|
|||
|
|
|
||||||
|
"A New Helm for HR?" Give Me a Break
In your February 2009 cover story, "A New Helm for HR," author Scott Flander wrote, "After decades of focusing on cost-cutting and operational issues in turning companies around, some private-equity firms have recently concluded that a little talent development might not be bad, either. In the last year or two, they've been hiring high-powered HR leaders to work closely with their portfolio companies, making sure the right CEOs and other senior leaders are in place and working toward the right goals." Either Mr. Flander does not understand successful private equity ("PE") investing or he is naïve. He may also not understand the propensity of human resource executives, especially from large companies, to overstate what they do and their impact on business performance. Many, if not all, high-performance business teams are built by line executives responsible for results from operations and, ultimately, shareholder value. HR executives, at best, play a support role that may, at times, be considered of little true consequence. Mr. Flander identifies two very large PE firms that recently hired chief talent officers who previously worked for corporate behemoths. Such corporations usually have tremendous resources, including an abundance of specialized support staff. Measuring individual executive impact is nearly impossible. To assume today's HR executive has much to do with creating his or her behemoth's culture is a mistake. The culture, selection and evaluation processes -- and performance measurement systems -- were, in most instances, put in place and functioning well long ago. Most PE executives are transaction professionals with banking, consulting and legal backgrounds. Few have meaningful business experience, and even fewer have run a company. Smart transaction professionals recognize their talent and skills are different than those required to grow and build businesses. For this reason, it is not uncommon for PE firms to "invest in good management." What this means to me is that smart, able managements produce the best results. This philosophy, however, contains a value-zapping loophole. Within most PE firms, there is no shortage of confidence, arrogance and hubris, especially among transaction professionals. Believing in their own infallibility and rarely having experience in business organizations or understanding how they operate, they have a tendency to wait too long before addressing problems. When action is finally taken, it's often an overreaction. PE firm staff swarm throughout a company "solving" problems that may or may not exist and are, unfortunately, anything but the root cause of faltering performance. HR executives will unlikely fix this problem. In my career, I have yet to meet an HR executive with the background and skills required to quickly and accurately assess a business' strategic, operating and talent needs. Few seem to understand when and how to consult and advise, when to take a more activist role (even if behind the scenes) or when to build consensus for significant organizational change. These are skills developed and refined in the cauldron of line responsibility -- responsibility for measurable results. More realistically, HR will sense the winds of a PE firm's political change. Then, HR can help promote and administer a change process conceived by others, even if that change is not the right business solution. To secure a higher return on invested capital, PE firms might consider the group-executive role used in conglomerates. Group executives oversee a portfolio of business units. Group executives typically have broad functional and industry experience, including having run businesses. Successful group executives measure performance by results. They will have "walked many miles in the moccasins" of portfolio-company executives and can, therefore, understand and anticipate the issues CEOs and management teams deal with. This shared understanding helps unlock "hidden" shareholder value! Before writing me off as someone who does not like HR, I offer a little information about me. I am a 50-something C-level executive. My passion is building businesses that consistently exceed expectations for growth, profitability, team cohesion and strategic alignment, customer satisfaction, and shareholder value. I have little tolerance for staff members who traffic in gossip and foment rumors, like to play "gotcha" and engage in destructive politics. I have worked successfully in global corporations and smaller companies. I've been a PE portfolio-company executive, served on public- and portfolio-company boards, and advised PE executives on a wide array of matters. I am currently between jobs. While I appreciate viscerally the positive impact capable staff personnel can have on a business, I know firsthand there is a shortage of truly gifted HR executives. The shortage may be greatest in very large organizations. Why, you ask? Political skill and instinct are required to rise in most large companies. Executives in HR build their careers not by being accountable for results, but by opining on the results of others as they try to remain upright while surfing the political waves of change. Simply put, in most cases, HR executives don't play the game and they don't make the rules. Now, if you work with a smart, capable HR executive, jot the person's name down and stay in touch. Good HR people who understand that HR is an administrative function whose value is undermined when people try to use it to supplant the line organization, and/or when it builds staff that meddles, are few in number. Like any rare commodity, good people are worth keeping! Name Withheld at Writer's Request
March 2, 2009 Copyright 2009© LRP Publications |
||||||
Print
Email
Write to the Editor
Reprints
|
||||
|
||||
|
||||
|
© Copyright 2010 LRP Publications. All rights reserved.
|
||||