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"Throwing Money Off the Balcony"

Years ago my CEO complimented me on something, but then immediately criticized the profession I represented and suggested that based on his experience, what he disliked most about HR people is that they tried to solve all their problems by “throwing money off the balcony.”

He meant that as a CEO, he saw problems every day. At the same time, he knew he had limited resources to meet and solve those problems as well as plan for the growth and success of the organization.  In his opinion, too many HR people -- when confronted with the problems of the organization -- immediately responded with a statement like:

  • “Oh yes, that is a big problem.”

  • “Boy, the employees aren’t going to like this one bit!”

  • “I think I can fix it, just give me more entitlements, higher pay, better benefits.”

Engineering, manufacturing, research managers, marketers, and anyone else with a budget have long known that resources are limited. HR is no exception. It is easy to have a high performing human resource management department when the HR person gets more than their share of resources. The real genius is creating such a reputation with limited resources.

Not too many years ago, many corporate employee relation’s reputations were influenced more by the generosity of their policies and programs than their design, cost effectiveness, and ability to advance the interests of the organization. Today’s global competitive pressures ensure that those days are gone forever.

Now corporate human resource management reputations are built on HR competency and the capacity to be a credible business partner. An HR professional’s role is to be a member of management and not some neutral party stuck somewhere between the interests of employees and management. HR is and always will be management.

Greater competency also contributes to erasing the incorrect assumption that “anyone can do HR work.” Requirements to join the human resource profession are steadily and dramatically increasing.

We’ve known for a long time that you could not “sell from an empty wagon.” CEOs are quickly learning that the person who is expected to bring human resource professionalism to the organization cannot do so “with an empty head.”  CEOs are starting to wonder how knowledgeable and competent their Chief Human Resource Officer is compared the CHROs of their competitors.  Those HR professionals who do not have the knowledge and skills to do the job are at great risk, but that is the way it should be in any demanding profession.

The HR professional striving to become a strategic business partner more clearly recognizes today that his or her customer is the CEO.  And, as in any customer relationship, you soon discover what the customer wants. 

And what do CEOs want? More revenue. I have never heard a CEO suggest that “…the organization’s revenue was $100,000,000 last year but we had to work too hard.  We’ll just make it $90,000,000 this year.” Nor have I ever heard a CEO suggest that “…the profits were $5,000,000 this year and that will be just fine for next year.” Similarly, no CEO says that the shareholders have already received their share, so increasing shareholder value need not be a top priority this year.

They just don’t make CEOs that way.  CEOs are interested in revenue growth, profit growth and increased shareholder value.  It is the CHRO’s job to demonstrate to the CEO why effective human resource management will contribute --- probably more than anything else in this day and age --- to the CEO’s objectives.

Most organizations today are trying to capture the opportunities inherent with an expanding global marketplace. They may find an inability to either attract or retain key talent. Severe skill gaps, changing demographics, a more diverse workforce, and soon the lowest net additions to the workforce in more than 100 years are the challenges facing not only the people in HR, but the organization itself.

It has been a pleasure providing the forward to the Arthur Anderson Annual Human Resource Management Yearbook for the past several years.

After 10 years with the Society and as I prepare to retire, I am extremely pleased to have contributed to the growth of not only the profession but also the Society for Human Resource Management itself.  For instance, in just 10 years SHRM’s membership has increased from 44,000 to more than 140,000; revenue increased from $13,000,000 to $64,000,000; net worth from $4,000,000 to $50,000,000, making it one of the fastest growing, largest and most successful professional society’s of its kind. It is my strong belief that SHRM’s growth reflects the growth of the HR profession.

How did we do it? By being competent and professional in everything we do. We stretched limited resources to their maximum through effective administration and leadership---not by “throwing money off the balcony.”

— Michael R. Losey, SPHR, CAE
President & CEO
Society for Human Resource Management
From:  HR Director: The Arthur Andersen Guide to Human Capital, 2000 edition

Copyright © 2011 Michael R. Losey. All Rights Reserved.
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