HR PEOPLE ARE FROM MARS, CEO'S ARE FROM VENUS!

By Dr John Sullivan

HR PEOPLE ARE FROM MARS, CEO’S ARE FROM VENUS
The differences between the "focus" of CEO's and HR professionals is dramatic. This differentiation can be characterized into 12 different “degrees of separation? They include:

I)?COMPETITIVE ADVANTAGE - CEO's are highly competitive. They continually focus on the opposition and look for ways to gain the upper hand. They want to win, and win big. For example, Jack Welch the CEO of GE expects each and every business to be #1 or #2?or he will sell it off! This means CEO’s constantly do side-by-side comparisons both in business practices and results between their firm and the top ones in their industry.

CEO's continually strive to improve their own firm, while simultaneously “hurting?the competitor. HR executives couldn't be more different. For example, the VP of sales constantly tries to steal away customers from the competitor. In contrast, HR is reluctant to steal away the competitors top talent because of "ethical concerns" or for fear of retaliation. Few HR managers have done a side-by-side competitive analysis comparing “us to them? And almost no one in HR does a monthly comparison of their results (for each HR function) with the results of each of the direct competitors as well as the top firm in the field.

HR executives also tend to have a preference toward “cooperation?and they often look at things only from the positive side. They need instead to learn how to identify the competitor's weaknesses and yes, even take actions that directly harm the competitors. This is especially true in the talent area, where there is a “war?for talent going on.

HR action steps

  • Do a function by function comparison of “our?and “their?HR. Compare our people results, not just our practices

  • Identify and design a plan to exploit your competitors weaknesses

  • Target the competitors top talent for poaching

  • Develop plans to continually improve our people practices faster than our competitors can “copy?them

  • Include in the design of all new programs a continuous improvement component to ensure that the program provides us with a continuing (measurable) competitive advantage

  • Hire HR people who are highly competitive and that have both business degrees and line experience (i.e., production, sales, product development or marketing)

II)?REVENUE NOT COSTS - CEO's are laser focused on increasing revenues (top line growth), profit and the stock price. The measure everything in either dollars or numbers. HR executives seldom see the relationship between HR and profits, revenue and the stock price. When they do focus on money it's almost always on cost savings. For example saving HR costs (when they make a less than 1 percent of the total company’s revenues) are unlikely to have any strategic impact on the business. For example, HR often measures the cost of the hire (COH) when the COH is generally less than 5% of the revenue generated by each employee during a year.

Beware, it’s not acceptable to focus on only half of the business equation (expenditures). HR needs to focus on the “other?more important half?generating revenue, profit and increasing the stock price! For some reason HR never takes the time to measure the revenue generated by hiring and retaining top performers compared to the revenue generated by a newly hired average performer.

In contrast to the relatively minuscule HR budget over 60 percent of the total variable costs of most corporations go to people costs (salaries and benefits). However, HR routinely fails to measure or demonstrate the return on investment (ROI) that great people practices can yield. Everyone knows in their mind that recruiting, incenting and hiring top talent can dramatically increase revenues but HR has failed to quantify that impact.

"This would include... running (HR) operations based on return on investment"
CEO of Cisco Systems

HR action steps

  • Quantify the revenue generation differential between top and average performers

  • Calculate your "people profit ratio" (which is the number of cents of profit generated for each dollar spent on people costs)

  • Identify and target the jobs and employees that generate the most revenue and profit

  • Calculate the ROI on each HR function and focus on those with a high return (and drop those with a low return)

  • Shift HR resources and emphasis to programs that have a positive business impact rather than putting resources into administration, processes and other low value areas

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