Tag Archives: Neil Roden

Measuring the organisational fear factor

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If you want to read a detailed case study on how not to run a company, especially a very large bank, I can firmly recommend a 450-page report entitled “The failure of the Royal Bank of Scotland” by the UK’s FSA (Financial Services Authority).  No one comes out of this story with any credit – literally – hahaha.

RBS has already had several mentions on this site because it was once held up as a great example of HR by many less-discerning HR publications.  Its HR team still persists with failed HR practices today, despite one revealing statistic from the FSA report which showed that in 2007, the year before RBS collapsed -

“66% of employees were recorded as agreeing with the statement – the ‘Group Executive Management Committee (GEMC) provides good leadership’”

This neatly disproves the latest theory in leadership development that says great leaders are defined by their followers.  What really comes across in the report though, loudly and clearly, is the opposite of employee engagement.  There was an insidious, underlying fear culture that completely contradicted RBS’s ‘Lemming Survey’ produced by its HR team.  The report is particularly damning of CEO Fred Goodwin’s management style and devoted a whole section to something HR strategists should know all about -

“The importance of management, governance and culture”

remarking that

“During 2003 and 2004, …. the FSA had identified a risk created by the perceived dominance of RBS’s CEO. While it was recognised that the CEOs of large firms tended to be assertive, robust individuals, the FSA’s view was that, in the case of RBS, the ‘challenging management culture led by the CEO raised particular risks that had to be addressed. ….‘Most of the members of GEMC we met with criticised the way the Committee operates. …. GEMC members also described dysfunctional working in relation to:

  • GEMC are not operating as a team.
  • Conversations are typically bilateral.
  • Performance targets consume too much of the agenda.
  • Discussions often seem bullying in nature.
  • The atmosphere is often negative and is at a low point currently.”

Fred Goodwin has undoubted talents but his management style is not one of them and it was the culture he created, above everything else, that ultimately condemned RBS to its inevitable fate.  This is the best possible argument for having an independent and effective HR director (rather than the one they had) reporting directly to the Board, with a specific remit to develop the right organisational culture whilst balancing the drive of “assertive, robust” executives with the need to maintain continuity and consistency; especially when your average FTSE 100 and Fortune 500 CEO lasts less than 5 years.

Another practical suggestion I would like to offer in response to the FSA report is to counterbalance the Q12 nonsense, that has prevailed in HR circles for far too long, with a Fear Factor Quotient (pat. pending).  I’m thinking along the lines of a questionnaire where the highest Fear Factor (i.e. the worst case) would be linked to statements such as: -

‘I am a complete nervous wreck, having lived in fear of my life every waking second that I am at work’

using the usual Likert-type response options ranging from ‘strongly disagree’ to ‘strongly agree’ with an additional box for those on medication to provide details.

At the other (best) end of the scale a typical statement might be –

‘I am encouraged to say exactly what I think to who the hell I like. I could walk into the CEO’s office tomorrow, call him a complete tosser, not bother to dress it up as constructive criticism and he would thank me for it. Hey, I would even be offered a coffee!’

I was thinking we could also invent a new unit of measurement – the ‘Goodwin’ – although you could adapt this to your own organization by just inserting the name of your most feared executive.  The ‘Goodwin Scale’, as with the logarithmic Richter Scale, would range from 1 to 10 with the difference between say a 5 Goodwin and a 6 Goodwin being the equivalent, in order of business disaster magnitude, of an increase from say $10 million to $300 million.

Alongside this I think we would also need to design in a specific ‘Whistleblower Propensity Rating’ where all employees were asked to state what would have to happen for them to blow the whistle.  These could be on a separate, sensitivity scale ranging from “I would blow the whistle on my own mother if she so much as borrowed my company pen”  to “I would have to witness my boss murdering someone with their bare hands, in front of my very own eyes, before I would feel inclined to blow the whistle on them.” (we might also have to insert a witness protection scheme clause in there somewhere).

I believe there is already a ‘Group Executive Management Committee Members’ Courage’ seismometer gathering dust somewhere in the bowels of RBS but it was never used because the bank was already registering an 8 on the Goodwin Scale and this meant there was nothing in the boardroom to be measured on it .

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HR is NOT a support function

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After hearing Neil Roden’s very late admission that the function he headed up at RBS (Royal Bank of Scotland) was merely a support function it is time to finally put a few hoary old misconceptions about HR to rest.

