Why did CHOs always get behind CFOs?

Autumn is the season to harvest. As a tradition, when it comes to HR, we call the time a golden period (only next to the Spring season), when organizations reap experienced professionals, while spare no effort to grab fresh graduate on campus.

However, if the tradition still dominates the market, we would have never been surprised at various tragedies as “HP splitting plan” and “Adobe’s overall abolition of Chinese R&D arm” following a series of huge downsizing actions by big names.

August 2014, P&G claimed to give up 90-100 small-scale product brands through M&A transcaton, aggressive intervention or factor shut-down, cutting the number of existing product brands by half. This move was identified as“the boldest decision P&G has ever made throughout its 177-year history”.

In mid-July 2014, Microsoft announced its layoff plan, involving cutting off 18,000 employees in one fiscal year, or 14% of the total. The Nokia phone business was the worst-hit area after it was acquired six months ago by Microsoft who had made promise of retaining old employees.

June 14, 2014, Zhang Rui-ming, the Chairman of the Board and CEO of Haier Group announced in a public speech that Haier had laid off 16,000 employees last year and intended to cut another 10,000 this year.

February 26, 2014, IBM began its layoff plan named as “Apollo Program”. At least 13,000 employees were involved. In early March, Shenzhen factory had a two-week strike because 1,000 workers on the X86 production line were reluctant to join Lenovo, the factor’s buyer.

On surface shrunk sales was to blame to have resulted in poor performance both in business and on financial report. The staff had to be disposed of as a part of operation cost to achieve a better balance sheet.

However, we like to dig deeply, we doubt if this is a good way out for business with bad performance, as we see no one happy in the situation, either Senior Executives, HR, or employees to be sent home.

With Poor HR Management, CFO has to Step in

In stead of sitting there regretting, we start asking ourselves: is there anything wrong we neglected? Is this kind of painful layoff really the only version for business difficulty to be handled?

Now, let us step back to review the above mentioned stories. What caused poor business performance? Primarily, we like to call them the following 3 things:

1. Changes happened to customer’s consumption habit and distribution channel, that leaded to slower sales of the incumbent brands;

2. New players came to the market and drove market structure to increasingly change, where incumbent businesses faced tougher situation in making the same profit as before;

3. Technological evolution, brought many alternative choices and services to the market, in which the incumbent business’s room shrank .

Why these things happened? Actually, when you think them over again, it’s easier for you to locate the root cause: the incumbent business did not responding to market demand in a timely manner, when the market changed and customers asked for something new, they were still where they had been.

So why didn’t they adjust business operation to manufacture and market new products to the changed market, and why didn’t they just send CFO to court the Wall Street for more funding instead of layoff which hurt everyone?

Why not? They could not. These companies were simply disabled to do any kind of solid change or adjustment about their R&D, production, distribution overnight, consequently, they were not qualified to get good funding scheme from the Wall Street.

Just because the common sense- all kinds/sizes of “businesses” are run by “personnel” and work for people. Adjusting operation, launching new product and lobbying investor , almost everything, would not happen if you didn’t change your human resources strategy and reallocate human resources accordingly. People get themselves in dilemma just because “personnel problem” – the root cause behind the scenes we saw from the above mentioned cases.

At that time being, step back to organic development and “building new projects to get immediate orders” only is a wishful thinking. Asset replacement became the first choice for survival, and that means disposing workforce. The incumbent business had to take up downsizing plan, cutting off employees to save paycheck which was proposed by CFO, and the HR department went to the war.

If HR strategy and practice play such as a decisive role, why was there nothing taken to change and improve it in a earlier stage,, or even before any change to market and customer expectations?

If so, not only would the incumbent business not slide into crises, but also no such tragedies as “layoff” and “split” events would happen. And, the socalled largest “downsizing” plan would have never happened in the 177-year history of P&R which was once famous for its “being driven by HR”.

So, if you happen to be one of the laid-off employees, you might blurt out, “why don’t we also cut the entire HR department since it’s their failure that makes the CFO cut off employees for the sake of cost saving? Why don’t you leave the HR the knife to cut themselves off?” You would even state, “with poor HR management, CFO has to step in.”

Yes, seems there is no reason for us to defend HR as a function when it failed to function.

Often, HR has no Idea When the Layoff is to Happen

“Oh, no, wait a minute, HR should not pack up and go home right now!” “Why not? They should suffer the same as we do,” “Well… I understand your frustration, but this is the case: because of the layoffs, we still need them to calculate all items of compensation, and we even need them to prepare for any possible labor lawsuits. It wouldn’t be too late to dismiss them by then.”

This conversation is likely to happen if you complain to a CEO. And you would have to nod your head and agree with him, because you wouldn’t want any delay to get your compensation. However, ironically, for the HR managers who are within the dismissal radar, maybe they would start to work for university recruitment just three months after you leave the company. As 3 months later you leave the balance sheet gets improved, Wall Street changes their attitude meanwhile a new order is landed.

We got the secret here — HR managers are always very busy, they repeatedly recruit, place, dismiss, and compensate, but rarely deal with the employees they recruited.

Just because there is little time for the HR managers to get along with the colleagues they recruited (of course belonging to other departments), they know little about how their colleagues get jobs done, what is value their colleagues created on jobs, consequently, know even less on how value expected by customers is delivered on jobs by their colleagues ; accordingly, when new expectations are raised by customers, they have no idea on how to encourage or drive colleagues to create more value on jobs, and timely alter or form HR service and protocal, to support customer value building associated business activities.

Hence, HR managers have no idea when their company performance begins declining, when losses happen, or even don’t know when the company will go for bankruptcy. In many cases, when CMO found hard on sales side, COO found low morale in the office, and CFO found a loss from auditing and reported to CEO, but CHO was still in the dark , being the last one to be on the same page.

