But time and time again, in numerous conversations I’ve had with HR professionals, both locally and abroad, one thing’s been clear. We have to earn our way into the boardroom. There’s no two ways about it. Ask yourself : Am I involved in creating and implementing the strategy for this organisation? Am I part of this process and if I’m not, why is this so? Put bluntly, if this is the situation you face, then HR is simply not in the perspective of senior management, a critical role. And your follow-up questions should be : what are you going to do about? Do you want to do anything about it and if so, what specifically can you do?

In this respect, we caught up with Stuart Ferguson recently. A three-time author on financial analysis of M&A integration and organisational cultures, Stuart has proven expertise in changing the behaviours and outcomes of adults, with firsthand experience in the design and implementation of TQM processes. He talks at length about whether organisations get optimum value from their HR people, how HR can play a strategic role in achieving the firm’s vision and goals, what makes for a high-performing organisation and what HR’s role is in developing the culture necessary for such organisations to thrive.

HRM : Do you think that organisations get optimum value from their HR organisation and people?
Stuart : If HR is regarded as a staff organisation with the primary focus on compliance, the firm is under-using a strategic resource. To get optimum value, the executive team must think of HR as an essential, proactive asset that ensures that the organisation has the right breadth and depth of knowledge, skills and abilities for the firm to achieve its current goals and objectives while on the road to accomplishing its vision.

HRM : How do you think HR can play a more strategic role in their organisations?
Stuart : I think that HR executives need to earn their way to the boardroom and one of the first things that they can do is to accurately assess what the cost of not having HR involved is. Think about it this way. All of business is assessed from a monetary point of view. So, the smart HR executive goes forward to senior management and says, “Hey, we are not as involved as we should be and this is really what it’s costing you in terms of cost of sales, profit per employee, and market share compared to our competitors.” You’ve got their attention now. Show them the amount of turnover going over to the competitor’s side and why this is happening. This is what business decisions are made on – cold, hard data. If you can dollarise this, you can convince them.

I won’t say it will be easy but being able to demonstrate the organisation’s position in this way can have a big impact on the stature of HR and the success of the firm. After all, all the other roles in an organisation talk about issues in terms of dollars and cents. The IT manager will say “Invest $50k here and it will cut costs threefold and raise productivity by double.” But when was the last time you heard HR say that we need to improve organisational development because our people are not as productive? Having people as the subject matter at hand, makes it harder for HR to be relevant and influential; HR undoubtedly gets regarded as a soft organisation. But the concept of dollarising the HR, I believe, is a good approach as you enable management to look at these issues and make sense of it.

HRM : What could HR then do, on a day to day basis?
Stuart : The President of the organisation, the Board, the CEO – these people are constantly looking at how to survive, tweaking their strategies this way and that. So why not do this - the next time an initiative is announced, whether they’re acquiring a competitor or looking to expand their market, sit down and think about how this will impact the depth and breadth of the employees. Think of how you can make sure this strategic plan will run smoothly and succeed. Analyse the situation using your HR expertise and then go to the boss and tell them how the plan will impact on HR and this is the clincher -- tell them what the organisation must do for the plan to succeed.

HRM : In short, firstly, do some background work. Secondly, think through the issues. Third, have a plan and lastly, be proactive - come forward.
Stuart : Exactly!

HRM : Can you give us an example of a more strategic role that HR can play?
Stuart : Let me give you a good example of what I mean. I was, at one point in my career, with a company whose market was quickly disappearing. All of our customers had cancelled their contracts and the truth was that we were going to be out of business within a year. The CEO sat down with HR and said, “What are our individual and aggregate skills? What are we good at? Taking a new look at what we were about, enabled us to flip the situation. We changed our mission from a supplier of nuclear power plant services for utility companies to an evaluator of hazardous waste sites for the government. We were tapping on the same skill set – only it now was being applied to a different market.

Our business didn’t merely survive after this – it thrived. It’s about thinking outside the box, identifying a market we hadn’t identified before and having that “first mover” advantage that enabled us to win in that situation.

HRM : You have an extensive amount of experience in organisation cultures. Can you explain how cultures impact organisation results?
Stuart : I think that we need to understand the role of people in the organisation. Look at it this way - culture affects behaviour and behaviour affects results. When you are getting better results from an organisation, it simply means that you are getting the behaviours that you want from your people. It’s stimulus-response-consequence. How does this work? Say I come into work and I see my boss in a bad mood. I hide in my cubicle and the consequence is that I stay out of trouble. Or I might see my boss in a good mood and be daring enough to ask for a raise. And I get it. The consequence is I get more money.

Ultimately, you either have a work force that is strong in organisational learning or weak in it. By this I mean how organisations look at things that happen and how they integrate them into how they do things in the future. In a place where organisational learning is weak, Bob who makes a mistake, is hung out to dry in public.. They have a sign that says: Bob made a mistake, “don’t be a Bob.” The others will be afraid to try new things, afraid to ask their boss about new ideas and will therefore keep doing the same old thing. Non-creative and unempowered.

But in a place where organisational learning is strong, Bob is treated differently. “Gee, thanks Bob, for telling us about your mistake. Now we know what not to do. Let’s share with the others so they know how not to do this, too”. Everyone’s intellect is more focused on how to do things better, they are more engaged. They have a positive relationship with their boss and they feel better, feel smarter. You can guess which organisation will have a higher turnover rate, lower quality and higher cost of sales.

