Are you a good-time Charlie/Charlene? Will your career proceed smoothly through the calm waters of highly profitable firms who own their markets? Do you work at public sector enterprises firmly entrenched at a tax trough they can control who can even print money when needed? If not, it is vitally important that you learn the cautionary lesson from the experiences of the American TARP firms. Otherwise, you may be cast aside when your employer experiences economic distress.
Keystone Award winner PhDs Jay Schuster and Pat Zingheim have boldly exposed the soft underbelly of our profession. HR and Compensation professionals consistently failed the test of tough times at troubled financial institutions (TARP firms). Work output results that were perfectly acceptable in good times proved qualitatively inadequate to the challenges of bad times. Worse, the top “people people” had no idea what they had done wrong, how to correct the situation or how to remedy the shortfalls found both in their HR/comp programs and in their organizations.
The experts presented a preview of that research paper at the 2011 WorldatWork Global Total Reward Conference and have now published the full results in the First Quarter 2012 WorldatWork Journal. It makes for uncomfortable but important reading for those practicing our Total Rewards tradecraft.
Just talking about banks and finance tends to scare “personnel” professionals. But there is much to be learned from the debacle in the financial sector. HR and compensation departments behaved both as enablers and as fecklessly helpless observers… until they were fired. The finance function deals with money and wants to control everything dealing with money, which invariably leads them to the major expense item called "human talent." One can make jokes about whether you would let your banker run your business, but when banking IS your business, that is a very different situation. It may happen, anyway, in any business enterprise, if you don't understand financial matters and the basic needs of your organization. Bankers don't have to understand HR but (unfortunately) HR and compensation people have to understand the language of finance and the perspectives of financial people. Schuster & Zingheim found that is exactly the disconnect that occurred when the 2008 financial crisis struck. The people people living in a la-la land world of their own when business was profitable stood by helplessly with nothing of value to offer their enterprises when major changes became necessary for survival.
Read it and weep. Take notes, too, to assure that you do not become guilty of the same mistakes. The errors are easy to make but have terrible consequences. The consensus suggestions of the top executives surveyed in the study are clear, sensible and practical. Anyone who fails to remedy their behaviors in accord with the recommendations deserves what will eventually happen to them. As the researchers concluded, we have a choice about whether we decide to be part of the problem or part of the solution.
The additional warning piece by Schuster/Zingheim published recently just supplies extra evidence of the importance of adding value to your employer rather than simply currying favor with the employees. Business partners sit at the big table while the children amuse themselves in the playpen. Choose your spot.
E. James (Jim) Brennan is Senior Associate of ERI Economic Research Institute, the premier publisher of interactive pay and living-cost surveys. Semi-retired after over 40 years in HR corporate and consulting roles throughout the U.S. and Canada, he’s pretty much been there done that (articles, books, speeches, seminars, radio/TV, advisory posts, in-trial expert witness stuff, etc.) and will express his opinion on almost anything.
Image courtesy of blogging4jobs.com
Great article Jim and good follow-up to the one by Schuster and Zingheim. Loved the one they did for W@W. That should be required reading for everyone in compensation.
Posted by: Jacque Vilet | 03/19/2012 at 07:31 PM