A 360-Degree View of HR

CEOs, line-managers, and employees speak frankly about HR.

July 3, 2002

Ask the employees at your company what HR does and how well they do it, and beprepared for a verbal assault. Collar a line manager. Interview a CEO. Inquireabout HR's organizational role and its reputation. Be ready to hear thingsabout your work that range from the politely acceptable to the downright brutal.

"Bullying bureaucrats" is a term that one employee uses to describe HR.In a quest to learn more about how employees, line managers, top executives, andprofessionals themselves describe HR’s purpose and performance, Workforceinterviewed dozens of people in all kinds of organizations. When it came toemployees, however, not one was willing to talk on the record, itself a powerfulstatement. Many said they feared retribution, and variously described HR peopleas incompetent, unsympathetic, and punitive.

Taken together, their comments contribute to a greater understanding of whereHR is today, and the future direction of the profession. The news isn’t, ofcourse, all bad. In fact, HR may be poised to play a far more pivotal leadershiprole in business in the years to come, perhaps under a different name, perhapswith a different charge.

In recent years, there may have been a great deal of buzz about HR’sincreased strategic role, but there has been far less action. However, as morepeople in leadership positions come to recognize HR’s role in adding value tobusiness, experts say, HR will be viewed not as a corporate stepchild but as arespected executive player.

Professionals in the field say a change in perception about HR is paramountto its productivity and future success. HR must re-examine its priorities andits identity. It must learn executive skills, and it must become far betterskilled at selling itself.

Employees are customers, too
Employees are HR’s largest constituency, and HR sees its obligation toemployees as substantial and profound. Rich Podurgal, vice president oforganization and people development for Analytical Sciences, Inc., in Durham,North Carolina, says, "HR is about making the company successful. We supportthe business through people."

One reason why employees see HR as bureaucratic is that their first and most common interactions with HR are bureaucratic.

That happens in several ways. Paul Benson, who has spent more than 30 yearsas an HR professional in organizations such as Kraft Foods, Frito-Lay, andKaiser Permanente, likens HR’s role to teaching the hungry to fish. Benson,who is now a leadership coach with his own firm, New Directions Unlimited, inPlacentia, California, means that helping employees develop skills and allowingthem to reach their full potential is tantamount to success.

But development isn’t enough. Alan Wolfson, an HR consultant with the HayGroup and a veteran of IBM’s HR function, says that successful HRprofessionals must be focused on internal customers, including employees. One ofthe ways that HR supports the business is to ensure equity in several areas,including working conditions, rewards, and day-to-day treatment.

"This doesn’t mean that all employees are treated as equals," he says."But it does mean that there needs to be a justifiable reason for differences."

But Podurgal cautions that HR should be careful not to advocate foremployees. "We have to advocate for the business," he says. "Advocatingfor employees pits us against senior management, which is not strategic."Instead, he argues that HR should protect employee interests through intelligentpeople policies.

Advocacy is, of course, precisely what most employees want. They say thatinequity is common. They want HR to be their advocate. An employee at anonprofit firm, for example, went to HR for help. His manager had assigned himmore work than anyone else in the department. When he asked for help in settingpriorities, his manager told him that helping him set priorities was not herjob. She then stopped speaking to him. HR responded to his plea for help bysaying there was nothing they could do.

It is an oft-repeated story. But what employees mean by advocacy issurprising. They want HR to fill jobs quickly and to hire people -- includingmanagers -- who are qualified to do the work. Employees say that nothing else HRdoes has as much impact on their day-to-day work experience. Though theygrudgingly admit that HR does fill jobs, they complain that the process is toolong and that HR often hires the wrong people. Asked why, they blame HR forbeing distracted by its own agenda.

"HR is a very reactive group with both feet planted firmly in old-style,autocratic, top-down, 1950s-style policies," says a county governmentemployee. "It’s based on old-style thinking where the manager reigns supremeand employees are there to simply carry out policy and perform tasks."

