Sunday, January 21, 2007

Human Resources VP’s “Seat at the Table”

by: Gary J. Salton, Ph.D.

This blog addresses the match between HR executives and the other executives participating at the highest levels of firms. The goal is to identify an objective and observable condition(s) that influence the ability of the HR executive to get and keep a “seat at the table.” In other words, to participate in setting the policy and strategy of a firm.

This study finds that there is a systematic difference between HR executives and other executives who already have a “seat at the table.” The consequence of this difference negatively impacts HR’s ability to consistently contribute to corporate policy and strategy.

The investigatory tool is a database of the information processing preferences of people at all organizational levels (n>30,000). This base contains exact quantitative measurements based on “I Opt” technology. The “I Opt” tool is thoroughly outlined at www.iopt.com. Its theoretical and operational foundations are addressed at www.oeinstitute.org. It is a well-tested, fully validated tool that yields reliable measurements.


HOW DIFFERENT ARE HR EXECUTIVES IN SHORT-TERM POSTURES?

I Opt” STRATEGIC STYLES measure the short-run decision preferences. In other words, what is the most likely behavior on the next decision that a person is likely to make? Chart 1 compares 26 VPs of Human Resources to an average of 207 VPs of other functions.

CHART 1
VICE PRESIDENT COMPARISON: HR versus OTHER FUNCTIONS

Strategic styles describe behaviors arising from the input-process-output elections of a person. For readers not familiar with “I Opt” technology, these can be crudely typified (but are not defined) by the italicized descriptors below each bar in Chart 1.

The HR VP “fits” into the overall posture of the other executives with whom they must deal “at the table.” This is confirmed by looking at the executive groups in detail. Table 1 shows the average scores of the executive groups for each strategic style.

TABLE 1
FUNCTIONAL VP MEAN SCORES BY STRATEGIC STYLE

HR is positioned in the middle of the group in all cases. A t-Test (parametric) and the Mann-Whitney U test (non-parametric) were used to determine if the mean scores were statistically different. Neither test found any statistically significant difference between HR and the other groups. In other words, senior HR executives “talk the same language” as their peers in their short-term information processing approach to issues.

There seems to be little reason to be excluded from “the table” on the basis of HR's short-term decision approach to issues. However, the focus of the “table” is not about short-term issues. It is about long-term positions and complex sequences of decisions.


THE LONG-TERM POSTURE OF HR IS DIFFERENT

“I Opt” STRATEGIC PATTERNS describe the long-term decision postures. Patterns rest on the idea most significant issues involve a series of decisions. It is very unlikely that every item in that series will respond to the same strategic style. People must shift. When they do, they tend to shift from their most favored to their next most favored style. The combination of primary (most favored) and secondary (next most favored) styles create the “I Opt” strategic pattern.

Strategic patterns are measured as the surface area of a quadrant bounded by adjacent strategic styles. This is visually represented in Graphic 1. The gray area of this graphic that depicts the preferred posture of the majority of VPs of HR. Over multiple decisions the HR VP would be seen as adopting an “great idea! Let’s try it ” stance (RI/RS). This is denoted by a “Changer” pattern. Anyone following this strategy would display a behavior pattern typified by change.

GRAPHIC 1
VICE PRESIDENT OF HUMAN RESOURCE STRATEGIC PATTERNS

The dots on the Graphic 1 represent the centroid (point of central tendency) of each individual VP of HR. These centroids are concentrated in the “Changer” quadrant. This “Changer” stance follows the general pattern of senior executives (as shown in previous blogs). In other words, the principal strategy of the HR executive is fully compatible with the principal strategy of other executives.

Table 2 takes the analysis to a deeper level. It shows how the HR executives compare to their peers along all Strategic Pattern dimensions (long-term decision making).

TABLE 2
FUNCTIONAL VP MEAN SCORES BY STRATEGIC PATTERN

In three of the four “I Opt” strategic patterns HR does not differ significantly from those of other senior executives. The fourth offers a different story. In the Perfector quadrant HR falls significantly below other executive functions who regularly participate “at the table.”

People occupying a “seat at the table” are expected to contribute to analysis and assessment of strategy and policy options that affect the firm. The “Perfector” quadrant is the one that is most relevant to these conversations. The average VP of HR falls a bit short in this dimension.


THE CONSEQUENCES OF THE SHORTFALL

It is clear that there is something happening in the “Perfector” quadrant. “I Opt” technology is fully validated and is being used daily by some of the largest firms in the world. The formal statistical significance tests tell us that the sample size, while not large, is adequate. It is likely that faith can be placed in the results. However, this just tells us something is happening. It does not tell us why it is happening.

The area where HR falls short focuses on convincing others to accept their position on important matters. People skilled in this "Perfector" pattern are able to explain what their position is, why they hold it and what it means to the future of the firm. They leave few "loose ends" and show a command of the area beyond the reach of the others at the table. They present "facts" but then go on to interpret those "facts" in a compelling way.

