Organizational Damnation 60: Human Resources

Does the doctor even have to write this post? I’m sure many of you are already cringing from the title knowing how an overly process driven human resources department, free of logic and common sense, can ruin the best and worst of plans and inspire your best talent to run to the hills and run for their lives.

Why do human resources often bring damnation to Procurement? Simply put,

  • They exacerbate talent tightness. (Societal Damnation 51)
  • They drive talent away. (Societal Damnation 50)
  • They think they know what Sourcing is.

They exacerbate talent tightness.

HR will insist on owning the talent recruitment process. Now, it’s true that, in most organizations, HR should own the process because most departments wouldn’t know how to go to market for talent if the market came to them and bit them on the thigh like a boghog of NowWhat, but a good Procurement organization knows how to go to market for talent. In fact, a good Procurement organization knows how to go to market for everything the organization needs, and, more importantly a good Procurement organization knows what defines talent to the organization.

But this isn’t the problem, it’s the way that many non best in class Human Resource organizations go about the talent hunt. They blast a poorly written advertisement with a list of requirements no living or dead human can meet across multiple channels, collect hundreds, if not thousands of resumes, and then go through a last-man standing vetting process. They create a ridiculous checklist, a set of arbitrary rules for checking the boxes (because they don’t understand what the boxes are), and then eliminate every resume that doesn’t check every box. They then interview the last men, or women, standing, eliminate those that they feel won’t be a good organizational fit (based on gut instinct), and pass you the candidates that remain.

This is almost guaranteed to eliminate a large number of good candidates, if not the best candidates, because Procurement doesn’t need a candidate that checks all the boxes, training can often handle that, it needs a candidate with the aptitude to learn what he or she doesn’t know because organizational needs are always changing and no Procurement professional will ever know everything he or she needs to know.

They drive talent away.

Many HR organizations institute policies that are so onerous, they will drive every individual in the organization insane. These will typically take the form of expense claims and pre-performance review. In the latter case, these will take the form of ten page questionnaires asking the individual to update their resume in detail and list all changes since the last review, describe all of their accomplishments since their last review, list the top ten reasons they deserve a 2% raise, do a 360-degree review on their boss, rate the HR process, etc. until they want to scream and jump out the 10th story window. In the former case, since the review agony comes at most once a year, they will insist on nonsensical requirements for even the simplest of rebates. For example, some organizations have a policy that, in order to get an expense claim reviewed, every employee had to send in an envelope with their expense receipts (and their name on it) stapled to the expense claim to get a refund. This sounds like a good policy, since good fiscal accountability means that receipts should be provided for any expense over a nominal amount, until it’s enforced to the extreme. And some organizations enforce this to the extreme. For example, as described by Sigi in his recent book (reviewed in Gettin’ Sigi With It), one organization refused to honour an expense claim without an envelope, even if their was no receipt. For example, Sigi recounted the story of when one of his team members came to him with a printed e-mail that said an empty envelope with the team member’s name on it was required to be sent in by the team member to get his mileage claim reimbursed. Wow!

They think they know what Sourcing is.

In some organizations, it is HR that thinks they do the Sourcing because, as far as they are concerned, Sourcing is the process of acquiring talent and nothing else. So if you say you do Sourcing, they try to beat you down and kick you unconscious. It’s crazy.

the doctor could go on, but you get the picture. Human Resources is yet another damnation Procurement has to live with. They are the gatekeeper and we are still waiting for the key.

Technology Damnation 89: IP & Patents

Intellectual property and patents are a good thing, right? They protect your inventions and prevent your competitors from stealing your innovation and making money off of them, right? Wrong. That’s the theory, anyway, but the reality is considerably different. They don’t stop your competition from stealing your ideas and inventions, they only give you the right to go after your competitors in court for damages if they steal your inventions. And moreover, they make it easy for your competitors to duplicate your invention.

Remember, in order to patent an invention, you have to completely define the invention in enough detail for someone to easily reproduce it. (And it clarifies why many companies would like to keep as much as they can trade secret for as long as they can.) It’s like handing a car thief the keys to your brand new custom made Ferrari and asking him if he’d like a joyride.