They see rules to follow and forms to complete, and their perception of HR islargely one of bullying bureaucrats. "I received an ‘urgent’ fourth noticethat I needed to get a TB test," a university librarian says. "I was toldthe next notice would come from the college president! I got the test rightaway, but I hadn’t received any notice before the ‘death threat.’ "

One reason why employees see HR as bureaucratic is that their first and mostcommon interactions with HR are bureaucratic: TB tests, employment applications,benefit enrollment forms, I-9 forms, change-of-address forms. One HR executiveobserved, "Ask a typical four-year-old what a mother’s job is. You’relikely to hear ‘baking cupcakes’ or ‘driving to school.’ People focus onwhat they see."

Yet even as employees deride the bureaucratic side of HR, they also depend onit. They expect accurate paychecks and prompt processing of benefit claims. Inthat context, employee perceptions of HR correlate precisely to whether theirbureaucratic needs are being met. If overtime is paid promptly and accurately,HR is great. If too much is withheld for Social Security from paychecks, then HRis terrible. You would be highly unlikely to find any employees who know or carewhether government paperwork is filed on time, even if it indirectly benefitsthem.

"One of the biggest challenges is that employees see HR as the reason fortheir problems," says Carrie Shearer, a consultant in Ithaca, New York, withmore than 30 years of HR experience. "If they don’t like their boss, it’sHR’s fault. If they suddenly have a serious illness and realize that medicalinsurance is only supplemental and they must come up with mucho cash from theirown pockets, it’s HR’s fault. If they feel overworked and under-appreciated,it’s HR’s fault, because even if there are recognition programs and all thatother good stuff, there is always someone less deserving than the unhappyemployee who got something. HR is the scapegoat."

The debate about whether employees and HR can ever really see eye-to-eye maynever be completely resolved. But it may be possible to narrow the gap. PaulBenson has done just that. When he took over the HR function at PresbyterianIntercommunity Hospital in Whittier, California, nurses were on strike over payand benefits issues and staff morale was low. Benson learned that nurses’salaries were lower than average among area hospitals. The benefits, however,were the best offered by any hospital in Southern California.

The trouble was, no one -- not even the hospital’s management group -- knewthat. Benson and his team began an aggressive communication plan to promote thebenefits. Salaries were raised to bring them into parity with those of otherhospitals. The HR team also began to address other issues in the workenvironment that were contributing to low morale, such as scheduling and lack ofcareer development. The strategy was so effective that over three years, thehospital was able to reduce the benefit package by 30 percent withoutjeopardizing morale.

"The line has been faster than HR at realizing HR’s impact. The line sees the value of developing talent, of focusing on recruitment and retention."

In fact, not only did morale improve, but surveys conducted at the time ofthe strike also showed that 54 percent of Presbyterian employees were satisfiedwith their jobs, versus a 56 percent national average. Within three years,satisfaction had jumped to 70 percent and was continuing to rise at a time whenthe national average had stalled.

Benson credits improved communication for the turnaround. In surveys andfocus groups, employees acknowledged the benefit cuts, but said that otherchanges in the overall work environment compensated for the reductions. And theysaid they understood what HR was doing, and why the changes were necessary.

The line managers see HR’s value -- really
If employees give HR mixed reviews, do the line managers see HR morefavorably? Again, the news is mixed. In a recent landmark study, CornellUniversity professor Patrick Wright and three colleagues studied how HR andmanagers each see HR’s effectiveness in its service delivery, roles, andcontributions to the firm.

The team investigated 14 companies. The process included hour-long interviewswith 103 top HR personnel and line executives. Each participant also completedsurveys. The companies were all large and had a median employee population of42,000. The industries represented included banking, computers, pharmaceuticals,and food processing. On average, the firms were in the top quartile of theirindustries in revenue, market share, and profitability. Two of the firms wereranked among Fortune’s "100 Best Companies to Work For" and five were inthe top 100 of the magazine’s "Most Admired Companies" list.

