Speaker A I love in. Good to great. His point about the brutal facts, because I find when I'm talking to HR audiences about this kind of stuff, really need to get some facts to get people into a different headset and a place around it. So I think in a lot of cases, what these slides are for me is describing the other game we ought to be in. I think that HR folks ought to be totally targeted at these boot effects right here that we've got data to show. Rob and I at bank of Montreal, we develop metrics, they absolutely prove this out time and time again. That about 50% of the time we know we'd have these boss subordinate relationships, not optimal. We know this. We've got data to support it. The pattern comes up over and over and over again. And we also know at the same time that the biggest impact on people's productivity and sense of staying with an organization and feeling good about it is what the boss so we know these things. Next one, just to reinforce that one.
Speaker B Our international over the last five years have also been doing that. We had 38% compression and 16% gap in the data.
Speaker A So it's wonderful to be having the same patterns. But the point is, what are we doing about these patterns? Like it's great.
Speaker B Yeah.
Speaker A Now we got data. Yeah, great. Then the other one is this thing about work assignments being unclear, and about one third of the time we see that over and over and over again. Now, of course, in my sense of things, how could you have clear work assignments if the other pattern I see all the time is people absolutely fundamentally not clear what their role is. Like, I don't know about you guys, but I rarely see a clear role described. I rarely see people understanding what accountability actually is. HR people and line folks on that one, how could we have that kind of thing? I don't want to get into this. And there was the whole day on that, but then there's the whole thing about base pay. And we've got all these interesting reward and recognition systems that create all these weird ways of pointing people in different directions than what we actually want them to be behaving in. And base pay is actually inappropriate, not surprising given the first numbers. If we have all this wackiness between people not being matched appropriate with work, naturally that's going to be out of line. And that leads us to the next one. And this is right out of some of Glenn's data. But again, this pretty much shows up time and time again where the mismatch factor is about 35%. Now, what I say to people is let's just pause for a moment and consider the economics of what we're talking about. And to me, this is where the game starts for HR. And I don't think HR people are taking advantage of those powerful economics enough to get people's attention. I forget what we have as our next slide. Yeah. So again, and I think Rob Savage and I would have seen this all the time, is, I think in most times and I've done.org design work most of my last ten years has been structural work. We're leaving 30% to 40% on the table. It's always there. It's always on the table in terms of productivity improvements that are sitting there. When we do the assessment and we talk about what could be changed. I think this is what HR should be absolutely obsessed with, focused on and contributing to, is this 30% to 40% productivity improvement. And I think the beautiful thing is that in our requisite set of tools, we have some wonderful things to help people get at that 30% to 40%. But to me, that's the game that I would like Nelly to play. And I think that's what this is about. And HR folks need to be better equipped to learn how to talk about the economics of labor, and that catches the attention of line folks and how can we actually get at changing some of these things? Does that resonate with folks? Yeah. Oh, sorry, I shouldn't have given you anything.
Speaker C That data does match experience, and it's very helpful. I couldn't help but think of conversations with managers who are accustomed to making investment decisions using CAPM and other sorts of structures and methods. They would take the 30% to 40% and then estimate it by the likelihood of successfully capturing it or gaining it. And the literature and the experience with change management and implementation of new computing systems and all sorts of these initiatives that are designed to improve performance suggests that there's only about a one in three chance of successful change in most organizations. So if you multiply a 30% possible gain by a one third or zero three likelihood of achieving it, you're suddenly under a value of less than 10% and less than 10% chance of gain of value. Expected value is simply not worth the effort. And I couldn't help but think of that connection on why organizations accept the suboptimization and accept it as an inevitable reasonable expense for literally decades at a time.
Speaker A Yeah.
Speaker C So this is very helpful data. We have to improve our capacity and ability to implement and capture it in order for the benefits to be big enough to motivate line managers to act.
Speaker A Absolutely.
Speaker D I would link it back to the speaker yesterday morning on the strategy, and.
Speaker E You'Re going into the middle group.
Speaker D Is it safer and less risk? This has got risk attached to it, certainly from the business leader recognizing the value okay. Risk to that point, the HR person that is going to be the catalyst or the leader to help implement it, risk to that person. And the tendency is to move to that middle ground where it's safer and you don't pursue it but I agree with you Anne, that's the right game to be playing.
