Sack the HR department! Why HR can be the source of disengagement and how it can be addressed

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1 Sack the HR department! Why HR can be the source of disengagement and how it can be addressed NOVEMBER 2013

2 Sack the HR department! Why HR can be the source of disengagement and how it can be addressed. Introduction HR professionals have long believed that good people practices benefit the bottom line. Research into employee engagement has now conclusively shown this to be the case. Although HR professionals have welcomed this validation of their role and many work actively to raise employee engagement in their organisations, the survey feedback analysed in research by Great Place to Work shows that HR departments in some organisations are not respected by staff and are probably a cause of some employees disengagement. This article highlights the problem and suggests ways that HR departments may address it. Best Workplaces Programme The UK s Best Workplaces Programme measures and identifies the most high trust, high engagement workplaces. Organisations who are recognised (or listed ) as Best Workplaces include some of the UK s most forward-thinking employers such as Microsoft, McDonald s, SC Johnson, Danone, Twinings and Capital One. Trust and Engagement Great Place to Work helps employers raise levels of trust in the workplace, thereby increasing employee engagement. Higher engagement leads to higher individual performance and therefore improved business performance as has been reported in the government s 2009 MacLeod report 1 and the subsequent 2012 The Evidence report. 2 Background For decades HR professionals have recognised the importance of following best people management practices in order to increase individual and organisational productivity, performance and profit. In the last 25 years research has been providing increasingly conclusive evidence to support HR s view and the Chartered Institute of Personnel and Development has played a big part in publicising research across the HR community. One of the most compelling aspects of recent research has been the growing accumulation of evidence about the effect that employee engagement has upon individual and organisational performance. This is captured in the 2009 MacLeod report 1 and even more succinctly and powerfully in The Evidence 2 published in November This demonstrates beyond reasonable doubt that higher employee engagement leads to higher individual and business performance and therefore a stronger bottom line. HR departments in some organisations are not respected by staff and are probably a cause of some employees disengagement. Great Place to Work conducts research, one strand of which involves mining its uniquely large database of employee survey data to identify best practice patterns of people management and the changing patterns of employees priorities and concerns. 1 MacLeod, D., and Clarke, N Engaging for success: enhancing performance through employee engagement. London: Department for Business Innovation and Skills. Crown copyright. 2 Rayton, B., Dodge, T., D Analeze, G., Engage for Success, The Evidence. University of Bath School of Management

3 Sack the HR department! Why HR can be the source of disengagement and how it can be addressed HR key to improving engagement HR has, potentially, a huge role to play in improving employee engagement. HR professionals can, because of their behavioural science expertise, advise managers on the kind of interventions most likely to secure worthwhile improvements in employee engagement. Furthermore, they can bring their professional expertise to bear to counter the tendency that some managers have of reacting to disappointing survey results by launching a spin initiative and an improvement programme confined to quick hits to try to convince staff that they have heard what staff say. Many HR departments have reorganised themselves more strategically, positioning themselves as partners to the businesses they support. HR departments ought to have high credibility in seeking to improve employee engagement to raise business performance. After all, over the last 15 years or so HR departments have inflicted on themselves the pain of changing fundamentally how they work; many have introduced new delivery models to increase their influence on their organisation s strategies, improve delivery and cut costs. These new ways of working stem from the concept of business partnering 3 which was first discussed in The Business Partnering model recognised that to be effective HR professionals needed to integrate themselves more thoroughly into business processes and align their day-to-day work with business outcomes. Sack the HR department and replace them. In the business partnering model, there are four different types of HR function: Corporate HR professionals Corporate HR professionals define corporate-wide initiatives and represent the company to external stakeholders. Embedded HR professionals Embedded HR professionals work as HR generalists within organisation units (business, function or geographic). They collaborate with line leaders to ensure that their organisations deliver value to stakeholders by defining and delivering competitive strategies. 3 Ulrich, Dave, Human Resource Champions