Contrast HR to finance. Like HR, Finance also lays facts on the table. However, they bind these facts together into cogent arguments. They trace the effects of an occurrence of some condition to the various financial accounts of the firm. When finance gets done there is generally no argument about the condition or its consequences. It has offered firm predictions on what will happen under different scenarios. Exactly what to do may be an open issue. But finance earned its “seat at the table” by creating a common understanding and forecasting a future on which decisions can be made. This contribution commands the respect of the others seated “at the table.”

Sales & Marketing offers another example. They invest heavily in consumer research. They use this to create a theory of what is causing sales to perform as they are and why. They develop mathematical models that forecast sales with a creditable degree of accuracy. They also lay “facts” on the table but go on to relate those facts to what it means to the bottom line. Their explanation (i.e., theory) is a creditable. Discussions on the right strategy will occur. However, Sales & Marketing laid the foundation for a common understanding and given a prediction that can be used as a basis of decision making. It has earned a “seat at the table.”

HR is a function in charge of a critical factor of production. In many ways they do a good job. They monitor “morale” and help to set policies that allow the firm to effectively compete in the labor marketplace. They are alert to conditions that can lead to legal liabilities and foster methods to insure that the effective flow of information (e.g., goal setting, empowerment, etc.). However, current conditions and program level initiatives are not the subject of discussion “at the table.” A seat at the table is earned by being able to accurately project what WILL happen if alternative policy or strategy courses are pursued.

Unfortunately, HR cannot systematically trace the consequences of the "facts" they offer into reliable future projections. For example, they are probably able to identify an area that is having organizational difficulty. However, HR is probably unable to say what would happen if Manager X were replaced by Manager Y. HR will have an opinion. But they are typically unable to outline the exact effects Manager Y will have on the group being lead. Without this knowledge HR is unable to make creditable predictions on the outcome of an organizational change. This is a critical shortcoming. Strategy and policy discussions"at the table" are about what will happen, not what is happening.


ISOLATING THE CAUSE

There is no shortcoming in the Vice President of Human Resources as a person. The evidence of the “I Opt” data shows that their overall “fit” with other executives is solid. They have just as many new ideas, they can act just as decisively and they can methodically execute with just as much precision as those other executives. They fall short in analysis and assessment.

“I Opt” technology and Organizational Engineering theory teach that people use strategies that work to some threshold level. People do not make VP by focusing on strategies that regularly fail. For HR, a focus on assessment, evaluation and prediction is not likely to yield high returns. The reason is that there is no theory (i.e., what causes what and why) available that will allow them to provide a cogent and compelling case along with a reliable prediction whose accuracy can be seen by all involved. It is much smarter to focus on things that others both see and value. Transaction volume or new programs will at least be seen as a contribution.

Unfortunately, activity is not a ticket to a "seat at the table." To earn that seat HR must be able to consistently present cogent and compelling postures on matters of future consequence to the firm. They must then be able to make accurate and reliable predictions on what will happen if a particular course is followed. This combination of being able to make a case for a position and then prove that case with predictions that come true is what is missing.


RESOLVING THE ISSUE

There have been many "explanations" offered for the current condition of HR. However, if it were as simple as being too “transaction oriented,” too rule bound or the other “usual suspects” it would have been resolved long ago. The people that head HR are every bit as bright as other functional executives. These "reasons" have tossed about for decades. Many HR executives have addressed them but fell short of earning an invitation to "take a seat."

In final analysis, there is no simple cause and no simple solution. HR will earn a seat at the table only when it can regularly offer analysis, assessment and options coupled with accurate prediction. Without this HR will remain relegated to a necessary but secondary status. Perhaps more importantly, failing to get a "seat at the table" means that a critical factor of production (humans) will be systematically short-changed.

The situation is not hopeless. There is technology that can offer HR the ability to accurately predict and control the future. It rests on a simple information processing foundation that can explain "why" a condition is occurring. It can offer cogent reasoning that takes the discussion out of the realm of opinion and into the domain of knowledge.

“I Opt” technology offers a concrete step available today. With it, HR can demonstrate its ability to consistently guide the successful development of groups reliably and at low cost. The technology is easy to administer and can be repeated on a big scale. HR can incontrovertibly demonstrate that it possess knowledge beyond that generally available. It can show its ability to accurately assess, create options, predict and ultimately control outcomes. It can do this day-in and day-out across a variety of functions. This will earn the positive notice of the others currently “at the table.”

“I Opt” is a quantitative technology. It measures things. The numbers gathered in working with groups can be turned to address bigger issues. Every entry on this blog is a data-backed analysis of a large scale condition. These entries illuminate the differences in CEOs; test for gender differences at the executive level and highlight the important factors involved in leadership development. The same kind of analysis can be be done inside of a firm. Issues such as corporate culture and organizational alignment are information processing based phenomena and can be addressed with "I Opt" technology.

“I Opt” technology is not everything. But it does illustrate what must be done to bring the human factor into the discussions at the “big table.” Even standing alone, it can go a long way to earning HR the credibility it needs. Using it, HR can show that it has unique knowledge and the ability to practically apply it. It can show that the human factor can be predicted and that outcomes can be controlled for the benefit of all involved. This is HR's ticket to a "seat at the table." It is to the benefit of all involved that this ticket be "punched" as early as possible.







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