Sack the HR department! Why HR can be the source of disengagement, and how to avoid or fix. FEBRUARY 2014
Sack the HR department! Why HR can be the source of disengagement, and how to avoid or fix. 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. First published in November 2013, this article highlights the problem and suggests ways that HR departments may address it. This edition explores in more detail how HR is perceived by the rest of the organisation and probes further a range of causes. Background 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 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. 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 2012. 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. 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 1 MacLeod, D., and Clarke, N. 2009. 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. 2012. 2
Sack the HR department! Why HR can be the source of disengagement, and how to avoid or fix. 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 1997. 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. 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. Sack the HR department and replace them. 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. 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. 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 3 Ulrich, Dave, Human Resource Champions 1997 3
Sack the HR department! Why HR can be the source of disengagement, and how to avoid or fix. 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. We can t go to HR for help because they kiss and tell. 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. 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. One of the adverse consequences of the changes in HR is that employees and HR employees themselves are often confused about HR s role in their business. How important is the welfare function to 21st century HR? What is HR s role in maximising the productivity of the organisation s human resources? 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 depart- 4 Caldwell, R, Are HR Business Partner Competency Models Effective?, HRM Journal 2010 4
Sack the HR department! Why HR can be the source of disengagement, and how to avoid or fix. ments, HR departments in both the public and private sector attract a considerable amount of criticism from staff. 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. 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. 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. 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. 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. 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. 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
Sack the HR department! Why HR can be the source of disengagement, and how to avoid or fix. Why can t we have an HR information system that is useful to staff instead of serving just the interests of managers? (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. From these two sources, we have evidence that employees in some organisations are critical of their HR functions. To understand this better we looked to see if there is evidence that HR professionals have different opinions from other employees. (3) Evidence also 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. Difference in views: HR and other staff Differences between the views of HR and the rest of the organisation are not always as easy to identify as in the cases above where the Trust Index for HR is considerably higher or lower than that of other staff. Sometimes the differences are only apparent when the survey results of HR and other staff are compared section by section or even survey statement by survey statement. HR specialists should analyse their results in this way as it can reveal fascinating insights. In a sizeable minority of organisations the views of HR specialists are quite similar to those of other staff except in a particular area of the survey. A recent 6
Sack the HR department! Why HR can be the source of disengagement, and how to avoid or fix. study using survey data archived in our database compared the survey results of HR against other staff in a sample of organisations with HR departments employing 10 or more staff. In approximately half of the organisations, the survey responses of the HR department were similar to those of other staff across most of the survey but were different in a key survey area pride. The concept of pride covers pride in one s work, one s team and in the organisation. It is measured by a series of statements such as: I feel I make a difference here My work has special meaning; this is not just a job I want to work here for a long time I am proud to tell others I work here Bring HR back in-house so we can have a decent standard of service again. Where HR staff respond differently to other staff to these key statements, they need to understand why. As this is not a universal HR experience, the causes are probably contextual and linked to a mix of organisational, cultural and interpersonal factors therefore each HR group should undertake its own analysis. To gauge the extent to which HR responses are similar or different from those of other staff, it is useful to calculate the correlation coefficient 6 between HR s responses and those of other staff. A value of between 0.75 and 0.9 is normal and indicates similarity. In the cases referred to above relating to pride, the correlation coefficient was around 0.5. Our research identified some particularly large differences in the survey responses of HR and other staff. In one very large organisation, the following remarkable pattern appeared: Table 1: differences in key survey areas between HR and other staff Survey Dimension Correlation coefficient, r Credibility r = 0.69 Respect r = 0.69 Fairness r = 0.89 Pride r = 0.79 Camaraderie r = 0.15 Note: anything between 0.75 and 0.9 is considered normal 6 A correlation coefficient (often written as r ) measures the similarity between two (or more) sets of data. The value of r always lies between 1 and -1. Two sets of data that are very similar (or highly correlated) will yield a value of r close to 1. If there is not much of a relationship between the two sets of data, r will be close to 0. If the two sets of data vary inversely (when one is high, the other is low, and vice versa e.g. the outside temperature and sales of gloves) the value of r is close to -1. 7
