Deloitte’s quack ‘HR maturity’ means quack ‘due diligence’, ‘accounts’ and ‘audits’ as well

MI Case Studies in Corporate & Organizational Maturity: No.1 Deloitte

Who owns HR Maturity?

In November 2002 an early extract from my new book “HR Strategy – Business focused, individually centred” was posted by HR.com. It contained the final version of my “HR Maturity Scale”, which I started developing in 1992. It is still the version which underpins, and is fully integrated into, our OMINDEX® today (see diagram). ‘HR Strategy’ was my way of presenting a totally new, management standard with its own measurement scale. Underlying the theory was, and still is, a philosophy I had begun to learn from Toyota (starting from a social purpose) when I worked in automotive. The publisher, Butterworth -Heinemann, included a clear and unequivocal statement – “Copyright © 2003, Paul Kearns. All rights reserved. The right of Paul Kearns to be identified as the author of this work has been asserted in accordance with the Copyright, Designs and Patents Act 1988”.

‘HR Strategy’ expressed my own, deeply held, values and principles: a personal standard that defined me as a true professional. Without such a measured standard, neither corporate nor personal legitimacy can be assured. Appendix 1 in the book, ’How much is a good HR strategy worth?’, made a direct, causal, link between managing people as human capital and the financial performance, and valuation, of any business. It included the evidence from a maturity league table of car producers, with Toyota (The Toyota Way) at the top, having reached a market capitalisation of $106 billion. Ford came bottom with just £28 billion. Ford had already lost the corporate battle for maturity and does not seem to have learned anything more about management maturity since.

When I worked in automotive myself, an executive colleague of mine, the engineering director, told me that when he visited Toyota City (in 1990) the Japanese management had a slogan – “By the time the Americans catch up with us we will be another 40 years ahead”. ‘HR strategy’ took this very long-term, strategic perspective with the intention of signalling a complete break with conventional HR management. I developed this argument further in 2010, with a second edition of ‘HR Strategy – Creating Business Strategy with Human Capital’; putting the onus on the CEO to make corporate and organizational maturity the foundation for their business strategy.

So what response did these books elicit? In 2002 the first reaction was instantaneous and truly ground-breaking. It came from a professor at Reykjavik University Business School. Although not an academic myself, I was immediately invited to speak at the Cranet International Conference they were hosting in 2004. In 2005 they asked me to replace the two Cornell academics teaching their MBA elective, HR Strategy class. The business school then researched and published the very first, academic study into the maturity of Icelandic companies. By 2008 my MBA students demanded that HR Strategy become core to the MBA curriculum, it did and received AMBA approval. The tectonic plates of management education had started to shift significantly, making conventional MBA programmes obsolete, not just in terms of HR and human capital management but every management discipline, especially accounting and audit. The direct consequences this has for investors and due diligence is obvious. MI maturity measures true responsibility, veracity of reporting and the high risks that come with immature governance.

So where does Deloitte NMI fit into this story?

One other party interested in the HR.com piece, in 2002, came from a Deloitte consultant. We are still in touch. So, after I stumbled across this YouTube video of Deloitte’s HR Maturity Model NMI recently, I contacted them to check what had actually happened at Deloitte in the intervening years and asked them to relate their side of this story – here is their testimony. The Deloitte US video NMI, superficially, appears to be a blatant and shameless attempt to appropriate IP (intellectual property) generated by the Maturity Institute since its inception in 2012; especially the development of our measurement standard for management – OMINDEX® (co-developed with my MI Council colleague, Stuart Woollard – see our book ‘The Mature Corporation –  A Model of Responsible Capitalism’ ©2019). I forwarded my concerns about Deloitte’s cavalier attitude to IP protection to their Assistant General Counsel, Office of General Counsel, in the US, as part of our claim for IP and © infringement (you can read Deloitte’s response to our claim for © infringement here).

Anyone who has ever become entangled in IP law for the first time will know that IP lawyers do not make the process easy; especially when they don’t understand the technology involved. That does not stop companies like Deloitte trying to pass off their own consulting services as the real thing, without any proper recognition, acknowledgement or attribution. This means that when Deloitte refer to ‘their HR Maturity Model’ NMI their lawyers cannot claim it meets the MI standard. Hence our superscript NMI denotes it is not MI approved; this should reduce the risk of Deloitte’s own clients being misled, and mis-sold, sub-MI-standard products.

The bigger picture – the world’s existential, management challenge

A much bigger intellectual challenge faces the world today; one that poses existential risks for the future of humankind – how to replace the present capitalist system. The shareholder value paradigm, with its inherently immature, management quackery (see our ‘Test’ of management quality) has run its course. Unless and until we find a better alternative, and reach a global consensus on corporate purpose and management standards (measuring corporate behaviour in terms of societal value not just profit), we will not resolve the in-built and unsustainable conflict between consumerism and climate change. This, essentially, is what OMINDEX® was designed to achieve; and it delivers the genuine goods. We have already produced the evidence.

MI is predicated on equivalence with the best of the scientific, medical authorities; combined with a strong and enforceable moral and ethical code (we even have our own oath). It is this standard which we used, in 2017, to rate Deloitte at BB+ (47.32%); ‘junk’ investment/credit grade on the ‘AAA’ scale used for OMINDEX® for our ‘Big 4 Report’. Perhaps Deloitte thought they could subvert our rating system by offering their own version of HR maturity NMI? Any supermarket shopper can tell the difference between ‘own brand’ and the real thing; hopefully Deloitte’s clients can as well?

An integral part of the OMINDEX® measurement system remains the original, official, HR Maturity Scale of 2002 (see both in the slide above); because the world’s problems are primarily created by humans and unless we can manage ourselves better, we have no future. This focus on people, as creators and consumers of value, fills the glaring gaps in conventional accounting and auditing. We have already trained equity analysts in OMINDEX®, which enables investors to put a value on human intangibles and to seek a proper audit of the whole, human systems we call ‘organizations’. Our evidence of the absence of authentic, corporate, societal responsibility is now forcing such companies to report what is really going on inside the, currently legal, definition of the corporation. OMINDEX® enables everyone to identify those corporations that have an inherent set of values and principles geared to a sustainable future and a possible way of avoiding the worst outcomes that climate change scientists have been predicting for decades.

As far as I am aware (having searched for many years), the Maturity Institute is the only, global management standards authority. If you know of any other, please let me know, especially if we can learn something from them. Alternatively, if you work for Deloitte you can voice your own views on our OMINDEX® Workforce Survey (or if you are ex-Deloitte click here). For more details visit https://www.hrmaturity.com/omindex-workforce-connecting-purpose-values-and-performance/

paul.kearns@maturityinstitute.com

Paul Kearns
Chair
Maturity Institute

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