Can Compliance be Strategic?

Last night on the HR Happy Hour Show I tossed out the idea that perhaps to further the HR organization's ability to pursue more strategic objectives and more value-added activities, that the traditional 'compliance' related functions be spun-off to another part of the organization, (perhaps finance and accounting).

My (shallow) reasoning was simple: if HR departments are truly getting bogged down in compliance and and administrivia, why not spin off those functions to another department (or outsource them)?

Shedding those non-strategic processes, I proposed, would really empower the HR organization  to focus on strategic planning, aligning the workforce and their skills and capabilities with the organizational objectives, and equipping line managers with the tools and abilities they need to succeed.

A win-win right?

Well, some of the guests on the show, China Gorman, Mike VanDervort, and others did not like the idea. They essentially said that giving up the control of these processes to accounting (or someone else) would not be a mistake and that HR has to own those processes.

So here is my question:

If HR needs to get more 'strategic' and compliance and regulatory issues are in the way, can you just outsource, spin-off, or otherwise de-couple them from the real value that HR can deliver to the organization?

Can compliance really be strategic?

You can listent to the entire conversation, and the rest of the HR Happy Hour 'Is HR Dead' Episode here:

Six Million versus Eighteen Thousand

According the the US Small Business Administration in 2006 (the last full year data is available) in the United States:

Number of firms with more than 500 employees: 18,000

Number of firms with less than 500 employees: 6,000,000

Think about it, there over 300 times as many small businesses in the US as large ones.

In the HR Technology space at times the news and commentary tends to be dominated by the vendors that cater the the top end of the market, those 18,000 or so big firms that have the most employees, the biggest budgets, and (typically) the most hierarchical and elaborate structures and decision processes.  I get that, it makes sense for vendors, consultants, analysts, and pundits to chase that market, heck, that is where all the money is. I have spent most of my professional career in that space as well, either working for giant companies, or working for myself and consulting at giant companies.

But I think today the small market is really the place to be.

To me, inside the six million small companies is where the the most exciting innovations are going to happen. Flickr - The Geekery

And the technologies and vendors that are most interesting to me are the ones that are accessible, lightweight, and inexpensive enough to be in the reach of say a 150 person company with one or two HR professionals on staff.

Solutions like Rypple, The Resumator, Socialcast, EffortlessHR, PbWorks, Shareflow, Kindling, and Brainpark to me are incredibly interesting and dynamic. These solutions (and scores of others) can be brought to bear by the average HR professional in the average small organization and can make an almost immediate and important impact.

I care about what is going on with the Oracle, SAP, and Workday.  I'd like to see Oracle Fusion delivered sometime before I retire. When and if the entrenched ERP vendors fully embrace SaaS and produce solutions that are more flexible, easier to manage, and are less reviled by their giant corporate customers are very important issues for the overall HR Technology industry. I get that.

But to me the real fun is watching what the new breed of HR Technology vendors are bringing to the table, and how the small business can exploit these tools to maybe one day rise from the ranks of the six million to the eighteen thousand. Personally, I enjoy connecting with and trying to assist HR pros at these smaller organizations.  Ironically, while there are scores of technology solutions out there that cater to the small organization, there are very few independent sources for unbiased advice and assistance with small business focused HR Technology.

What do you think?

Is it more fun to be one of six million, with a real chance to make an impact, or to be one cog in the wheel at a giant organization, but with at least a chance to be a star on the big stage?

Time to Stop Digging

This is what was said in the Enterprise Systems planning meeting:

We have to expand the ERP system footprint, get more business processes integrated, really 'use' the system, and maybe we will start to see the return on investment that we've been waiting for.

This is what is closer to the truth:

We've sunk about $5M into this, we are in upgrade, maintenance, and crappy UI hell, so we better figure out a way to make this seem worth it to the executives or we're all in trouble.

The exact amount of the sunk cost in the installed system is not really the issue, it's more the fact that whatever the (large) investment was, many organizations are at the crossroads.

They've implemented big ERP systems for core HR, maybe payroll, tossed in a bit of self-service, perhaps dabbled in workforce management, but more or less have not really leveraged the capabilities of the massive system.

To the left, upgrade the ERP, get on the latest release (a daunting proposition for many), and try to take advantage of the new capabilities and features that are available (that will never be backported to your release from 2002), and upgrade the UI to something that looks relatively modern.

