Article: Is HR too fragile?

Strategic HR

Is HR too fragile?

After years of preaching to everyone about being VUCA-ready, HR itself proved to be fragile under the stress of the COVID-19 crisis. What can HR do to become 'Antifragile' when the next black swan swoops down?
Is HR too fragile?

When the going gets tough, HR:

  • keeps going – as if nothing happened
  • runs around – like a body-only baby-hen
  • goes to sleep – in an ostrich pose

When the COVID-19 crisis hit India, these were some of the snide comments doing the rounds among employees about HR’s lack of a realistic and timely response that helped people. It’s not as if the desire to help wasn’t there. Trouble was, the kind of help they offered focused on an HR agenda like how to get coached in a WFH situation. Far from wanting coaching, employees were worrying about losing jobs and wages and management teams were working on restarting operations safely.

But the central argument of this column is deeper than simply pointing out that some HR leaders didn’t exactly cover themselves with glory in their haste to jettison contract workers, cut pay at the BOP, dishonor campus offers and focus on the safety of just the top echelons of the company and their families. There were plenty of HR people who struggled in the best way they knew how, to deal with the crisis. The game, unfortunately, had been stacked against them. The main reason HR floundered was because it has been made progressively more fragile. Unless we reinvent HR with an Antifragile core, our reactions in future disasters will be equally dismal. I bow to the small minority of CHROs already operating in an Antifragile mode. I and the rest of the HR community have a lot to learn from you. This column will attempt to provide those who were caught in a brittle system with some pointers for building Antifragile HR.

The Talebization of Fragility

Nassim Nicholas Taleb wrote the book on Antifragility1 (literally) and, though he can be curmudgeonly, he has many extremely valuable insights (interspersed with quite a few vituperative and sweeping generalizations). Here is my attempt to extract what’s relevant for us from Taleb’s 'Antifragile: Things that Gain from Disorder'.

Let’s start with Taleb’s definition of Antifragility:

"Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk, and uncertainty… Let us call it antifragile… Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better …"

Here are some of his suggestions (quotes from Taleb’s book) to move from Fragility, through Robustness, to Antifragility:

  • Some parts of the system need to be fragile (i.e. constantly get destroyed and replaced by sturdier successors) for the entire system to move towards Antifragility.
  • Limiting size, concentration, and speed are beneficial in reducing Black Swan risks.
  • Prediction and forecasting are not so important for the robust and antifragile. As Taleb puts it: "If you have extra cash in the bank (in addition to stockpiles of tradable goods such as cans of Spam and hummus and gold bars in the basement), you don’t need to know with precision which event will cause potential difficulties." 
  • Blind optimism gets the greatest shocks from disasters and takes the longest to recover."
  • The appropriate strategy in the face of uncertainty comes in barbell form. Taleb describes it as "a dual attitude of playing it safe in some areas (robust to negative Black Swans) and taking a lot of small risks in others (open to positive Black Swans), hence achieving antifragility."
  • The most resilient technologies, solutions and processes result from random tinkering. The drive for efficiency often drives out 'slack' that is essential for permitting such experimentation. 
  • On the other hand, an overabundance of resources and the dearth of 'stressors', takes away the need to improvise, innovate and become capable of meeting unanticipated demands with what is available at hand."
  • We need to be skeptical of accepted wisdom.2 Taleb’s words are punchier than mine: "In life, antifragility is reached by not being a sucker... we know a lot more what is wrong than what is right."

Robust HR

The starting assumption for making HR more resilient to future disasters is that none of them will be the same as those we have experienced in the past. As such, there is no point in practicing responses to specific catastrophes. That would make us like those generals who are taunted with being fully prepared – for fighting the last war! What we need to do instead is to make ourselves robust enough to face a wide spectrum of disasters. This will mean equipping ourselves with a broad range of capabilities, commitments, emergency action protocols and principles for prioritization when tough choices have to be made. Here are a few suggestions for what HR can do to make itself robust. These are only intended to trigger thinking within different industries and organizations for robustness-builders customized to their own needs.

Let’s start with size. We’ve all been brainwashed into believing bigger is better. But scale isn’t always an advantage, particularly during some cataclysms. I am not going to be impractical enough to suggest that companies stop growing but the wise CHRO will seek to limit individual unit size with Dunbar’s number in mind.3 To operate viably with smaller unit sizes demands new ways to organize sets of teams in ways that allow their energies to synergize within a larger corporate entity. In his book 'Team of Teams', General Stanley McChrystal presents some easily understandable (if not so easy to implement) ways of creating the Shared Consciousness (though systemic understanding and strong lateral connectivity) as well as Smart Empowerment (for which people have been chosen and trained).4 Where this form of organization is infeasible for regular operations, HR needs to craft it as an emergency operating mode. Triggering the mode need not be through a specific instruction from corporate – after all, we can imagine scenarios where no such instruction can be forthcoming for reasons of total communications breakdowns or worse. Once such an autonomous mode is activated, unit heads would automatically be empowered and capable of securing life and property while seeking to resume cash-generating operations under their own steam.

