MTI HR Forum 2013 looks to create dynamic HRMs

By David Ebert

MTI Consulting along with its subsidiary HR arm MTI HRM Solutions hosted the first MTI HRM Forum amidst a large number of HR heads and CEOs gathered to listen to the findings of MTI’s recently-concluded study of 100 top heads of HR and 50 CEOs in the country.

The focus of the forum, according to MTI CEO Hilmy Cader, was to challenge conventional wisdom rather than to transplant textbook HR concepts and also to question some of the hard issues in the sector such as why HR professionals don’t go on to become CEOs. In effect, to probe HR challenges encountered by SL businesses, challenge current practices and effectiveness and to explore more effective ways of utilising HR in a Sri Lankan context.

The forum comprised of two HR modules and one CEO module where each module commenced with a presentation of MTI’s research findings and thought leadership, followed by focused panels that discussed the research findings and looked to debate the relevant issues at hand.

The methodology used in the modules was based on primary research, best practices and consulting learnings from MTI’s vast regional presence and experience.

The primary research looked at 100 heads of HR, with 75% from large midcap industries in eight key economic sectors and out of which 38% consisted of female heads of HR. In addition, the survey also questioned 50 CEOs from a similar industry profile for their views as well on the same subject.

HR modules

The first model looked at was HR strategy, where strategic relevance, documented strategy and employee value proposition were looked at and according to the survey results, 68% of respondents claimed that HRM was given high priority in their businesses and the balance 32% accounting for response such as no priority, medium priority and no clear response.

What does this mean in the larger context? So if this figure is correct, where is the room for improvement? Does this figure indicate a feeling of satisfaction with the status quo and no room for improvement? The survey findings however show a different picture altogether. It showed that there is a marked confusion between HR and HRM. The conventional definition is simple.

Human Resources (HR) is a term used to describe the individuals who comprise the workforce of an organisation and Human Resource Management (HRM) means employing people, developing their capacities, utilising, maintaining and compensating their services in tune with the job and organisational requirement. With this in mind the finding indicate a growing need for organisations to identify and address their strategic HR requirements and the implementation of effective measures to take them towards their respective organisational goals.

In addition, findings showed a heavy reliance on HR clichés rather than a well-thought-of and ground reality based approach to HR management. Hence popular clichés need to be done away with or organisations can expect to fall behind.

The survey also showed that there seems to be a growing frustration among head of HR and an inconsistency in CEOs perception of HR and its role in the growth of an organisation.

According to the findings, 65% claimed a documented HR strategy being used in their organisations and linked it to the overall business strategy. These were however confused with policies and procedures, manpower planning, inputs demanded by business plans and initiatives and activities

In terms of employee value propositions which in simple terms is the balance of the rewards and benefits that are received by employees in return for their performance at the workplace, a further 55% of the respondents stated a lack of it with their organisations. This highlighted a decreased understanding of the importance of EVPs in most businesses surveyed.

In addition, the 45% who claimed an existing understanding of EVP in their workplace claimed that EVP was mostly associated with compensation and benefits, career and personal growth, work environment and organisational culture and governance and responsibility.  

Capacity and competency

87% claimed the existence of a HR capacity planning system in place, while 82% claimed a framework for competency development in their organisations. With regards to the basis, 36% claimed a strategic basis and 72% claimed a tactical basis for capacity planning. In terms of how they go about a competency development framework, 69% stated that they go about it in terms of performance appraisal, training need identification, job descriptions, behavioural- based and leadership development.

24% claimed that the framework was training program driven and 7% stated that it was business strategy, gap-based, holistic (mentoring, exposure, certification, etc.), and measured.

Talent and culture

The issues looked at in terms of talent and cultures were the attraction challenges faced by organisations, the current talent pool available, the organisation’s culture and its workforce potential optimisation. The biggest faced by HR professionals surveyed, was highlighted in 72% of the cases where it was finding the right talent that was the biggest challenge. This was further highlighted by the fact that only 42% of respondents were satisfied with the current talent pool available to them and a further 32% stated that their needs were only partially met.

