April 2008 – Terminal illness for Human Resources

In Xanadu did Kubla Khan a stately pleasure-dome decree. Meanwhile British Airways settled for a fifth terminal at Heathrow. One inspired epic poetry, the other, epic failure. I wonder what the great Khan would have said had his baggage train gone walkabout?

Looking at the various teething problems experienced last week at the new terminal, it did appear that a collection of operational issues were involved and some of them exposed staffing and training weaknesses. Insufficient security staff on the first morning and inadequate training in baggage handling were two of the factors blamed for the embarrassing delays when the system failed.

The smoothest thing about my own delayed flight in to the terminal on Friday was the T5 celebratory chocolate. At least I had a flight. The earlier one was cancelled. I had flown out to Rome two days earlier to attend PricewaterhouseCoopers Human Resources Services international conference that was focusing partly on HR relevance.

The bad news for HR is that when 1,150 chief executives worldwide were questioned in PwC’s annual global CEO survey, only 43 per cent of the bosses believed their HR department was equipped to handle any changes required to compete for the best employees.

Findings such as this, coupled with the kind of problems experienced at Terminal Five, raise the question of whether workforce planning, staffing cover, skills and training are becoming too important for a single function that seems to have become stretched in recent years. No wonder that 89 per cent of the chief executives agreed that what the survey called their “people agenda” was a top priority.

But do HR professionals have the necessary capabilities to ensure their organisations have the right people to do the work? Not everyone thinks that they do.

In his Financial Times column in January, Luke Johnson, chairman of Channel Four, described HR as a “necessary evil for a 21st century business” and a “burden on the backs of productive workers. Much of HR, he wrote, was “expensive, bureaucratic hogwash.”

His views were criticised by some, including Mervyn Davies, chairman of Standard Chartered Bank, who described the comments as “pathetic.” He said: “The guy doesn't know what he's talking about. The reality is that we’re in a people industry where talent is an increasingly scarce commodity.”

But if you looked at the posted comments on FT.com, responding to the column, readers were split in their reactions. While the majority of responses defended HR, a substantial minority supported the criticism.

Goodness knows what the outburst did for morale within the HR department of Channel Four that, according to its 2005 report and accounts, the latest available online, had not been idle during the year.

Staff training and development had increased by 12 per cent, a new programme of leadership development had been installed, the appraisal system had been revamped, and a staff survey was able to report that 98 per cent of employees were proud to be working for the station, even those, presumably, in HR who were blissfully unaware of their chairman’s views at the time.

Whether or not you agree with Mr Johnson’s remarks, it cannot be denied that he represents a significant minority of managers in business. But this is countered by bosses of the stature of Mervyn Davies and Fred Goodwin, chief executive of Royal Bank of Scotland, who have invested their HR directors with considerable power and influence to ensure that the right people are doing the right jobs.

The same goes for Cynthia McCague, senior vice president, global human resources at Coca-Cola, who told the Rome conference she had been given a seat at the senior executive table. With 25 year experience in the business, she reports directly to chief executive Neville Isdell with whom she has been working to restore employee commitment after the company experienced a dip in performance. “He knew that I knew how the company makes money,” she said.

The question remains, however, whether the profession has enough people of this calibre to carry out the seismic changes expected of many businesses today, including flagship infrastructure projects such as Terminal Five.

As it turned out, BA problems, past and present, were the talk of the conference. One of the speakers, Hamish Taylor, a former head of brand management at BA before he went on to become Managing Director of Eurostar (UK), then Chief Executive of the Eurostar Group, challenged HR managers to think outside their disciplines when seeking to solve problems.

At BA, for example, when seeking to create beds in the first class cabins, he said that the business had approached a yacht designer that knew how to create luxury furnishings in a confined space. When looking to improve the way people queued, it had approached the Disney Corporation that had perfected queuing systems in its theme parks.

Much of Mr Taylor’s career expertise was gained in marketing and branding where some of the best sales and advertising campaigns are based on selling a perceived benefit. The Mars company, he pointed out, was a past master at this, devising slogans such as “A Mars a day helps you work, rest and play,” and “Milky Bar, the sweet you can eat between meals.”

In his early career at Procter and Gamble, product designers and marketing people would be sent out in to homes to view people using cleaning products in order to gain insights.

The same kind of insights could be applied in HR, he said. One of the best ways of helping chief executives to understand the art of communication, he said, would be to take them for a half a day in to a classroom where they could watch a teacher of seven-year-olds.

“You can learn more about how to get people to listen to you in that environment than by talking to 30 other chief executives. I promise you it works,” he said.

Armed with such insights, including those they need for their own roles, Human Resources people, he argued, needed to demonstrate their benefit to the business in the same simple terms adopted by companies such as mars to describe their products. They needed a brand proposition, he said.

Dave Ulrich, a business professor at the University of Michigan and a writer and specialist in HR, told the conference that HR professionals needed to be what he called “credible activists” who can articulate how they deliver value.

My own view is that activism should not be confused with aggression. Any behaviour that risks bruising the ego of a chief executive is best avoided. This is why I believe that senior HR professionals should position themselves in the role of trusted advisor who can deliver reliable and relevant employment data upon which a chief executive can make decisions.

Data and measurement is going to become increasingly important in the assessment of performance. The performance, or lack of it, at Terminal Five last week was being measured in cancelled flights and the backlog of thousands of cases that needed to be reunited with their owners. It is possible that these failures may hit some BA executives in their pockets since a bonus element is tied to airline punctuality. There has to be some justice in reward.

See also: HR and reorganisation