Leadership Gap

Some companies have demonstrated bottom-line benefits of technology that support the organizations business goals, but most are lagging.

By Bill Roberts Dec 1, 2004

HR Magazine, December 2004

Editor’s note: Technology contributing editor Bill Roberts will be on hiatus from HR Magazine next year while writing a book. We asked him to reflect on the HR technology changes, trends, best practices and needs for improvement that he has observed.

A friend who was preparing for a leadership development workshop sent me an e-mail asking what I thought the differences were among the terms administration, management and leadership. Having written about HR technology these past seven years, I found myself pondering his question in the context of HR systems.

“Administration” makes me think of employee self-service (ESS). “Management” brings to mind tools that help supervisors with the day-to-day business of organizing, motivating and directing workers. “Leadership” conjures up systems that help executives guide the workforce in ways that contribute to the accomplishment of organizational goals, which, in the case of business enterprises, means contributing to the bottom line.

Many organizations—maybe the majority—use software for administration; fewer deploy tools to help managers beyond simple administrative tasks; fewer still use systems that support leadership processes. This last set of tools does exist—compensation planning, succession planning and knowledge management come to mind—but as we reach the decade’s midpoint, I’m perplexed that these strategic applications are not in much wider use than when I wrote about them five years ago.

Naomi Bloom, a strategic HR consultant with whom I’ve had many spirited discussions, has an answer. Bloom, president of Bloom & Wallace of Fort Myers, Fla., and a passionate, tireless advocate for HR systems strategies that are driven by business goals, believes that most HR professionals are just too mired in “grubby details and compliance anxiety” to offer any vision that contributes to their organization’s broader goals.

Pulling no punches, Bloom says the HR executives she encounters fall into three groups. “A very small number are strategic thinkers with real business acumen running in their veins.” A somewhat larger number have good intentions but lack the intellectual capacity for vision and leadership, she says. A third group—the majority—“wouldn’t know a strategic thought if it hit them. They’re going to be automated and outsourced right out of business.”

Bloom may be right. Here are my parting thoughts on leadership and HR systems with examples collected during seven years of trolling for stories.

Management By Any Other Name

After I received that e-mail from my friend, I turned to the dictionary. We both have been students of leadership theory and practice for 30 years but had not exchanged serious thoughts on the general topic or his specific query about these terms in a long time.

Webster’s dictionary sees scant difference between the terms administration and management. The verb administer means “to manage the affairs of.” The verb manage means “to handle, control or direct.” As for leadership, there’s a nuanced difference between it and the other terms. “Lead” means “to guide on a way, to bring or take.” That implies the leader knows where he is going, suggesting vision, strategy and goals.

Notwithstanding their similar definitions, administration and management have different meanings in the world of the enterprise. Management typically means to direct, motivate, influence and correct people. It is the hands-on work of bosses. Administration is about the standard procedures and supporting paperwork that should help—but can hinder—effective management of people to some minimally acceptable business standards. Small and large organizations alike need equally deft management. Administrative tasks, on the other hand, unfortunately tend to grow in number and complexity as organizations get bigger.

HR technology can automate most, if not all, administrative tasks and increasingly offers tools to assist the more hands-on aspects of managing: decision-making, communicating, planning, deploying people, overseeing projects, and assessing and rewarding employees. Tools that support leadership processes contribute to the pursuit of vision and strategy. HR management systems (HRMS) offer applications built on a common database for all aspects along the administrative-leadership continuum.

HR departments have dealt most often—and most effectively—with administration; many companies have squeezed the costs out of administrative practices through automation and, more recently, outsourcing, removing human hands from most transactions ranging from payroll to vacation requests. Only companies that truly understand that people are their most important resource have also adopted HR systems that provide processes, data and training to help managers—from first-tier supervisors to top executives—effectively direct, control and motivate workers.

Administrivia Isn’t Trivial

Automating administrative processes is no small feat; just ask anyone who has ever implemented an HRMS. These systems and the automation of basic transactions by pushing them out to employees over the web have saved enterprises a lot of money. Various surveys suggest most large companies have adopted some kind of HRMS and use it for at least some ESS transactions, cutting costs as a result.

For example, International Paper Co. of Stamford, Conn., demonstrated impressive savings with its ESS implementation. Eleven months after going live with its HRMS and ESS, it had improved its HR professional-to-employee ratio from 1-to-80 to 1-to-126, and reduced HR costs per worker from $1,600 to less than $1,200 per year. Earlier this year, the company was anticipating further savings and improvements by outsourcing its HR system and call center.