In this scenario, the tragedies mentioned above had to happen as justified. We can only say that in such events, both employees and HR managers are losers, and employers lose more.

How to solve this dilemma?

HR supposed to Develop and Deliver Employee Value, rather than Placing Employee

HR need concentrate on its key agenda and deliver key value- develop and deliver employee values. The employee value involves both leadership and financial output, and the former determine the latter. No leadership, no financial output. As a HR, to generate financial output from an employee, you need develop their leadership in the fist place.

How to develop and promote leadership for your organization? First of all, you need turn your eye to internal world in a business, from external world. Working on the existing talent pool, all your employees is the biggest leverage — actively serve, manage and develop the existing employee, in a total practice of talent management.

However, “how to do right” talent management is out of discussion here, I like to encourage you to attach much more importance to the big picture here — “why to do” and “what is right to do” talent management.

As you may already know, HR function exists as part of bid to deliver customer value as a brand promises, as the same with other departments in a business.

If a HR function fails to support the top agenda- improved delivery of brand experience and customer value, it is defunct, and deserves no value for existence. Since a business without a separate HR function can deliver customer value, a business with a separate HR functions must deliver improved customer value. Agree?

In the first place, a business/organization often positions themselves with a certain customer value proposition to specifically serve a segmentation (certain groups of customers) in the market, based in knowledge and insight into market status and organizational resource inside. To deliver customer values to fulfill the customer value proposition, naturally, establishment of a relatively clear employee value position is required to unite the employees and ensure this organization to obtain certain capability.

In reality, the market doesn’t stand still, but change constantly, so does customer expectation. Simultaneously, organizational resources inside a business are also subject to changes, so do the workforce and employee expectations.

When a business/organization is determined to hold its long term commitment to development and customer value delivery, eventually it has to keep its customer value proposition updated with the market status and customer expectation. Accordingly, in order to fulfill the updated customer value proposition, the business/organization should reformulate its employee value proposition, so that it can realize the transfer and inheritance of the leadership, through reshaped employee value, to create new customer value.

In this case, HR function would better to be run inside out. In the first place, HR staff understands the expectation of its own “customers” – the employees, or internal customers of a business/organization, and then through eyes of its own “customers”, promptly learn about the “customers” of the employees, or the external customers of a business/organization, so as to collect corresponding impacts on the business/organization and respond in a timely manner, in formulating and revising its strategy and process.

Downside in Positive Way, not Negative Way

Ideally, HR team should in the first place formulate distinctive “values” that value leadership and performance of employee distinctively, prioritizing actively managing and developing current talent pool over external talent, with an endogenous learning organization to build as an ultimate goal.

In the framework, HR team actively intervene employee value proposition, based on changes inside and outside a business/organization, and leverage employee value proposition as a philosophy to update talent management practice and streamline employee https://www.linkedin.com/redir/general-malware-page?url=experience%2eAs a result, employee value will be reshaped among the existing workforce and improved leadership will be retrieved from reshaped employee value.

In the case, improved leadership will drive the business/organization to deliver customer value to fulfill the previously agreed customer value proposition, or bring back the customer expectation changes at the market, and drive customer value proposition and the employee value proposition to update to respond to new changes poised to the business/organization.

If so, with the backup of the business/organization’s leadership, HR team picks up even anticipate feedback from the market in a very early stage , so as to proactively drive employee value proposition update to reshape employee value, enjoying much more flexibility to push forward a small-scale “downsizing”.

In the small-scale “downsizing”, HR team has much more room and time to review current talent pool, audit the workforce, pick up problematic employees, and more importantly let them leave to avoid increasingly negative impact on the workforce and even a potential “tragic layoff” ahead.

I would like to call the above small-scale “downsizing” plan“ as “Re-selecting”, much more positive, as opposed to “ Layoff”, much more negative.

“Re-selecting” is an organic part of an aggressive, strategic “talent management” practice, a necessary way for organizational refreshment, and a little step but far meaningful for HR to come back to its core value – “managing and developing value in people”.

On the other hand, an aggressive and strategic “talent management” practice not only enables a business/organization to optimize internal resources, increases value of existing employees and human capital RO; but also facilitate a strategic workforce plan to avoid blind recruitment and tragic layoff from time to time.

In other words, if the small-scale “downsizing” or “re-selecting” mode was established in place, negative and zero-sum style events of“ layoff” could be avoided in IBM, Microsoft, Haier and Adobe as the above mentioned.

Once you have effectively build a endogenous and learning organization in place, the highly engaged employees that advocate employee value proposition can not only be reserved to replenish your leadership pipeline, but also naturally become the ambassador of your employer brand, actively bring in new candidates with nearly zero recruitment cost, and even spontaneously promote products and services of your brand on social networks.

So please reconsider your recruitment plans, strategize your talent management practices, and actively pay attention to the impact that the external customer expectation changes would bring to your organization.

First and foremost, from now on, stop downsizing the staff in a negative way, but re-selecting, the positive way ~

This article is written by Steven Li. Since 2009, he has been the producer of EBS Employer Brand Strategy Series Conference of LinLead, an independent B2B learning meeting organizer.

Check him out, please follow WeChat Account “ steven_lidi” or visit LinkedIn profile: cn.linkedin.com/in/stevenlidi/

For more information about The 3rd Employer Brand Strategy Summit to be held on 13, November in Shanghai, please click “Read Original Article” or follow our Wechat service ID “thelinlead”!

  • this was originally published on published on November 10, 2014 I made some slight change to it for this publication.

You must be logged in to post a comment