The Tightrope Walkers

It was raining and gloomy outside, and the mood inside the social-buying startup BuyWithMe was no better. A group of employees sat around a table having drinks and working their way through a stack of pizzas. The feeling of dread in the room was compounded by the fact that the number of pizzas ordered was in no way sufficient to feed all 200 employees waiting to discover their fate. The past couple of months had seemed bright for this promising young organization. Companies such as Groupon and LivingSocial had defined an effective business model in the social buying space, and BuyWithMe executives liked to emphasize that it held a strong number three position to those competitors. The organization had been hiring staff, and the new Chief Marketing Officer had been heard discussing plans to advertise the company during the Super Bowl. However, the optimism and enthusiasm of this young organization were replaced with feelings of fear and dread just two weeks before the rainy day pizza party. An e-mail, intended for the executive team, that outlined the names, salaries, and proposed termination dates of a large number of workers was mistakenly sent to a group of employees. Needless to say, the rumor mill kicked into high gear as the unwitting workforce waited for some kind of explanation. The management team took an entire day before addressing the mistake and announcing that, because of the lack of capital, layoffs would indeed take place, hiring was frozen, and that terminated employees would not receive any severance. Two weeks later the axe fell, and BuyWithMe immediately showed more than half of its employees the door.²

Layoffs of this kind are not uncommon in the startup world characterized by small groups of people, banded together in a fast-paced environment, working together for long hours in an effort to achieve a common goal. Oftentimes, that common goal is meeting certain milestones to secure the next round of funding that is needed to keep the lights on—that, or attract the attention of a larger, more successful company interested in a purchase. Both of these objectives were in play at BuyWithMe, so perhaps it is not surprising that mistakes were made as the leaders of the company desperately searched for a solution to their problem.

Surely a larger, more established organization would have clearly defined processes and procedures in place to avoid such blunders.

Aviva Investors was experiencing a slowdown in sales. The European debt crisis and the worsening economy were taking a toll on the organization. In an effort to balance their business, the asset management arm of the United Kingdom's second largest insurance company had just announced a reshuffling of their board and the replacement of several corporate executives. The company was also in the all too familiar position of having to reduce their staff. And although employees were aware of the ongoing restructuring, more than 1,300 global staff were shocked to receive an e-mail from the Human Resources Department asking them to return all company property and hand over their security badges on their way out of the building. The e-mail read, in part:

Thankfully, shock turned to relief a few moments later when the staff received another e-mail apologizing and explaining that it was a mistake. Paul Lockstone, a spokesperson for Aviva explained:

The poor economic environment of the past several years has been difficult for organizations around the world. Mistakes like the ones illustrated above do little to bolster the security or enthusiasm of employees in today's business environment. Reductions in force, elimination of benefits, and teams struggling to do more work with fewer resources are common refrains in today's enterprise and are impacting the relationship that companies have with their employees. A human resources and leadership consulting company recently published a study that illustrates the decline in this employer/employee relationship. According to Interaction Associates, of the 440 workers polled from a variety of industries, only 27 percent of respondents said that they have a “high level of trust in management and the organization.” That is down a full 39 percent from just three years ago.⁴ Additionally, Maritz Research found that only 14 percent of employees believe that their company leaders are ethical and honest. Only 10 percent indicated that they trust their management to make the right decisions in times of uncertainty. And just 7 percent believed that senior management actions were consistent with what they told employees. These 1,857 employee respondents cited poor communication, lack of perceived caring, inconsistent behavior, and perceptions of favoritism as the largest contributors to the overall lack of trust in their organizations.⁵

Unfortunately, in a tough economic climate, the human resource function is often seen solely as the organizational hatchet man—trimming and cutting a workforce to satisfy a management team that is neither trusted nor respected by the workforce. The perception couldn't be further from reality. Charged with everything from the selection and onboarding of employees, the training of the workforce, the oversight of organizational leadership, and employee and labor law compliance, today's human resources (HR) organization finds itself in the difficult position of trying to serve two masters. As the primary recruiting arm for the organization, HR is responsible for ensuring that the company is attracting the best talent—allowing the organization to grow and remain healthy and competitive. They are also the primary arbiter in ensuring that both the company and its employees are protected from a policy and workforce and labor law perspective—ensuring that clear policies are in place to protect companies from legal action and employees from exploitation. Finally, as the cultural steward of the enterprise, HR is tasked with maintaining a healthy and productive work environment—ensuring that current employees are properly prepared, engaged, and satisfied in their work lives. Unfortunately, this organizational department often finds itself at cross-purposes as it struggles to balance its role as an advocate for both employees and the company it serves.

