided me with a priceless opportunity to develop my analytical and communications skills.

After a while he transferred the project to me. I’d never have been so successful if he hadn’t fostered my development beforehand.

What’s your most powerful experience with a life-changing leader? How has it influenced the way you support others as they develop?

Working with an Assistant Deputy Minister of human resources in a major government department was my most memorable experience. Whenever I would have ideas that could bring about significant changes or improvements, he would listen, probe to understand, and ask questions that would push my own views to places I often had not explored.

Once we agreed, he gave me the latitude I needed to ensure success. During a farewell get-together when I was leaving this organization to explore other challenges, he told all in attendance that with me, he set clear boundaries, but also knew that if the boundaries were too close, I would not thrive. “I quickly learned that the fence I put around Jean-François had to be quite far away, so he could not see it.” I thought that was wonderful, and have kept it in mind.

Does how you inspire leadership depend on the individual’s generation or background? Or do the same factors apply equally to everyone?

Had you asked me this question 10 years ago, my response would have been quite different. I thought then that the approach was relatively the same for all, regardless of age, experience, and background.

However today, as I am more and more exposed to individuals from various cultures and generations, I realize that people come from different backgrounds and circumstances, and that the context varies from individual to individual.

The latest generation to join the workforce has a higher need for involvement and engagement. So what could be better than having a person from the baby boomer generation and another from the millennial coach each other? Baby boomers will learn and come to appreciate what they may first find challenging in these younger employees, while sharing their own views and knowledge with a younger generation thirsty for knowledge. For the younger generation, this will provide insight into the history of systems, as well as various cultural systems.

And as a leader you need to realize that different generations work differently. I had a co-op student a couple of years back. I gave him a task to do on Monday afternoon, and we agreed to meet Wednesday to discuss his progress. On Tuesday I walked by his desk and saw he was listening to his mp3 player. I almost lost it. Then I saw he was working on the project I’d asked him for, so I let it go.

Later that afternoon he knocked on the door and asked if I had a minute. I asked if he had run into a challenge. “No, I’m finished,” he replied. I couldn’t believe he could be done already. In fact he’d done a fantastic job, even better than I’d anticipated — while listening to music.

I’ve also learned, for instance, that millennials can’t stand the “you’ve got to earn your dues” idea. With boomers the growth and promotion cycle was 10 to 15 years. With millennials it is one to two years. They want to be challenged, engaged, and involved, as research demonstrates.

Is developing younger leaders an issue for CMHC?

CMHC has a relatively low separation and resignation rates compared with the marketplace. Though there is no solid information about reasons for resignations, anecdotal information indicates that many are under 30 years old and have been with us for less than three years. Comments received point to an ineffective use of their skills and capacity, too much bureaucracy, and an insufficient amount of challenging work.

Government in general struggles with this challenge. Government departments, agencies and Crown corporations will need to respond and interact more effectively with the younger generation, which will be coming in droves as the boomers retire over the next few years. The first ones will be eligible to retire by 2011, or before, depending on their individual situation. By the time Canada reaches 2021, 6.7 million baby boomers will be poised to exit the workforce. Private sector leaders and policy-makers need to realize this sooner than later and start developing strategies which will permit their continued growth and success — otherwise they will have a hard time attracting and keeping the next generations, much less developing them as leaders.

Ready for Risky Business?

For human resources professionals, risk readiness means more than just planning for management departures, says Queen’s IRC facilitator Yvonne Latta. Yvonne is a consultant and former senior executive with 31 years in the federal public service, including directorships of HR at Transport Canada and Strategic Business Planning at Agriculture and Agri-Food Canada. In this article, she talks about succession planning, creating next-generation managers, and the importance of identifying your knowledge experts.

What are the main issues for human resources leaders around risk management?

If you don’t consider employee-related concerns around risk readiness and make a strategic plan, you reduce your own organization’s competitiveness.

For example, with succession planning, what do you do when there’s a shortage, as today with accountants or in the medical technical field? Without a strategic plan for recruitment and retention, the organization is going to lose people who have essential skills. This is the big one – and there’s a direct link to profit, or excellence if you’re in government.

The other issue is that as the boomers retire, organizations have an opportunity they haven’t had in 25 years to shape their leaders in a more deliberate way, to create the next generation of managers.

