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Tuesday, June 19, 2007

Does HR Add Value?

Thomas Otter tagged me regarding his comments on a Workforce Article: Business Leaders Don’t See HR as Key to People Strategies.

Thomas asks:
It is not the first time I’ve read this sort of study, but it concerns me a lot. Yes, the sample isn’t huge, but the numbers are similar to stuff I’ve read before. It doesn’t seem to be getting any better. A couple of years ago there was a big huff about the “why we hate HR article”, but has much changed? Should HR care?

My answer? Yes, HR should care, but what are we doing about it? My previous post was all about recruiters. Like it or not, this is the face of HR. It should not be, but it is. And whose fault is that? Ours.

Do we add value to the business? Some of us do, some of us do not. Are we caught up in paperwork and policies? Do we create employee handbooks that would rival War and Peace?

We say things like succession planning are critical to an organization's success, but do we know how to make the business case for it? Have we developed metrics to prove what works and what doesn't? Do we even speak the same language as the line?

Once upon a time I worked for corporate HR for a Fortune Top 100 Companies to Work For. While I hope not to give away too much info, suffice it to say, the business was retail oriented. Do you know what they required of every corporate HR person? A minimum of 3 weeks in the stores. I stocked shelves. I listened to customers. I worked in every department. I learned to speak the language of the line. I learned to understand the business, not just HR.

The reason I left? To be promoted I needed to work in the stores. And while I loved the company, retail requires hours I wasn't willing to work, so I left. Was that a bad policy on the part of the company? Absolutely not. Their business is retail and I wasn't willing to pay the price to learn it, so no promotion for me. (And for the record, I was not encouraged to leave, I got a new job and then resigned. I wanted career growth and I knew that wouldn't happen without working nights and weekends.)

Did HR show value there? Absolutely. HR realized what the needs of the business were and created policies accordingly.

For HR to add value we need to speak the language and be able to state our case. We often get in scuffles with finance because training, development and benefits all cost money. When we give in because the CFO says, "that's too expensive" we have cooked our own goose. Before we propose we need to have the figures that will show how it will save money in the long run--lower turnover, higher productivity, etc. If we can't show that, we have no business making the proposal in the first place.

We need to not sit by quietly while the "big boys" make the decisions and then carry them out. Are we conducting layoffs? Why? Before we sign on the dotted line we better be showing that his layoff will truly help the company financially. What is the cost of turnover? How come we don't know this off the top of our heads? (Or at least how to calculate it?) Are we increasing the employee portion of medical expenses? What will be the result of this in terms of turnover? We better be able to build models.

What are models? Crud people, hire yourself some statisticians.


Lisa said...

Bravo and very well said!

DrinkingTea said...

So much of what HR does is preventative. If successful, the end users never see what was prevented. It's hard to measure something that was avoided.

A lot of companies did the same with their IT staff and were stunned when things quit working. Well, hmmm... if you had 20 people and you really only needed 15 but you cut it down to 3 bad things are going to happen!

Evil HR Lady said...

drinkingtea--excellent point. As Mike pointed out on the previous post, you want to take a job where things are screwed up so you can show improvement. If HR has been doing what it should for a long time, bad things haven't happened for a long time so people forget that they could.

Mike Doughty said...

Evil One, we emailed about this topic a while ago. I'm going to repeat some of what I said in the email.

Too many HR people, I think, don't understand the difference between authority and power. I've seen HR executives who have complained of no authority, who demanded that they be given that "place at the table", without any real idea of what they're going to do when they get there. Personally, I don't want authority. If you have authority given to you, others then try to figure out how to go around that authority, since they see it as just an impediment to getting what they want (this is the source of much of the "politics" and gamesmanship at work). Power, on the other hand, in a company, usually has to be earned. HR people should concentrate on creating situations where people WANT to come to them, because they value the advice and assistance that HR can give them, or they're afraid not to ask for said advice/assistance. This, of couse, isn't easy. It means you really have to know what you're doing, plus it takes time (often years) to establish the necessary credibility.

bruce said...

While I agree with drinkingtea that much of what HR does is preventative, I don't feel that this should be so limiting. If it's been so long since a major screw up that no one remembers it, lay out some worst case scenarios. If no one believes they could happen then hire me, because you surely work in a perfect company.

Wally Bock said...

Does HR add value? Sometimes. So it may make sense to look at what happens in those cases.

HR is perceived as adding value when HR people offer recommendations and reactions in dollarized business terms that suggest whether a particular strategy will aid or hinder competitive advantage and profitability.

HR is perceived as adding value when the HR people are seen as willing to be accountable in the same way that operating managers and other key staff executives are.

Both of these are under the control of HR, but another factor is not. HR is perceived as valuable when top management does not have the attitude that everyone in HR is some form of glorified secretary or failed social worker.

There are companies where you see this. GE is one example.

Compare HR today with IT thirty years ago. Then we did not have CIOs. The department was usually called "MIS" and those in it were perceived as having a primarily preventive function, making sure that the accounting statements got done on time.

The Digital Age revolution brought the importance of information to the covers of business publications and the front of the minds of CEOs. "Wow!" they said, "We can get competitive advantage and make more money if we handle information better." And so the CIO was born.

robert edward cenek said...

HR will never have much clout in an organization if the function's leader is not bright, articulate and able to convincingly show how HR can help solve (and not create) business problems.

Most especially, the leader needs to be aggressive - and have fire in the belly. He or she was be able to hold them own intellectually with their peers.

These are the sources of power that Mike Doughty so astutely referenced in his post.

robert edward cenek
Uncommon Commentary in the World of Work

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Anonymous said...

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