Professional HR

Evidence- Based People Management and Development

Paul Kearns

• Publisher: Routledge
• Year: 2013
• ISBN:
  9781135626273
• Edition: 1
• Topic: Business
• Subtopic: Business generale
• Index: Business

A new breed of HR Professional is needed who can offer the sort of effective people management that can change the way organizations work. They will first have to resolve the legacy left by an absence of professionalism in people management amongst both operational managers and the HR departments that serve them. Much of the problems that currently undermine capitalism and governance today can be traced back directly to insufficient attention being paid to the professional management of human capital.

This text offers an objective scale to gauge levels of professionalism that can be applied to management in any sector. Paul Kearns has also developed a clear 10-step guide for anyone looking to develop their HR professionalism in a practical way. With an insightful Foreword by Professor Jeffrey Pfeffer and with these tools, readers will be encouraged to move away from the old world ineffectiveness of people management by looking towards a New Norm and the huge potential it offers for value and wealth.

Suitable for managers and students studying HR, Professional HR provides the answer for what could be the next iteration of the capitalist system, with professional, evidence-based people management at its heart.

1
THE VALUE OF THE PROFESSIONAL

Beware the HR ‘professional’

If you are looking for professional HR advice be very careful. Managing people is a really serious business and your search will not be made any easier by the fact that anybody can work in HR. That is because the professional institutions have no powers to restrict entry and their qualifications are not always required. There are many reasons why HR is in this predicament but it will only be able to put matters right when it has clear evidence to distinguish between the professional and the unprofessional; between best practice and malpractice. Once those distinctions can be made we will have the basis for a General HR Council (GHRC), with similar powers to a General Medical Council. Gathering the right evidence is not that straight forward though and measurement in HR is notoriously problematic. This is why the most well-established professional bodies (CIPD, SHRM, ASTD), with a combined world membership of over half a million practitioners, have so far failed to become evidence-based. Changing times now make change imperative: people management might never become an exact science but there is a real need for a much higher level of HR Professionalism. The ultimate challenge for us all is to convince ourselves that we are achieving the best returns possible from our human capital. Professional HR will play a major part as soon as it starts dealing with the real problems, which start right at the top.

When Stephen Green, former CEO and Chairman of HSBC, was asked whether the bank had any regrets about its disastrous purchase of Household International, which resulted in record losses in subprime lending, he replied¹ ‘It's an acquisition we wish we hadn't done with the benefit of hindsight, and there are lessons to be learned’.

So what has HSBC learned from its experience and what wisdom does hindsight bring? When Green referred to ‘we’ did he just mean he and his executive colleagues or did he mean everyone at HSBC? What about the managers who did the Household deal and their investment banking colleagues who advised them? Then there are all the other thousands of people involved in the global financial system, including those at the lowest levels who were close enough to the actual coalface to realize, well before their masters, that this was always likely to be a bad deal? They are the ones who saw the poor quality mortgage applications going into the system. While we ponder that we should not forget the journalists at the press conference; what did they learn? That assumes, of course, that the journalists want to learn so that they can spot any bad deals in the future, before they happen. Foresight is much more valuable than hindsight. Would HSBC's mergers and acquisitions team have been better served by interviewing the mortgage administrators at Household rather than the accountants? Have any lessons been learned at all, by anyone? Apparently not.

In 2012 Green was under pressure again, although he was now a UK Trade Minister after retiring from HSBC. He was under the spotlight this time because there was some explaining to do concerning HSBC's diligence in its anti-money laundering procedures.² The Wall Street Journal reported that ‘Law makers said money laundered through HSBC-linked accounts benefited Mexican drug lords and terrorist networks, and skirted US sanctions on Iran.’ It appears that lax management controls are endemic at HSBC; one part of its system probably infected another. The problem with systemic infections is they spread very quickly and HSBC is part of a much larger system; the entire, global financial system.

Before anyone gets the impression we are picking on HSBC let us stress that we chose them because of their good reputation. No organization is perfect and HSBC has come in for its own share of criticism but it weathered the financial crash of 2008 better than most. Its previous Chairman at the time of the Household acquisition, Sir John Bond, is highly respected and Green was at least willing to admit to some mistakes. Green is actually our example of a ‘good’ CEO and such animals are rarely sighted. He is an ordained Anglican priest and manages to reconcile his own deeply-held convictions with his personal ambitions and responsibilities as a commercial banker. He even writes books on the moral aspects of capitalism with titles like ‘Good Value: Reflections on Money, Morality and an Uncertain World’. So if large organizations like HSBC, with principled CEOs and respected chairs, can become so mired in illegal and highly questionable deals and practices, what should we expect from the rest who are likely to have less integrity? Maybe we are onto something here?

