Don’t Trust HR, Professor Tells CFO Gathering

Mar 12, 2009
This article is part of a series called News & Trends.

The stuff’s just now beginning to hit the fan over the incendiary comments of Rutgers University academic Richard Beatty to a conference of CFOs Monday.

Under the title “Memo to CFOs: Don’t Trust HR” CFO magazine says the professor blasted the human resources profession for working without useful analytics, and contributing so little that, in the words of the article’s author, “typical human resources activities have no relevance to an organization’s success.”

Beatty dismissed efforts at employee engagement as having “no evidence” to show it produces a meaningful return. Training to improve low performers he all but called a waste of time saying “Low turnover isn’t necessarily a good thing. Think about where you might want to disinvest.” And efforts to become an employer of choice he called “silly.”

As you might expect, HR professionals were quick to take issue with the professor’s remarks.

Of the 11 comments posted to the article, 10 took umbrage with at least some of what Beatty said. Within hours of the article being published Gartner’s Jim Holincheck published his own take on the matter.

As Holincheck observes, there is truth in Beatty’s words. When the professor, who is a co-author of The Differentiated Workforce, says HR is “unable to provide analytics that are useful in making workforce decisions that build economic value,” Holincheck agrees. He points out, “However, it is not universal and the trend I see is that more HR organizations want to build a competence here.”

He makes several other excellent observations in his point-counterpoint, including puncturing the claim there is no correlation between employee engagement and financial results.

Like Holincheck, I found points of agreement, once I was past the professor’s hyperbole. It was a challenge, though, not to dismiss Beatty all together over his insistence that it was “silly” to want to become an employer of choice because “Everybody and their dog’s brother” will want to work for you.

I once went to work for a company that was anything but an employer of choice, and I can personally attest to how hard it was convincing people to come work there. Few top performers, including some I counted as close colleagues, would even consider the company. On the other hand, I did get plenty of average, and OK, and early career candidates.

Being an employer of choice is a definite advantage in hiring top performers.

As for the notion that training to improve performance is a misappropriation of effort, I also disagree. Holincheck himself doesn’t so much disagree as he challenges Beatty’s contention that HR is focused on low turnover as a positive metric. Smart HR people know that high turnover in highly skilled, mission-critical positions is far more dangerous than it might be in other areas. Plus, as Holincheck observes, HR professionals know to look at both involuntary and voluntary separation.

More directly, however, training the underperformer is an obligation in my view and can pay off handsomely. Or not. The trick is to be able to accurately assess whether the performance is a result of poor training, a miscast employee, or simply a lackluster, unmotivated worker. Sometimes, as in the case of a top performer who suddenly slips, the problem may be entirely external to the training and the company.

So rather than simply dismiss an underperformer out of hand, it seems to me prudent to analyze the problem and pick the right cure, which, in some cases, is indeed dismissal.

The main thrust of Prof. Beatty’s address is, however, unarguable: HR doesn’t have the metrics necessary to make economically wise workforce decisions.

What is arguable, professor, is how to develop those metrics, how to make the measurements, and how to use them.

This article is part of a series called News & Trends.