Welcome back to Work Minus where we talk about what we need to drop from how we work and quick pivots that you can make today to get closer to the future of work. Today, our guest is Jay Jamrog. He’s the co-founder at the Institute for Corporate Productivity and this episode is Work Minus Bad HR. Hi, Jay. How are you today?
I’m doing fine, Neil.
Great. Great. We’re excited to have you on the show. I want to talk to you a little bit about some HR practices, but first, tell us a little bit about the Institute for Corporate Productivity. What is it? What do you guys do?
We’re a research organization and primarily, what we look at is, what are the factors, the people factors that truly drive a high market performing company? So we discover the practices. We, actually, we’re a membership driven organization. And we help our members leverage talent to drive higher market performance. So we do a lot of qualitative and quantitative research. We do about 20 research projects a year. We have lots of interaction with our members, so a lot of peer-to-peer interaction. And our exchanges in our boards actually drive our research. So our members drive our research and the topics that we get into. We’re not a consulting organization and there are no vendors or consultants in our network. So we’re completely vendor free. They don’t pay for any of our research and we don’t look to make them happy. So we are primarily a research organization.
Great. So you’ve been studying this field for a long time. How long have you been in this career?
About 35 years. I founded my first company, it was called HRI, back in 1982. It was the same thing. It was a human capital research organization. Back then, it was a non-for-profit, academic based think tank that I started out of graduate school. Eventually, I moved there to Florida from the University of Massachusetts. My mentor and co-founder of HRI was George Odeon, who is the father of management by objectives. And so he got a chair position offered in Florida. We followed them to Florida in ’86. I took it off campus in 2000 because we were doing some great research on the organizational effectiveness. And then I ran into Kevin Oaks around 2006. He saw a small research company that he knew he could grow because he was a very successful entrepreneur in his life. He has started click2learn, merged it with Docent, and started SumTotal Systems. And he has really liked the organization, our business model, and he felt he could take this sleepy research organization and really grow it and he did. Last year, our net was 40% over the year before our growth. So tremendous energy he brings into the company. He’s the CEO and he actually just done a phenomenal job.
Well, that’s fantastic. You are definitely someone to listen to and you have a post that’s coming out that’s called 10 things HR should stop doing. So we’re going to go through that a little bit. We’re not going to do all 10, but we’re going to look at four of them that are there. So why don’t you start with the first one for us?
So the first one is around — four years, I’ve been hearing about, we need a seat at the table. You’re not hearing it so much from the companies that are our members. Most of the CHROs and most of the good HR people have a seat at the table. But for years, they’ve been asking to have a seat at the table and I wish–even the ones that are continually do it today–I wish they would stop saying we want a seat at the table. My whole philosophy is, you earn your seat at the table by providing great service to company. And another bugaboo about the seat at the table is a lot of people who have a seat at the table don’t have a voice at the table. They’re very passive. So they only chime up when they’re asked to, rather than really being a true business partner and have that voice at the table. So I believe that HR earns their seat at the table by providing great services.
Yeah. And this is another thing we will get into a little bit more about the service mindset. But it’s also true that a lot of times, people on a service side of the business don’t even understand how the business makes money, which is a point that you brought up in your article. Can you give us any more examples about the things you’ve seen about how, whether an HR or a different service industry, really don’t understand the fundamental business principles?
Well, you know, there’s various levels of understanding how the company makes money. There’s the basic level. Okay, we sell this service or we sell this product. We have this kind of model that goes out to sell this business model. We may be a franchise model. We may have the B2B model. There’s a lot that they know. They’re really getting deep down into, where are the different supply chains? Where are the different customers? Where do we get our feedback from? The different value propositions that we have out there, what is the service chain that we have and how do we supply that? What is the whole thing about customer service and who does that and how well are they doing it? There’s nuances about how the company makes money that if you’re in a line position and you have your own profit loss, your P&L that you have to be responsible for every year, that you really get into deep into how I make money and how I make my profit and loss, my P&L, every month. So when you’re a line person or a manager responsible for that, you learn the nuances of how the company makes money. I think there’s a lot of HR people have surface knowledge on how the company makes money, but not that deep understanding. And I think if they’re really going to be a strategic HR business partner to business, they’ve got to know more about how the nuances of how they make money, not just the surface level.
So you’ve brought up another point about being a business partner, which is another thing you said HR should stop doing. Can you go into that a little more?
It’s a little nuanced. HR is a service. They provide support for the organization. And marketing supplies support for the organization. Finance supplies support for the organization. R&D supports the organization. Those other functions never asked to be a business partner or never try to put that label on themselves. They just provide good service. And, you know, HR has, all of a sudden – it is not all of a sudden. It’s been almost 20 years now since Dave Ulrich came out with the business partner model. And now, all of a sudden, HR is being called a business partner, or a strategic business partner, or a business adviser. I wish HR would just start helping the company make money and provide services to help them make money rather than trying to always come up with some cute name to call themselves.
Yeah. I think there’s some amount of feeling they need to, maybe other service sectors are like this too, but need to prove themselves, need to show that they are essential to the business when just providing a service is being essential to the business too, right?