But that’s not the worst part. Let’s say your competitor fully replicates your invention and starts selling it to your customers and making all the profit. Your only recourse is a lawsuit, and if your competitor is bigger than you, has deeper coffers, and more expensive lawyers, it’s going to be an expensive lawsuit. Even if you know you are in the right and there is a very good chance that you could recover legal fees in the award (after multiple appeals), you might not be able to afford the suit. In fact, even initiating a lawsuit might bankrupt you.

But this is far from the worst of it. The worst of it is that many companies file, or buy, patents not to protect their IP, but to prevent you from selling yours (and this has been going on for a decade as per SI’s classic post on how the patent pirates will plunder away. Since patent clerks are not experts in anything but the rules associated with filing patents, and the reviewers are typically not experts either, many patents that are much broader than they should be, and that actually patent innovations that exist in prior art as part, or all, of the invention, get pushed through by firms with big pockets and persistent lawyers. These patents are then used by companies, known as patent trolls, with no intention of actually developing or selling such products to go after companies with similar technology, like yours, for patent infringement, even if these technologies and companies are not actually infringing the patent. The idea is that, since you know how much a patent lawsuit will cost, you’ll simply cave and pay a small license fee to “license” the patent you are not already using. These patent trolls know that all they have to do to bring you to court (in Marshall, Texas) is make a reasonable sounding (not reasonably effective) case to a non-technical judge who will allow them to bring you before a jury. Now, it is true that the US is finally trying to put a stop to these trolls (who make the nasty trolls who live under bridges look like oversized benevolent gnomes) with a a new bill (S. 1137) that requires that trolls not only stipulate what patents are being infringed, but precisely how, before a case can be filed (and prevent filing of vague claims that are enough to get you on a Texas or Delaware docket on-demand) (and also requires that all claimants be listed and expensive discovery delayed until prosecution has progressed). It’s a good start, and will minimize the tens of billions of dollars of damage these trolls do every year (as these trolls do over 1 Billion in damage to the economy every two weeks as summarized in this post on how the US is still letting the patent pirates plunder away), but you know that, since the bill already passed the US Senate Judiciary Committee, the patent trolls already have their legal team looking for loopholes to use against you.

The reality is that the US is just not as smart as the EU Parliament, which quashed the Computer Implemented Inventions Directive 648 to 14 when it was introduced (and a significant portion of bullsh!t patents these days are computer related), and, for a big enough payday, the patent lawyers will become more and more creative and manipulative. Since the US allows business process patents (which, in the doctor‘s view, is a bullsh!t patent), this insanity is here to stay. So, you’re damned and you have to play the damnation game (and spend tens, if not hundreds, of thousands filing your own bullsh!t patent just to prepare a defense against the bullsh!t claims you know are coming if you get big, or threatening, enough).

Your SRM is in a State of Flux. Shouldn’t You Find Out Where?

Last week we reminded you about State of Flux, a provider of Supplier Relationship Management (SRM) software and services, and the initiators of the SRM Research Report that we highlighted in our 3-part series on why you should focus on essentials, plan against the pillars, and be a customer of choice.

Your supply chain success is ultimately dependent on your supply base and their failure is your failure. Your customer doesn’t care why the order is late. He just cares that the order is late. Your customer doesn’t care why the product is crap. He’s just upset that he forked over good money for bad product and only cares what you are going to do about it. Thanks to omni-present supply chain disruptions that are increasing at a rapid rate (to the point that less than 15% of companies will not experience a major supply disruption over the next 12 months), something is going to go wrong. And the question is, do you have a good relationship where your supplier will proactively notify you of a potential disruption so that you can collaboratively work together to prevent it, or a not-so-good relationship where you won’t know the shipment isn’t coming until it’s two days late and someone calls the supplier who admits that, because of a missing raw material shipment, production line breakdown, or simply poor scheduling (which lets you know how important you are to them as a customer) it just isn’t coming.

Unlike RFX or e-Procurement, for which there are a plethora of good platforms that walk you through good workflows by the hand and make it hard for you to do it wrong (although they don’t prevent you from designing the process or event wrong), there are not as many platforms for SRM, and SRM cannot be fully automated. SRM is more than just performance monitoring and corrective action management, it’s also nurturing, development, and partnership. It’s a good process, with appropriate best-practices embedded within, that focusses on the soft factors as well as the hard factors.

