Queen's University IRC

The Need for Lean HR: Reinvent or RIP HR


Diane Wiesenthal
FCHRP, Corporate People Responsibility® Ltd.

September 22, 2014

RIP HRRIP HR. That will be the tombstone on the HR profession if we don’t get our act together soon. Sadly it seems we just cannot agree on a unified national approach on the professional association front, or even in some provincial regions. It’s no wonder that we lack the ability to move HR to the next level in business. What’s most unfortunate is that as a profession that should be recognized for leadership, vision and collaboration, we are setting a very poor example. We’ve been talking about the same old tired things for years, if not decades. Hence we are still dealing with the age-old issues of ineffective people management practices and the real value that HR can add to expedite business versus blocking it by protecting the institutional shrine of outdated HR programs. Most of these programs are rooted in elaborate and complex administration (look how smart we are) and they are costly on many fronts. While we most certainly need to salvage and maintain some essential elements of the past, there is a renewed critical need to completely reinvent the HR profession to support and enable business today; otherwise tomorrow businesses will find a way to circumvent the HR profession or the HR department entirely. In fact, successful entrepreneurial businesses have already sped away from main stream HR. It’s not that they don’t value it, they are forging their own path.

Consequently there is real need to streamline or adopt “Lean HR” to profoundly shift our profession forward. The term “Lean” means to eliminate or minimize waste and drive efficiency, which is exactly what needs to be done with HR programs.  I say this with certainty as I’ve lived in this world at virtually every level of the profession within organizations for over 40 years, and I have felt the effects first hand. The effects of using out dated tools and the toll it takes on our professional and personal lives, not to mention on our organizations and our people – it’s staggering. Having lived through this for many decades, I now know, that you don’t know what you don’t know, until you know it. It’s not that HR practitioners aren’t working hard. In fact they are probably the hardest working crews in industry today – consumed and engaged almost entirely in organizational firefighting, 24/7. It’s a smoking hot mess is what it is.

The HR department treadmills are zooming along faster than modern day amusement park super-coasters or genetically modified performance-enhanced hamster wheels that are ready to explode out of the cage. The fact is, HR practitioners can’t keep up to the sheer demand. And it doesn’t matter how many firefighters you hire, the fire just consumes more and more resources. As a result, HR departments unwillingly become an organizational funnel that backs up a deluge of work. When the damn breaks, everyone in the company will have to run for their lives, literally and figuratively. While that event may quench the raging fire, instead of fighting an inferno, folks will be fighting a deadly flood that can be even more difficult to contain.

When someone asked me what it feels like to work in the HR profession within a large complex organization, I describe it as though I am working inside a tornado. You just have to learn how to work within the deadly vortex and get things organized so the tornado doesn’t consume company property or people alike. Now as an entrepreneur and having been spit out on the other side, it’s a lot easier to see things with a little more clarity. Actually, with a lot more clarity.

It’s clear that traditional HR methods are no longer effective. Sure, we’ve renovated core HR programs with a couple of coats of new paint, the odd roll of wallpaper and lots and lots of glue and duck tape. The harsh realities are that these programs need a complete overhaul with a brand new engine. However, we can still preserve some of the elements and knowledge or the “transmission” of the past to build the new future. We are not just talking about trying to keep up, we are talking about positioning HR ahead of the curve to enable business results and provide the support to organizations that it was designed to deliver. That, is Lean HR.

So what’s the spark that will ignite and unite us to action? Perhaps the need for, or increasing demand for, healthier companies. That equals better family life and that equals better communities. And hey guess what, that can reduce a significant toll on our overworked health care system.

Here’s what I’ve observed and learned, and the most important lesson of all was called “taking a step back and observing the madness”. Watch attentively; look with specific intent; listen to the noise – and the silence; and question with an unbridled driven rigour. The old adage is when HR sneezes, everyone in the organization catches a cold as these actions normally affect every single person in the company. And all transactions or actions equal cost on either the financial or employee engagement scores, most often both.

Lean HR concepts

Let’s explore just a few examples of Lean HR concepts.