Yeah. Yeah. You know, marketing went through the same dilemma years ago where they were trying to prove their worth to the company, because there’s not a direct relationship toward to marketing and actually there’s a correlation, but there’s not a cause and effect that we could actually nail down. And what they did was, okay, we’re going to prove our worth with numbers, to be able to really do the analysis and the deep dive into the data, to show how we move the needle when we do marketing well. HR has not learned that stuff yet. And so every 7 years, it seems like some business journal comes out with an article about killing HR, or blowing HR up, or getting rid of HR. And they really hammer on HR. So there’s a lot of business writers who hammer HR. And HR does provide a lot of value with the service. They just have to get into the numbers better and really understand how the organization, how what they do and the support they give, actually runs the needle. Now, forever they’ve been saying, if we don’t provide the service, it will hurt the company. It will get sued. Compliance, Health and Safety, we’re going to actually get sued if we don’t do it. Well, they have to flip that and say, we do this and it does show an impact on your organization. And they can do it. The ways of analyzing HR, the efficiency, the effectiveness, and impact of HR have been around for a long time. It’s just HR is slow like this to get to the table and really use analytics to show their work for the company. And it is there. We know it’s there. Many of our own members have done it and they show where the value is. So it’s a little catch up and they’re slow to catch up to everybody else.
What’s one of the big metrics you feel like HR needs to focus on and needs to start tracking, that they’re not right now?
There’s a lot of efficiency metrics. Okay, I’ll take recruiting, for example. The time to fill, cost to fill is a popular recruiting metric. But our research says there’s no correlation with market performance with that efficiency metric. It’s an important efficiency metric but that doesn’t move the needle. Now, the next level is effectiveness. That’s the quality of hire. And you can actually segment the workforce. Look at critical and pivotal roles. Those are the core to the business success, but hard skills to get. And look at the quality hire and start mapping the quality of hire. Once you map the quality of hire for that critical role, now you can track the high performers and actually show how your recruiting efforts are actually making that critical role of that business unit a better performing business unit. But it takes a logical way of thinking. So you can look at the feedback from customers. You can look at your Net Promoter Scores. You can look at the bottom-line results. You can look at the 360s of the managers. And you look at the quality of hire and you do a correlation between, okay, the quality is going up, turnover is going down, engagement is going up, customer satisfaction is going up. So you can get these different correlations. Now, I say, correlation is not a cause and effect but it’s an important data point which prove your worth to the company. So that’s just recruiting.
You can also do the same thing with development. So development efficiency metric is the money spent on development of employees or the amount of people who took the development opportunities. The effectiveness measure is the quality of that development. Was there actually increase in performance or productivity after they did that development? How long did it last? Did it last six months, one year, two years? Did it bring down turnover? That’s all effectiveness metrics. And then you can look at, okay, what was their impact on the output of that business unit by doing that? And that’s your impact. So it’s following a logical course. Whenever you get effectiveness and impact, though, you have to look at a segment of the workforce because there’s different things that impact. So the quality of hire is different if you’re looking for call center people versus engineers. So you have to do the segmenting of the workforce where they look at the development. You’re also going to look at the quality of attrition. We know that raw turnover data, there’s no correlation with market performance. But who and why does turnover has a huge correlation of market performance? And actually looking at that can be your profit metric. You can actually show that the lowering of the turnover adds X amount to the bottom line because of the quality of attrition.
Great. Well, why don’t you lead this to another thing that HR should stop doing today?
So, you know, this one I didn’t give you in the four, but I’ve been thinking a lot about it is, HR is like a different tribe within their organization. So organizations have cultures and these tribes have their own cultures. So HR, as a tribe, has its own language, its own secret handshakes, etc. Engineering is a tribe. Sales is a tribe, etc. And it cuts through all the culture. HR tends to just talk to itself. So it has its own language, which the business does not understand or even care about learning. So a business manager may have went to business school or may have gotten an MBA, but he never taken an HR course and no one has ever taught him about HR or doing HR. So when HR talks talent management, they don’t know what you mean by talent management. When HR talks strategic workforce planning, they don’t know what that means. So using — I wish we would start translating what we do our language of HR into a business language. So instead of talent management, call it a talent supply chain. Managers understand supply chain. That’s what they learn in business school. So you have a talent supply chain. Now they get it. Instead of workforce planning, it is talent risk analysis. Business people learn about risk analysis in business school. This is talent risk analysis, now I get it. So really looking at that and the language we speak. And it gets reinforced by the conferences we go to, the people we talk to. Everybody in HR talks the same. I’m guilty of it too. Whenever I’m on the phone with other HR people, I start using the HR language because that’s what they understand. But the business, sometimes, has a hard time understanding that language.
Yeah. It makes a lot of sense to be able to translate what you’re doing into other languages. It is the same way that an engineer needs to be able to translate what they are doing to the marketing team, to be able to put it out there.
