The biggest concern for any organization..

So Many Leaders Get This Wrong

By Jack and Suzy Welch

We've always said that human resources should be the most powerful part of an organization. So why, in reality, is its impact more often felt in a negative way?

Because human resources, unfortunately, often operates as a cloak-and-dagger society or a health-and-happiness sideshow. Those are extremes, of course, but if there is anything we have learned over the past five years of traveling and talking to business groups, it is that HR rarely functions as it should. That’s an outrage, made only more frustrating by the fact that most leaders aren’t scrambling to fix it.

Look, HR should be every company’s “killer app.” What could possibly be more important than who gets hired, developed, promoted, or moved out the door? Business is a game, and as with all games, the team that puts the best people on the field and gets them playing together wins. It’s that simple.

You would never know it, though, to look at the companies today where the CFO reigns supreme and HR is relegated to the background. It just doesn’t make sense. If you owned the Boston Red Sox, for instance, would you hang around with the team accountant or the director of player personnel?

Sure, the accountant can tell you the financials. But the director of player personnel knows what it takes to win: how good each player is and where to find strong recruits to fill talent gaps. Several years ago we spoke to 5,000 HR professionals in Mexico City. At one point we asked the audience: “How many of you work at companies where the leader gives HR a seat at the table equal to that of the CFO?” After an awkward silence, fewer than 50 people raised their hands. Awful!

Since then, we have tried to understand why HR has become so marginalized. As noted above, there are at least two extremes of bad behavior.
 
The stealthy stuff occurs when HR managers become little kingmakers, making and breaking careers, sometimes not even at the leader’s behest. These HR departments can indeed be powerful, but often in a detrimental way, prompting the best people to leave just to get away from the palace intrigue.

Almost as often, though, you get the other extreme: HR departments that plan picnics, put out the plant newsletter (complete with time-in-service anniversaries duly noted), and generally drive everyone crazy by enforcing rules and regulations that appear to have no purpose other than to bolster the bureaucracy. They derive the little power they have by being cloyingly benevolent on one hand and company scolds on the other.

So how do leaders fix this mess? It all starts with the people they appoint to run HR—not kingmakers or cops but big leaguers, men and women with real stature and credibility. In fact, managers need to fill HR with a special kind of hybrid: people who are part pastor (hearing all sins and complaints without recrimination) and part parent (loving and nurturing, but giving it to you straight when you’re off track).

Pastor-Parent types can come up through the HR department, but more often than not, they have run something during their careers, such as a factory or a function. They get the business—its inner workings, history, tensions, and the hidden hierarchies that exist in people’s minds. They are known to be relentlessly candid, even when the message is hard, and they hold confidences tight. With their insight and integrity, pastor-parents earn the trust of the organization.

But pastor-parents don’t just sit around making people feel warm and fuzzy. They improve the company by overseeing a rigorous appraisal-and-evaluation system that lets every person know where he or she stands, and they monitor that system with the same intensity as a Sarbanes-Oxley compliance officer.

Leaders must also make sure that human resources fulfills two other roles. It should create effective mechanisms, such as money, recognition, and training, to motivate and retain people. And it should force organizations to confront their most charged relationships, such as those with unions, individuals who are no longer delivering results, or stars who are becoming problematic by, for instance, swelling instead of growing.

Now, considering your negative experience with human resources—and you are hardly alone—this kind of high-impact HR activity probably sounds like a pipe dream. But given the fact that most leaders loudly proclaim that people are their “biggest asset,” it shouldn’t be.

It can’t be. Leaders need to put their money where their mouth is and get HR to do its real job: elevating employee management to the same level of professionalism and integrity as financial management. Since people are the whole game, what could be more important?

Jack Welch is Executive Chairman of the Jack Welch Management Institute at Strayer University. Through its Executive MBA program, the Jack Welch Management Institute provides students and organizations with the proven methodologies, immediately actionable practices, and respected credentials needed to win in business.

Suzy Welch is a best-selling author, popular television commentator, and noted business journalist. Her New York Times bestselling book, 10-10-10: A Life Transforming Idea, presents a powerful decision-making strategy for success at work and in parenting, love and friendship. Together with her husband Jack Welch, Suzy is also co-author of the #1 international bestseller Winning, and its companion volume, Winning: The Answers. Since 2005, they have written business columns for several publications, including Business Week magazine, Thomson Reuters digital platforms, Fortune magazine, and the New York Times syndicate.
A version of this column originally appeared in BusinessWeek Magazine.

Posted by:Jack Welch

The Biggest Dirty Little Secret in Business

By Jack and Suzy Welch

Can you guess the biggest dirty little secret in business?

If you’re thinking “outsized bonuses,” “bureaucracy” or “poor strategy,” guess again. While these issues may have merit in their own right, we believe that the absence of candor is the single largest roadblock keeping companies from being effective.