In a rapidly changing and hyperconnected world, human resource departments are faced with new issues and challenges every day. Building an effective organization in a shifting business environment and ensuring that productivity, culture, and retention rates remain positive, present daily obstacles that must be overcome for an enterprise to achieve its goals. In addition, although some of the most significant challenges faced by today's organizations are specifically people-related, finding the right candidate for the right job goes a long way toward mitigating some of the issues that might arise. Bad hires are much more common than one might think. According to a report by CareerBuilder, more than two-thirds of employers were impacted by a bad hire in 2011. This impact can be significant. Of the 2,700 employers surveyed, 41 percent estimate that the cost of a single bad hire to the organization was $25,000. An additional 25 percent of the respondents estimated that bringing in the wrong talent costs their organization $50,000 or more.⁶

Human resources has a significant role to play in the reduction of poor hiring decisions; however, evidence suggests that there are areas for improvement. There are few groups within an organization that touch as many other departments as human resources. One would expect that no other group would be in a better position to understand the strategy, direction, and business needs of the company it represents. But this doesn't seem to be the case. In a survey of more than 1,400 HR professionals and senior management from around the world, the global management consultancy firm Hay Group found that only 34 percent believe that HR provides some strategic contribution to their organization. Furthermore, only 36 percent of respondents indicate that talent management and organizational effectiveness are closely aligned.⁷ It seems that the C-Suite would agree. In the fall of 2010, the Human Resources Professionals Association and the human capital consultancy firm Knightsbridge Human Capital Solutions conducted a series of interviews with CEOs from companies across a variety of industries. Virtually across the board, the CEOs they spoke with stressed the need for HR managers to understand the challenges and business needs of their internal customers better. One CEO said:

A broad approach to the business is essential to the hiring manager in avoiding a bad hire. Beyond just understanding the checklist of required qualifications and experience for a specific role, a deeper understanding of the internal team's goals, challenges, and culture will ensure more accurate identification and successful hiring of the best talent for the team.

In addition, securing top talent is no easy task, because regardless of larger market conditions, top talent is always in high demand. In the ongoing battle to secure the best resources, it's the role of the HR department to model and communicate why an external candidate should consider their organization over another. Job seekers are often counseled to develop and present their own personal value propositions to separate themselves from other candidates. The same holds true for employers as well. Developing a compelling story to demonstrate to a candidate why she should invest her future with the organization makes it far easier to attract and retain the best candidate in a market where the best talent is always coveted. Southwest Airlines is a great example. Known for its unique and fun-loving culture, Southwest has created a high-performing environment focused on teamwork. Those who have flown Southwest have no doubt noticed that the entire flight crew, including the pilots, helps to clean and prepare planes for their next flight. Core expectations, such as efficient operations and superior customer service, are clearly articulated to employees, and they are rewarded with an environment that encourages them to “bring their personality to work.”⁹ As a result of this employee-centric culture, the airline has three times lower turnover than the industry average and has won numerous awards, including Fortune's America's Top Ten Admired Companies.¹⁰

Given the view that the HR department has across the breadth of their organization, no other internal department is better suited to develop an organization's employer value proposition. This differentiator could be based on company culture, opportunity for advancement or learning, or even the technology resources that are provided to employees. For example, forward-leaning companies have already realized the connection between a positive company culture, technology, and company success. In the 2012 Alcatel-Lucent study described in the preface of this book, nearly 79 percent of those in high-earning and successful companies (as self-reported based on a series of company financial metrics) indicate that HR has more influence over organizational technology decisions than they did just three years ago. Three in five, 61 percent, of HR decision makers say that their influence on technology decisions is continuing to increase. In an always-on world, successful organizations are using every asset at their disposal to create an environment that will attract the best and brightest. Understanding what sets the business apart from the competition allows for the creation of a compelling proposition designed to sell the organization to the best talent in the market.