Absolutely. Absolutely. Another thing that I think we’ve got to stop doing is stop doing the manager’s job for them. What I mean by that? A manager is responsible for their P&L, not finance. They are responsible for the quality and quantity of widget or service that goes out the door. Marketing and sales is not responsible for that. They should not be delegating the responsibility for HR work to HR. I really feel, and research supports this, that managers have got to do their job around HR because they are the true HR professional. They’re managing people every single day. But for some reason, they’ve delegated that responsibility to HR. And even the companies that have got that on their performance reviews, that managers have to develop talent, manage talent, etc., even when it’s on there, they lacked the spine behind it to really say, you’re not doing this well and there’s a penalty for it, or you’re doing this well, there’s a reward for it. Reward doesn’t have to be money all the time. But there’s no punishments or rewards whether they are doing it well or not doing it well. And so people can do it or not do it, even when they have it on their performance review. And managers aren’t trained on how to do HR stuff. And so a lot of them do it badly. You hear all the time that the business partner on the field is always putting out fires for managers making bad HR decisions. Well, that’s not a manager’s problem. It’s HR not being able to be a coach or mentor or train them on what is a good HR decision. So it’s just, I think, we’ve got to get back to the manager actually being more responsible and being measured and rewarded for doing HR work, especially, developing talent.
That makes a lot of sense. Now, Jay, you are a self-described futurist. So walk with us a little bit into the future. What is a world of Work Minus Bad HR look like? Where are we going in the future here?
Well, I really think HR is going to play an important role in the future because good talent — especially if we continue down this road of tight labor market, the management of talent and the ability of managers to manage that talent is going to become more important. So HR’s role as an influencer, as a coach, as a teacher of HR, is going to become even more important. And then put it in, especially in the world of AI and machine learning, being able to go behind that and really keep monitoring it and make sure the morals and ethics of AI really correspond with the morals and ethics that you have when you’re dealing with people. So there’s a big role for HR. But I really feel that this is going to happen. Right now, most of HR work is what I call top down. The business develop their strategy, HR leadership team gets together, looks at the business strategy and develops an HR strategy to support it. So that’s a good supporting function. The problem is when they develop that plan, they do their budgeting, they do their accountability, and then they look at what the centers of excellence are going to do and their plans that support the business strategy.
Well, I think that’s going to be flipped in the future because we need more agile organizations. Agile organizations decision making gets further down in the organization, where it’s very close to the customer. And what’s going to happen is the HR business partner in the field is going to meet with the manager more and be more strategic and really come up with a talent strategy for that manager, and for that business, or for that unit. Then that will flow up into HR and budgeting center would be will be allocated for it, and there will be more customized approach to HR. Instead of the one-size-fits-all programs, now we’re going to have to customize it for each business unit or each business manager out there who needs XYZ program for their talent, for their people. So it may be a specific training program, or different way of recruiting, or maybe tapping into the gig economy. And there’s just a myriad of customized approaches that will have to be done at the business unit level and that will flow up instead of flowing down to the one size fits all programs. So be very customized. Now, that gets to be more expensive. And I think we’re realizing that we’ve got to be efficient and effective when we start looking at this kind of stuff and how it’s going forward.
Yeah. Absolutely. It sounds like HR has its work cut out for it coming into the future. It’s a lot of forced, you know, thinking about things, trying to make them work, trying to make them work for lots of different situations. It’s a lot of work.
Oh, absolutely. Now, just think about it today. For every open position, there’s only one person looking. So for every person that’s unemployed, there is a one-to-one ratio now between open positions and people unemployed. It used to be seven to one. Now it’s one to one. And that one, you may say 50% would never have the skills to actually get that job or they want to move. These are the reasons why these jobs aren’t getting filled. So being able to recruit, to develop, to retain, we see this development especially as being crucial in the future. People, when we survey people on the employer of choice, young people say they want a firm that will develop them. When we look at and conversely, the lack of development is a big factor for turnover. It is also a big factor that drives engagement and alignment. So the development is going to be key in the future and that’s why the manager has to be a developer of talent. You need a development culture if you’re really going to survive in this tight labor market, and it’s going to be a differentiator going forward. And that’s all on HR. And development culture does not mean new courses. It’s a way of thinking.
Yeah. Yeah. That sounds like a whole new episode we can do thinking about that differentiation.
Well, great. Jay, where can people go to stay in touch with you, your thoughts, and your work?
Sure. So our website is i4CP.com. We post a lot of things all the time. Most of it is for members only. But we do have occasion where we have blogs, we have other things, that sometimes are open to public. There’s an app, a mobile app, we just launched. This is really cool too, where you can look at some of the things we’re doing and where we’re going in the future. So it’s i4cp.com. If people want to contact me, it’s fairly easy. It’s my first name, [email protected] I’d be glad to hear from anybody, especially when people have different thoughts about how HR can be different, where it’s going to go in the future. Or one of the things we do within our company is we’re always looking for what we call “next practices”. So if somebody out there says, since we’re doing this awesome thing, maybe I could talk to Jay and i4CP. Because we give a Next Practice Award every year at our conference in March in Scottsdale. So we have about 400 executives come together, with no vendors, we actually give Next Practice Award. So companies that feel like they have this next practice, I love to talk to them.
Fantastic. Sounds great. Jay, thanks so much for being on the show today.
Thank You, Neil. I appreciate it.