We are not implying that Green or Bond have necessarily done anything wrong. What we are suggesting is that to manage large organizations, in a global marketplace, is getting decidedly tricky in the twenty-first century. The scale of the damage that can be caused is now potentially so great we can no longer afford to get it wrong. The answer, in principle, is relatively simple; we need much more professional management to minimize the risks. CEOs and Chairmen cannot know every detail of every transaction so they need every bit of help they can get. They need to feel absolutely confident that their people are only doing what they are supposed to be doing and are doing that to the best of their ability. They need to combine commercially-sound decision making with a moral form of corporate governance. In the hard-nosed world of banking that is an extremely difficult balancing act to pull off, which is why so many banks are no longer fit-for-purpose. The same balancing act also applies to every other global corporation because banking is only one part of the complete global system. Maybe getting that balance right requires a much higher form of Professional management; especially people management?

The global system needs Professional people management because any system can only be as watertight as the human beings who run it. Financial regulators know that their main purpose is the stability of the financial system and have learned, both in theory and with hindsight, that asset bubbles should be avoided at all costs. Yet history has an unfortunate habit of continually repeating itself because we fail to apply these lessons in practice. We should not need reminding that some unscrupulous human beings will follow their own short-term selfish interests, to the detriment of society as a whole, unless there are sufficient constraints in place to curb their worst inclinations.

These lessons are not rocket science. Any reasonably intelligent, objective observer will witness human beings behaving in irrational ways, on a daily basis, if they keep their eyes open. Despite this, successive generations of managers in mortgage companies, banks, financial regulation bodies and governments have failed to influence or stop such behaviour. Historians, or at least those with a sense of humour, tell us that the most significant events in history can all be perceived as either a conspiracy or a ‘cock-up’ (badly managed). So is the global financial system one big conspiracy or just an almighty cock-up? If it is a conspiracy then perhaps many financial dealings today, that are deemed to be legally acceptable, will one day be declared illegal? Conversely, if it is just the result of bad system design, then someone should have known better and, if HSBC had educated its senior managers to higher Professional standards, maybe none of this would have happened. So what level of professionalism have you reached so far?

So how Professional are you?

To answer this question you obviously need a definition of Professionalism but note the capital ‘P’, which signifies the very highest form of Professionalism; governed by a General Council that monitors standards and has the authority to strike off those who are guilty of malpractice. If you cannot pass this test then maybe you can still reach a lower standard of professionalism with a small ‘p’? At that level it is more a case of personal conduct and minimum standards of expected basic behaviour. We could refer to the lowest level as the Entry point to the world of the professional. The following list offers a sample list of the types of behaviours we would all like to see and expect from any professional:

• Listening to your customer's needs.

• Respecting others and their views.

• Fulfilling your commitments.

• Turning up to meetings on time.

• Being properly prepared.

• Being courteous and having good manners.

• Maintaining confidentiality.

• Being prepared to listen to constructive criticism.

• Keeping any criticisms you might have of others objective.

• Being honest and having integrity.

• Informing those who need to know.

• Ensuring you have communicated clearly.

• Being impartial and making others aware of possible conflicts of interest.

• Maintaining self-control in any meetings, debates or disagreements.

There is a simple, over-arching principle here: ‘treat others as you would like to be treated yourself’. Not everyone will manage to satisfy this most basic requirement because human beings are fallible and will have occasional lapses. Nevertheless, you can try applying this standard to someone you know, right away. Think of someone who you regard as very professional but who also exhibits ‘small p’ failings? For example, your doctor may be a brilliant physician but perhaps they are unpunctual, forget common courtesies or their bedside manner is not what it could be? So what do you expect from your doctor, a good bedside manner or effective treatment? Ideally, we want medical excellence combined with all of these professional niceties but if we had to make a trade-off then presumably we would value a cure above common courtesy?

This begs the question of whether professionalism can be dissected and deconstructed in this way. For a doctor, is ‘listening’ just courtesy or a necessity? How can they apply their medical knowledge and expertise without having first undertaken a thorough diagnosis; including the patient's own description of their symptoms? To start answering these difficult questions we had better set out our Professional stall more clearly. Our aim is to define, shape and develop a total, people management version of Professionalism, with a capital P. This will also be the highest value version because value creation is our ultimate purpose.