In addition to ensuring that the organization is staffed with the best possible personnel, human resource professionals are also responsible for setting the policies and procedures that govern all facets of organizational life. From policies surrounding drug use to workplace harassment, records management, disciplinary procedures, and technology usage, these guidelines are designed to provide a safe, professional, and empowering workplace environment for all employees. Policies surrounding technology usage have proven to be especially challenging as today's HR organizations strive to maintain pace with a rapidly changing workforce and the ever-changing innovations that are brought into the workplace. According to Josh Bersin, President and CEO of HR industry researcher Bersin & Associates:

Policies that address technological innovations in the workplace will continue to evolve as more and more employees bring their own devices with them to work, access third-party applications, and leverage all of these tools to take their work mobile. Issues such as technology usage, monitoring, privacy, and data protection have now taken on a higher degree of importance as HR strives to protect both the employee and the organization itself. Beyond technology distracting workers and negatively impacting their productivity, more serious risks to the organization abound. The loss of a device that contains company information can be devastating to an organization if it falls into the wrong hands. E-mail and other company communications need to be retained and made available in case of litigation against the company. Improper use of technology in the workplace could expose the organization to lawsuits by harassed employees. As the primary functional department responsible for developing the policies and procedures that protect the organization, HR needs to consider all possible contingencies.

However, as stewards of company culture, the HR department also needs to balance the requirements of the organization with the needs of the employees. In addition to keeping employees in contact with others and making a world of information available to them wherever they may be, the technology that surrounds the workplace also offers up significant opportunities for worker exploitation. RFID and GPS technologies allow managers to monitor and track employees whenever they like. Every keystroke, every phone number called, and every text message sent can be archived and retrieved to maintain a constant eye on employee activity. And while federal law gives employers the legal right to monitor an employee's activity, the tracking and monitoring of every move an employee makes don't do much for morale. Only 28 percent of current employees surveyed in the 2012 Alcatel-Lucent study found it acceptable for managers to monitor the current location and availability status of employees during work hours. Although the United States lags behind other nations in the adoption of regulations addressing workplace privacy concerns, effective workplace technology policies need to address the evolving implications of an always-connected workforce. Flexible and clear guidelines related to the use of technology in the office will only become more important in the coming years as the next generation of workers enters the ranks. This next generation of workers lives their lives through their devices. It is up to the HR department to ensure that organizational guidelines and policies both protect the company and empower and support the worker in his quest to be a successful and productive employee.

Perhaps one of the more challenging roles that HR is expected to fill is the effective “care and feeding” of an increasingly disenfranchised workforce. According to the Gallup Employee Engagement Index, a full 71 percent of American workers are “not engaged” or are “actively disengaged” from their work.¹² Based on a random sample of 2,341 employed adults, this survey paints a sobering picture of the state of the American workforce. Over the past several decades, Gallup and other researchers have identified a strong connection between employees' workplace engagement and their company's overall financial performance. The data indicates that businesses in the United States, and as a result the U.S. economy, are likely not reaching their full potential because disengaged workers are less productive than their more engaged counterparts. Gallup estimates the cost of this lost productivity to be more than $300 billion.¹³ In addition to being less productive, the less engaged an employee is with his or her work, the more likely he or she is to leave the company—adding further costs to the equation. As the cultural stewards of the organization, today's HR department plays a significant role in ensuring that employees are engaged in their work, invested in their company, and contributing from a productivity standpoint.

Human resource professionals understand that employee engagement affects everything they do. From recruiting the best talent, to developing policies to protect the organization and the employee, to preventing employee churn, HR needs to engage the employee's head, heart, and hands (commonly referred to as the 3-H principle in HR parlance). Engaged employees understand what they need to do to add value to a company, have a feeling of connection to the organization, and are willing to put those thoughts and feelings into action. Some could argue that the manager is in the best position to support her employees and ensure that they are properly engaged with their work. It is a logical assumption. However, Teresa Amabile, a professor of management at Harvard Business School, found that leaders frequently misunderstand what drives their employees. Amabile asked 600 managers to rank the factors that they felt most contributed to an engaged workforce. “Recognition for good work” was number one with “Progress” coming in last. She then compared that feedback to the results of a multiyear study tracking the day-to-day activities and motivations of knowledge workers and found that “Progress” ranked as the primary engagement mechanism. After analyzing 120,000 journal entries, Amabile uncovered a significant disconnect in the perception of managers and the needs of their employees.¹⁴ Managers clearly need a partner. By working across the organization to understand the needs and desires of an increasingly disengaged workforce and properly equipping company leadership with the insights and tools they need, human resources is in the best position to make a significant impact on employee morale and retention.