Many catastrophic disasters have a direct impact on the lives and safety of employees. When they strike it is too late to seek preferential hospital admissions, mass scale transportation arrangements and dedicated medical workers. Depending on the scale of the operations, special tie-ups with large or small hospitals and practitioners need to be in place. Each facet of the operations, people movement and material logistics must be reviewed, audited and, where appropriate, practiced. A Total Safety Management programme needs to be certified and then reviewed at the Board level. When crisis strikes, it is not only physical but mental well-being that is under stress. Once again, contracts with remote counselors and other mental health professionals have to be lined up and tested for efficacy well before the black swan flies overhead. Some organizations may have already established a mental wellness platform of the kind described in an earlier column5 and will not need to do last minute scrabbling around. Though not as burning an issue as physical and mental health, both during and very shortly after a disaster, the financial situation of employees will be negatively impacted. The exact 'tiding-over' assistance cannot be decided beforehand but the principles governing the distribution and channels for effecting payments can certainly be pre-determined. In the recent cataclysm, those HR heads who destroyed the mental and then the physical well-being of their contract workers (and of some permanent staff) by depriving them of their jobs and financial subsistence need a special place in HR’s Hall of Shame. Some of them maintain they could do nothing else in the face of pressure from their CEOs. They should memorize the quote often attributed to Dante: "The hottest places in Hell are reserved for those who in time of moral crisis preserve their neutrality."

After the safety of employees, HR must contribute to getting the output lifeline of the company up and running. During the COVID-19 emergency, there were discussions at several HR forums about companies getting critical supply chains up and running with minimal risk through the reengineering of processes for safety and the innovative design of protective gear and other equipment. Strangely enough, the same HR people who had been loudest in their business partnership claims showed the least understanding of what process reengineering entailed6 and the ones who ran workshop after workshop on design were blank about actually putting design innovation to practical use. 

In order to contribute to employees and delivery processes in times of inordinate stress and scarcity, HR needs to be able to transform itself for 'battle' in a preplanned set of moves. What seems important in peacetime becomes a luxury in war. This column has written about Frugal HR in more than one context.7&8 Toughened HR departments are those that are able to quickly pick people processes that are critical for that emergency and carry them out to near perfection while stopping others or letting them tick away in 'standby' mode. While the top choices for prioritization will vary by situation, it is unlikely that people contact will leave the top list in any circumstances. 9 To do such a rapid shift to emergency stations, HR should have already instilled a mature way of process thinking which may or may not correspond to the normal assignment of responsibilities. Where it does not, process leadership and delivery responsibilities need to be allocated in advance and rehearsed from time to time so that 'hat' addition or change becomes almost second nature.

Among our most fragilizing addictions is our penchant for the precariat. Just like organizations have to rethink their fragile, lowest-cost, single-supplier, JIT, component supply chains, HR will need to abandon totally its own least-cost, contract labor drug.10 Cost-efficiency that is resilient to shocks can only come from the commitment, productivity and skill of durably employed people.

Taleb points out that: "Much progress comes from the young because of their relative freedom from the system and courage to take action that older people lose as they become trapped in life. But it is precisely the young who propose ideas that are fragile, not because they are young, but because most unseasoned ideas are fragile." 1 To balance this, older people who have been successful leaders through life-threatening challenges, thereby acquiring the mental stamina to respond without panic in adversity, need to be positioned in key decision-,making roles that might confuse novices. Having a sprinkling of 'old hands' scattered throughout the organization, and particularly in HR, is a useful backbone stiffener in times of great stress. The reassurance that such a been-there-seen-that group can provide is particularly helpful when the majority consists of millennials. Readers of this column, of course, may long since have taken steps towards getting a richer (and differently wise) age mix.11

Aspiring to Antifragility

True Antifragility, as Taleb repeatedly emphasizes, is much more than just resilience. For HR to be Antifragile, it must emerge stronger from the crises it encounters. It is the major cataclysms, when run-of-mill HR departments run around in flurries of conventional activity, that real pioneers can distinguish themselves. 