Speaker A But it's interesting too. I've also had CEOs look me right in the eye and say just like saying, yeah, you know what, I know that if we kind of did this a different way and went after things, we'd probably get that. But you know what, I'm going to let people just dick around and do what they do. And if it's only 10%, then fine, I'm okay with that. Like actually rationally, there is one brutal fact missing.
Speaker B Yes.
Speaker A Tell us.
Speaker E Yes, that comes out of rest of it. Because you gave the data for relationship this way. Manager subordinate.
Speaker A Yes.
Speaker E 50% wrong mismatch.
Speaker A Yeah.
Speaker E And then you said that individual late role, it was also a percentage given for that. And then you said it was unclear tasks. But there is one more fact and that is when this is wrong, the delegation is wrong.
Speaker A Yes.
Speaker E And the delegation is also to more than 50% wrong in companies, according to.
Speaker B Our data at least.
Speaker E Because what is normal is that HR are involved in these kind of discussions and also these kind of discussions. But HR are never asked to discuss delegation and task and the reason for it. And that's why all of you like to hear about HR, of course, or Ro, because that gives you an opportunity for the first time to have a systematic approach to do this. So this problem, this deficiency is maybe the key to get into the kind of discussions necessary for HR to get more impact.
Speaker A Yeah, no, absolutely. And actually in the data that Juan Capell has collected and thanks for bringing that up because what he actually asked about to get that data I showed on this relationship, he actually asked about clarity around task and also delegation. What is being delegated?
Speaker F Delegated? It's ration or gap in rule delegation. And that is what you're talking about when HR is on level three and ought to be on level four.
Speaker E Absolutely get what you're saying is the gaps and the jam ups of the compression are a direct result of managers potentially delegating either too much or too little to that next report, which makes.
Speaker A A ton of sense. Hold on, you can take mine and we'll be hooked together.
Speaker B One of my dreams.
Speaker A Later.
Speaker B I'm getting frustrated because I think we could be talking about any function here. And actually these are just standard statements we can make about people in working relationships. I don't mean these things up here, I mean some of the things we're saying about dysfunctionality in organizations. My concern is what can we actually say about HR and how it's led so that it actually becomes an effective strategic partner or whatever in the organization. And clearly the first thing is who's the HR boss or who is it that has that role in the organization and how do they see the strategic universe that they're actually working in for me, I've done HR at a variety of different levels. But the critical thing is, if HR person doesn't understand the business first thing, there's no right to be there in a leadership role. Frankly, that's not a question of HR. That's a question of is this person human enough to be part of the culture in which they're actually there stewardship is actually the Judeo Christian fundamental value. It's the Old Testament value for our stewardship of being here as God's servants. So that's for everybody, we all police one another's behavior. We all say that's not a good idea. I wish you wouldn't do that. I wish you would do more of that. So that's a kind of universal thing as well. And that applies to all functions too. But what about when you're in the organization and we are talking about going from being, sorry, can I draw something you want? This one that's disappointed me in some senses. See, I can be politically inappropriate while I'm here because I'm not under managerial hierarchy. If you're the HR boss and let me just tell you about conversation in British gas that I had. I was in the international strategy team and I was the only member of the UK business in the international strategy team. And I had been an HR director, right? So we were talking about we were in 42 countries, we're deciding what to go, did we want to be a multidimestic organization, said we want to be a transnational, said we want to be global. Did we want to be international? Why is that important? It's important because you can be an international business and entirely run your HR from level four. No problem. Because many international businesses just do abroad what they do at home and the local pay rates are slightly different and the local guy can take charge of that. But actually nothing else very much changes. There are tiny differences in the internal system. We have an assumption often in the Ro community that that equals six or more. Right? Lots of companies happily run big, international, highly profitable enterprises running out of four because they don't need the complexity. In fact, the complexity is a cost, it's a complication and it's an overhead. And so not there. What about a transnational business where actually you have centers of excellence around the world? And let's say power engineering is run in India and say gas exploration is run in the UK or in Houston as it was in our case, right? And something else that's run in, say, Geneva, and something else that's run in Argentina. These are entirely different businesses which require a sophisticated level of involvement to design the HR systems. And of course, the key thing is that then leads you to design of the corporate center. Because it's when you know this that you start to design your corporate center. And if you don't get your corporate center thoughts right, that what your structure is going to be everybody gets screwed. Can't help it after that, if you're busy doing the wrong things in the corporate center because they're all going to fight you forever. And they do. We've all had it. We've all had that kind of experience or observed it. Then there's another thing where you're multi domestic, and this is a typical thing for utilities, where you run, say, a water company or you run a gas company or an electricity distribution company. And actually the electrons don't really know whether they're in Argentina or whether in Canada or whether they're in consumers. They don't know where they are. They're just electrons going along. The cables probably look quite similar. Much of the stuff was the same. Little bits of the technology will be different. Maybe the pilings are different because you have different weather conditions or some things are underground as opposed to overground. You have a billing system because you send customers data to get money from them. Sometimes you send it once a month, sometimes once a year. Some do it by direct debit or some fancy banking thing. Others pay cash. These are all essentially level two and level three issues that you don't grapple with at the corporate center. So again, you're redesigning what you're doing there. I could go on, I don't want to bore you too much. But the key thing then is what is the role of HR in doing here? What value do we add? And the other question is, who do we serve? Who do we serve? Now, for me, just to give you a clue about the who do we serve thing, let's pretend that I'm a chief executive.