First on that list is the simple fact that when we all talk about ‘HR’ most people forget that this is short for human resource management – HR is a management function. Second, managing an organisation’s human resources (or human capital if you prefer) is inherently and necessarily a strategic role. The reason RBS went bust was because a sizeable chunk of their bankers were not managed well enough to stop them creating huge bad debts.  RBS’s strategic ambition to become the ‘most admired bank’ was not matched by an ability to get the best value from its human capital. If that isn’t the job of an HR director then I don’t know what is.  For Roden, as with the HR directors of all the other banks that failed, if they somehow think this is not their job then they need to make room for those who do.  Otherwise they are turning the clock back to the bad old days of the lowly, unprofessional personnel manager – often appointed because no other department would have them.

A support function like Roden’s involves recruitment, advising on contractual pay and conditions, dealing with the usual grievance and disciplinary issues and reacting to any changes happening in the business such as relocations, revised terms and conditions and the like.  This is what passes for HR in the vast majority of organisations today but is just old-fashioned personnel administration by any other name, with all the severe limitations that entails.  The world might have changed in many ways and the job titles too (e.g. talent manager) but a support function runs training courses – it doesn’t get the best value out of its talent.

Day-to-day maintenance and reacting to operational demands, such as filling vacancies and running courses (even in expensive, purpose-built business schools or corporate universities) is intrinsically low value work because it is so easy to replicate; as evidenced by the low salaries of personnel and training officers relative to other professions.  Nevertheless, even basic tasks need to be managed well and constantly monitored for how efficiently and effectively they are carried out.  This leads personnel administration teams to resort to the sort of number crunching promoted by PwC/Saratoga to show how quick or cheap their recruitment process is.

The key distinction between personnel admin and real HR is that real HR people know that their main priorities are getting the right people and ensuring they are performing to their full potential, adding as much value as possible.  They know this presents them with a much more problematic set of issues but they are not stupid enough to be taken in by the sort of simplistic and misleading data used in PwC/Saratoga-type metrics.

The biggest problem of all though with an HR ‘director’ believing an organisation like RBS can operate in a global banking and finance system with only a personnel support function is the most obvious one – it failed miserably – because if you leave human capital management to personnel people, or even other senior, operational directors, it doesn’t happen. Fact.

For personal development linked to this topic visit the Consummate Professional Series

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PwC – The March of the Clones

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Anyone who has ever seen the films Village of the Damned (based on the book The Midwich Cuckoos) or Stepford Wives, or any other work in the genre of people being turned into crazed automatons, and has also had the misfortune to work with PwC’s ‘HR consultants’, cannot fail to have noticed some very disturbing similarities.

This might leave me open to charges of libel if it were not for the fact that the person who pointed this out to me was one of PwC’s own staff development managers – puts a whole new spin on the word ‘development’ doesn’t it?  To protect this person’s identity, and to save them from the sort of gruesome fate that usually befalls anyone who tries to halt the march of the humanoids, I will refer to them as ‘A’.   ‘A’ said that PwC had a reputation for producing “clones” (A’s word not mine), and very arrogant ones at that: apparently some of the partners were increasingly concerned about it .  As A was telling me this in a very public gathering I suddenly felt an urge to look over my shoulder and clock everyone else in the room for any suspicious or menacing behaviour.

Unfortunately, in the time since A told me this PwC does not seem to have had any success in stemming its descent.  I stumbled across an interview yesterday, about the totally discredited ex-HR head of RBS (Royal Bank of Scotland) that only confirmed my worst fears.  I first met Neil Roden in 2001 and suffice it to say that his is a classic case of  over-promotion (in every sense) having become CEO Fred ‘The Shred’ Goodwin’s HR head while he was at Bank of Australia.  Roden, like many HR directors, was struggling to maintain some semblance of competence and composure in a job that was obviously too big and too strategic for him.

At the time he was boasting about reducing his ratio of HR people per 100 FTE’s since RBS acquired Natwest: an obsession with irrelevant minutiae fostered by Saratoga – a specious benchmarking regime now run by PwC and inflicted on many of their clients.  Also, as one of Fred Goodwin’s henchmen, he had to show his macho credentials by mimicking his master’s appetite for  slashing costs. What has never occurred to Roden, or PwC/Saratoga for that matter, is that really effective, evidence-based and value driven  HR people are not a cost but a sound investment.  What a difference a few good HR people, who understand the true value of human capital, might have made to this now state-owned bank.