Sack the HR department! Why HR can be the source of disengagement, and how to avoid or fix. As the table shows, HR staff responded to the survey in a similar way to other staff across most of the survey but not in the area of Camaraderie. Here there was virtually no similarity between HR responses and the responses of other staff. Camaraderie is about work relationships and is measured by statements such as: People care about each other here This is a friendly place to work When you join the organisation, you are made to feel welcome You can count on people to co-operate. 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? Without knowing more about the organisation concerned it is puzzling to know why HR s experience is so different from that of other people. The statements included in the Camaraderie area relate to organisational culture. The department concerned probably needs to study why this difference exists. There is certainly no obvious case for creating a culture for HR that is different from other parts of the organisation. HR responses are often different to those of other staff in key areas of employee surveys. The HR paradox But should the views of HR be similar to other parts of the organisation? This is a big question. You could reasonably expect HR specialists to respond to an employee survey which covers matters that are of central importance to HR differently from non-hr specialists, just as finance department staff would respond to a survey about budgeting differently from staff in other departments. However, you could argue that if HR views differ too much from those of other staff, then they are not identifying closely enough with other members of the organisation. On the other hand, if they are too similar, HR may lack the vision and motivation to drive change and improvement. There is an interesting historical angle here too. Historically the roots of the modern HR function lie in the welfare functions established in large industrial organisations a century ago. Originally the role of HR was to promote the welfare of employees but for a long time welfare, subsequently renamed personnel, lacked influence in the boardroom because welfare/personnel staff were not trusted by senior management because of their close links with workers. So personnel staff were unable to achieve the improvements in welfare they wanted and needed. In order to gain the influence they needed to bring about organisational change, personnel managers embraced the notion of professionalisation championed by their professional body, the Chartered Institute of Personnel and Development (CIPD) through which they hoped to enhance their organisational status. Personnel managers were then able to increasingly gain access to the 8
Sack the HR department! Why HR can be the source of disengagement, and how to avoid or fix. boardroom by aligning themselves more closely with organisational and senior managerial goals. The re-labeling of personnel departments as human resources departments epitomised this change of focus and motivation. HR don t follow their own rules about recruitment and promotion. This, then, is the HR paradox: that HR sought to gain greater influence in organisations to promote the interests of employees, but to gain influence they aligned themselves increasingly with management and consequently are now less aligned with staff. By aligning themselves closer to management HR are now seen as less aligned with staff. So in summary, Great Place to Work trust surveys show that HR functions are often criticised by non-hr colleagues and that HR professionals often hold different views from non-hr colleagues. We also recognise that HR specifically organised the delivery of HR in an attempt to improve the effectiveness and efficiency of delivery, and that HR staff have increasingly aligned themselves with organisational goals and the priorities of senior management to increase their organisational influence. This now leads on to the question of: what can HR do to raise employee trust and engagement? 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. Trust Index Survey results quite often show that employees don't 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. 9
Sack the HR department! Why HR can be the source of disengagement, and how to avoid or fix. 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. Case Studies how three HR departments improved in response to employee feedback Human Resources claims to be the advocate of employees, wanting to nourish and invest in them, but they have no structural accountability to the employees, so it's all a sham. * 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. 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 * This employee comment is not from our database but does demonstrate that criticism of HR is not uncommon. 10
Sack the HR department! Why HR can be the source of disengagement, and how to avoid or fix. Unfortunately HR have demonstrated how ethically bankrupt they are... They allowed and 'defended' an 80% headcount churn in our UK business. This is unjustifiable, it made no business sense and took momentum out of our business effectiveness the complete opposite of what anyone with the slightest business acumen would have been trying to build and in any other company HR would have been churned too. * 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. HR has been accused of not being accountable to employees, and of siding with management. Conclusions Given its changing role, it is not difficult to see why HR has become the champion of employee engagement in many organisations. HR has considerable power to influence 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. To champion employee engagement, HR need to be good role models of effective and efficient delivery. They also need to champion employee engagement without offering to take the responsibility for this from line management. If HR fail to deliver, staff are more likely to be critical of HR and HR-led engagement initiatives may not succeed. Whilst some of the criticisms reported in employee surveys may be more of a perception than a reality, they nevertheless still need to acknowledged and addressed. If HR put their shoulders behind the drive to improve employee engagement, they succeed in resolving the historical dilemma of improving the quality of working life and at the same time improving organisational performance and the bottom line. * This employee comment is not from our database but does demonstrate that criticism of HR is not uncommon. 11
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) 870 680 8780 www.greatplacetowork.co.uk