The concept is simple but its consequences are huge. Without of an open culture of frank, sincere and exhaustively honest talk, people feel left out of important conversations (because they are), or worse, they are brought into the loop but given inaccurate information, which they then act upon. Decisions are slowed because everybody doesn't have the same information, and what information they do have can't be trusted, so must be checked and double-checked. Ideas are debated not in open forum, but rather in cloistered quarters to which only those in the know are admitted. Costs go up as resources are wasted preparing reports to confirm what everyone in the room already knows, or think they know. And most troubling of all, team members have little idea where they stand in terms of their own performance.

While socialization, legal, and cultural factors all undoubtedly contribute to the absence of candor in business, the influence of organizational practices, metrics, norms and incentives on candor are things that all of us can do something about.

You can read any number of management books that share our opinion on the need for candor. According to most of them, the key to achieving candor is for employees to summon the courage to give tough love to peers, and speak truth to power. Senior executives, too, exhort their subordinates to speak up for what they believe in, and courageously challenge the old established ways of doing things.

But why? Why should it take courage to give your boss and other senior executives what they say they want? Shouldn't it be just the opposite? Shouldn't courage be required to give higher management what they don't want?

One explanation for this seeming paradox is that, in many organizations, the people at the top say they want candor, but what they really want is for people to agree with everything they say and go along with everything they do. And even if they don't feel that way, if your boss is the kind of person who interprets every constructive recommendation as a personal attack, you’ll end up in the same dilemma. In this situation you aren't without options but, there aren't many, and they are far from risk-free.

Often, however, when candor is punished, it is not because higher management really does not want it, but because the policies, practices, metrics and incentives inadvertently discourage it. For example, consider the norms that surround how performance feedback is given in many, if not most, organizations. The ratings of most employees are lumped into the top two performance categories, and even those employees who are not carrying their weight are assured by higher management that they are doing a good job. If an area of weakness is mentioned at all, it is mentioned gently in passing and future rewards are not made contingent upon future improvement. When people are passed over for promotion, they are reassured that it was because of politics, or told that they barely missed getting the job because someone else scored just a little bit higher. After all, they’re good people and you want to be kind.

But look, everyone doesn't perform at the same level at the same tasks. Most managers would agree that some number of their employees are underperformers. And when an important customer comes to town, will your low performers be assigned to squire them around? When you have an important job that needs to be done, will you give it to them? When a promotion opportunity opens up, will they be seriously considered? Probably not. But since no one has told them how their performance is really viewed, they think they are up for getting these things, and they die a little each time they are passed by.

Eventually, they figure it out, but by then most of their work years are gone and they're not very marketable. You may think of yourself as being nice, but really, giving less-than-candid feedback is the cruelest thing you can do. You’ve sabotaged these people's careers.

At least have the honesty to admit to yourself why you are doing this. It's not for your employees' benefit. They would be better off knowing where they stand while they are still young enough and self-confident enough to look for a great career somewhere else. And don't tell yourself that it's for the organization's benefit. Do you honestly believe that you can't find people who can help the company more than your underperformers?

Admit it -- you're doing this for your own sake. You just don't want to have those conversations. And you shouldn’t. You’ll be sick to your stomach before your meeting and you won’t be able to sleep the night before. It's a terrible thing to have to let someone go. It’s something you’ll never get used to.

But you still have to do it. It's your job! Continuously upgrading your organization's talent is one of the most important responsibilities a leader has. And while you're being kind, your customers are getting more demanding each year, and your competition is getting better each year. Talk about being cruel -- if you let your competition take over your markets and steal your customers, a lot more people are going to lose their jobs -- probably including you.

Thus, as tough as it is to learn to live and breathe, candor is an antidote not just to phony performance reviews, stifled feedback, secretive information and the future careers of your people, it’s also critical to the competitiveness of the entire organization. Companies must work to get their people to embrace this socially-maligned trait by creating an environment in which candor is encouraged, rewarded and integrated into the organizational culture itself.

For without it, organizations lose “idea capital” and valuable information, they burden their divisions with underperformers, and they keep those people from achieving success elsewhere. And worst by far, they continue to build business upon the lies and falsehoods they tell themselves, a house of cards that will eventually fall.



Jack Welch is Founder and Distinguished Professor at the Jack Welch Management Institute at Strayer University. Through its executive education and Welch Way management training programs, the Jack Welch Management Institute provides students and organizations with the proven methodologies, immediately actionable practices, and respected credentials needed to win in the most demanding global business environments.

Suzy Welch is a best-selling author, popular television commentator, and noted business journalist. Her New York Times bestselling book, 10-10-10: A Life Transforming Idea, presents a powerful decision-making strategy for success at work and in parenting, love and friendship. Together with her husband Jack Welch, Suzy is also co-author of the #1 international bestseller Winning, and its companion volume, Winning: The Answers. Since 2005, they have written business columns for several publications, including Business Week magazine, Thomson Reuters digital platforms, Fortune magazine, and the New York Times syndicate.