I’ll give you an example. Right now in government, many departments are using an executive pool rather than hiring a director for a particular job. They’re using a cross-government or cross-department, entry-level executive selection pool. So there’s an opportunity for the people at the top to really define what it is they want those new executives to be competent at, beyond just knowledge.

If you are not being strategic, you’re missing an opportunity for the future of the organization in terms of quality of management. And the quality of management is linked to the quality of results.

Is creating an human resources risk readiness plan complex?

You can do this without spending a lot of time and money. It’s a matter of focus. And you can measure results in this area. Many managers, as soon as you say “succession planning,” think that it’s going to be very expensive. A lot of this is cost neutral, or of low cost.

But rather than doing it by branch or by group, managers need to plan corporately, sharing the costs across the organization. I’ll give you an example. When I was at Transport Canada, over five years we identified 58 potential high-risk departures. So if we break that down, it’s about 15 a year. If four of those happened to be in the Atlantic Region, and significant funding was required, the region wouldn’t be able to afford to put a big plan in place.

But corporately, at the Deputy Minister or President level, there’s access to reserve funds, and these people know when money’s not being spent in one part of the organization that they can then access. Some manager sitting out in Moncton can’t do that.

Managers can do risk planning – it’s not as big a deal as they think it is. And the risks to organizations from not doing it are high, especially in specific shortage areas.

So the biggest risk of all is not having a strategy?

Yes – take the importance of knowledge experts. At Transport Canada we had a chap who was an airline pilot, but he was also a biologist, which is a pretty unusual combination. Over the course of 25 years in his career he became an international expert on the management of wildlife in airports; you know, birds flying into planes, deer running out on runways. There aren’t very many people that study this.

When it became clear he would be retiring, it was a really big issue because there aren’t a lot of these people out there who do this. If you must look for a replacement, are you looking for a biologist or a pilot?

The organization found a really sharp young biology student and brought her in to work under a co-op program. The organization was able to direct her. “What are you taking next year? We’d like you to take this kind of course.” In return, she had a guaranteed job offer as his successor when she was through school.

So the cost was minimal but the payback was huge. A lot of knowledge experts develop over time – and it’s often the quiet and unnoticed person at the back that becomes an expert in something, and everyone relies on him or her.

What can you do to mitigate this kind of risk?

Organizations pay a lot of attention to their management departures but not to their subject matter experts. Not that they shouldn’t deal with management too. But there aren’t a lot of these subject matter experts in organizations. If you start really searching for them, it’s manageable to plan and to find fairly cheap and easy ways to ensure knowledge gets transferred.

Sometimes it’s just a matter of asking someone to document information, in cases where it’s only one person who knows how to do something. If you don’t think about this and he drops dead, you’re in serious difficulty. So you need to be mindful of your risks in the “one of a kind” jobs.

How should risk management within human resources be integrated into the overall management of organizations?

Why not make it part of the annual business planning process? Most senior management teams talk a lot about how to spend their capital money and not as much on how they’re going to spend their human resource money.

So as part of business planning, you determine trends, attrition rates, and high risk departures, and do a risk assessment. Then you target efforts to where a lack of competent staff will hurt you the most.

Make it an executive-level HR committee that manages this – again, most organizations have capital committees. And then link the performance pay to achieving those results. And as I discussed earlier, manage it corporately.

You need an ongoing feedback process at your management level, with tangible results. For example, let’s look at recruitment. Where you have difficult recruitment challenges, part of that process is having feedback to the senior management committee. Is our recruitment strategy working? Having recruited people, what’s our retention? And what’s our annual attrition rate?

Again, it should be like finance. All executive committees get financial information routinely: the quarterly update, the bi-annual update, where are we at with this, how much money have we got flexibility on.

Very few organizations apply the same discipline to the management of people. I don’t know why: if I were president of a bank, I think I’d want to know if part of the organization that had a 30 percent attrition rate.

It’s really quite simple. If you’ve got a structure called “financial”, why don’t you have one called “people”? You can’t do terribly well financially if you have incompetent people, or you don’t have enough people.

Why don’t organizations typically plan this way?

I think our models don’t put a lot of emphasis on people. For a long time in the 1980s and 90s, people were not in short supply. In fact, they were desperate for jobs. Look at the GenXers, who were all hired on contracts: there was always a pool of feeders that the organizations needed.

A lot of organizations still haven’t clued in to the fact that it’s not the case any more; and that what the workforce wants has changed. You hear managers complaining that the younger generation is not loyal. I don’t think it’s got anything to do with loyalty. I think this group is extremely loyal to a good boss, but they have options. So if you’re a lousy organization to work for they won’t stay.