Exhibit #1. The dreaded Job Evaluation Committee work that is torturous, for all committee members.  Does the following scene sound vaguely familiar? The committee is sequestered and huddled behind closed doors with mounds of paper and electronic tools. They will be held captive there for days. Managers vie for position ratings with cleverly worded job descriptions and business cases that took no less than 6 months to pen and run through all of the various sign off processes. They know there is no job audit process, since the committee and the HR department can’t even keep up with reclassification requests. And oh by the way, the job description is now also already out of date due to constant business change. Diligent committee members take their jobs seriously and carefully consider all the information presented and then the arguments ensue over a few points here or a few points there. One must stop and pause to watch this ground hog day scene play over and over again, and watch it ever so carefully. I came to the brilliant conclusion as most of us have – that this is just NUTS!

At the end of the day the few points here or there, have absolutely no material impact on what you pay a candidate when you bring them into the organization since the 19 level salary bands for 500 employees all overlap like airplane runways. Step off of the treadmill and with one decision, the committee was disbanded, recognized and thanked for its diligent service. Committee members cheered a great sigh of relief. Accountability for the JE function was shifted to the manager to rank the job within their existing departmental structure. Heaven forbid we trust the manager to do his or her job. HR then evaluated the job descriptions. If the manager and HR disagreed, a panel of 1 – 3 experts from within the organization would be called upon to reach a decision. Those would be the people, peer managers, who know the job, as there are natural linkages to other operational areas. Almost immediately, politics, clever writing and elaborate wording no longer dictated job ratings. Accountability was now very easy to pinpoint with precision to individual roles. As a result, the “panel of experts” was never called into duty. The process was instantly cut from a six-month timeframe down to a two-day timeframe, and none of the rigour was lost.

When the final changes were made to a new streamlined salary and classification system and a progressive knowledge based competency model was designed, the process was reduced to a remarkable 5 minutes. Even with such incredible speed, required precision and rigour was thoroughly maintained. Jobs were in either 3 tracks: people leaders, technical experts or business experts. Job summaries captured each job’s scope of accountability and responsibility. This was benchmarked to the marketplace for base pay. The required competencies placed jobs along a salary continuum, and natural clusters emerged with job similarities to support cross training and succession planning. Job duties became the “annual job description” where all activities were now directly aligned to the approved strategic business plan; each job was based on what the company required that year. And tasks could change midstream as in the real world. There were no more rear-view mirror job descriptions that merely documented history and that were out of date before they even hit committee, or that collected dust on the shelf. Best of all, removed from the organizational language – no one said, “that’s not MY job”! When managers and employees were informed that job descriptions were going to be burned at the stake, a cheer rang out across the organization while our HR colleagues thought we lost our marbles. Cost savings and increased employee engagement were staggering. That, is Lean HR.

Exhibit #2.  A Performance Management model designed with a “laundry list” of competencies, where managers and employees pick and choose competencies that try to capture every detailed concept that may be required at some point in time in a job. These often overlapped or were duplicates thus creating confusion and difficult career planning discussions. The more individual competencies that there are, the more time consuming and difficult the measurements of those competencies are. A large number of competencies are impossible to measure; it creates frustration, and therefore the whole process is rendered almost meaningless to both employees and managers alike. Organizing the competencies in a model with a progressive or higher order fashion, not only supports understanding and usefulness, it saves organizations big bucks. In working with a client on this very problem, their “laundry list” competency model cost them about $4,600 per employee to manage. People often forget that the more light bulbs you have to check on the Christmas tree, doesn’t always mean you get the lights on. When the main competencies were determined and then progressed or advanced by knowledge, skill and ability, according to the job level, the cost to run the system was reduced to about $430 per employee and with +$1,500 in valued added opportunities. In addition the entire system became “coaching” tool versus “report card” tool. That, is Lean HR. (See section below “doing the math”.)

Exhibit #3. A business owner was complaining about the most common problem in virtually any organization – a poor performer with a poisonous bad attitude. We outlined some respectful exit strategies to help the employer and the employee part ways and move to better platforms. The business owner said, “I couldn’t afford to pay $60,000 in severance”. Then we did the math together and the cost to retain that person ballooned to a cool million (management time, lost productivity, disgruntled co-workers, time left on job to retirement, etc.). Money talks. Now that, is just the right thing to do.

