ORC Sightlines

November 2005

Ram Charan Addresses ORC Networks on Strategic HR Challenges

Noted author and business advisor Ram Charan addressed an audience of ORC Network members at the Fall Conference. Charan’s keynote speech brought together ORC’s Senior HR Officers Networks, Human Resources in R&D Network, Human Resources Solutions Network, Executive Compensation Forum, and International Management and Remuneration Group, all of which held their autumn meetings at the Harrison Conference Center on Long Island.

Charan challenged his audience to become role models for trust and judgment, to have the courage to “weigh in” on important strategic issues within their area of competence, and to become trustees of their companies’social systems (the collection of human resources and the structures that organize them). Expanding on what trusteeship entails, Charan argued that one of the most important functions HR leaders can play, and one for which they are ideally situated, is as a broker within the organization, making sure that leaders of the different functions and organizational units, teams, and committees are talking to each other effectively, that necessary linkages are made.

Noting that the bulk of HR resources are now spent implementing and managing change, Charan called on the HR function to prepare HR leaders capable of making strategic contributions. The single most important capability that potential HR leaders need to develop is an understanding of the business and what he called “business sense,” the equivalent of common sense in daily life. Charan advocates teaching every HR professional to use business diagnostics. The point is not to train HR professionals to be financial analysts, but to give them the ability to extract strategic lessons from the numbers.

Further, high potential HR professionals should have an experience in which they are attached to a senior line person and have the opportunity to apply the lessons of business diagnostics to real situations. HR leaders who understand the business system will be able to identify those aspects of the social system that have a direct impact on business results.

In sum, the responsibility of senior HR executives today is to understand how the social system affects the business system, to demonstrate those cause and effect relationships to the organization, and to help management determine where, when, and how to intervene in the system to improve business results.

ORC’s Senior HR Officers Network offers the top HR executive in each member company a confidential, high-level forum in which to discuss current issues and trends that affect their companies and the HR function. The Human Resources Solutions Network does the same for the top HR leader of business units or divisions of Fortune 500 companies.

The Human Resources in R&D Network comprises HR partners for research and development organizations in large companies; Executive Compensation Forum helps senior executive compensation decision makers align executive rewards with business strategy; and the International Management and Remuneration Group brings together executives from leading U.S. and European companies to focus on HR developments with particular emphasis on executive performance and rewards.

For more information on any of these ORC Networks, contact the Sightlines editor, who will put you in touch with appropriate ORC staff.

ORC/Fordham Symposium Provides Insight into Chinese HR Environment

Members of ORC’s Labor & Industrial Relations Advisory Group (LIRAG) for the Pacific Rim as well as representatives from other ORC networks recently traveled to Beijing to attend China: The Emerging Economic Giant, a symposium co-sponsored by ORC and Fordham University. At the meeting Chinese academics, business leaders, and government officials offered their views of the labor environment in China.

Setting the stage, Dr. Justin Lin, Director of the China Center for Economic Research at Peking University and Deputy Chairman of the All China Industrial and Commercial Federation, predicted that China’s GDP will continue to grow at rates above 9 percent for the next 30 years. By 2030, he expects China’s economy will be bigger than the American economy, with per capita income 20 percent of that in the U.S. However, he warned of three pitfalls that could retard China’s growth:

A panel of CEOs from Chinese companies indicated that unions are not a major factor, although they can be effective at times on a single issue, such as a layoff. Union participation in company affairs is increasing, but since most union leaders are appointed, their strategies support the pro-growth policies of the Communist party.

ORC vice president Tom Connors, who organized the symposium with Fordham, observed that, since the unions have little role in advocating for employees and Chinese people as yet have little political power, despite increasing economic freedom, there is no mechanism for workers to have workplace concerns reviewed. “Without a safety valve, discontent in the system could boil over,” Connors said, “yet a strong union movement could challenge the Party.” To try and head off the potential for unrest, one company has implemented an employee representation scheme patterned after European works councils, apparently with good results.

In general, the message to multinationals was that to succeed in the Chinese environment, they must be perceived as linking themselves to the future of the country. Multinationals are often held to a higher standard than Chinese firms, but developing a company culture and values that encourage respect for Chinese rules and demonstrate commitment to the welfare of the Chinese people will go a long way.

ORC Resources: Understanding the return on health, safety, and environmental investments

ORC consultant Joanne Linhard’s paper, recently published in the Journal of Safety Research - ECON proceedings 36 (2005), describes a process for applying financial metrics to health, safety, and environmental decision making. ORC’s Return on Health, Safety, and Environmental Investments (ROHSEI) was developed in collaboration with 15 members of ORC’s Occupational Safety and Health Group to provide companies with a comprehensive process and tool for answering important questions such as:

The ROHSEI process leads an HS&E analysis team through four steps in the decision making process: understanding the opportunity or challenge, identifying and exploring alternatives, gathering and analyzing data, and making a recommendation.

Since its development, more than 200 organizations have sent representatives to be trained in ROHSEI. Training will be available at the American Society of Safety Engineers’ SeminarFest 2006 in Las Vegas from January 22-28. For more information on the conference, visit http://www.asse.org/seminarfest/. To learn more about ROHSEI, contact Joanne at 202-293-2980 or joanne.linhard@orcww.com.

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