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1 Reinventing HR the relationship between and the line Understanding both barriers and opportunities in the relationship between HR and line managers in Australia and New Zealand Line managers and HR need to have a close working relationship to effectively implement the company s strategies. New research among Australasian line managers and HR practitioners reveals both camps are eager to overcome the barriers to fostering a more constructive relationship. >>

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3 Contents Introduction 2 1 HR and line managers rebuilding the relationship 3 2 Megatrends that foreshadow the future 5 3 People power where it matters most 7

4 2 Reinventing the relationship between HR and the line Introduction Executing a business strategy is easy to say, but not easy to do. This is because companies don t implement strategy, people do. There is no autopilot. If people are not driving it, or driving it well, it will inevitably go off the rails. HR directors and teams play a critical role in effective strategy implementation. These are the people who transform the decisions made at the top into workable frameworks, procedures and policies. It is the HR team that helps gain company-wide acceptance and support of the strategy by guiding managers and employees to act. When HR and line managers work well together, it has a profound effect on company performance, long-term sustainability and profits. But it s no easy task and the relationship between HR and line management is not always smooth sailing. In spite of the best intentions, conflicting priorities and deeply entrenched conventions can hinder progress and undermine objectives. When initiatives are thwarted, mutual frustration rises and communication breaks down. It s not hard to understand why the HR-line management relationship can quickly become frayed. This report looks at how the HR-line manager connection can be improved. It draws on both research among Australian and New Zealand line managers and HR directors that indicates there is both a willingness and readiness for a new approach. This view was echoed in Hay Group s global research with HR directors and line managers in the UK, US and China. A radical new way out of this unprofitable impasse is to strengthen relations between the two parties by harnessing information and innovation. Activating line managers with new tools will mean they can act autonomously while still within the framework of company HR policy. About the research The study is based on the views of 161 HR directors and 112 line managers in Australia, New Zealand and the Pacific Hay Group. All rights reserved

5 1 HR and line managers rebuilding the relationship If strategy execution is being hampered by mutual frustration between HR and line management, then what can be done to rebuild bridges? Eager to understand the impacts of these potentially damaging undercurrents and quantify opinion on both sides, Hay Group has conducted in-depth research. The survey polled 273 line managers and HR leaders in the Pacific region to expose the most severe pain points and determine what urgent action was needed. While the results reveal an uncomfortable truth about the current state of affairs, its findings also offer clear pointers towards a far more constructive, cooperative future for HR and line managers alike. One of the most obvious factors to emerge from the research is that HR teams are feeling the strain. As cost-saving cuts bite, many HR departments are losing headcount. At the same time, HR can feel over-burdened by routine transactional requests and queries from line managers. More than one third of HR directors estimate that their teams spend between per cent of its time dealing with such matters, while one in five estimate the time spent on everyday enquiries takes up half their team s time. While HR responds to these routine requests from the business, it also struggles to be recognised as a strategic partner. Nearly half (47 per cent) agree or strongly agree that HR spends so long handholding line managers that it prevents them taking a strategic view. Adding insult to injury, more than one third (36 per cent) of HR directors responded that in their company line managers expect immediate responses to queries and are unforgiving if the process takes longer. A major issue identified by many HR directors is the low importance that line manager s place on the soft skills of people management skills which research has shown to be a key driver in productivity and performance. It is concerning to note that HR directors in the Australasian region rate the enthusiasm of line managers towards their people management responsibilities as low only 28 per cent believe line managers make people management a priority, compared with 56 per cent of global respondents. Improving these skills through HR training was not always successful with more than half (54 per cent) of Australian and New Zealand HR directors admitting they were frustrated that line managers do not integrate learning points from HR training in their day-to-day role. Globally, the issue affected around a quarter (26 per cent) of HR directors. 47 per cent of HR directors feel they spend too much time hand-holding, preventing more strategic activity

6 4 Reinventing the relationship between HR and the line 51 per cent of line managers feel that HR closely guard information and data. 30 per cent feel that HR processes block them from making decisions. A mutual concern The views of line managers revealed another challenge to the relationship. Around half of them (51 per cent) feel that HR teams keep information and data closely guarded with one in five (20 per cent) of them even stating that Google is a better source of information and support. More than a third of line managers (38 per cent) felt that they would be empowered to make better, faster decisions if HR shared more information. This view was echoed strongly by all respondents, globally. In Australia and New Zealand almost one third of line managers (29 per cent) think that hiring, promoting and resource planning processes are convoluted and inefficient. Around one third (30 per cent) feel that HR processes are an administrative burden rather than an enabler to better decision-making. Towards a new togetherness Given the problems identified by so many HR directors, it is small wonder that an overwhelming majority (89 per cent) of them agree or strongly agree that empowering line managers to make autonomous people management decisions should be a key goal. The research found this view was not isolated to the Australasian region, with nine out of ten respondents globally agreeing that empowering line managers to make such decisions was a key goal. On the other side of the divide, a common sentiment among line managers was that HR would be more effective if they were more responsive and open around one in three (32 per cent) local line managers shared this view, as did more than half (54 per cent) of global respondents. In light of their comments about HR performance, they too would welcome any move to increase their independent authority. A major frustration and barrier in the relationship is that each side lacks a clear understanding of what the other does. Four in five HR directors considered the line managers in their organisation to have a low level of understanding about HR policies and procedures. For Hay Group, these findings go to the heart of both the problem and the solution. Reinventing the HR-line manager relationship something called for by managers and HR directors with equal passion promises to open the way for a more collaborative, more productive way ahead Hay Group. All rights reserved