4 Sack the HR department! Why HR can be the source of disengagement and how it can be addressed HR specialists HR specialists work in centres of expertise where they provide technical insights on HR issues such as staffing, leadership development, rewards, communication, organisation development, benefits and so on. We can t go to HR for help because they kiss and tell. Service centres HR professionals who work in service centres add value by building or managing technology-based e-hr systems that enable employees to manage their relationship with the firm. This includes processing benefit claims and payrolls. These HR professionals may work inside or outside the company. They deliver value to all stakeholders by reducing the cost of processing employee information. Some HR professionals have found the business partner way of working challenging. The concept of business partnering as the way forward led to many HR professionals having to adapt to meet the challenges of operating as a business partner. Whilst many HR departments have embraced the challenge of the business partner model with great success, others are inevitably finding it more difficult; in any change it is suggested that around 20% will be unsuccessful and research shows 4 that some HR functions are finding it a challenge. As well as business partnering, HR functions went through other, less strategic changes, e.g. line managers taking on more elements of the HR function such as recruitment, onboarding, appraisals, etc. The downside was that often these activities became more functional and less strategic and this is likely to be behind some of the dissatisfaction expressed by employees. Line managers are not always equipped with the tools and training to do those HR tasks effectively so the fact that they are often poorly delivered is not necessarily the fault of the manager they may not even be aware that they were expected to do those tasks. Likewise, it could be argued that it is the responsibility of HR to ensure that line managers are aware of any HR elements of their role which is their responsibility to deliver, and that they are able to do so effectively. 4 Caldwell, R, Are HR Business Partner Competency Models Effective?, HRM Journal

5 Sack the HR department! Why HR can be the source of disengagement and how it can be addressed Many line managers are expected to take on HR tasks such as recruitment and appraisals, but may not always be equipped to do this effectively. All these experiences may be reflected in the somewhat negative comments from employees in our surveys. What staff think about HR Unfortunately HR departments are not always as successful in enhancing the employee experience as they intend. Like public sector procurement departments, HR departments in both the public and private sector attract a considerable amount of criticism from staff. Although it is not surprising that employee engagement surveys contain some criticisms of HR in the light of HR s central role in employee engagement, the extent of the criticism is perhaps surprising. There are three types of evidence: (1) The first comes from the comments that survey participants in the Great Place to Work employee survey write at the end of their survey. Below are a few examples from our database 5 of comments that employees have written about their HR departments: Sack the HR department and replace them. Our HR make things up as they go along. We need a department of HR professionals. Bring HR back in-house so we can have a decent standard of service again. We can t go to HR for help because they kiss and tell. Our HR make things up as they go along. We need a department of HR professionals. Why can t we have an HR information system that is useful to staff instead of serving just the interests of managers? When you look at who gets promoted, you marvel at the extent of favouritism and rule breaking that goes on. Why don t HR stand up to managers who want to break the rules? HR don t follow their own rules about recruitment and promotion. 5 Great Place to Work has a large international database of qualitative and quantitative employee engagement data. The database also contains complementary information provided by employers about their people management practices. So it is possible to see how different people management practices affect employee engagement and read what staff say about them. 5

6 Sack the HR department! Why HR can be the source of disengagement and how it can be addressed There is often a gap between how effective HR departments think they are being and how this is perceived by the rest of the staff. Why can t we have an HR information system that is useful to staff instead of serving just the interests of managers? Comments like these are not uncommon and they crop up in most surveys. They show that HR policies, procedures and practices can be real irritants for some staff which may damage employee engagement and potentially harm business performance. (2) The second source of evidence about the extent of criticism of HR has emerged from post-survey focus groups. These sometimes show that whereas people in HR departments feel that they are making a valuable and strategic contribution to the business, people in the rest of the organisation are highly critical of HR and rate their contribution as neither valuable nor strategic. (3) The third source of evidence emerges through comparing survey results for HR departments with those of other departments. Opinions of staff in HR departments often differ noticeably from those of other departments. For example, in one organisation with a large HR department, HR staff agreed with 20% more survey statements than staff in other departments. This large disparity in perceptions was present across all parts of the survey. The people in HR were out of touch. In such a case it is hard to see how HR, the department that exists solely because of other people in the organisation, can perform their work effectively when HR perceive the organisation so differently from other staff. We have also worked with organisations where HR is one of the lowest scoring departments. This might reflect the frustration HR professionals feel over the disparity between the best practice they read about in other organisations and the practices operating in their own organisation. Low HR survey results may also come from the stress some HR staff in shared services roles suffer through the criticism and all too frequent offensive treatment they receive over the telephone. In either situation, the fact that HR is a low scoring department means it is in no position to lead an organisation-wide employee engagement initiative. It is difficult for HR professionals to take the lead in engagement if they are perceived by employees as out of touch. 6

