Canadian HR Reporter

STRATEGIC CAPABILITY NETWORK'S PANEL of thought leaders brings decades of experience from the senior ranks of Canada's business community. eir commentary puts HR management issues into context and looks at the practical implications of proposals and policies. CANADIAN HR REPORTER July 11, 2016 EXECUTIVE SERIES 9 www.scnetwork.ca Join our professional community of Canadian HR & Organizational Leaders: • Connecting @ monthly events • Collaborating with peers • Challenging conventional thinking The Power of Human Capital CULTIVATING LEADERSHIP FOR 35 YEARS Great Leaders GROW www.scnetwork.ca Michael Clark Organizational Effectiveness CHRO role requires balance, decisiveness is May's SCN session centred on un- packing Learning to Fly, Aon Hewitt's 2015 study of 45 CHROs. e intent of the study was to answer the question "Is HR developing its own leaders to tackle the challenges of a dynamic (VUCA) environment?" e key finding of the study, "De- veloping the Next Generation of CHROs," was a definite "no." Hu- man resources is, in fact, doing an awful job preparing HR profes- sionals for the C-suite: "e num- ber of people taking on the CHRO position without any background in the function is alarming." Now, an attendee at the SCN event could be forgiven for not knowing this because, like any good consultant, Aon Hewitt repur- posed their study (full disclosure: I'm a consultant). At the session, the study was instead used to an- swer a different, implied question: "What are the characteristics of (45 presumably successful) CHROs in this VUCA environment?" e individual characteristics identified by the study will not be new to anyone tracking the quali- ties and trends of HR executives, but the compilation and categori- zation of the findings is impres- sive. A model emerges of a role that requires — simultaneously — balance and decisiveness. Your human capital strategy needs to be integrated into busi- ness strategy, not parallel to it. Be close to the chief experience officers, but not too close. Under- stand the business and promote collaboration between your peers — but not so much that you for- get to champion yourself and the HR function. Lead in all directions simultaneously: up, across, func- tionally, externally and internally (yourself ). Balance and decisiveness are indicative of what organizational psychologist Elliott Jaques re- ferred to as stratum-five thinking. is is the level at which you must leave behind zero-sum games and trade-offs. Rather, the role calls for decisiveness within a constantly shifting internal and external en- vironment of variables, actions and consequences too complex to control outright. The CHRO must sense the interaction between these forc- es, including their second- and third- order effects, all the while moving things forward by con- stantly re-imagining the means to do so. Contrast this with a stratum-four vice-president of HR role, whose task should be that of orchestrating the com- plicated rather than re-imagin- ing the complex. It is a world of trade-offs between parallel paths of people's own making, and con- trolling a changing yet finite set of resources that they must con- stantly shift from one path to the next and back again to maintain overall progress. So, what does Aon Hewitt's report have to do with organiza- tional effectiveness? Well, if most of OE is a function of having the right people, and having the right people is a function of having the right HR, and having the right HR is a function of hiring the right CHRO, then it's a good a place to start. You might as well. As the report says, HR isn't going to help you. Michael Clark is director of business development at Forrest & Company. Forrest is an organizational trans- formation firm with over 25 years experience in developing the organi- zational and leadership capacity in organizations. e role calls for decisiveness in a constantly shifting environment. Karen Gorsline Strategic Capability What does VUCA environment mean to HR? Apparently, the U.S. Army War College in- troduced the term VUCA — volatility, un- certainty, complexity and ambiguity — to describe the world post-Cold War. Use of the term in business settings began in the 1990s. e three speakers at the recent SCN event shared some of their experiences with change and how they addressed them. Many practical tips were shared, but one comment stood out in contrast — one speaker said things really had not changed. While the "what" and "how" might have changed, the "why" had not. e challenge is to stay focused on the "why" and to learn new tools as needed. This prompted me to think about whether VUCA is really relevant to HR and to business- es, and to look for some other perspectives: "It's become a trendy manage- rial acronym: VUCA, short for volatility, uncertainty, complex- ity and ambiguity, and a catch- all for 'Hey, it's crazy out there!'" wrote Nathan Bennett and James Lemoine in "What VUCA Really Means for You" in the January– February 2014 Harvard Business Review. "It's also misleading: VUCA conflates four distinct types of challenges that demand four distinct types of responses. at makes it difficult to know how to approach a challenging situation and easy to use VUCA as a crutch, a way to throw off the hard work of strategy and planning — after all, you can't prepare for a VUCA world, right?" e authors present a guide to identifying, getting ready for and responding to events in each of the four VUCA categories based on how much people know about the situation and how well they can predict the results of your action. Roger Martin then touched on the issue in "e Big Lie of Strate- gic Planning" in the same issue of the Harvard Business Review: "All executives know that strat- egy is important. But almost all also find it scary because it forces them to confront a future they can only guess at. Worse, actually choosing a strategy entails mak- ing decisions that explicitly cut off possibilities and options. An executive may well fear that get- ting those decisions wrong will wreck his or her career. "The natural reaction is to make the challenge less daunting by turning it into a problem that can be solved with tried and tested tools. at nearly always means spending weeks or even months preparing a comprehensive plan for how the company will invest in existing and new assets and capabilities in order to achieve a target — an increased share of the market, say, or a share in some new one. e plan is typically sup- ported with detailed spreadsheets that project costs and revenue quite far into the future. By the end of the process, everyone feels a lot less scared. "is is a truly terrible way to make strategy. It may be an excel- lent way to cope with fear of the unknown, but fear and discomfort are an essential part of strategy- making. In fact, if you are entirely comfortable with your strategy, there's a strong chance it isn't very good. You're probably stuck... You need to be uncomfortable and ap- prehensive: True strategy is about placing bets and making hard choices. e objective is not to eliminate risk but to increase the odds of success. "In this worldview, managers accept that good strategy is not the product of hours of care- ful research and modeling that lead to an inevitable and almost perfect conclusion. Instead, it's the result of a simple and quite rough-and-ready process of thinking through what it would take to achieve what you want and then assessing whether it's realistic to try. If executives adopt this definition, then maybe, just maybe, they can keep strategy where it should be: Outside the comfort zone." In general, I find VUCA smacks of a "e sky is falling" reaction to change. From looking at his- tory and talking to people about change that they, their parents and their grandparents have expe- rienced, it would be hard to make a case that dramatic, unsettling change and upheaval is a recent phenomenon. Is application of early post-Cold War military thinking to business or human resources needs re- ally appropriate — especially in a world that has evolved far beyond that era? Taking a scenario approach to stimulate thinking and expand consideration of options just makes common sense. HR, for all kinds of practical reasons, focuses on putting programs and systems as tools in place, but in terms of strategy, perhaps HR needs to venture further "outside the com- fort zone." Karen Gorsline is SCNetwork's lead commentator on strategic capability and leads HR Initiatives, a consult- ing practice focused on facilitation and tailored HR initiatives. Toronto- based, she has taught HR planning, held senior roles in strategy and poli- cy, managed a large decentralized HR function and directed a small busi- ness. She can be reached at gorslin@ pathcom.com. Is the application of early post-Cold War military thinking to business or HR needs really appropriate?

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