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HR Budget Calls for Iceberg Lettuce

July 8, 2014

481039191My father once bought six heads of iceberg lettuce.  Seriously, bear with me, there is a point to this.  Now, my father is a smart man – went to college and graduate school, held a leadership position, basically lived the middle class dream, and so forth.  Despite this, he still makes some really questionable and regrettable decisions – like buying six heads of iceberg lettuce.  Upon arriving home with his proud purchase, my mother asked the obvious question, “Why on earth did you buy 6 heads of iceberg lettuce?”  My father’s patented reply, “It was really cheap.”  This was par for the course in our household.  My father notoriously purchased things, simply because it was a ‘good deal.’  I think Dad still has a stockpile of flat, tepid 2-liter Pepsi bottles from the Bush administration (that’s George H. W. Bush).  I can still picture them – lined up on the basement shelves like howitzer shells.  You scratch your head at the logic behind it.  Speaking of which …

I recently received the results of the 2014 HR Technology Survey from Workforce magazine.  Senior human resources practitioners were asked their opinions on HR Technology now and for the next three years.  None of the results surprised me, including this one.  When asked, “What is the most important factor in choosing technology-enabled HR solutions?” the number one response was … COST.  Cost outweighed other factors such data security, scalability, and ease of use.  Cost was even chosen over the effectiveness of the solution itself.  Pause and think on that.  Isn’t that the whole reason for buying something in the first place?  You have a need, so you buy something that addresses that need.  Right?  Or, like dear old Dad, are we treating HR solutions like iceberg lettuce?

Unfortunately, as I mentioned, this survey finding wasn’t surprising.  On the other hand, what would have been shocking would be to see cost near the bottom of the list.  Fundamentally, this is the problem with Human Resources today.  HR deservedly has a seat at the executive table.  CEO’s continually give sound bites like, “our people are our most important asset.”  Yet, HR solutions are habitually understaffed and underfunded.  Why is that?  Assuredly, decision makers have heard of the phrase, “you get what you pay for.”

Case in point, I know a company who recently spent heaps of millions of dollars on a machine to increase productivity by 5%.  Good for them.  Given the product they make, over time, this investment should begin to pay dividends.  However, this same company won’t spend $50,000 to improve their employee selection process.  Comparatively, this meager investment in employee selection would yield a 5% increase in productivity (or more!) within the first year, by improving output, shortening skill acquisition time, decreasing turnover and absenteeism, and enhancing workplace safety.  Additionally, the investment would avoid a costly lawsuit because their current hiring process is less accurate and fraught with risk.  Good employee selection processes produce a measurable return on investment.  The best ones guarantee it.

I have to wonder, do you think engineering, management, operations, and finance all sat around this company’s table, evaluating machines to improve productivity; and, at the end of the meeting, they simply said, “Well, let’s just go with the cheapest solution; that ought to be good enough, right?”  Would that be logical?  I think we all know the answer to that.

Yet, why then is HR buying six heads of iceberg lettuce?

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Doug Wolf Doug Wolf was the Chief Executive Officer at Select International, which was acquired by PSI. He works extensively with organizations that have large‐scale, national and global staffing needs. His expertise includes competency‐based job analysis, selection system design, validation, applicant sourcing, automated testing, virtual job auditions, structured interviewing, applicant tracking, reducing risk in the selection process, OFCCP and EEOC compliance reporting, and turnover analyses.