A Professional statement of purpose and value

Being Professional means being sufficiently disciplined to achieve your declared purpose. Our declared purpose is as follows: ‘The purpose of a Professional is to ensure they offer the highest probability of the highest value solution to their customer's needs.’

The ‘customer’ is anyone receiving your Professional help, whether they have to pay for that help or not. Customers can also include patients, students, clients or any service user.

We then define ‘value’ as: ‘The cost of a product or service that is fit-for-purpose.’

‘Fit-for-purpose’³ is a standard definition in quality that will work with any conventional, quality management system. Under ISO 9000:2000 lead auditors are taught that quality is defined as ‘the degree to which a set of inherent characteristics fulfils requirements’. In other words ‘will it do what it is supposed to do?’ The value requirement asks ‘will it do it at the lowest possible cost?’ Sticking to these strict definitions is an important discipline that works well in manufacturing. The customer is always the ultimate arbiter of ‘value’ and can vote with their wallet, or their feet, if they believe they can get better value elsewhere. Taxpayers, who might decide they are not prepared to pay for poor value government services, will vote accordingly.

These same definitions and terminology can be applied to any sector, product or service. They can be used as a yardstick, for example, to judge the value of financial advice. When the adviser recommends a pension product, all that matters to the customer is what returns they receive. In the final analysis, the customer's judgement of professional advice will come down to what they expected to get for their money and what they actually received. Of course, there are many other factors outside of the financial adviser's control, and we can understand that some of these might not be foreseeable, but we still tend to judge people by results.

Let us take this idea further by looking at the case of a doctor's patient wanting a second opinion. If the second doctor's diagnosis turns out to be identical to the first then whichever doctor charges the least for the treatment is offering the best value for money. This should be just common sense because rational human beings are unlikely to pay more than they have to. We should just add here that this definition of value does not impose any condition, on either doctor, to charge the lowest price for their services. A Professional doctor can charge what they like in a free market and, assuming the market works well, those regarded as being the most Professional should attract a premium.

But how do we judge professionalism if there is no market or price mechanism in operation? Take the example of someone looking for free legal advice from a citizen's advice bureau. The professional adviser will do whatever they can to ensure that the quality of their advice is the best it can be, in relation to the cost of the service. If a taxation-funded, or charity-based, advice centre costs more to run than an equivalent, private law practice then the state version is of less value, and vice versa. This is a general principle of value that will apply in any context and can be expressed in simple equation form, as shown in Figure 1.1. If you achieve more output, more revenue or better quality per dollar spent then that is extra value. If you receive the same output, revenue or quality at a lower cost that is also better value. Now let us consider the potential for extra value from more Professional people management.

Applying the test of value

If you ask a football or baseball team manager what creates ‘value’ they would probably include everything from picking the right players, training them well, motivating them to perform and instilling team spirit. Yet all of this is neatly summed up in one, ultimate, objective— scoring goals, or home runs. If Manchester United never scored goals the club would eventually cease to exist. For a Manchester United fan it might mean that life itself is no longer worth living because they value their team so much. As Bill Shankly, a famous Liverpool FC manager once joked: ‘Some people think football is a matter of life and death. I assure you, it's much more serious than that.’

FIGURE 1.1 Added value is always in dollar's linked to OCRQ

Shankly was known for his witty quips but there was usually some fundamental management truth in his jest. If he did not take his own management job as seriously as life itself, how could he expect his players to give their all? If he placed a limit on the club's ambition, how would the fans react? This is the mindset of a true Professional, there are no limits, their Professionalism is more important than life itsel...

Table of contents

• Cover
• Title Information
• Title Page
• Copyright Page
• Table of Contents
• List of Illustrations
• About the Author
• Foreword
• 1 The Value of the Professional
• 2 Professionalizing the Management of People
• 3 The Definitive, Professional Manager
• 4 Educating the Professional, Evidence-Based Manager
• 5 Human Capital Management Recognizes the New Order
• 6 What should we do with HR and L&D?
• 7 Establishing a Universal, Evidence-Based Standard for HR
• 8 Ten Steps to Becoming an HR Professional
• 9 We Need More Professional Management for a More Civilized World
• Notes
• Bibliography
• References
• Index