In his April 19, 2010 article for SmartMoney Magazine (Ten Things Human Resources Won’t Tell You) Jim Rendon quotes Tony Rucci, former chief administrative officer at Cardinal Health and a professor at the Fisher College of Business at Ohio State University saying: “As much of what was once HR’s domain increasingly gets outsourced, human resources is regrouping to help show top management how it can add to the bottom line…”
Rendon goes on to say: “Though that may seem like an odd role for a department that doesn’t make or sell anything, strong HR departments are now focusing on boosting productivity by helping employees better understand what’s expected of them and by showing managers how to be more effective.”
While employees might find it interesting to know what HR won’t tell them, we think business executives, boards and investors would benefit from knowing what HR isn’t telling itself. We’ve got our own list of ten issues for HR professionals. To echo The Who from 1978: HR, Who Are You?
1) HR Transformation (that is, restructuring the HR service delivery model to optimize ROI of human capital) is not going away. It has reduced costs and improved service in areas such as benefits administration and employee and manager self-service and now is expanding to other types of HR services such as recruitment. These changes allow for necessary services to be delivered with fewer people. Headcount in HR departments will continue to decline.
2) HR department structure has moved from a “pyramid” to one more “diamond” in shape. The days of in-house administration are gone and HR’s support of operations is also waning. Hr must move away from providing information to providing insight that delivers value. Providing granularity around the meaning of data is far better than providing more data. HR personnel need to re-invent themselves to be more in line with the new structure and provide more value or risk becoming unemployed relics of an earlier time.
3) Business Managers are the “new” (and better) HR. There was a time when managers managed people. Then they stopped and “Personnel” and then HR departments were created to “fill in the blanks.” As HR departments undergo transformation, and self service and outsourcing grow, smart companies are re-empowering their business managers to once again manage personnel. These business managers are intimately knowledgeable of the business needs, know the unique qualities and capabilities of the people who report to them, and are informed in the basics of employment law and regulations.
4) HR is NOT the business. Especially during difficult economic times when “cost cutting of non-essential services” has a pleasant ring to management’s ears, an HR department that hasn’t justified its value to the enterprise by delivering tangible business results will find itself with little leverage. Even though the compliance functions of HR don’t go away when the stock price falls, there are plenty of service firms ready and qualified to take over even these responsibilities. HR needs to be cautious not to marginalize itself by failing to demonstrate business literacy and business acumen. Aren’t all large scale efforts funded by the company and for the benefit of the company actually ‘business programs’, not HR programs? HR programs in themselves don’t add value to the enterprise. It’s not what you did (i.e. ran a training program) it’s WHY and HOW it was valuable to the business. Did it advance the goals of the company? In our experience too often HR has failed to ask itself if they and their programs have made a tangible and positive difference to the business. To be a business partner, HR needs to step up and truly understand the business.
5) The workforce has changed; in fact, for the majority of companies it’s not even one workforce any longer. It may be 10 or even 100 different workforces that are aligned like layers of an onion. A single planning, management, rewards system or communications program doesn’t work in these complex environments. Workforce differences can be geographic, generational, economic, educational, and now more than ever before based on employment status. Use of temporary, contingent and part-time workers has begun to outpace the hiring of full-time and permanent workers. Contingent workers are often hired by the business units and usually do not fall under HR’s performance management and other programs. HR needs to begin thinking about how it will drive human capital strategies through a contingent workforce over which it has little or no control.
6) For employees it’s “all about me.” Regardless of generational differences, more and more workers are “free agents.” They expect the company to “do the right thing” and by that mean “the right thing for them.” The employer/employee loyalty contract is a thing of the past. Employees will continue with a company for as long as it feels “right” to them, and often not a moment longer. Employers will retain workers for as long as they provide value, and not a moment longer. HR must recognize that there is, essentially, a series of often unwritten individual employment agreements between the talent and the business. HR’s role in strategy, advocacy, administration and compliance must recognize and address this situation.
7) All employees are not equal. Some provide a disproportionate effect on value creation and these individuals should be appropriately rewarded. Successful companies cannot treat everyone the same way. Workforce segmentation is necessary along with a sophisticated approach to rewards design that permits the right incentives to be delivered to the right people. Particularly in the high cost and high visibility area of executive compensation and incentives, significant efficiencies can be realized with a surgical approach to designing compensation and incentive programs around appropriate market attachments that create true incentives to drive desired results and risk-appropriate behavior. The company and the individual both win if the incentives are properly aligned. This puts incredible pressure on putting in the right programs, but, once implemented, a company doesn’t need thousands of HR folks to deliver the message.
8) If your HR role is employee advocate, beware. HR departments report to company management and therefore HR works for the company, not the employee. A successful HR advocate will work with employees to help them perform better and be more productive. That serves both the individual and the business: a win-win.
9) Although HR isn’t THE business of the company, it should be treated like a business. Every business needs a CEO. And there needs to be staff addressing HR marketing, sales, research, development, operations and logistics, just like the enterprise as a whole.
10) Change is a constant but the pace of change is has increased. Companies go through various stages: from start -up to growth to maturity and, in some cases, to turnaround. As the business changes, so does its HR needs. Grahall has conducted numerous HR Effectiveness Assessments to compare what the business requires from HR to what HR is actually delivering. Time after time, our results show that HR’s customers (the executive and the employees) give poor performance marks to HR around the issues they see as most important. Even more telling is when we compare what HR believes to be critical to what the business views as critical. Sadly we often find a major disconnect between where HR invests its time and money and what the business feels is most important. HR must continually check in with its customers to make sure that the investments of time and money are aligned with their changing needs.
What’s more, as the HR role changes, so do its staffing requirements. Contingent HR staff is a cost-effective approach to continual re-invention of an HR department. For many companies a ratio of 50% permanent to 50% contingent HR staff is a reasonable goal and would provide the nimbleness to address changing business requirements. Grahall’s Workforce Solutions is a flexible and reliable source of targeted solutions to complex workforce problems in program design and structure, plus a broad range of recruiting solutions.
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