Manage by numbers? Why quantification doesn’t work for GR
Peter Drucker wasn’t a GR guy
Oh, the old quantification question! While most companies are proudly “data-driven”, pesky global functions like GR usually struggle to deliver such numbers. We have seen many GR functions trying to quantify their work, mostly for two reasons: (1) justify expenses and protect budgets by becoming a profit rather than a cost center, and (2) to provide GR managers data to drive decisions on priorities, ressources and headcount assignments. As management guru Peter Drucker put it: “You cannot manage what you can’t measure” .
Well — we think Peter Drucker never worked in GR. We haven’t seen a convincing quantification model for GR yet. The core problem is that tracking outcomes would be meaningful, but is very difficult, while tracking output is easier, but also a rather stupid idea.
Let us explain: If you try to measure outcomes, regulatory influencing and public sector business support might be the cases you would look at. In cases of regulatory influencing, changing a law affecting the bottom line of a company is usually a long-term process involving plenty of other players (other corporations, associations, NGOs etc). While it might be easy to calculate the impact of a specific regulation, it is pretty difficult to identify which impact your GR work specifically had. In cases of public sector business development support, it is usually the sales team that claims the commercial success — which is OK. How big is the role of GR in such projects? Can you really claim a certain success impact for your team? Not really.
As a substitute, you might feel tempted to measure output instead of outcomes: How many meetings did the team organize? How many briefings were written? How many people attended “thought leadership” events organized by your team? Setting up such “balanced score cards” for teams or individual GR managers has been quite en vogue for some time.
We think it’s a waste of time. Firstly, business does not really care. It’s just not meaningful data — do you feel comfortable to discuss how many meetings you have held with a top manager in your company? He might stare at you for a long time. Secondly, you establish incentives to do more rather than incentives to do better. Thirdly, these data points do not provide you meaningful decision points to manage your team. Taking into account how much resources are usually spent on such output tracking, we are highly sceptical.
If you have a cost center discussion, be alert
If you already have a cost vs. profit center discussion ongoing, something is wrong. Is Corporate Strategy a cost center? Maybe — but it does not matter, because the value of these investments is clear to business. Ideally, the value that GR creates should be as clear — regardless of numbers. If you provide strategic value to the core of the business and stay close to their needs, it does not matter if you are a cost center.
Rather than spending time on quantification, it might be better to re-evaluate the assignment of resources within GR. We often find that GR organizations are operating at the fringes of a corporation, not at its center. Understanding the needs of business sounds simple, but it is not. We would assume that most GR functions do not hire business operatives or product specialists, but from the political world. How many of your team members really understand the products and the future strategy? Starting with this question might be more beneficial than setting up a quantification process.
Next steps
So what are the alternatives if quantification does not work for GR? We suggest the following focus areas:
- Stay close to the core: GR should be a strategy consultant to management. Your team should inhale corporate strategy content. Proactively seek strategy updates from business units, and make sure you respond to these strategic priorities by structuring your own GR strategies accordingly. If you cannot map your own priorities on the corporate strategy, something is fundamentally wrong.
- Understand and have empathy for the sales force: Be laser-focused that your team understands the product portfolio of your company as well or even better than the sales force. There should be zero tolerance to a high-handed attitude towards the go-to-market organization. Let’s be very frank here: The GTM organization hires employees regardless of academic degrees — contrasting with your academically skilled GR workforce. We have seen many cases in which we sensed a slight contempt for the “hands-on” sales people. For a GR manager, it is key to get one message across: In the end, every employee in a company is in Sales.
- Establish robust feedback loops: We are often surprised how few resources are spent on learning from the past. Feedback loops are usually underdeveloped in companies who seem to live in the moment and barely look back. Both positive and negative feedback are essential to grow your GR organization and provide the direction that quantification could never give you.
- Be a briefings fanatic: Briefings are one of the main products your GR organization is delivering. Be absolutely diligent regarding the quality of briefings, both regarding structure, layout, content, and process.. Do whatever it takes to train your team, you will not regret it.
- Rigorous stakeholder management: “Knowing people” and “having a network” is a lazy version of managing stakeholders. Be diligent in your approach and ask your team to apply more rigor. If you can map stakeholders according to their interest and influence on a specific topic (that’s your classical two-dimensional stakeholder matrix), you might also ask your team to map their level of relationship to a specific person on a scale from 1 (barely know him) to 5 (our kids regularly acquire the same flu virus in kindergarten) — and set specific targets until when you want to develop a contact to which scale level.
Curious what you think about GR quantification. Keen to listen to examples that contradict our hypothesis! Get in touch! And follow us on Twitter.