7 Sack the HR department! Why HR can be the source of disengagement and how it can be addressed If HR departments are seen in a negative light by other staff, if they are out of touch, or if engagement in HR is low, the HR department may contribute to disengagement elsewhere in the organisation. This will make it especially difficult for them to lead an organisation-wide employee engagement improvement project. What can HR departments do to improve employees trust and engagement? This final section outlines some actions that HR departments can take. It refers firstly to the generic issue of fairness and then describes three case studies where HR departments have taken initiatives to improve the services they provide and improve the way they are perceived by staff. This has helped them raise their credibility and authority in leading improvement projects to raise employee engagement. HR s role in creating a fair workplace and building trust The Great Place to Work Trust Index employee surveys show clearly how important fairness is to staff. This is borne out by the way staff who are treated unfairly or who witness unfairness often dwell on it and talk about it for weeks or months. The kind of employee comments (above) indicate that people look to HR to ensure that the workplace is fair. HR departments should focus their efforts on promoting fairness and this will improve levels of trust across the organisation. Bring HR back in-house so we can have a decent standard of service again. Trust Index Survey results quite often show that employees do not think that promotions are made fairly on merit. This is a big concern to staff and HR have a real opportunity to help the organisation improve by ensuring that fair policies exist and that they are followed consistently. The credibility of a good policy is badly dented when, for example, the policy of advertising all internal vacancies is not followed in particular cases. Many HR departments work hard at overturning disengagement with significant results. The Great Place to Work trust surveys indicate that in some organisations backstabbing and politics are a significant issue. HR has an opportunity here to facilitate the development of organisation values which discourage such behaviour and of ensuring that the behaviour of people who act in such ways is not rewarded by their being promoted. 7

8 Sack the HR department! Why HR can be the source of disengagement and how it can be addressed Case Studies how three HR departments improved in response to employee feedback Organisation A improving the reputation of HR. After reading survey comments that were highly critical of HR, the HR department in Organisation A began its own improvement journey by launching a customer service survey to gain much more information about what staff thought about HR and wanted from HR. This was a painful but transforming experience for HR which helped them focus more closely on providing the types of services that people wanted. They also made the crucial discovery that most line managers had neither the skill nor commitment to act as people managers. They addressed this by making line managers people management role less of a burden and by introducing a management induction and training programme, the main objective of which was to encourage managers to embrace the management part of their roles and execute it professionally. Organisation B raising trust. In this organisation the Trust Index survey showed that managers were less trusted than they had been in the past. A number of survey comments also suggested that HR should reassert its role in leading the organisation s training and development. With senior management support, HR introduced an organisation-wide management development programme to address the management behaviour issues. This has led to an improvement in survey results and in HR s reputation in the organisation. You look at who gets promoted, you marvel at the extent of favouritism and rule breaking that goes on. Why don t HR stand up to managers who want to break the rules? HR has the power and expertise to help organisations achieve strategic goals. Organisation C raising fairness. The Trust Index survey indicated that there were serious problems with both performance management and rewards. Many staff volunteered comments about the two systems. These two inter-related systems were both managed by HR and HR decided to try to improve the performance management system and the performancerelated pay systems because of the heavy criticism and also because both are central to staff engagement. HR s first step was to launch an employee survey focused specifically on performance management and performancerelated pay to find out what was wrong with the current systems and what staff were looking for. The new systems that HR introduced satisfied employees main requirements of being fair, impersonal and transparent. This initiative improved staff perceptions of HR as well as addressing problems that had eroded employee engagement. 8

9 Sack the HR department! Why HR can be the source of disengagement and how it can be addressed HR don t follow their own rules about recruitment and promotion. Conclusions HR has considerable power to influence staff engagement because of its role in managing pay and benefits, training and development, staff communications, management strategy and values and other people-related systems. The way HR functions are delivered and the culture of the organisation (e.g. small friendly family team or more traditional command and control culture) will also impact on the HR function and delivery. If HR fail to deliver these satisfactorily, staff are more likely to be critical of HR and HR-led employee engagement initiatives may not succeed. In many cases the criticisms reported in employee surveys may be more of a perception than a reality, but nevertheless still need to be acknowledged and addressed. If HR run the core HR systems competently and efficiently, this will raise trust and engagement and support HR s credibility to lead broader employee engagement initiatives. 9

10 Best Workplace Programmes Consultancy Research Educational Events The Great Place to Work Institute UK is part of the world's largest consultancy specialising in workplace assessment and optimisation. Every year Great Place to Work surveys some 6,000 organisations around the world representing around 11 million employees. This gives us unrivalled insight into what makes an organisation s employees tick and how leaders can improve their business performance by understanding and improving their workplace culture. We believe passionately that any organisation can become a great workplace. Our mission is to help you create yours. Great Place to Work Institute UK Davenport House, 16 Pepper Street, London E14 9RP +44 (0)

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