Commando Consulting, March 2011

The Inherent Lunacies of Human Resources Departments in Consulting Firms

By Tom "Bald Dog" Varjan, Organisational Provocateur

Podcast: MP3 Version

In May 2009, a Victoria-based lawyer was appointed to investigate the British Columbia College of Teachers (BCCT) after several complaints that the Teacher's Union had hijacked the BCCT.

BCCT and the Teacher's Union have always been at odds with each other. But in 2009, when BCCT tried to increase standards for teachers, the union seriously stepped in demanding BCCT to reduce standards but increase wages and benefits for teachers.

There have been cases of gross misconduct by teachers, including sexual molestation of children, and in spite of the increasing number of complaints, the union would vehemently defend even the most pervert teachers.

One initiative BCCT tried to implement was to toughen up continuing professional development for teachers. The union stepped in saying BCCT has no right to expect higher level of competency form teachers, and teachers have the right to perform at any damn level they feel like.

Well, the union essentially said that teachers had the right to be as incompetent as they felt like.

So, here we are. BCCT wants to increase the standards for teachers and education in general, but the Teacher's Union, as all unions do, want to keep standards as low as possible while demanding more job security, higher wages and beefier benefits.

And this is the exact battle I see in so many consulting firms between the C-level executives and HR departments.

HR departments keep hiring people with impressive resumes, and C-level executives keep crying for people who actually can do the work.

In spite of the fact that business gurus all over the world have been preaching for many years that 80% of a business' success is about good people, and 80% of a good person is personality and attitude and other personality traits, most consulting firms still relegate this vital function of talent husbandry to human resources departments or, even worse, external headhunters.

I suggest when a consulting firm starts calling its people human resources, that company is in deep shit.

What's the next step on the road to lunacy?

Calling their parents ancestry resources? Their spouses reproductive resources? Their children inheriting resources?

Attracting passionate, enthusiastic folks with excellent subject matter expertise has always been and, I fear, will always be a serious shortcoming for many consulting firms. As a result of high talent turnover - coupled with a chronic resentment for core business functions, like marketing, branding and selling, the professional knowledge firm, the category which consulting firms belong to, is one of the least profitable business model.

They are good in terms of gross revenue, but there is a problem in terms of, my favourite indicator, net profit per associate.

Just look at even those firms that grow by 20, 50 or even 100% in gross revenue. The 20% gross revenue growth is achieved at a 60% operating costs increase and by doubling headcount. Big deal.

Consulting firms get so busy improving their clients' performance, that they ignore their own underperformance and hide behind socialistic protective shields like billable hours, where clients pay for - often useless - tasks, regardless of improvement in their situation.

Part of this problem can be traced back to human resources departments.

But where does this underperformance actually originate from? First let's look at the key difference between pursuing jobs in industrial businesses and pursuing a careers at consulting firms.

In other industry sectors, such as, manufacturing, retailing, junk foods, etc. human resources departments are busy hiring employees to perform tasks for as low pay as possible. Well, they call it competitive compensation. Employee loyalty is virtually zero, so employers try to squeeze the most out of their employees as quickly as humanly possible.

And of course, in response to employers' squeeze, people, especially the less competent ones who couldn't survive in a value-driven market economy, started gathering into trade unions and squeezed their employers for all sorts of unfair privileges.

That is, unfair relative to their pathetic work performance. And the war between unions and unionised employers have been getting worse by the day. The union toadies keep demanding more and more, while producing less and less. But that's another topic.

For consulting firms it is all about recruiting highly skilled professionals for careers who buy into the firm's vision both emotionally and intellectually in order to co-create bigger and brighter futures for their firms, their firms' clients and for themselves.

So, as long as human resources departments do the hiring, consulting firms are in deep shit. HR departments know how to hire people with impressive resumes and excellent acting skills. After all, that's all you need to get the job.

However, when it comes to performing in the real world, consulting firms must replace their traditional hiring processes (raw technical skills) with recruiting processes based on personality traits. Why? Because performing professional services is all about relationships.

So, What's The Conceptual Difference Between Hiring And Recruiting

Hiring is merely standing on the top of a hill and shouting into the world that your company is looking for a chimney sweeper and candidates should send their resumes and cover letters to hr@company.com.

Hiring is a fast and easy "retail operation", as Seth Godin calls it in one of his blog posts on recruiting.

Hiring raises the interest of jobseekers, that is, people who are actively looking for work.

You Can Easily Recognise Hiring Ads By...

"Due to the overwhelming response, we contact only the shortlisted candidates."

Meaning: We treat you like shit, well, easily replaceable cog in our machine both before and after hiring you.

"Send us your salary expectation."