Roden was never one to hide his ‘talents’ and ‘achievements’ as he won awards and was regularly chosen to top HR league tables.  I even had my own clients asking me what was so good about RBS?  I tried to put them straight and even challenged him head on but to no avail because one of the biggest myths in HR, that companies making lots of profits must be good at HR, is perpetuated by those very HR directors who work in profitable companies but have no evidence to demonstrate what their own contribution is.  The old saying ‘no one ever got fired for buying IBM’ has been replaced by ‘She must be good – she worked for Pepsico‘).  Only when it is too late is the reality revealed, when companies like RBS or Enron crash.

So what is Roden’s hindsight view now?

“There’s a debate here about what HR can reasonably be held accountable for. People think HR runs companies. I say, stop getting carried away; HR is a support function, no more or less important than sales or IT. HR critics are way ahead of themselves; they need to get back inside their box.”

Roden is of course referring to ‘critics’ like yours truly but what Neil always failed to realise was that any criticism was objective and evidence-based and we were never criticising HR, per se, only its worst exponents.  It would not be so bad if he actually stopped contradicting himself: compare this with an interview he gave to PwC’s newsletter ‘Hourglass’ in February 2008 (just before RBS collapsed) in which he was quoted as saying -

“I was personally involved in the group executive committee on whether or not we should proceed with ABN Amro.”

This contradiction and bare-faced hypocrisy actually makes Roden a perfect candidate to join PwC, having passed their integrity standards test with flying colours.  As Michael Rendell, head of HR services at PwC, commented on Roden’s appointment:

“In addition to a wide ranging role advising clients on all aspects of HR, Neil will be focusing on the role of the HR function, how to optimise its activity and the critical impact of people on business performance.”

Obviously Rendell and PwC don’t care what Roden did at RBS.  The fact that they are already contradicting each other will soon be resolved because PwC’s core competence in cloning will soon ensure their latest recruit is mouthing exactly what their clients want to hear.

For personal development linked to this topic visit the Consummate Professional Series

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And the award for the best evidence goes to ….

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It’s that time of year again – the awards ceremonies.  As a judge in this year’s Personnel Today Awards – ‘HR Impact’ category, of course – the only category that would attract the interest of an evidence-based HR manager – I have had to wait for the final results to be announced on 30th November before writing this piece – not that I am planning to divulge any secrets here; except to say that some HR teams have a funny way of defining ‘impact’.  If any entrants for this category want some personal feedback as to why they did not win please feel free to get in touch.

I have always wondered what the point of awards are when organisations enter themselves – presumably they genuinely believe they are doing something pretty special or out of the ordinary – but if the awards are not treated with great respect by the professional community at large then what purpose do they serve?

I got a mention myself in dispatches in Personnel Today’s ‘Top 40 Power Players’ in 2007 (no.30, in case you were wondering) without anyone interviewing me or assessing my work (as far as I am aware) – I didn’t ask to be mentioned – in fact I would have much preferred it if they hadn’t because looking at the other ‘Power Players’ there was no one that I would have held in high esteem – Neil Roden (ex Royal Bank of Scotland) was No. 1.  I suppose if helping to get your bank nationalised is a mark of success then he obviously deserved his award. It just shows that these league tables are not great predictors of success.

In fact Roden was No. 2 in HR Magazine’s list for 2008 (yes, that was after we all knew that RBS had crashed!) so perhaps some HR journalists are a bit out of touch with reality? That same year I was also one of the ‘ones to watch’ in their list (at the very tender age of 53 and after a mere 30 years in the business).  HR Magazine also had a list of the ‘top HR thinkers’ (sic) which included Dave Ulrich at No.1, whose infamous model has rapidly fallen into disrepute and Will Hutton at No.7, who took the Industrial Society and ‘transformed’ it into the financial disaster and pseudo-research joke that is now the Work Foundation. If I had known I was to be in such sparkling company I would have asked HR Magazine to stop tarnishing whatever reputation I might have earned with its own very low standards.

Of course, the only reason I am mentioning all of this is that the one thing that is usually conspicuous by its absence at awards ceremonies is any real evidence of success. I remember Personnel Today many years ago used to run an annual, recruitment advertising  competition but no one bothered to ask whether any vacancies were successfully filled or not – never mind whether the new recruits actually performed.

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