It goes back to competitive advantage, and profitability, or excellence. A lot of places are doing things like interviewing employees three months after they’ve joined to see whether the conditions they were told they would be working under are in fact what they’re experiencing, or they are already looking for another job. Rather than waiting for the exit survey, they conduct an entry survey. This is the kind of thing organizations need to wake up to.

Bah Kumbaya

Respect, not superficial goodwill, is the key to inspired teamwork, says Dr. Shawna O’Grady, Associate Professor of Management at Queen’s School of Business. Great teams work hard at keeping members aligned and making the most of creative conflict. We spoke recently with Shawna about the challenges of creating and sustaining a collaborative work environment.

When you have a team that is generally well-managed, how do you know when things are starting to go wrong?

One of the things that I often notice is when teams stop meeting face-to-face and communicating. Members of a great team will usually want to spend time together and one of the first signs of trouble is when this stops happening. You can have plenty of e-mail and other technology-enabled contact but there must be some time that is spent face-to-face, whether weekly or bi-weekly.

Another thing is what I hear people call “workarounds”, as in, We’re going to work around her. That’s very dangerous. It usually points to an issue of equity, where someone is not pulling his or her weight, and that’s not going anywhere but downhill. It always leads to difficulties if team members avoid assigning work to one or more of their colleagues. It plays to lack of communication. You’re not acknowledging the elephant in the back room.

How is creative tension managed on a team without spiraling into the dark side?

You first need to determine when you want it and when you don’t. Many organizations have a team-based structure and then they think they need to use teams for every decision. You have to remember that simple tasks still require simple solutions. Creative teams are best for complex issues, anything unique, and when you want to have an innovative outcome. Also for when you need strategic alignment across the organization and for anything ambiguous, when you unsure of the outcome.

But organizations often neglect to take the time to allow their teams to recognize what strengths each team member brings to the project. Even taking a half day to build some recognition of different problem-solving styles and how they can each contribute to the creative tension in the room can be extremely valuable.

The second step would be to align the team members to a common purpose around what they are trying to do. Unless you’re in a very creative culture where that dynamic is understood, oftentimes people feel they have to be polite or they have to play nice. Eventually that breaks down and you learn that there is very little respect across the individuals in the team. Without respect, you cannot have a creative outcome or an effective team.

What do we say to the manager who comes in, whether from a different department or from outside, who inherits a group that is just not clicking?

The first thing you need to do is find out the root cause of the dysfunction. It may not be a team-building issue at all but rather a performance-related problem or a resource issue. You should also check whether or not there have been any breaches of trust. I always ask first: Is everyone pulling his or her weight? Secondly, it is tough to build trust or respect if someone has betrayed someone else. If so, this must be addressed and specific expectations clarified before moving forward. Sometimes one or both of the people involved may have to leave the organization to restore a positive culture.

Most of the issues I see fall into two categories. One is a problem of perception. In cases where one team member perceives another one negatively, it usually comes down to a lack of understanding of the other person’s strengths. In that case, you need to go back to teambuilding exercises to help build trust and respect.

The second major issue is alignment around a clear set of norms for working together. In effective team building, you help teams to set these up, but the key is whether or not the team members stick to the norms. Once the team has time to live together for a while, issues begin to arise and expectations get out of alignment. Team members need to confront the lack of alignment to remain effective. A good example is arriving on time to meetings. Some people take this much more seriously than others yet all team members may have agreed to a norm of “No late arrivals”. Sometimes you have to set new norms or confront an issue to re-establish alignment.

Have you seen many cases where organizations fail to “walk the talk” in terms of encouraging strong team work?

A lot of organizations say teams matter but they continue to reward individual behavior. Very few have a good performance management system that backs up teams. This is very important to ensuring team success. People do what they are rewarded for. It’s only natural. When employees an individual puts a lot of effort into helping a team succeed, they or she should be rewarded and celebrated. Also, when a team comes to you as the manager and tells you that one person isn’t contributing and that they’ve tried everything to turn that person around, what is the organization prepared to do? In both cases, we need to be able to send the right messages.

Have you seen organizations use compensation to back up commitment to teams?

Yes, but you have to be careful. What you don’t want to do is have one team in competition with another. Sometimes people will think an easy answer is to have a team bonus system. These can be dangerous because you can have one team winning at the expense of another. The best are organization-wide systems where there is a component of team reward in which each member of the team has an incentive to work collaboratively with each other as well as with other teams.

