Our attention has been drawn to several articles recently (here, for example, hat tip to John Sumser) pitting CFOs against HR. The Economist boarded this particular train early, with its late 2008 article The Year of the CFO by Financial Timescolumnist Lucy Kellaway.
Full disclosure: I have nothing against CFOs. Many of my most respected client relationships are with CFOs. I also happen to be married to one. But I will say this, as it pertains to my little corner of the world: For right or wrong, I have found that the typical CFO approaches employee rewards in a fundamentally different way than those of us trained in the "human" professions.
If there is a shift underway, though, let's be clear that it isn't just about us and our profession(s). It is one, as Kellaway herself asserts, that "will affect how companies are managed, what it feels like to work in them, the culture of business and even its language."
But it does have pretty profound implications for people practices, as Kellaway notes under the subheader "Goodbye 'talent', hello 'staff'":
An old truth will be whispered by the brave: most workers are not terribly talented and most of them don’t need to be, as most jobs don’t require it. In 2009 a more elitist shift will occur: companies will worry about the performance of those at the top of the pyramid, while everyone else will be managed like a commodity. “Talent” will be a word we wave goodbye to. In 2009 the word “staff” will make a comeback, as will “headcount”.
I have had a lot of opportunities to review and audit the effectiveness of reward systems - particularly incentives - in organizations like this. For the most part, reward plans are designed to fairly distribute excess profits. And they do this. But that doesn't focus attention or drive any change in behavior. And so it doesn't produce much in the way of bottom line results. Because if you treat people like a commodity - or sheep, for instance, or mere cogs in some giant wheel - they tend to act accordingly.
Jerry McAdams, author of numerous reward books including The Reward Plan Advantageand someone I had the privilege of working with at Watson Wyatt, was fond of saying that it took about eighty years after the onset of the industrial revolution for management to discover the customer, and about ninety years after that to discover the employee. Could it be that this is a cycle of sorts, and we are about to loop back to our earlier disregard for the value of "the talent"?
Do we, in fact, need a reality check, a shot of responsibility, a new level of discipline and accountability in how we manage our organizations? It is difficult to argue "no" here, given some of the excesses and examples of irresponsibility we've witnessed as the walls around us have come tumbling down. But this is the age of knowledge and the knowledge worker. Whether or not we want to pretend otherwise and treat them like interchangeable expenses, they are the chief - sometimes the only - asset underlying the worth of most businesses today. In reality, how far can our organizations allow the pendulum to swing backwards and still have a shot at success and prosperity (never mind digging out of this hole)?
At any rate, let's be clear on what's really at stake here.
Your article reminds me of the Eastern philosophy of yin and yang. Yin and yang are complementary opposites within a greater whole. Everything has both yin and yang aspects, which constantly interact, never existing in absolute stasis. While Finance and HR are opposing each other in many respects; they are also rooted together, transform each other, and need each other to exist.
Posted by: Paul Weatherhead | March 13, 2009 at 12:00 PM
To me, it's more like the Hegelian dialectic: thesis and antithesis, opposing forces constantly evolving, interacting and inevitably resolved by synthesis. The perfect path is always a fine line.
Posted by: E James (Jim) Brennan | March 13, 2009 at 06:34 PM
You wrote: 'Could it be that this is a cycle of sorts, and we are about to loop back to our earlier disregard for the value of "the talent"?'
This question presupposes that there are only a few places for the pendulum to swing to: product, customer, employee.
While I accept that there's a repeatable cycle to just about everything in life, I'm not sure that this particular cycle is limited to just these choices.
Posted by: Elizabeth Evans | March 14, 2009 at 12:05 PM
Admittedly things are a little different in the midst of a serious recession, but the CFO beancounter approach is to regard staff as abstract units -- let's call them human beans.
The problem is that human beans are not like floating randomly in a gas, or products on store shelves, they are autonomous, thinking, rational beans. And an autonomous, rational, thinking bean is going to autonomously, rationally think about working anywhere other than an organisation that treats them like a unit of production.
This is harder for beans with undifferentiated skills than for more talented, knowledge worker beans.
So, ultimately, the CFO approach is simply going to make a company dumber.
Posted by: Bill Bennett | March 14, 2009 at 06:50 PM
Great post, Ann. We conducted a survey last Summer on the need bridge the gap between the CFO and the CTO (Chief Talent Officer).
I said at the time the study was released that business leaders understand HR has the power to transform an organization by taking a strategic view and using technology to implement a measurable employee engagement solution that generates real results. Leaders also understand employee recognition can improve employee engagement and – by extension – their bottom line, shareholder value and customer retention. To get there, it is essential that today’s global companies bridge the current gap between finance and HR, empowering these functions to collaborate on this new strategic imperative and ultimately implement a universal recognition platform that motivates, retains and attracts great talent.
Key findings of the study include:
* Human Resources Must Take a More Strategic Role in the Business
* Employee Recognition Drives Engagement and Therefore Impacts Recognition, Retention, Productivity and the Bottom Line
* Creating a Universal Recognition Platform for Global Companies Is Difficult
* CFOs Are Not Aware of How Much They Are Spending on Recognition Programs
* The CTO and the CFO Must Work Together to Chart the Course for the Future
More on the research is available here: http://globoforce.blogspot.com/2008/06/bridging-gap-between-finance-and-talent.html
Posted by: Derek Irvine, Globoforce | March 17, 2009 at 03:07 PM
Paul and Jim:
I like the yin and yang, thesis and antithesis analogies - thanks for sharing!
Elizabeth:
Actually, I'm looking at it even more simplistically here - a pendulum which has "employees as assets" on one end, and "employees as costs" on the other. That's the one dimensional pendulum I am referencing - but as you point out, there are a number of other dimensions with their own pendulum effects - each of which may reflect a different cycle. Interesting to consider how these may all interact - I suspect there are some interesting underlying relationships.
Bill:
I agree with you - the days when we could compete with human beans have come and gone.
Thanks all for sharing the thoughts and comments here!
Posted by: Ann Bares | March 17, 2009 at 03:10 PM
Congratulations! This post was selected as one of the five best business blog posts of the week in my Three Star Leadership Midweek Review of the Business Blogs.
http://blog.threestarleadership.com/2009/03/18/31809-midweek-look-at-the-independent-business-blogs.aspx
Wally Bock
Posted by: Wally Bock | March 18, 2009 at 01:41 PM
Wally:
Thanks - always an honor. Readers, click through to see the whole rundown of the "Midweek Review".
Posted by: Ann Bares | March 20, 2009 at 09:42 AM
I like your distinction above, Ann. Another way to describe the same dichotomy is "employees as people" at one end of the spectrum and "employees as parts" at the other.
Posted by: Wally Bock | March 22, 2009 at 04:09 PM
Wally:
Boy, that dichotomy really makes me twitch. I can't really believe, in my heart of hearts, that we can possibly be moving in that direction. But these are strange times...
Posted by: Ann Bares | March 23, 2009 at 08:46 AM