Meaning: We're scanning the horizon for reasonable skilled people with low self-esteem who are willing to work for barely above minimum wage.

A "great" example of a crappy job ad from Craigslist...

Proofreader needed for tomorrow

I have written a paper and need someone to look over it. The person will have:

- Excellent English language skills (grammar /spelling/ sentence composition)

- Attention to details

- The paper has to do with technology so someone with information technology knowledge will be preferred

- The paper should take about 2 hours to edit. I will pay $40 cash for editing and will buy you a coffee. We can meet at a Starbucks in Surrey/ Langley area tomorrow afternoon. Please respond with your credentials.

So, a layperson is looking for a skilled professional and stipulates how long the work will take. And this stingy bastard is willing to pay about 20% of what a real pro would charge.

Highlights from another ad...

Web Contents & Marketing Materials

Education and Experience

A bachelor's degree or equivalent in journalism, technical communication, English or related field

A minimum two years experience with professional copy editing

Proficient in MS Office, Internet browsers and Internet operations


Exceptional written, listening and verbal communication skills

Strong organization skills with a high degree of initiative, creativity, motivation, flexibility and self-direction

Working knowledge of HTML

Blogging and social networking experience

Ability to multitask

Able to work well independently or in a team environment

Team oriented with a warm personality and positive attitude

Stays informed of industry trends and best practices

Proven ability to learn new information quickly

Desire to work in a fast-paced, success-driven environment

Compensation: $9.50-$12.50/hour

What does this company want? A student or a pro? Students don't have excellent communication skills and ability to work in teams. And people with journalism degrees don't work for $9.50 an hour. They stay on welfare which gives them a higher standard of living than a $9.50 an hour job.

And most real $9.50 an hour people, that is, people who are really worth only that and no more, couldn't find their own arses even if you gave them mirrors and sticks, let alone being proficient in MS Office or possessing exceptional communication skills.

Now Let's Look At Recruiting...

Recruiting is a carefully designed and implemented process of 1) finding the best people for very specific positions and 2) persuading them to give up what they're doing and join your company.

Recruitment is a slow process involving almost everyone in the firm, and instead of HR Best Practices, it requires relationship building, which is pretty much of an art.

Recruitment understands the basic premise that hiring ignores...

"The management of knowledge workers should be based on the assumption that the corporation needs them more than they need the corporation. They know they can leave. They have both mobility and self-confidence. This means they have to be treated and managed as volunteers, in the same way as volunteers who work for not-for-profit organizations."~ Peter Drucker, A Functioning Society: Selections From 65 Years of Writing on Community, Society and Polity, 2003

But the basic premise of recruiting is that you have to have something to recruit people to. You may have a job opening but talents that are worth recruiting are not looking for jobs. They are looking for careers at the low-end and earth-shattering causes at the high-end.

Talents are not jobseekers. They have to be seriously pissed off with what they're doing to attract them to your firm.

They definitely don't fall for the typical employee bromides like competitive wages and medical and dental coverage. They have the total opposite of the union labourer's mentality.

So, during the recruitment process, partners and senior associates do the search and handpick people.

And this is mutual because recruitable talents also handpick the firms that they're willing to join. They don't change engagements merely for a bit more money.

In the world of consulting, the majority of overall business success is about a healthy blend of emotional competence not intellectual competence. And for many forms, this emotional competence is missing. As McDonald's founder Ray Kroc once said...

"You are just as good as the people you hire."

And I dare to bet some vital parts of my anatomy that by "good people" he did not mean people with amazing burger cooking skills. Ray just realised that he would go further with "emotionally talented" people than with technically talented people.

Although, what I've heard is that nowadays the people at McDonald's are as apathetic as government bureaucrats and intellectually they're a good few sandwiches short of the picnic.

Now I can't say this with 100% certainty because I rather die than go to McDonald's to eat, but this is what I've heard.

Where do you think this kind of ad would have led good ol' Ray Crock?

"People wanted for fast food restaurant. Must have a degree in mechanical engineering with a major in thermodynamics (we use sophisticated ovens, you know), animal psychology (burgers are made of cows) and food science, and must be board certified by the local food hygiene authority.

I think when it comes to recruiting, the military does a great job. Yes, I know there is misrepresentation going on in the military too, just like in the world of commerce, but on a much smaller scale.

The military, also known as the ultimate professional service firm, recruits enthusiasm and ambition to succeed. Then it turns technically inexperienced and often even incompetent but enthusiastic and ambitious people into some of the finest soldiers with amazing technical skills.