The other thing to remember is that it does not have to be linked back to compensation. It does have to be linked to accountability. There can be a peer review where team members have input in each other’s evaluation. This way team members receive clear feedback on areas they are doing well and areas needing improvement. If someone is a free rider and taking advantage of the team, An individual lcan be that person can be involved in setting out clear expectations and then coached over a period of time to do better. given a set of expectations to do better and a period of time to make things better. Only if he or she does not change are there negative consequences.

Money is not the number one motivator here. The best way to create engagement and great performance is for people to know they need to do a great job because they will be receiving feedback from peers and that they have to live up to their expectations. Someone who you respect cares and is paying attention. Accountability is also important. If you do well, it is rewarded through celebrations and recognition – possibly pay but not necessarily. And if you do not meet expectations, you know there will be consequences.

The Rigour of Requisite Organization

Requisite Organization (RO) is a science-based management theory that traces organizational dysfunction to poor structure and systems rather than underperforming employees. According to RO adherents, the way to fix dysfunction is to fix the system. That means having crystal clear management accountability, setting compensation and employee capability to job complexity, and ensuring the proper number of organizational layers. The result: souped up organizational effectiveness, says Ken Shepard, founding president of the Toronto-based Global Organization Design Society. In the following Q & A, Ken discusses RO’s relevance to people management practitioners.

Let’s start with the basics: what exactly is the Requisite Organization philosophy?

For the senior human resources practitioner, Requisite Organization (RO) is a strong beacon of light in the darkness of the management theory jungle. It’s an integrated management system that helps organizations achieve their strategic business results. It brings fairness to a radically higher performing workplace, and builds trust between managers and subordinates – as opposed to the exploitive and paranoid relationships that exist in most organizations. It all adds up to strong employee engagement.

RO includes many evidence-based tools to design and align roles and practices throughout the organization. It can be used to better understand and bring together the many partial truths that makeup the craft of designing and managing organizations.

I understand it was developed by a Canadian management guru Elliott Jaques.

Yes, Elliott Jaques was born in Canada. He was a multi-disciplinary scientist and long-time organizational clinician. He graduated in psychology with honours from the University of Toronto, then completed a medical degree at John Hopkins Medical School, and a doctorate in social relations at Harvard. After service during World War II with the British Army, he settled in the UK, where he was one of the founding members of the Tavistock Institute. He worked in the UK as a scientist and researcher for many years, and that’s where he developed his theories.

These theories are being applied with dramatic results to the world’s largest organizations. He was a pioneer and a brilliant innovator. He died in 2003, and wrote 20 books on how organizations using his integrated organization design and management systems can be made to work effectively.

What characterizes his method?

His levels-based approach to organization design and management creates significant increases in employee satisfaction, customer satisfaction, and financial results. It involves three main steps: getting the right structure; getting the right people in the right roles; and holding all managers accountable for using the right managerial practices.

RO provides leverage and power for working strategically, and you can do it with less energy. It’s a good theory that makes complicated work actually light and easy. Rather than carrying around100 tools, I would rather have one integrated tool. Jaques’ system is like having the Swiss Army Knife as opposed to all the disorganized tools in different sizes, all with different handles.

RO is a nonsense screen. There’s no field so full of fads and puffery than HR. So many things in the marketplace are being sold to HR managers. How do you make sense of them? Knowing this theory helps you sort it out really quickly.

How was RO developed?

It was in a unique partnership between a British industrialist, Wilfred Brown, and Elliott Jaques. These two worked in daily partnership over15 years solving problems at every level of a major manufacturing organization, and then carefully building an integrated management system that they carried around the world. The system was further developed during a subsequent 15 years in an interdisciplinary management consulting institute at Brunel University with major contracts in redesigning the UK Public Health Service.

Senior consultants brought RO ideas to General Electric’s talent pool work in the 1970s; McKinsey consultants took it to CRA in Australia in the 1980s; and the U.S. Army has used it for over 20 years. Recent world conferences on RO practice have brought together practitioners from 14 countries to Toronto to share their experiences and to learn.

Why should HR leaders be interested in RO?

