The Inherent Lunacies of Human Resources Departments in Management Consulting Firms

by Tom "Bald Dog" Varjan, Organisational Provocateur

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 firms still relegate this vital function of talent husbandry to a human resources departments or, even worse, external recruitment firms.

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

What is the next step?

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

Attracting both technically skilled and passionate, enthusiastic folks has always been and - I fear - will always be a shortcoming for many professional service firms. As a result of high talent turnover - coupled with a chronic allergy to core business functions, like marketing, branding and selling - the professional service firm is one of the least profitable and most underperforming form of business.

Firms get so busy to improve performance for their clients, that they ignore their own underperformance and hide behind protective shields like time-based fees, 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 a key difference between pursuing jobs at other businesses and pursuing a career at service firms.

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

For Professional Service 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 a bigger future both themselves and their firms.

So, as long as human resources departments do the hiring, service firms are in deep shit. HR departments know how to hire people based on their resumes, and that is enough for performing jobs.

However, when it comes to performing professional services, 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.

It means, the majority of overall business success is about emotional competence not intellectual competence. And for many forms, this emotional component 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.

Where do you think this kind of ad would have led him? "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.

Just look at the ultimate professional service firm: The military. They require nothing except enthusiasm and ambition to succeed. Then they turn technically inexperienced people into some of the finest soldiers with amazing technical skills.

With this fact in mind, I dare to propose that recruiting professionals to 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 firm that improves their clients' condition through the skilful application of law. Success at any firm is about 20% content knowledge (what do we do?) and about 80% process knowledge (how do we do it?).

Look at most information technology consulting firms. They are basically a bunch of geeks, fixing hard drives, floppy drives, firewalls and other bottomachingly 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.

Hiring not recruiting. Hiring is about gaining access to people's heads and hands to perform tasks. It is based on a resume. This is a fine approach when hiring labourers, but is a definite no-no in professional service businesses, where the firm's only asset is the quality of its people and their personalities.

While hiring is about having access to certain skills, recruiting is about having access to certain personality traits. Hiring is about offering a job. Recruiting is about offering a career. A good example is the US army, as some call it, "the ultimate professional service firm": As long as you have the ambition to be all you can be, you can join. They will teach you content.

If you have a heart for it, they teach you the "head stuff". A great firm is about enthusiasm, passion, ambition and innovation. Oh, yes, and a bunch of horse sense, which is as good as stable knowledge. While labourers can be hired by HR departments based solely on resumes, professionals should be recruited by their future colleagues based on their personalities.

Focusing on the firm not on the candidate. Many 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 time, talent and effort in it? What is so exciting about your firm? Sell me on you and your people?

Seeking full-time employees. Full-time employment at professional service firms basically means "we expect you to spend 40 hours per week in our building, using our toilets, our photocopier and have 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 40 hours per week. 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 professional services is highly creative work, and it cannot be performed on command. Hourly payment is fine for labourers but not for creative professionals. Often good ideas for projects come during a movie or under the shower. Commissions are disastrous too. They turn professionals into mercenaries, looking for short-term money grabbing and ignoring long-term relationship building. Here are some of the problems with commissions:

People are motivated to focus on short-term results, ignoring sustainable long-term improvements. This can later backfire to the firm big time.

Conflict can arise from the firm and the professional's difference of assessing the improved situation Sometimes projected results are not achieved because management does not provide the right support Professionals with great ideas are often overruled by the firm's super-bells-and-whistles trademarked proprietary approach. "This is the way we handle these problems around here."

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

Professionals are professionals because they require a certain level of freedom in the way they operate. Also, they must have a very high level of emotional skills, which trade barbarians do not need.

However, as long as you respond to applying talents with messages like "Thank you for applying. Your application has been successfully received and will be reviewed by our Recruitment Team. Should your qualifications meet our requirements, you will be contacted for an interview. Otherwise, we will keep your application on file for future consideration if a suitable position becomes available" any professional worth his/her salt will regard you as a second rate punk.

It sends more or less this message to the reader: "We will treat you like shit both as a applicant and as an employee."

The nub: Abolish your HR department and make it a firm-wide effort to attract and retain top-tier talents.

Copyright 1997-2010 Tom "Bald Dog" Varjan. All rights reserved. You are free to use this article in whole or in part. One favour though: Can I ask you to you include complete attribution, including a live website link. Also, can you please let me know where you plan to publish the article.

The attribution: This article was written by Organisational Provocateur, Tom "Bald Dog" Varjan of Dynamic Innovations Squad, a firm specialising in helping consulting firms to sell their expertise at the highest margins. Get Tom's free Practice Management Black Paper when you sign up for his monthly newsletter, Commando Consulting: Lessons And Practices From The Ultimate Professional Service Firm, The Military. Visit Tom's website at http://www.di-squad.com.

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