With this fact in mind, I dare to propose that recruiting associates to consulting firms through HR departments based on resumes is often a call for a disaster. Some great mistakes human resources make when hiring professionals:

Overemphasising content skills. Bring together the ten best lawyers and watch what they do. It will be a far cry from the best law firm. There is a world of difference between practising law and running a business that improves their clients' condition through the skilful application of the law.

According to studies at Stamford and the Carnegie Foundation, success in any profession is about 20% content knowledge (what do we do?) and about 80% process knowledge (how do we do it?).

It's only the TV series where intolerable geniuses, like Dr. House, are actually employed. In real life most of them are either on welfare or do jobs where their disturbing behaviours can't undermine their companies' success.

Look at most information technology consulting firms. They are basically a bunch of geeks, fixing hard drives, floppy drives, firewalls or concrete walls, and other bottom-achingly sophisticated stuff. But what many of those firms do is a far cry from consulting. Is that surprising? Not at all. The HR department was looking for geeks in the first place, and that is what it got: Geeks, not consultants.

Focusing on the firm not on the candidate. Many consulting firms got it the wrong way round. They ask why the firm should bring the new candidate on board. The best candidates ask back: What makes your firm worth investing my life in it? What is so exciting about your firm? Sell me on your firm and your people?

Seeking full-time employees. Full-time employment at consulting firms basically means "we expect you to spend 37.5 hours per week hanging around in our building, sitting on our toilets, pushing button on our photocopier and eating your lunch in our cafeteria. We watch your time-keeping like a hawk.

It has nothing to do with achieving certain outcomes, but staying - seemingly - busy for 37.5 hours per week and be accountable for your hours in 6-minute intervals. Full-result employment is about outcomes not lists of tasks. Tell new people what they are expected to achieve by the end of the first year and help them to achieve it.

Compensating people with hourly wages or commissions. Performing consulting services is highly creative work, and it cannot be performed on command. Hourly payment is fine for manual labourers digging ditches or working on production lines, but not for creative professionals. Often good ideas for projects come during a movie or under the shower.

Actually, based on the survey of a British firm, the best ideas come to us during commute to and from work and under the shower. How do you account for that time?

Commissions are disastrous too. They are bribes, turning professionals into mercenaries, looking for short-term money grabbing and ignoring long-term success. And this can later backfire to the firm big time.

Conflict can arise from the firm and the individual's difference of assessing the client's situation. Sometimes projected results are not achieved because the consulting firm's management doesn't provide the right support for the consultant who works on the project.

Professionals with great ideas are often overruled by the firm's super-bells-and-whistles trademarked proprietary approach...

"Yes, your solution is better than the firm's standard solution, but you must adhere to the firm's trademarked approach here. No deviation is tolerated."

While human resources departments are great for hiring "trade barbarians", with consulting firms HR should focus on growing people once they are working at the firm.

On Summary

Professionals are professionals because they require a certain level of freedom in their operation. Also, they must have a very high level of emotional skills, which trade barbarians don't need and don't possess.

Yes, without the emotional skills, we can measure things, but if our work requires judgement and discernment, and consulting does, we'd better have the emotional stuff. And I dare to say that the biggest value consultants can offer to their clients comes from their judgement and discernment, not measurement.

However, as long as consulting firms put out job ads like...

"Thank you for applying. Your application has been successfully received and will be reviewed by our Hiring Committee. Should your qualifications meet our requirements, you will be contacted for an interview. Otherwise, your application will be kept on file for future considerations."

By the way, do you notice the cold, impersonal, passive voice?

No wonder most professionals worth their salt would regard this advertiser as a second rate punk not a firm worth working at.

Well, just as psychologists are some of the most emotionally screwed up people in the universe, most HR professionals passionately hate interacting with people. So, they often act as the Human Remains or Human Repression departments.

So, just abolish your HR department and make it a firm-wide effort to attract and retain top-tier talents.

Apple visionary, Steve Jobs, has said...

"It doesn't make sense to hire smart people and then tell them what to do; we hire smart people so they can tell us what to do."

But there is a problem, especially with male managers. Most of them operate on ego and testosterone, and in lieu of an instant penis enlargement, they get their kicks from bossing their people around often in the most horrendous, abusive and retarded manner. That's their enjoyment.

Hint: Look at most woman-led firms and what you find is collaboration and cooperation among associates. Now look at most man-led firms, you find fierce, often borderline deadly competition among associates.

And in my experience, the best consultants are more collaborative and cooperative than competitive.

Consulting firm compete either internally (with each other) or externally (in the marketplace). And they can't do the two together.

So, how does your firm compete? Internally or externally? And how much of this problem caused by an ill-contrived HR department?

Remember, hiring workers to recruiting talents is what plane food is to fine dining.

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