Senior HR practitioners need to understand the organization as a system and to support the CEO’s work in leading that system, to contribute to strategic business results, and to enhance the quality of work life for managers and employees at every level. RO provides methods to support the CEO in preparing and developing the senior management team for re-design and strategy execution. In terms of structuring the organization, its methods enable measurement of the level of work complexity required to accomplish the organization’s strategy; design of the optimum number of managerial levels for the organization; and role design and related vertical and lateral authorities and accountabilities. RO methods are valuable for recruitment, for establishing effective managerial leadership practices throughout the organization – including a transformed, trusting, and accountable relationship between manager and subordinate, and for designing aligned and effective systems. These might include setting fair compensation systems aligned to work level sand capabilities, effective talent pool systems including identification and development of high potentials, and effective cross-functional teaming systems.

Which Canadian organizations have applied RO principles successfully?

Since the 70s in Canada there’s been a lot of RO activity in the private and public sectors. RO has been applied by Bank of Montreal, Canadian Tire Acceptance Ltd., Canadian Tire, Imperial Oil, Inco, Inglis, Ontario Hydro, Roche Canada, Suncor, Chapters Indigo, and Tembec, among others. Many VPs of HR ran RO projects, including at Roche Canada. Various elements stuck very well: restructuring corporations, getting rid of pay for performance systems, putting in the requisite compensation programs, and introducing product launch teams. (See below to read a case study from Organization Design, Levels of Work and Human Capability: Executive Guide.)More recently, Denis Turcotte – Canadian Business CEO of the year last year – used it to turn Algoma Steel around. After being bankrupt Algoma became one of the most profitable steel companies in the world, and that was using Requisite Organization. As well, the Government of Canada, including Health Canada and the Public Service Commission, has used RO extensively on its own structure and in evaluating and assessing levels of executive leadership in the public service. Not-for-profits such as the Victorian Order of Nurses have used it. In the HR field five years ago we used it to help the board of HRPAO to reposition the organization, and it led to an explosive growth period.

Is RO a radical approach for North American organizations?

It is. It challenges conventional assumptions. It’s a more thoughtful approach to management. The people who like it are those who read – and not many managers read anymore. They’re people who think, are reflective, who have a longer time horizon. They’re systems thinkers. To get your head around RO requires more than a one-day workshop. It takes some time and study, because it has substance. It’s foundational. You can build on it – you can use it. It gives you such a powerful lens, grounded in solid theory. No matter what part of management you do – and as an HR person you might be recruiting, you might be in compensation, you might be in labour relations – if you understand this theory, you can do whatever you do so much better.

Can HR practitioners benefit from RO’s leadership practices?

Yes. In the HR field there is this current interest in competencies, which tend to explode in number, and it gets fairly bureaucratic and difficult. In the RO system, there are about 10 leadership practices, all based on the need to dialogue. These require some study and practice. But it’s a much lighter system. You don’t have to have 150 competencies to do the job well. If you can do these dozen or so practices, and grow in your ability to do them as you move up the organization, they will serve you well. They’re very well thought out, and very well designed.


For an introduction to Requisite Organization theory, download The Global Organization Design Society’s new book, Organization Design, Levels of Work and Human Capability: Executive Guide. It is available free at:

If you have limited time, focus on these articles:

The Long View of Leadership

An Executive’s Guide to RO-based Organization Design

How Did Dennis Turcotte become Canada’s CEO of the Year?

The Inglis Story: How It Became The Number One Appliance Company in Canada

Teams Can’t Be Better Structured Than Your Organization: How Roche Canada’s Created High Performing Cross-Functional Product Launch Teams

The Global Organization Design Society – formed in 2004 to promote the RO approach – has a website with articles, books, and video interviews. Go to:

There’s a useful, keyword-searchable, 1,000-page bibliography at:

The New Language of Teamwork

Globalization means HR/OD professionals are facing a new job requirement – learning to work in diverse and virtual teams, says Wynne Chisholm, a Queen’s IRC Facilitator on Organizational Design. Wynne, who worked abroad for several years as principal of her own Alberta-based management consultancy, tells tales from the field in the following Q&A.

Are HR and OD leaders being asked to work internationally more often?

I think so – the world is becoming smaller every day. Most companies have products being commoditized globally, so you can’t just stay in your own little niche of the world. Everybody, including OD and HR professionals, needs a better understanding of the global implications for their organizations. And working abroad with diverse people is a wonderful learning experience – both professionally and personally.

What global projects have you been involved in?