Where to start Lean HR

  1. Identify organizational pain points.
    Thoughtfully talk to managers, employees, executive members, and in some case Board members for things that just generally irk or annoy them. Be prepared for tough criticism and don’t defend or justify anything. Just really listen to what their problems are, put yourself in their shoes (forget your HR shoes they are worn out anyway) and in some cases read between the lines. You can’t redesign a system if you don’t know what all the issues are. Then throw all the issues on the worktable, and start by putting all the puzzle pieces together with a balanced and reasonable approach. Respect tradition and knowledge and mix the old with new, or simply realign components. Realize you probably won’t make everyone happy, so manage expectations that shoot for the 80 – 90% satisfaction rate. Or lower for large-scale change – and give it some time for people to realize the value.
  2. Calculate the cost of programs – actually do the math.
    Let’s use the Performance Management example, for instance:
    – Employee had 17 job specific tasks
    – Employee had 34 required competencies
    – Competency measurement = current skill, future state and gap
    – 34 x 3 measures = 102
    – 102 + 17 = 119 items for consideration
    – x 2 (employee and manager) = 238
    – x 2 per year (semi-annual)= 476 (plus ongoing feedback/communication)
    – x average of 5 minutes each per review / consideration = 2,380 min
    – or 39.66 hours for one employee evaluation
    – x 27 employees = 1,070.82 hours
    – x average hourly salary cost assume $50.00 per hour = $53,500 per year ($53,541.00) (conservative average given high management time investment)
    – or $1,983 cost per employee
    – Plus lost opportunity focus on actual business activities versus admin (assume you cut the time and effort by 50% = $25,000)
    – Plus lost meaning in measurements assume 2% disengagement factor (2% of total salary budget – assumption for model 80k x 27 ~2m @ 2% = 40k)TOTAL:
    $53,500 cost to run the program
    $25,000 lost opportunities
    $40,000 disengagement lost productivity
    $118,500 to run a performance management system or $4,389 per employee

    The new system had 5 job specific tasks and 7 core competencies. Same math = ~$430 per employee.

    There are many ways of calculating value on anything, just start by getting some data points and making some basic assumptions on all the system feeds and connections. That, is Lean HR.

  3. Create marketing solutions to change long-standing practices.
    Use target marketing, target marketing and more target marketing. Clearly define WIIFM (what’s in it for me) at the executive level, WIIFM at the manager level, WIIFM at the employee level and WIIFM at the Board of Director level. Give tangible examples of how they will each be better off with the new system. Even illustrating costs to employees, helps support the need for change. Would you rather the company spend money on administration or value added services?
  4. Muster up a good supply of pure guts and courage, and bold creativity.
    Start with the end solution (If you could build it today, what would it look like?) Do not start by creeping into the realm of details and existing or conventional methodologies as these will lead only to countless barricades and roadblocks. Get off the treadmill for just as long as it takes to put on a new set of eyeglasses and look at how things can be different. There are always more possibilities than barriers, but you have to take the time to step back and thoughtfully and intentionally plan the change.
  5. Design with a “less is more” approach.
    Having the flashiest and most gaudy Christmas decorations or system bells and whistles, does not make it better. Keep it simple. That’s it.
  6. Shift Accountabilities.
    Place accountability where it belongs and that is often squarely on the shoulders of the managers or employees. As a “helper” profession we often become embroiled in doing things for people, versus teaching them how to do it on their own steam, through skill and knowledge transfer.

As a profession, we can’t no longer afford to just “talk about” or label things differently. Take an example like the label of “Human Capital”. First of all the label is absolutely the most offensive term in industry today. Secondly, companies don’t own people like a cow on a farm income sheet. It’s akin to the despicable slavery days to treat people like a company owned commodity. Smart companies recognize that they are merely “renting” or retaining employee talent, brainpower and ingenuity – not the actual person. What you give is what you get. And what you get in return is exactly what you deserve. That’s the deal. Finally a new label is not a meaningful change to make a damn bit of difference in anything. It’s not about change for the sake of change; it’s about change for purpose and meaning.

It is time to design Lean HR programs to build the workplaces of tomorrow, today. Workplaces that inspire people and allow them to use their brains for thinking; just what the brain was designed for.

About the Author

Diana WiesenthalDiana (Diane) Wiesenthal, FCHRP created and leads a company called Corporate People Responsibility® Ltd. (CPRinc). Previously she was a member of the executive for the Canadian Wheat Board as Vice President, People & Organizational Services. She is a past President of NAHRMA, CCHRA, and HRMAM. Based on her international leadership experience, Diana was selected by the United States People to People Ambassadors organization to lead senior international HR delegations to various parts of the world. Her academic training in HR management was completed at Queen’s University (executive program), the University of Manitoba and Red River College. She obtained her professional human resource designation, CHRP, in 1993, and was awarded the Fellow designation in 2012.

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