The best news is that both HR and line managers recognize HR’s potentialfor making a strategic contribution. "The line sees that HR is adding value tothe business," says Wright, chairman of the HR Studies Department andco-director of Cornell’s Executive Education program. He says that lineexecutives view several HR activities as "critical" to a company’ssuccess.

Surprisingly, when one group rated HR services higher in importance, it wasinevitably the line managers who gave the rating. "The line has been fasterthan HR at realizing HR’s impact," Wright says. "The line sees the valueof developing talent, of focusing on recruitment and retention."

Although both groups recognize the potential, they also believe that HR isfalling short. The study shows a negative relationship between the importance ofan HR function and how effectively it is delivered. "If something isn’t veryimportant, we excel," Wright says. "If it adds value, we can’t deliver."

Specifically, HR is rated high on providing services such as equitablecompensation systems and effective staffing systems. Neither line managers norHR professionals give HR a high score on change consulting and other strategicfunctions.

While the news isn’t good, it should be considered in context. At the HayGroup, Wolfson has worked with several organizations to conduct the Hay HRAudit, a tool intended to assess HR’s effectiveness and bring people togetherto make necessary changes. He says that the view of a company’s internalsupport group is always lower than external customer satisfaction. This ispartly because few organizations have a strong internal-customer focus. He addsthat these support groups are usually perceived as having their own goals andthat IT usually scores lowest in evaluations.

Wright points to other reasons why HR isn’t viewed more favorably. Threethemes emerge from the research:

  1. HR isn’t doing a good job. Wright notes that he and his colleagues wereallowed into the organizations studied at least partly because the HRorganizations were in transition. They deliberately sought data because theybelieved they could be doing better.

  2. HR gets blamed when the line manager implements poorly. One HR executivein Wright’s study said that HR was blamed for a poor compensation system, butthat managers were reluctant to make tough calls on individual raises orbonuses, and that reluctance undermined the system.

  3. HR is not good at marketing. When HR does great work, it often doesn’ttake the opportunity to let people know what it has accomplished. This problemis compounded by the fact that many managers -- and CEOs -- don’t reallyunderstand HR.

Lawrence Pope, vice president of human resources for Halliburton EnergyServices Group in Houston, says that every one of these issues can be mitigatedwhen HR has a close relationship with managers, an association he terms "absolutelyfundamental."

At Halliburton, line managers participate directly in shaping andimplementing HR initiatives through an oversight-committee structure. Topperformers who have demonstrated a passion for specific elements of HRmanagement, such as employee development or compensation and benefits, serve onthe committees.

The performance-review board might, for example, focus on employeecompetencies. The process begins with identifying jobs and mapping the requiredskills to perform the work. Then the board looks at the people who are doing thejobs, identifies gaps between existing and optimal competencies, and developsinterventions such as stand-up, on-the-job, or self-paced training.

Pope says the effectiveness of the interventions is measured in two ways:through an exam to see if an employee grasps the content, and through acorrelation to performance improvement. Measuring performance improvement can bedifficult, he says, but can be achieved by looking at changes from year to yearin a specific area such as improved safety records.

"Many organizations abdicate management of people to HR," Pope says. "ButHR can’t implement. If HR throws a program over the wall to the line and asksthem to implement it, it isn’t likely to be well received. It’s better ifyou present the business case for a program and explain how it adds value. TheHR challenge then is to keep from losing control, which is a better position tobe in."

CEOs want strategic partners
Employees and managers need a better understanding of what HR is doing andwhy. So does the CEO, says Don Holzworth, the top executive at AnalyticalSciences, Inc. He says that most CEOs don’t really understand what HR can do,and don’t know how to get what they want. "They see HR as a necessary evil,as a cost center, like photocopy paper," he says. "Most CEOs areuncomfortable with the topic of HR."