But what the the best-practices that are appropriate for your organization? What’s the right process? How do you get started? And, more importantly, how badly are these needed? Unless you want to wait until a major disruption or disaster occurs, that could have been prevented with a better supplier relationship, the only way to find out is to measure up against your peers. Probably the best way to do this is to proactively participate in the 2015 State of Flux SRM Research Report and get the full results ahead of the market. Time is running out to complete the SRM Survey, which, in it’s seventh year, is focussed on helping you get executive sponsorship and support for your SRM initiative.

Follow the bright blue hyperlink today and take the 2015 SRM Survey today. Given the depth (and breadth) of work consistently produced by State of Flux (compared to the average over-priced and under-researched analyst report), the 45 minutes of time that is required makes the effort infinitely more valuable than the cost.

State of Flux Fooled You

Economic Damnation 9: Oil & Gas Price Shocks

Take a look at the West Texas Intermediate Crude Oil Price chart for the last twenty (20) years over on Macrotrends.net. It’s bouncing up and down like a yo-yo. And any chart you pull up for international oil and natural gas prices is going to look similar. In the chart, we see oil goes from a high of about $38 in 1997 to a low of about $16 in 1998 to a high of about $47 in 2000 to a low of about $26 in 2002 and then a series of gradually increasing perturbations until it reached a high of about $145 in 2008 before it crashed down to about $43 in the same year. And so on.

In other words, within a one year period, prices can double or be cut in half without almost any warning. And either situation can run havoc with your supply chain. Let’s tackle the obvious situation first. Prices double seemingly overnight. Your costs are going up – if not right away, very very soon. If you have a contract, you might be able to insist that your supplier absorb the increase since they were, at signing, charging you higher than market cost since they were taking a risk over a predefined period. But, at some point, their margins go to zero, and soon after that, they are not going to put up with it anymore, especially if they are struggling financially. They are going to insist upon fuel surcharges, or simply stop honouring your contract and fail to pickup. Now, of course, you can try taking them to court, but in the interim, no shipments, no sales, and screaming customers which cost your organization much more than it could recover in a legal battle years down the road. If you don’t, you are buying on the spot market, paying 10%, 20%, 30% or more than expected for transport, eroding your margins, and possibly even losing on every delivery to your customers if you are working on thin margins to a competitive marketplace. You can either try to pass the costs on, and risk angry customers, or try to ride it out.

The non-obvious situation is when prices drop. Suppliers are the first to cry foul when prices increase rapidly but the last to insist on being fair when the drop. When was the last time they voluntarily dropped a fuel surcharge after fuel prices dropped back to the levels they were when they cut the contract to begin with? Never! You will have to spend a lot of time and effort to negotiate prices down to reasonable levels, and even more time tracking prices to benchmarks to know when you need to start those negotiations — this takes resources, and that costs money. This is a situation where you’re damned if prices rise and you’re damned if prices fall. It’s damnation all around.

And that’s just the short term damnation. If prices drop too much, the first thing the producers are going to do is pump less oil, reduce production, and wait until demand nears (and maybe even exceeds) supply, so that prices will start to rise again. In other words, as soon as you manage to successfully negotiate the price reduction, you’re only a few months away from the supplier coming back with a new surcharge request. The pendulum always swings and knocks you in the head upon every return.

It’s Official! Twitter Has Made Us Dumber Than Goldfish!

It’s official. Twitter, that will make a twit out of you, has now made us dumber than the average gold fish.

According to this recent article in The Telegraph, humans now have a shorter attention span than goldfish, thanks to smartphones. The article summarized a recent study by Microsoft that surveyed 2,000 participants and studied the brain activity of 112 others using electroencephalograms and demonstrated that the average human attention span has fallen from 12 seconds in 2000, when the mobile revolution began, to 8 seconds today.

And why are people checking their smartphones every 8 seconds? It’s not web browsing, that still doesn’t always work that well on a small screen. It’s not e-mail, that only polls the server and pulls e-mails down every 5 minutes at most. It’s not Facebook, people are always on it, but not posting every 8 seconds. It’s Twitter. New tweets in your feed every single second. Non-stop beeps for attention. And the 140 characters can be formatted to fit your screen exactly.

Congratulations Twitter. Thanks to you, we are now dumber than an average goldfish (which are believed to have an average attention span of 9 seconds).

I guess there’s nothing left to do except join in the chorus. I am the Twitter!