Hi,
Is Your HR Department Friend or Foe? Depends on Who's Asking the Question
Talk to human resources professionals, consultants, and scholars who study the workplace, and you will find two different views of HR.
According to its critics, HR departments can be needlessly bureaucratic, obstructionist, stuck in the "comfort zone" of filling out forms and explaining company benefits, and too closely aligned with the interests of management yet lacking the business knowledge to be effective strategic partners. Dealing with these types of HR departments "is like going to the dentist," says David Sirota, author of The Enthusiastic Employee: How Companies Profit by Giving Workers What They Want (Wharton School Publishing). When people are asked to rate the quality of different functions within their company, he adds, "IT and HR are repeatedly rated the lowest."
The more positive view of HR is that it works directly with senior management, providing crucial input into major business transactions such as mergers and acquisitions and restructurings. In this scenario, HR departments have moved away from the traditional role of administrators -- many of those responsibilities are now outsourced -- to a more creative focus on their prime role, which includes recruiting talent, promoting mobility and career development, and improving organizational effectiveness. "I would not choose HR as a career if we couldn't be a strategic partner with the business," says Kathy Gubanich, managing director of HR at The Vanguard Group. "HR is fortunate to report to the CEO of Vanguard.... If we didn't, it would mean HR's priorities are being set differently."
Peter Cappelli, director of Wharton's Center for Human Resources, recently led a discussion at the Center focused on the question: "What is the role of HR now?" From the 1920s on, Cappelli says, HR was seen as a way to advocate for, and protect, employees -- an orientation that became "quite explicit in the 1950s and beyond as part of an effort by management to prevent unionization." But more recently, and especially over the past decade, the threat of unionization is much less widespread even as technological advances have made employees more expendable. The "social contract" between employee and employer -- in which companies provided lifetime employment to its workers in return for loyalty and commitment to company goals -- has ended.
These days, employees are afraid to quit because of the tight labor market and reluctant to complain about increased workloads for fear of being laid off, says Cappelli. "Companies are pushing more and more work onto employees, and HR departments are becoming the mechanism for doing that. As a result, the idea that HR people are there to represent workers -- or at least deal objectively with their concerns -- is pretty much gone." In addition, with companies continuing to cut back employee benefits such as healthcare and pensions, HR departments have found themselves "increasingly the bearer of bad news to employees."
Meanwhile, HR issues are very much a part of the press's business coverage, whether it's Hewlett-Packard's recent announcement that it is laying off 14,500 employees (including a number of HR positions) or the breakdown of talks between Citigroup chairman Sandy Weill and Citigroup's board over the retirement perks available to him under his contract. Weill, who is reportedly interested in starting a private equity fund, had earlier committed to staying on as chairman until April 2006.
Strategy-driven HR: Reality or Goal?
If you look at the history of HR, says James Walker, a consultant on strategic human resources based in La Jolla, California, trends in HR -- such as outsourcing, the establishment of call centers and service centers, and the integration of work-life balance issues -- usually require about a decade to take hold.
For example, "most of us would like to see HR be transformed more rapidly into a business partner, with less emphasis on administrative functions that can now be outsourced," Walker says. "To achieve that, it's vital to help key HR individuals accelerate their development of business skills. I think many companies are, in fact, doing this, but not as fast as I would like. There is still a tremendous attraction within HR to the comfort zone of more traditional and functional support-service kinds of relationships."
The classic area where HR leaders can provide strategic input is "anticipating a merger," says Walker. "A very well-defined set of opportunities and experiences exists, including assistance in valuing the merger, developing the integration plan, communicating with employees, matching talent, and so forth. Some company HR departments play a key role here. In others, they are still observers, cleaning up the mess afterwards." HR executives who serve as business partners, he adds, are more likely to be in strategy-driven organizations -- professional services firms, financial services firms, high-tech companies and "to some extent pharmaceuticals, the opposite end of the continuum from healthcare companies and manufacturers." The most talented HR leaders, he says, tend to work "in pockets within a business. They have established a relationship with their client executive in which they are able to have a dialogue and push back as appropriate."