Podurgal, Holzworth’s senior HR executive, says that until recently, HRhasn’t had clearly defined expectations or accountability. "Many CEOs justwant HR to keep them out of jail."

Alan Schnur, a senior consultant and market leader in the San Franciscooffice of Watson Wyatt, offers this appraisal. "Sometimes, CEOs and the linedon’t really want HR to be strategic. HR is given a double message: Get out ofthe box, stay in the box."

He tells a story about a CEO who challenged the executive team to figure outhow the company could triple revenue within five years. The HR team took theassignment seriously and came back with an assessment that said the company didn’thave the right leadership or structure to accomplish the desired growth, andproposed some changes. "The team was told, ‘You took it too far,’ "Schnur relates.

But for every organization in which strategic HR is an oxymoron, there isanother in which HR is actively helping to run the company. Talk is turning toaction, Schnur adds, and there’s never been a better time for HR to play astrategic role.

It will take the right CEOs working with the right HR executives to make ithappen. Holzworth credits Podurgal, for example, with helping to boost the450-employee organization to a new level. "There are a lot of HR professionalsout there who are not very effective," Holzworth says. "Traditional HRpeople could not have accomplished what Rich has done. They are focused onemployment law, compensation, and dispute resolution. They don’t have theskills to be strategic."

Despite impressive successes, no one says HR’s job is getting easier.

And it’s no wonder. HR has had few opportunities to learn strategic skills,because it hasn’t been included as a participant in the decision-makingprocess, and because many CEOs themselves operate in a strategic-planningvacuum, Schnur says. What’s more, HR’s efforts at strategy are often foiledbecause there is a disconnect between the espoused and the actual culture of anorganization, Wolfson notes. Examples of common company slogans that often havenothing to do with reality: Employees are our most important asset. We pay forperformance. We advance people on merit.

Podurgal and Holzworth are in sync about the corporate culture at AnalyticalSciences and they work closely. "In the beginning, Don couldn’t definespecific objectives for HR," Podurgal says. "He saw that turnover was toohigh, that the company was not recruiting the top people, and wasn’t anemployer of choice."

Holzworth says the first step in improving these critical areas was to definethe company’s broad initiatives and to confer with Podurgal about what HRshould do. What they came up with is so different from earlier notions of HRthat Holzworth dropped the term in favor of "organization development." Theemphasis now is on performance development, performance management, supervisorand manager training, and employee competencies. Each element is tied tolong-term business goals.

"I can’t think of a proposal I took to him where he didn’t listen,"Podurgal says. "That doesn’t mean he doesn’t push back, but he trusts us."Podurgal has been given the latitude to add value to the business, and he hasseized the opportunity.

Although he has been at the company for little more than a year, Podurgal hasalready created a performance-management program that ties each employee’sgoals to organizational goals, and has implemented market-based merit pay,introduced succession planning, and built a competency model that is linked toHR. Costs per hire have been reduced, and turnover has been slashed from 38 to10 percent.

Despite impressive successes, no one says HR’s job is getting easier. AsSchnur points out, the wobbly economy is forcing CEOs to put more pressure onevery department to contribute more, including HR. He says there is a shortageof qualified people for important jobs, and that adds considerably to thepressure on HR to retain top performers and develop employees.

In recent weeks, he’s met with a dozen CEOs who have expressed a wish thatHR could make a greater contribution to their companies. A lot of people are "rootingfor HR" to step up to the plate and redefine its charge, Schnur says. "Whereare the models for brilliant HR work? Where are the Jack Welches of HR? When isthe last time that a CEO told shareholders, ‘Profits are up because we havethe best performance-appraisal system anywhere’?"

Schnur concedes that becoming a pivotal player won’t be easy. He predictsthat it will begin with small steps. "HR can be the quiet kid in the back ofthe class who has been watching for a long time and finally raises her hand tosay, ‘How about these three ideas?’ "

Workforce, June 2002, pp. 28-34 -- Subscribe Now!