Speaker F You even have to ask that question, who you're serving.
Speaker B You do have to.
Speaker F Isn't that obvious?
Speaker B Well, it might be, but not to many HR people. Not to many HR people. Let's take your level three systems as a relatively closed system, as a linking set of systems, which we all know, and every HR person in most companies knows how to do that. And as Anne says, my observation is the world's full of really good HR people working in this level, and so they've got a nice closed loop of things they do from recruitment, et cetera, et cetera. What does the CEO want from the HR? Well, he wants these things to run well, but actually the CEO wants the HR person to be, I'm going to use my word, advocate for the people, a CEO who's actually balanced and integrated in what they want to do. They want to know what's the story down here and they also want to know the story for the future people, the people we have not yet recruited. Because that may be how well we run now, but it may not be any good when graduates have changed, expectations have changed, pay systems have changed, bonus structures have changed, private equities moving the market, whatever the story is so we're looking for somebody who brings the advocacy of the people from the HR function. And there are advocates for shareholders. Who do you think the shareholder advocate would be? Three P finance. Right. Who's the advocate for the customer? Three P marketing, et cetera, et cetera. So the CEO is actually looking out there, if they're any good, they're looking out there doing their horizon scanning, getting their messages, talking to other CEOs, opinion, formers politicians, et cetera. And then they come for an internal conversation and they want their HR person to be able to do this.
Speaker F If I'm the CEO, I would ask the HR to contribute to the business performance.
Speaker B Yeah, well, maybe, but what I'm saying is, in my experience, if you can't.
Speaker F Advocate, advocate for the people responsible for contributing to achieving the business purpose.
Speaker B Well, most of the world isn't unionized, so somewhere somebody advocates for the people. Right.
Speaker A But I hear that that's an end question.
Speaker F You have to take care of people to be able to achieve your business.
Speaker A Plan, but the ultimate drive is so.
Speaker B Anyway, I'm just saying that there's this issue here about what is your VPHR role or your present HR role. I as somebody who's had to integrate all this, the thing you want is people who come and tell you what's necessary and required and advocate for it and don't give up until they get something they want. Now, you might not be able to help them if you're the chairman or the CEO. You might not be able to give them all that they want, but you don't want to lose the sight of the fact that if this seems valid, if that's a sound argument, as part of the agenda you will have to address or pay for, it's part of the risk and reward consequence of being the leader. So I really am saying a couple of things. I'm saying the HR person has to think about what will be the ecosystem that we will live in, how we're going to design the habitat for that ecosystem, so that the people, as a sensible part of the business, can be in there. For me, be clear about who we're serving. And for me, that's the people and it's the CEO, all within the context of the total business. And the second thing I think I'm saying is that going the wrong direction. Second thing I'm saying is that if you don't have the internal clarity and coherence about your message, it's not just about competence has been good at deciding. It's the clarity and coherence to advocate on their behalf. Then you will be wiped out by the finance director who can give very direct, detailed, immediate information about cash money. Cash flow. And you're talking about the wishes of the people, the desires and hopes, their aspirations, their dreams, their fantasies, the desire to be great citizens. And actually, no, we've got just in time coming in, and that's going to save us $5 million in three months. Well, you need to be good. And where you need to be good is that.