Over the last 10 to 15 years, HR has begun to have a much bigger impact on how a company operates, says J. Steele Alphin, global personnel executive at Bank of America. "To put this in perspective: At Bank of America, we have $28 billion of non-interest expenses. Of that, $15 billion is related to personnel" -- everything from salaries, incentive plans and fringe benefits to talent retention programs and risk management strategies. "If you can effectively manage those dollars, trying to get as high a return on investment as possible, then you approach the opportunity a lot differently."
To fulfill his mandate of growing revenue, increasing productivity and developing leadership in the company, Alphin, who reports directly to CEO Ken Lewis, has assembled an HR team that includes managers with degrees in business, HR, psychology, and engineering. "Our team looks very similar to any other high-level team in Bank of America," he says. So when HR sits around the table with other departments, "we don't talk HR; we talk about the business."
Lewis, he adds, "looks to us to be business leaders, business partners, the person at the table who will always bring up the critical fact that no one else does." Alphin, who has 10 direct reports, says that most of those 10 people show up "on replacement charts for other areas of the company. One of our goals is to be a net supplier of talent to Bank of America. We have had personnel executives move into running real estate, branding, and transition on acquisitions."
According to Mark Bieler, a human resources consultant who was executive vice president of HR at Bankers Trust from 1985 to 1999, "without the direct tie to strategy, there is no context for HR work. You have to be completely focused on aligning HR practice, policies, and procedures to the overall strategy of the organization." In the mid-1980s, when Bieler was at Bankers Trust, chairman Charles Sanford converted the company from a commercial bank to an investment bank -- "about as radical a cultural shift as one could imagine," says Bieler. "My role was taking a set of HR practices that I had inherited and making sure they were consistent with where we were trying to take the firm. At the simplest level, that means redesigning pay systems, not so much to pay people more -- although investment bankers do tend to make more -- but to restructure the system to include smaller amounts of fixed compensation and to put more of people's pay at risk.
"In addition, we became the first bank in the mid-1980s to offer a cafeteria-style benefits approach because we wanted people to take charge of their lives, to be more entrepreneurial. Cafeteria benefits were more suited to the type of organization we wanted to be.... We shifted our recruiting goals, changed the way new employees were socialized .... and bit by bit, brick by brick, aligned what we did from the people point of view with the strategy of the company."
Jack Welch, former CEO of General Electric and author of a book entitled Winning, noted in a recent interview that "outside of the CEO, HR is the most critical function in any company. Development of leaders is the ultimate responsibility of every CEO and thus is an integral part of HR. I saw my job as allocating people and dollars to opportunities. I wasn't designing products. I was putting people where I thought they were right for the job. I did that with my partners in HR." HR evaluation systems, he says, "should be rigorous and nonbureaucratic" and monitored as closely as financial reporting is now monitored under Sarbanes-Oxley.
While many HR professionals say their role is to be a strategic partner with senior management, critics question whether this is possible given that HR people often lack the business skills to understand strategy or their role in implementing it. Furthermore, some senior managers aren't interested in having HR as a strategic partner; they just want the department to go out and hire the people they (the managers) want.
"If top management doesn't see value in having HR as a strategic partner -- and if HR can't think out of the box in that role -- then the partnership is probably not going to happen," says Wharton management professor Nancy Rothbard. She cites the case of a woman who heads HR at an in-house call center for a large financial services firm who is "constantly experimenting with new ways to help the company achieve its overall goals," such as trying out new tools to better select employees and sitting through hours of training sessions to test their effectiveness. Overall, says Rothbard, such an approach "means committing resources -- in terms of top management's time as well as the time of managers a level below." The effort, she says, "took guts on HR's part because it wasn't clear there was going to be a definite payoff."
Of course, becoming a "partner" with senior management doesn't always
From India, Madras
Acknowledge(0)
Amend(0)
11Is Your HR Department Friend or Foe? Depends on Who's Asking the Question
Talk to human resources professionals, consultants, and scholars who study the workplace, and you will find two different views of HR.