To the right, scrapping the upgrade, patching the legacy ERP together for employee tracking, payrFlickr - AidanBrooksoll, and benefits and looking to a modern SaaS-based platform for more strategic functions like Performance Management, Succession Planning, and Learning and Development.

Now there is even a third option, tossing the ERP entirely and moving to a SaaS HR system that will over all of those processes like Workday.

Obviously there isn't a blanket one size fits all solution for organizations in this predicament, and I won't offer any sweeping recommendations, but I will say this:

When you have dug yourself into a deep hole, it's probably time to stop digging.

I don't care what it says, who else has seen this?

One of my very first 'mentors' in the corporate world was the CFO of a rather large division of what then was AT&T. Whatever is left of that group today would likely be part of Alcatel-Lucent, although it is really impossible to say what became of the department.

Back in the day before ubiquitous e-mail, important information was circulated via the old-school written memo.  The memo was usually typed out by an administrative assistant, copied, and finally distributed to two 'lists' of people.  The 'To' list and the 'CC' list. Generally speaking, the folks on these lists would be the only people to see and read the contents of the memo.Flickr - mil.

Back to my CFO. Whenever a memo of any kind crossed his desk, he immediately glanced at the top of the first page, (where the 'To' list of names was), and then quickly paged to the end of the memo, (where the 'CC' list of names was).

Once I observed him doing this and asked why he instantly paged to the end of a particular 5 page memo and he replied,

'I need to know who else has this information, before I read it, and before I even think about making a decision about it'. 

He really meant it too.  His approach, strategy, and decision making process was heavily influenced by his perception of 'Who else knows this?'.  Back then, information could be controlled, e-mail was not universal, there was no wiki, blog, or Twitter to spread and share information.  To use the old cliche, knowledge was power, and in many cases it was hoarded and exploited for the wrong reasons.

That all seems like such a long time ago, and I would like to think in the modern organization, supported by almost limitless media and technology to share and transmit information, that the 'Who else has seen this?' question is ridiculous and unimportant.

But I am not so sure.

I still think that the 1970's mindset of the closely guarded memo still endures in many organizations. I still sense that information, and access to those who have information is not as free and effortless as many of us would like to believe.

I hope that my organization, and yours, can get to the place where the answer to 'Who else has seen this?' is typically, 'Everyone'.

I hope that soon, even asking the question is ridiculous.

Planning versus Adoption

Recently, a Twitter conversation regarding the success or likelihood of success of so-called 'Enterprise 2.0' projects made me consider some of the fundamental differences between Enterprise 2.0 and more traditional corporate software project implementations, like ERP.

Traditional

The planning, testing, and prototyping steps are typically quite lengthy, frequently involving many months to even years, but once the 'go-live' date is reached, you have almost 100% adoption rates right away.

If you were to chart traditional ERP project timelines and user adoption levels it would look something like this:

Think of major system implementations for Core HRIS or Accounting. The 'adoption' of these systems is not 'optional' for the vast majority of end users, it is normally an 'all-or-nothing' proposition. The old systems are turned-off, and all users almost simultaneously 'adopt' the new system on Day 1.

Enterprise 2.0

Contrast that timeline to a typical Enterprise 2.0 deployment, where the software tools themselves are dramatically simpler, the time spent planning prior to deployment is usually significantly less, but achieving higher levels of user adoption can be much more difficult and take much longer.

These projects may be internal social networks, blogs, micro-sharing, wikis or idea markets, but commonly they are presented as 'alternatives' to traditional ways of communication and collaboration. Companies, at least initially, rarely 'force' adoption, rather they try to 'build' adoption through training, word of mouth, a visible internal champion, or small pilot programs.

Companies don't get rid of the e-mail or voice mail systems just because a new wiki is available.

Consequently, the length of time required to achieve full or the desired levels of user adoption could actually be longer for these on the surface 'simple' applications.  Of course 'time' is not the only important factor to consider in any kind of enterprise implementation, but it is certainly an important component.

These large E2.0 projects are probably not going to be any simpler, faster, and less problematic than traditional projects.  But, they will present a whole different set of problems for the organization, the kind of problems that many 'traditional' project managers and organizational leaders may not be prepared to address.

What two or three things can E2.0 project leaders do to try and mitigate these issues?