This showcased a culture of too much emphasis on persons or personalities to fix talent problems versus having the right process disciplines and senior managers getting more ‘hands-on’ involvement in developing talent on-the-job.

The way out of this called for a long-term solution where national education reforms were essential from now in order to address the talent needs of corporate in the country even though this would have a minimal impact on the HR resource pool in the next five to 10 years.

The most frequently relied-on methods of attracting talent according to the survey were links to educational institutions in 25% of the cases, word of mouth and personal networking in 18% of the cases and social media in 12% of the cases.

In addition, the survey also highlighted the fact that 43% believed that the current culture does not effectively enable performance and optimise HR potential. With 28% out of that figure believing in a mix of cultures and the balance believing that a vibrant corporate culture does not help with this issue.

In terms of how HRM influences a corporate culture, 46% identified events, programs, training and communication as the best ways, 26% quoted developing procedures and policies while the balance 41% quoted remuneration structures, pay for performance, orientation for new employees and the integration of performance appraisals.

Performance and rewards

In terms of measuring employee performance, 75% claimed it to be outcome based within their organisations, 16% stated it was based on competencies and 7% on a 360 degree basis. The other responses received were that it was based on sales targets, KPIs, objectives and goal setting, attitude and behaviour, a cascading process and a forced ranking

This highlighted a limited use of capacity optimisation and productivity for measurement and begs the question on the effectiveness of KPIs and targets without a direct link to rewards and recognition.

In this case, the challenges with measuring employee performance stated were in 24% of the cases subjectivity, line manager competency and cooperation in 23% of the cases and target setting in 17% of the respondents. This highlights a lack of focus and quality time and fundamental research on how target setting impacts performance versus ‘get done with it’ and drop downs from the dash board.

92% of respondents stated that pay is directly linked to performance and in terms of how; they claimed that it was mainly through increments, bonuses and incentives.

Living HR

This section looked at focus and capacity management, HR change management and upward mobility and in terms of how it was thought HR spends its time in an organisation. There were mixed perceptions where 40% felt it was mainly operational, 27% felt it was on strategy and policy and 13% felt that HR spent most of their time on counselling and handling and addressing employee grievances.

This highlighted the negative impact of admin functions on strategic HR focus and suggested a separation of admin functions from HR which would lead to a dedicated specialised role for infrastructure and facilities management, thus allowing the HR functions to focus mainly on the more important functions of HRM.

Interestingly, when asked to state the one change HRMs would make to improve the cause of HR only perception management (12%) garnered double figures. This figure begs the question of whether there is a rich diversity or a lack of clarity and strategic focus on the part of HRMs.

Why do HRMs never

become CEOs?

This question was looked at from the points of view of both HRMs and CEOs. The responses were varied with 42% of HRMs surveyed believing that it is mainly a perception issue within an organisation that prevents them from reaching the role of CEO. 18% stated that it a belief that they are unable to demonstrate HR results, 25% quoted a misconception of lack of business knowledge and 15% claiming a widely held belief that HRMs do not have the numerical and financial knowledge to take on the role.

From a CEO’s point of view, there was a whole range of reasons given. The most widely held perception was in the form of 21% holding the view that they lack the business and industry acumen, 16% believing that they do not possess the required financial knowledge and 15% believing that HRM is not viewed as a key driver of business related functions. The other reason given were, narrow exposure, a lack of vision, no visible contribution to the company’s bottom line, that they were only good for firing, not flexible or responsive to market requirements and too much jargon and a negative contribution to revenue.

Hence in a nutshell CEOs believe that there is low value addition from HRMs in terms of financial sense, business acumen and strategic involvement to their businesses. 92% of responses involved one of these in some way. This gets one thinking: Are HRMs victims of Board/CEO thinking and lack of exposure to potential role of HRM? Or is it because of the domination of Sri Lankan CEO positions by finance professionals and technocrats? The only way to bridge the gap is for HRMs to quantify almost everything that’s HR, to concentrate on providing solutions to businesses, cross job training and to educate CEOs and potential CEOs through results demonstration.

Pix by Upul Abayasekara