In 1997 I worked with a group of 17 different subsidiaries of a senior oil and gas firm. Then from 1999-2003 I was consulting for a specialty chemical company based in the UK. It was operating in about 55 countries and had more than 40,000 staff. I worked with the global Chief Information Officer and the business CIOs to facilitate a functional capability review and implement a series of projects to bring the function to world class.

I dealt with people in Europe mainly – in England, Ireland, the Netherlands – and in the U.S. But there were team members in Australia, Hong Kong, and Canada as well. It was really interesting being able to work with clients who are not all located together.

How did your global teams typically work?

We’d meet quarterly unless there was some special project, in which case we would come together more often. We often worked in teams where we weren’t physically together.

We relied on technology to get our work done. We connected by Internet and did a lot of conference calls. Not only were people in different countries, and in different time zones, but they were often traveling, making it complicated to round everyone up. Usually there were between six and 20 team members, depending on the project.

We also did a fair amount of video-conferencing, which meant you could have some face-to-face time even if you were across the ocean from one other.

I found that people were further ahead in the use of technology than their Canadian counterparts. You’d show up a meeting and everyone would have their laptops out – that’s only now starting to happen with all my clients. Everyone was readily accessible through cell phones and email too – whereas here, it depends on whether that’s a cultural norm in the organization.

What was different about working in a global team?

Technology that worked in sync became really important. One of our first decisions was to get similar systems for the team – similar laptops with sign-ins so we could get into shared databases, for example, and didn’t have to email documents all over the place.

Meeting software was useful. If I did a presentation and the other people were in four or five different locations, or even countries, I could have control of their laptops. Otherwise it was confusing, with everyone asking, ‘Am I on the right slide?’

It was wonderful for decision-making too. A little hand would come up on your screen, so you knew who had voted, and how. This gave a sense of how important it was to move something forward, or what level of commitment there was. It was much faster than always polling people on the phone.

Aside from the right technology, what do you need for an effective global team?

The same foundations as for a regular team apply – but they get magnified in a virtual team, or in teams where there’s a core group that can get together and other people in far-flung locations.

Basic teamwork management practices need to be done way ahead of time with a virtual team. Conflict-handling protocols are essential so you can avoid having someone literally thousands of miles away from you sitting and stewing later on.

Virtual teams should meet early so people can see each other face-to-face, even if it’s just a video-conference, or by web cam. This builds trust, making it easier to work together when issues arise down the road.

Can you talk about issues around communicating?

In a team where people are all geographically together, sitting at a boardroom table, they’re looking around the room and can see each other’s body language. They know who’s paying attention, who’s bought in, whether someone is really engaged. You can see if they’re shuffling or rolling their eyes or doing their email – it’s really visible.

In a virtual team, you don’t have the benefit of being able to see the individual’s reactions, so you end up having to rely much more heavily on verbal communication and checking back with people and clarifying things.

It’s very easy to have communication glitches, to misunderstand each other. I think people can feel emotionally hurt much more quickly, or angered more quickly, or feel fearful more quickly, because they’re always trying to read between the lines. They don’t have that face-to-face connection, and can’t just walk down the hallway and ask for clarification.

Are cultural misunderstandings an issue working in global teams?

They are. One of the things I found culturally was that you needed to be able to learn what a “yes” means, and whether it means you have a commitment to move forward or not.

I would talk to people about our deadlines and what we were trying to achieve; discuss the outcomes and benefits; find out what issues people had. Then at the action planning phase, where you’re trying to agree on who’s going to do what, people would be nodding or saying yes.

But I soon found that it didn’t mean that they had agreed, or accepted any responsibility for anything in that action plan. They were just saying they had heard me! So you really have to keep checking that kind of thing, have to start asking better questions.

What else is different working in global and virtual teams?

You have to be aware of legal issues – in China it was against the law to have open wireless Internet, for example, and in many places, your phone calls would be monitored. There may be rules you don’t know about.

There are social and cultural differences too. Even though we all spoke English, we weren’t necessarily using words in the same way. Once I told someone that dress was casual, so he could wear pants to a meeting. In the UK, ‘pants’ means underwear! You will often find yourself doing things differently – once we had to schedule a meeting around a rugby match.

But these kinds of cultural issues weren’t as big as things like making sure everyone knew what time zone everyone else was on; who might be jet lagged; who we were we calling at a particularly bizarre hour of the day.

In a global team, you really need to learn to be more tolerant if people are tired and starting to zone out because they are 13 hours ahead of you.

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