According to its critics, HR departments can be needlessly bureaucratic, obstructionist, stuck in the "comfort zone" of filling out forms and explaining company benefits, and too closely aligned with the interests of management yet lacking the business knowledge to be effective strategic partners. Dealing with these types of HR departments "is like going to the dentist," says David Sirota, author of The Enthusiastic Employee: How Companies Profit by Giving Workers What They Want (Wharton School Publishing). When people are asked to rate the quality of different functions within their company, he adds, "IT and HR are repeatedly rated the lowest."
The more positive view of HR is that it works directly with senior management, providing crucial input into major business transactions such as mergers and acquisitions and restructurings. In this scenario, HR departments have moved away from the traditional role of administrators -- many of those responsibilities are now outsourced -- to a more creative focus on their prime role, which includes recruiting talent, promoting mobility and career development, and improving organizational effectiveness. "I would not choose HR as a career if we couldn't be a strategic partner with the business," says Kathy Gubanich, managing director of HR at The Vanguard Group. "HR is fortunate to report to the CEO of Vanguard.... If we didn't, it would mean HR's priorities are being set differently."
Peter Cappelli, director of Wharton's Center for Human Resources, recently led a discussion at the Center focused on the question: "What is the role of HR now?" From the 1920s on, Cappelli says, HR was seen as a way to advocate for, and protect, employees -- an orientation that became "quite explicit in the 1950s and beyond as part of an effort by management to prevent unionization." But more recently, and especially over the past decade, the threat of unionization is much less widespread even as technological advances have made employees more expendable. The "social contract" between employee and employer -- in which companies provided lifetime employment to its workers in return for loyalty and commitment to company goals -- has ended.
These days, employees are afraid to quit because of the tight labor market and reluctant to complain about increased workloads for fear of being laid off, says Cappelli. "Companies are pushing more and more work onto employees, and HR departments are becoming the mechanism for doing that. As a result, the idea that HR people are there to represent workers -- or at least deal objectively with their concerns -- is pretty much gone." In addition, with companies continuing to cut back employee benefits such as healthcare and pensions, HR departments have found themselves "increasingly the bearer of bad news to employees."
Meanwhile, HR issues are very much a part of the press's business coverage, whether it's Hewlett-Packard's recent announcement that it is laying off 14,500 employees (including a number of HR positions) or the breakdown of talks between Citigroup chairman Sandy Weill and Citigroup's board over the retirement perks available to him under his contract. Weill, who is reportedly interested in starting a private equity fund, had earlier committed to staying on as chairman until April 2006.
Strategy-driven HR: Reality or Goal?
If you look at the history of HR, says James Walker, a consultant on strategic human resources based in La Jolla, California, trends in HR -- such as outsourcing, the establishment of call centers and service centers, and the integration of work-life balance issues -- usually require about a decade to take hold.
For example, "most of us would like to see HR be transformed more rapidly into a business partner, with less emphasis on administrative functions that can now be outsourced," Walker says. "To achieve that, it's vital to help key HR individuals accelerate their development of business skills. I think many companies are, in fact, doing this, but not as fast as I would like. There is still a tremendous attraction within HR to the comfort zone of more traditional and functional support-service kinds of relationships."
The classic area where HR leaders can provide strategic input is "anticipating a merger," says Walker. "A very well-defined set of opportunities and experiences exists, including assistance in valuing the merger, developing the integration plan, communicating with employees, matching talent, and so forth. Some company HR departments play a key role here. In others, they are still observers, cleaning up the mess afterwards." HR executives who serve as business partners, he adds, are more likely to be in strategy-driven organizations -- professional services firms, financial services firms, high-tech companies and "to some extent pharmaceuticals, the opposite end of the continuum from healthcare companies and manufacturers." The most talented HR leaders, he says, tend to work "in pockets within a business. They have established a relationship with their client executive in which they are able to have a dialogue and push back as appropriate."