The question uppermost in the minds of CHROs who hope to build Antifragility must be: "What can my HR team and I do which will make employees and managers remember this as our finest hour? How can we build a reputation for exemplary action under fire that will move HR and the organization in the direction of Antifragility?" Questions like these provide limitless scope for the brightest minds in each company. Any universal suggestions cannot be truly innovative. All the same, I will stick my neck out and give some ideas that could have had an electrifying impact on employees during the COVID-19 crisis:

  • Instituting special additional medical insurance and counseling assistance for physical and mental problems, particularly those related to homestay.
  • Announcing the availability of rapid-response financial and physical help to employees and family members struck by the disease – both for the illness itself and for the trauma and expense of family isolation. Very few employees may have needed to avail of this assistance but its availability would have been a tremendous source of comfort and future gratitude.
  • Intensifying the employee 'touch' programme with the assistance of all hands in HR and senior line managers so that each employee was contacted (outside of work dealings) and had concerns addressed by someone or other at least once a week.
  • Informing contract workers (in the absence of whom companies struggled to resume operations) that they will be appointed as permanent company employees (or at least with equivalent compensation) when they rejoin.
  • If salary cuts became inevitable, prompting the promoters of large enterprises not only to share in them but (since their equity holdings are the larger source of their incomes) encouraging them to use part of their wealth to fund the salary gaps at the least paid levels. This would make people's commitment hugely Antifragile. Its impact on the CHRO’s tenure might be different!

Surely, I can’t be serious. Whoever has heard of a promoter putting personal wealth on the line for the sake of employee salaries? Permit me to share a story about Tata Steel from a book written by a person I knew and respected greatly. "One day a telegram came from Jamshedpur that there was not enough money for wages… In November 1924, the steel company was on the verge of closing down. Sir Dorab [Tata] pledged his entire personal fortune of Rs 1 crore, including his wife’s jewelry, to obtain a loan of Rs 1 crore from the Imperial Bank of India for a public limited company." 12 Having had the good fortune to start my career with Tatas and to work there for many years, I am often asked why Tata people’s sense of belongingness is so resilient. It is heroic history like Sir Dorab Tata’s that has made the people-bonds there so Antifragile and durable. Now we have the greatest opportunity of this century for every corporation in the world to build Antifragile HR and a legend that can last for the next 100 years.

Please substitute my ideas with more creative ones of your own. But remember, the test of their Antifragility will have to be a startling improvement in the engagement, retention and sense of belonging in the general employee population and in the capability of HR to face equally terrifying swan attacks in future. A person working in any company led by the true baton-bearers of Sir Dorab will never forget the sacrifices and care demonstrated by its line and HR leadership now.

Old men forget; yet all shall be forgot,
But he'll remember, with advantages,
What feats he did that day. Then shall our names,
Familiar in his mouth as household words …
Be in their flowing cups freshly rememb'red. 13

Which leader would miss such an opportunity?

-------

Notes:

  1. Nassim Nicholas Taleb, Antifragile: Things that Gain from Disorder, Penguin, 2013.
  2. Visty Banaji, Pyrrho, please pay another visit - A DIY kit for sniffing out BS in HR, People Matters, 23rd March 2017.
  3. Visty Banaji, (R)evolutionary Thinking- Organizational puzzles that Evolutionary Psychology can solve, People Matters, 24th August 2018.
  4. Gen. Stanley McChrystal, Tantum Collins, David Silverman and Chris Fussell, Team of Teams: New Rules of Engagement for a Complex World, Portfolio, 2015.
  5. Visty Banaji, Corporate India's mental health crisis, People Matters, 15th January 2020, ().
  6. Visty Banaji, The yin and yang of people productivity: HR contribution business leaders miss most, People Matters, 18th April 2019.
  7. Visty Banaji, Minimal HR for maximal effect: Hyper-frugal Resourceful HR in the age of aggregators, People Matters, 12th January 2017.
  8. Visty Banaji, How non-profit orgs can get the best out of their people, People Matters, 19th February 2019.
  9. Visty Banaji, HR is a contact sport, People Matters, 7th April 2020.
  10. Visty Banaji, Udta Udyog – Industry’s addiction to contract workers, 15th September 2016.
  11. Visty Banaji, Forward to Methuselah: How older talent can rejuvenate organizations, People Matters, 19th May 2017.
  12. Russi M Lala, The Creation of Wealth The Tatas From 19th to 21st Century, Penguin Random House, 2017.
  13. William Shakespeare, Henry V, Act IV, Scene iii.

 

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Topics: Strategic HR, #COVID-19

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