7 2 Megatrends that foreshadow the future 1 Threats and promises combine to make the time right for change. Accelerating forces in globalisation, technology, demographics, consumer demand and expanding cross-border operations have collided to drive Australian and New Zealand organisations and industries towards a rapid transformation. There have been wide-sweeping changes for organisations, their leaders and their staff. Traditional hierarchies and reporting lines will soon be redundant, if they are not already. The old, top-down exercise of power is making way for a new, highly collaborative approach. Trust is a key factor here. HR directors and line managers must now be prepared to work in closer cooperation with culturally, generationally and geographically diverse teams. When information and authority flow in all directions across a flat organisation, individuals need to be entrusted more than ever with the tools to act on their own initiative. HR teams cannot be constantly available to handle a stream of everyday queries and requests from multiple time zones nor is this the best use of HR resources. Understandably, HR directors themselves prefer to be active rather than reactive; not mere process executives but strategic partners in the organisation. 1 For more about megatrends that are set to transform organisations and their leaders, see Vielmetter, G and Sell, Y (2014) Leadership 2030: The six megatrends you need to understand to lead your company in the future. AMACOM

8 6 Reinventing the relationship between HR and the line Here-and-now decisions needed A third and equally potent factor is the continuing war for talent. As industrialised countries such as Australia and New Zealand suffer growing skills shortages due, in part to their aging populations, attracting, developing and retaining good people becomes increasingly challenging. Leaders must learn new ways to understand and motivate their teams. The potential delays involved in referring back to HR risk losing valuable opportunities to recruit or retain key personnel. In this new climate, it is vital that HR and line managers forge new methods of productive collaboration. HR must learn to provide managers with the right resources and authority to secure the talent, skills and behaviours they need to deliver results. Line managers who are closer than HR to their employees and better placed to develop and reward them must be equipped to make decisions on the spot, in the here-and-now. New generation, new demands A more fluent working relationship between HR and line managers goes a long way towards meeting the expectations of a new generation of employees. Australian and New Zealand consumers are highly IT literate and have rapidly embraced mobile technology with a growing number of consumers accessing the internet via smartphones or tablets (source: ACMA, Stats NZ). For Australian and New Zealand workers, it s a 24-hour digital world in which the boundaries between home and office are dissolving. An always-on, instant access, consumer-style experience is now an essential ingredient of both work and play, whenever and wherever they take place. Speed and functionality are expected to be as readily available at the desk as they are on the sofa. Instant access is not a luxury it s a basic right. The same younger generation of managers takes a more individualistic, independent, selfdirected approach to their professional lives. Particularly important to them is the freedom to act with greater autonomy and flexibility than their predecessors ever did, which in turn calls for HR to allow them a quick and easy route to the necessary information and tools. Organisations are therefore confronted with both a threat and a promise: cater for the demands of this generation or lose the very talents that are essential for success. Equally, nobody wants to keep the bright and the brilliant at the cost of complete anarchy on the shopfloor. HR does have an important view on how to organise things. Reinventing the relationship between the line and HR is key to engaging all of the energy and ability of a new generation without losing control Hay Group. All rights reserved

9 3 People power where it matters most Accountable independence and authority for line managers HR and line managers agree: the power to act decisively on people management issues must be extended from the central HR function down the line to managers. For this to be achieved, HR will need to relinquish a degree of control and entrust line managers with tools to manage their people better, while retaining its role as sole guardian of employee data. Managers, for their part, must (if they do not already) accept a new level of accountability for everyday staff operations, within a policy framework defined by HR and, ultimately, corporate strategy as a whole. to influence employees perceptions and behaviour, and to galvanise the entire organisation. Activate to accumulate Closer relations with HR give line managers the power to act and help them perform better. When they perform better, so do their teams. And when that happens, both HR and the organisation stand to benefit. This is the essence of activating the line. In this way, HR policies can be leveraged The results of successful activation are substantial and measurable. Line managers are empowered to take prompt and decisive action Their enhanced leadership qualities promote a more productive team climate and improved ROI HR policies are applied consistently and robustly across the organisation New skills and training, expensively acquired, are deployed through the organisation with real, long-lasting effects on individual performance Motivational changes to reward policies are properly communicated right down the line HR directors retain oversight and control, while enjoying greater freedom to realise their own strategic ambitions.

10 8 Reinventing the relationship between HR and the line HR and line managers: best of both worlds Difficulties with relations between HR and line managers are not new. And solutions have not been easy to come by, until now. Hay Group believes that consumer world technology ironically, one of the key factors driving the need for change offers huge potential to reinvent the relationship for the better. It can provide HR with a solution that helps the organisation achieve its objectives, while setting them at the forefront of change. This is the vision behind Hay Group s new suite of mobile business apps: they provide the missing link that puts strategy-aligned authority and tools directly into the hands of line managers, within a policy framework set and monitored by HR. Full details of the first three apps in the growing Hay Group Activate suite can be obtained by visiting Hay Group. All rights reserved

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