Over the last 10 to 15 years, HR has begun to have a much bigger impact on how a company operates, says J. Steele Alphin, global personnel executive at Bank of America. "To put this in perspective: At Bank of America, we have $28 billion of non-interest expenses. Of that, $15 billion is related to personnel" -- everything from salaries, incentive plans and fringe benefits to talent retention programs and risk management strategies. "If you can effectively manage those dollars, trying to get as high a return on investment as possible, then you approach the opportunity a lot differently."
To fulfill his mandate of growing revenue, increasing productivity and developing leadership in the company, Alphin, who reports directly to CEO Ken Lewis, has assembled an HR team that includes managers with degrees in business, HR, psychology, and engineering. "Our team looks very similar to any other high-level team in Bank of America," he says. So when HR sits around the table with other departments, "we don't talk HR; we talk about the business."
Lewis, he adds, "looks to us to be business leaders, business partners, the person at the table who will always bring up the critical fact that no one else does." Alphin, who has 10 direct reports, says that most of those 10 people show up "on replacement charts for other areas of the company. One of our goals is to be a net supplier of talent to Bank of America. We have had personnel executives move into running real estate, branding, and transition on acquisitions."
According to Mark Bieler, a human resources consultant who was executive vice president of HR at Bankers Trust from 1985 to 1999, "without the direct tie to strategy, there is no context for HR work. You have to be completely focused on aligning HR practice, policies, and procedures to the overall strategy of the organization." In the mid-1980s, when Bieler was at Bankers Trust, chairman Charles Sanford converted the company from a commercial bank to an investment bank -- "about as radical a cultural shift as one could imagine," says Bieler. "My role was taking a set of HR practices that I had inherited and making sure they were consistent with where we were trying to take the firm. At the simplest level, that means redesigning pay systems, not so much to pay people more -- although investment bankers do tend to make more -- but to restructure the system to include smaller amounts of fixed compensation and to put more of people's pay at risk.
"In addition, we became the first bank in the mid-1980s to offer a cafeteria-style benefits approach because we wanted people to take charge of their lives, to be more entrepreneurial. Cafeteria benefits were more suited to the type of organization we wanted to be.... We shifted our recruiting goals, changed the way new employees were socialized .... and bit by bit, brick by brick, aligned what we did from the people point of view with the strategy of the company."
Jack Welch, former CEO of General Electric and author of a book entitled Winning, noted in a recent interview that "outside of the CEO, HR is the most critical function in any company. Development of leaders is the ultimate responsibility of every CEO and thus is an integral part of HR. I saw my job as allocating people and dollars to opportunities. I wasn't designing products. I was putting people where I thought they were right for the job. I did that with my partners in HR." HR evaluation systems, he says, "should be rigorous and nonbureaucratic" and monitored as closely as financial reporting is now monitored under Sarbanes-Oxley.
While many HR professionals say their role is to be a strategic partner with senior management, critics question whether this is possible given that HR people often lack the business skills to understand strategy or their role in implementing it. Furthermore, some senior managers aren't interested in having HR as a strategic partner; they just want the department to go out and hire the people they (the managers) want.
"If top management doesn't see value in having HR as a strategic partner -- and if HR can't think out of the box in that role -- then the partnership is probably not going to happen," says Wharton management professor Nancy Rothbard. She cites the case of a woman who heads HR at an in-house call center for a large financial services firm who is "constantly experimenting with new ways to help the company achieve its overall goals," such as trying out new tools to better select employees and sitting through hours of training sessions to test their effectiveness. Overall, says Rothbard, such an approach "means committing resources -- in terms of top management's time as well as the time of managers a level below." The effort, she says, "took guts on HR's part because it wasn't clear there was going to be a definite payoff."
Of course, becoming a "partner" with senior management doesn't always
From India, Madras
Acknowledge(0)Amend(0)Join Our Community and get connected with the right people who can help. Our AI-powered platform provides real-time fact-checking, peer-reviewed insights, and a vast historical knowledge base to support your search.
HR department.zip
Setup HR Department.doc