Administrative drudgery ranging from expense reporting to compliance monitoring is easier through HR systems. For example, Thomson Corp., a Stamford, Conn.-based business information company, reduced the cost of processing a simple business travel expense report from $30.75 to $14.10 using web-based software.

Many companies have adopted web-based applicant tracking systems to manage resumes. But Air Products and Chemicals Inc. of Allentown, Pa., solved a thorny compliance issue for federal contractors that resulted from web-based tracking. The company, which supplies industry and federal agencies with gases and chemicals, installed a system that forced applicants to declare their intentions and take Air Products off the hook for following federal regulations that relate to defining and responding to “applicants.”

In each of these cases, the companies saved time, money and aggravation. The applications are not trivial, but they are entirely administrative.

Next Step: Manager Self-Service

It is only a small step up the value chain to automate managerial tasks, but companies are not moving quickly. With manager self-service (MSS), companies push data collected from their ESS transactions out to supervisors to help them better manage direct reports. For example, MAPICS Inc., an Atlanta-based developer of enterprise resource planning software, saved $1 million by wiping out accrued vacation time with an MSS application that let supervisors monitor workers’ time off. Software development firms are known for their high energy and high stress, so MAPICS supervisors found they were also better equipped to counsel workers to take time off, helping them avoid burnout.

Although such applications can help managers, adoption is slow. A company first must have an HRMS and ESS before it can adopt MSS. But only one-third of large U.S. companies have adopted MSS applications. And here’s another disheartening trend: It appears that the biggest reason more companies haven’t implemented MSS is that they can’t agree internally on standard management processes—an absolute prerequisite for successful MSS. What’s more, these organizations aren’t ready to tackle the hard work of reaching consensus on these practices. What kind of leadership does that suggest?

Training is another management chore. Many companies now use the web for technical, sales and other training. For example, Days Inns Worldwide Inc., based in Parsippany, N.J., uses the web to train a workforce of 18,000 at 1,800 properties. Training includes everything from reservation operations to housekeeping duties to supervisory skills. With worker turnover of more than 100 percent a year, making training available to workers at all properties has been a big advantage for Days Inns.

Strategy, Vision, Leadership

The success of web-based training would be a nice upbeat place to end these reflections, but there’s tougher ground to plow. Although software is available to help companies accomplish more complex objectives linked to organizational goals and profits, I don’t see many of these tools being adopted. That’s because most HR executives don’t link HR systems to bottom-line goals, Bloom and I agree.

There are exceptions, however. For example, Dole Food Co. Inc., based in Westlake Village, Calif., has talent all over the world but had no way of planning for succession throughout its global operations. The highly decentralized company launched a web-based succession planning system so executives at any Dole location would know what talent they had across the world and what development opportunities those workers needed.

Succession planning correlates positively with the corporate bottom line, studies show. But only one-third of the largest U.S. companies have installed succession planning software to help, analysts estimate.

Enterprise compensation planning software is another strategic tool that can help meet broader goals. Kellogg Co. of Battle Creek, Mich., has made good use of such a system, enabling executives to more systematically direct bonuses and raises to the people who most deserve them, remain competitive in their own marketplace and increase retention. Yet this is another area into which relatively few companies have ventured.

The most disturbing news is that, in many cases where HR executives do not seize the initiative, others in the organization do. One example is knowledge management. What could be more germane to leading people than gathering, organizing and delivering explicit and tacit knowledge to the workers who need it, when they need it and in a useful way? Yet analysts and executives who have implemented knowledge management systems say the HR executive is rarely even consulted on these projects.

The Federal Highway Administration (FHWA), based in Washington, D.C., launched several knowledge management initiatives to collect, share and extend information throughout the large bureaucracy, part of the Transportation Department. Despite the cultural shift such an effort takes and its potential impact on workers, the FHWA executives behind the program were not from human resources, and they say HR had little input. Analysts who follow knowledge management concur this is often the case: The HR executive isn’t involved.

“HR has blown its opportunity to provide leadership in many instances like knowledge management,” says Bloom. “Instead, they have allowed themselves to become administrivia masters and the policy police.”

Bill Roberts, technology contributing editor for HR Magazine, is a freelance writer who has covered business, technology and management issues.

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