Article: 'HR is the most undervalued function'

Strategic HR

'HR is the most undervalued function'

Dermot J. O'Brien, CHRO of ADP Inc, talks to People Matters about driving big transformation from the bottom up
'HR is the most undervalued function'

When you are making big changes, it is necessary to be honest with people about the possibilities


HR needs to have multiple frameworks underpinned by data and to bring the topic of talent into the weekly and monthly meetings until the leaders discuss it like they do financials


How did ADP transform itself from a US-based backend payroll management company to a global human capital management company?

To me, everything starts with the client. When ADP realized that clients had been asking for a broader offering of Human Capital Management (HCM), we built our internal capabilities & products and acquired strategic partners where it made sense. From the business side, it was purely market-driven as we transformed from a payroll company to a broader HCM solutions provider. The alignment of the people strategy with the business strategy was a significant step as we needed to think about what businesses we needed to be in, not just in terms of revenue but also in terms of skill sets. We acquired partners that helped us expand our skill sets. Since we are a long-tenured company with an ingrained culture, change was measured. Listening to our clients not only helped us get into a broader market, but also helped us to adapt more.

Part of the challenge was to integrate ADP with the new partners. We created ‘The ADP Way’ of driving end-to-end change. HR has been playing a major role in it because much of the battle is not just about the process and the data, but about the people and helping them drive the change. We’ve created our own change management process (The ADP Way) so that there was a standard approach and framework to facilitate change.

The challenge was that in order to provide people with solutions, we need to be a leading practitioner inside the company. For us to be credible with our offering of HCM solutions, we should be world class in our people management. A big part of our transformation was to put a mirror up to ourselves and analyze – qualitatively and quantitatively – the stakeholders, big users of HR inside the company & HR people and then prioritize the areas of greatest pain. We are now very clear about our people strategy and are in the process of executing the pillars of that strategy. In the first phase of execution, we have created seven work streams and they are dealing with issues ranging from technology strategy to pay for performance.

At the macro level, you have to keep it fairly simple and be consistent in your messaging. That is how we are executing our transformation.

Transformation leads to not only resistance to change but also the fear of the unknown. How do you tackle those insecurities?

When you are driving big changes, roughly a third of the people are going to be with you, a third will be on the fence and then you have the resistant third. The question is: Are you savvy enough to help them see that they can also be a part of the change early and in the right way? When we are driving change, we know that there is going to be impact. The key is treating people with respect. . When you are making changes, it is necessary to be honest with people about the possible outcomes. You need to be transparent about what you will do to ease the transition for those affected.

What are the pros and the cons of being the talent head in a talent services company?

One very big plus is it helps in attracting the right talent. We can use the same effective hiring practices on our own behalf that we supply to our clients. The downside is that expectations on what we can deliver are much higher. We’ve had pretty good success meeting those expectations.

What is your recommendation to the head of HR who is trying to get the talent agenda to be the top priority?

In the last five years, the talent conversation in the C-suite has changed. It is time for HR to transform from an art to a science and get the basic fundamentals right. For that you need feedback and data. HR needs to have multiple frameworks underpinned by data and to bring the topic of talent into the weekly and monthly meetings until the leaders discuss it like they do financials. HR complains that top leadership does not listen. That’s not true. We just have to provide quality information to the leaders. It is time for HR to take ownership through dialogue and influence.

How do you develop the new capabilities required for HR?

I have a passion for this function and I think it is a very impactful role. But unfortunately, it is can be undervalued. For HR to be taken seriously, we need to bring in the right people, give them the right opportunities and demonstrate diversity (gender, race, etc). HR needs to make sure that they provide opportunities and allow people to grow. You need to be able to measure HR’s effectiveness. If you are driving the transformation, do it from the bottom up. This is something that I learnt from one of my earlier CEOs. HR needs to make sure that whatever approach it takes becomes sustainable in the long run.

During this transformation exercise, what keeps you awake at night? What worries you?

The biggest thing that worries me is behavior. We need to have the right character in place at the leadership level. Having the right character to respect people and having the integrity to tell people where they stand are important qualities. I want values to be lived and not just paid lip service. The second thing that worries me is the culture cancer where companies say one thing and do another. Worldcom and Enron are two examples of that. The Boards of these companies were interested only in the financials of the company and not the culture. They were not good at sensing culture. The question you should ask yourself is how comfortable are people in raising issues when they see one?

Dermot joined ADP in 2012 and leads the company’s global human capital strategy, including talent acquisition, performance management, succession planning, learning, compensation and benefits, diversity and inclusion, and corporate social responsibility. Prior to this, Dermot served as Executive Vice President of Human Resources at TIAA-CREF, a Fortune 100 Company, where he served for nine years. Dermot is a founding member of the Human Resource-50 Group, an invitation-only, thought-leadership and knowledge-sharing group consisting of chief human resource officers from the world’s most respected companies. ADP is one of the largest providers of business processing and cloud-based solutions, including payroll, talent management, human resource management, benefits administration and time and attendance to employers and automotive dealerships around the world.

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Topics: Strategic HR, Culture, #ChangeManagement

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