Biggest HR Question of First decade of 21st Century?

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The world economics went through a big turmoil during the third/fourth week of September 2008. The news of debacle of major financial giants like Lehman Brothers, AIG and Merrill Lynch scared event the most patient investor across the world.

In the middle of the same turmoil (whether somebody noticed or not) TT Ram Mohan, Editor , The Economic Times of India, asked one of the most critical questions of the era:

How on the Earth did the Boards, the top management and the collection of brains down the line MANAGE to bring top three firms (Bear and Sterns, Lehman Brothers and Merrill Lynch) to their Knees?

Mohan continues, “Most of the blame is being laid at the doors of the CEOs. Bear Stearns’ chairman, Jimmy Cayne, and Lehman’s CEO, Richard Fuld, have gone swiftly from being iconic figures to arch villains.”

Obviously, there follows lots of hues and cries on the capabilities of the CEOs of these firms. I would still refrain from commenting on the capabilities of the CEOs and top management of these financial giants. They have been the visionary and leaders behind the growth of these companies to an unimaginable breadth and height. Prior to failure, they were not only meeting but exceeding their goals in terms of growth and profits (that’s what made them CEO).

But it still does not stop one from asking whether the success brought by these big talents was because of the natural growth of the domain which they headed or was it because of their special talent to spearhead the industry towards growth? Or did they fall prey to The Peter Principle, which says, “In a Hierarchy Every Employee Tends to Rise to His Level of Incompetence“; and nobody could realize that in time.

This further raises many questions that still remains unresolved and need debates and discussions, especially among the Human Resources Community. Where was the mistake?

  • Did the previous success acted as a halo around the performance of these executives hiding the mounting failures to be ignored until they become blunder?
  • Which competencies or skills do these men-at-the-helm lacked?
  • Did they have right system to know the skills and competency required for their success to continue?
  • Was their Performance Management System big enough to evaluate the skills and competencies of top management?
  • Or were they too big for any Performance Review by anybody else in the company?

While search of a suitable answer to these questions continues, here are some afterthoughts:

  1. Every organization, irrespective of its size and growth should have a Performance Management System, which can find the gaps much before they become blunders.
  2. Performance Management System should find key skills and competencies necessary for any position in the employees and identify the gaps, if existed.
  3. The performance evaluation should be objective and not merely a subjective decision of the evaluating manager. The autocratic style has to go.
  4. It should apply to all irrespective of the position held by the person, let it be CEO or Head of the Departments.
  5. The evaluation system should pierce through the halo effect of the past successes, though taking it into consideration. It should critically measure the current performance.
  6. Head of HR (if competent enough) should be above all when performance reviews are concerned. Who else can do it better?

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