The key characteristics of organisations with a strong learning culture is one where the leader has a certain amount of humility. The leader understands that engaging people’s intellect, pride and personal commitment to the job is important. He also realises that people are human, mistakes happen but that organisations can profit from these mistakes if they learn how not to repeat them. What we are talking about here is an attitude. An attitude that encourages people to be candid about what they know, about how their processes work so that they are engaged in continuous improvement.

HRM : So, what is HR’s role in this?
Stuart : Let me put it to you this way - who else but HR can influence the culture of the organisation? The bigger question is how does one do this. It’s like eating an elephant. You do it one bite at a time. You concentrate on small, demonstrable and valuable ways. You look for the one subtle change. You show them that you don’t have as much turnover as a key competitor . This gets people’s attention that maybe the HR stuff is working. You hope you can start with a little viral success. You need to see how and why so that you can get better results yourself and then you have new outcomes.

Why? Because what is the alternative? The status quo! The cost of sales is not going to get better. In fact, many of these things are on downward spirals. So, unless someone is willing to come in and make these changes, nothing is going to happen. HR is the only one equipped with the tools to effect this kind of change.

HRM : Do you believe that culture performance can be objectively measured?
Stuart : Yes, I spend several chapters in my book, Culture Clout, on this area.
Don’t be fooled into thinking that culture performance cannot be objectively measured. It can be done. You can take the financial measures, things like cost of sales and return on investment, and relate it to the cultural aspects as they specifically impact how the organisation performs compared to competitors or industry averages. When you spend the time objectively measuring this, you can make huge inroads into crafting a high-performing organisation.

HRM : In your opinion then, what makes for a high performing organisation?
Stuart : One that sustains itself and that prospers in a changing environment. Yes, prospers.
In my opinion, there are five characteristics that a high-performing organisation has to have :-

1. very clear vision of where they want to go

2. very clear goals and objectives on how they will achieve their vision

3. very strong in addressing and resolving conflict. If problems and issues are not acknowledged, they go underground and progress is sabotaged and the opportunity to improve ruined by political agenda or emotion

4. very strong organisational learning – i.e., a culture where people are never satisfied with who they are or how they are doing. They are always learning from their mistakes, always keen to move to the next point, always wanting to know what their customers and suppliers are doing

5. empowerment – employees have ownership of their jobs and a sense of pride and knowledge. There is a connection between their job and the vision of the company. If you can imagine a thick rope, one made of four to five cords each made of individual fibres, thereupon each set of fibres made of individual strings. Each employee, fibre by fibre, makes the final rope and all of them, are connected to the vision of the firm.

HRM : What is HR’s role in developing high performing cultures?
Stuart : It is critical for HR to have a definition of what their highest performing organisation looks like. It’s a vision of all their people being fully enabled, all pulling into the same direction. It’s a vision of optimum efficiency, one where all are ready for the next challenge. One where the company looks at change as an opportunity to do something better. My ideal HR organisation is one where as a CEO, my HR person would come in and tell me, “Hey boss, we need to invest in training X”. Or “we’ve got to change our compensation strategy to keep X and Y people”. Or “we need to employ XX here to get us up to speed on this issue”. So I don’t have to worry about the match between what needs to be done and our ability to do it. My job is then to figure out what the changes in the market are, what the barriers to our success are.

“Vacations are cancelled until morale improves.” I read that once somewhere and frankly, that’s sort of like where we are with HR right now. We’re downsizing our HR and organisational development departments now. When, in fact, they are actually our best ally to aid us in our recovery. You ask yourself why this is happening. It’s because HR has not demonstrated their value. They are therefore regarded as part of the problem and in many places, they are regarded as an overhead cost rather than an asset that will enable the firm to survive the storm and prosper in the next era of prosperity.

The issue here, I believe, is that HR is looking at itself wrongly. They are looking at themselves as a staff function rather than a strategic position. This is an image problem.

The reality is that most organisations capture only 20 per cent of the intellect of their employees. In a high-performing organisation though, or when employees are totally focused on where they need to go, how much more engaged do you think you would be? Imagine your own creativity and energy for tasks you enjoy and value versus those you regard as meaningless or boring. It’s HR’s job to develop commitment of purpose and abilities to the functional responsibilities of the firm’s people.

This doesn’t always happen in an organisation though; in many places, people walk by things that can and should be changed and they do nothing about it. Creating a high performing organisation is about creating a sense of ownership and accountability and creating a set of agreed-upon and shared value.

HRM : In summary, what specific cultural characteristics must an organisation have to prosper in today’s economy?
Stuart : There’s a fundamental element to every human relationship -- trust. If you do not trust a person, you do not rely on that person. When leaders create an atmosphere of universal trust, people are willing to invest their own genuine self to the goals and vision of their organisation.

HRM : What culture strengths must the different functions within the typical business organisation have in order to maximise overall results?
Stuart : Different functions within the typical business organisation must possess different cultural strengths to maximise overall results. Look at it this way. In a hospital, if you go in one door, say for example, for a consultation with a specialist, you expect stability and a certain amount of consistency, in a way that their reputation says they will do so. Through another door, say for example, the emergency room, you expect something else. You don’t expect them to inundate you with forms and paperwork at first, you expect your situation to be attended to immediately. You’re bleeding and you need total flexibility in their approach.

So, here we have two completely different standards for an appropriate culture within the same organisation. How does this work in an business culture? If you have programmers, you want creativity. You want people who are ready to abandon what they did yesterday for something new tomorrow. If you have administrative staff, you want a consistent level of service.

In effect, you want the appropriate culture for each of the different environments. You want an appropriate suite of behaviours for the goals people are striving to achieve.