In addition to partnering with individual managers to understand and improve engagement across the organization, HR professionals have an opportunity to look across the organization as a whole and work with leaders in other functional areas to reduce organizational churn and satisfy the needs of the employee base. The IT department is a perfect example. The 2012 Alcatel-Lucent study found that one-half of HR decision makers drive technical requirements or cooperate with IT in considering new technology solutions that will have a positive effect on the culture of the enterprise. Further to this, when company decision makers were asked how the introduction of advanced technology solutions would impact their desire to stay with the enterprise, almost 50 percent indicated that having access to several of the specific services would entice them to stay. Beyond just engaging these established leaders, enticement of the future workforce also depends on the technological environment in the workplace. When these upcoming college graduates were asked what approach to technology they preferred in a future employer, 57 percent indicated their preference to work for an organization that offers them the latest tools. In addition, good technology, training on that technology, and the ability to use those technological tools to realize flexibility in where and when they work ranked almost as high as salary as key consideration factors when evaluating a job with a prospective employer.

Employee engagement is no simple matter. And while some may scoff at the apparent softness of an approach that engages the head, hands, and heart of an employee, organizations ignore engagement at their peril. An engaged employee is a productive employee. Productive employees add value to the business and are much less likely to leave one organization for another. In a highly competitive world, working to build a positive and engaged company culture is not “soft”—it is essential for success.

As HR departments struggle to find the appropriate balance between protecting the interests of the organization and advocating for the employee, the challenges they face in a competitive business environment continue to evolve. Many in the organization may only see HR through the lens of a singular function, but the opportunity to make positive lasting impacts on the success of the enterprise has never been more real. The following actions will likely elevate the standing of the HR professional in the boardroom and in the eyes of the employees he or she serves:

• Build partnerships—More than anything else an HR professional can do to establish credibility and have a positive impact on the success of the company is to better understand the strategic direction of the organization and market forces surrounding the business. Understanding these forces and the challenges faced by individual groups within the company allows HR professionals to respond more effectively to the needs of their internal customers. Comprehension of the challenges and issues faced by a specific line of business allows hiring managers to identify and recruit the best talent for the organization—ensuring ongoing success and productivity. Beyond just recruiting and hiring, partnering with internal lines of business means developing an ongoing working relationship with specific organizations within the enterprise. These working relationships facilitate a more effective approach to staff training, workforce management, and long-term resource planning. Given that HR touches every internal organization in some way, the opportunity to deliver real value and economies of scale across the organization is a significant strength.

  This may be more easily said than done. Survey evidence points to the challenges that HR is having in achieving this ambition. A global 2003 study by the consulting firm Mercer found that, despite their best intentions, HR professionals only spend 15 percent of their time strategically partnering across lines of business.¹⁵ Finding themselves more frequently concerned with the how than the why often diminishes HR's role from a strategic effort to a second-order activity. This lack of attention to strategic detail also affects the perceptions of their internal partners. The Chartered Institute of Personnel and Development reports that, although HR professionals may rate themselves “good” at partnering with line-of-business management, these managers have an opposite view—reporting HR performance as “below average.”¹⁶ Chris Brewster, Professor of International HR at the Henley Management School, points to three key problems that HR professionals have in effectively partnering across their organizations: The role that HR hoped to take in strategically supporting the business was not sufficiently defined; the desires of the internal customer were not taken into account; or HR suffered from a lack of appropriately skilled leaders to gain and maintain credibility in the role.¹⁷

  Forward-leaning organizations that value benefits derived from effective HR/business partnerships are looking at new ways of approaching the issues above. Becton, Dickinson and Company, a medical technology company, restructured its global organization to better support its global business strategy. Faced with cultural and managerial difficulties in implementing the structure, the company's CEO turned to HR for help. The recently hired Vice President of Human Resources had earned the company several industry and functional accolades for his implementation of multiple innovative HR programs and processes, such as a new education and training initiative and a cafeteria-style approach to employee benefits. Unfortunately, however, the CEO discovered that, internally, the HR function lacked the ability or credibility to influence the needed organizational transformation effectively. Thinking out-of-the-box, the CEO responded by asking his head of strategy to take control of the HR organization. The merger of these two functions led to a new approach to HR—one that was based on the foundation of the alignment of behavior, strategy, and aspirations across the business.¹⁸

• Police the policy—As the organization charged with defining, creating, and communicating the policies that govern the workforce, HR is responsible for setting the stage for what activities are appropriate, useful, and legal in the workplace. A consequence of a litigious society is the burden HR professionals face in navigating the shifting sands of policy direction. Comprehensive policies are often seen as too complicated. At best, they lead to confusion, and, at worst, they are completely ignored by a workforce that doesn't see value in taking the time to understand the intricacies of the complicated documents. A recent study by the UK-based office services provider Business Environments found that less than a third of the 1,000 UK office workers they surveyed (27%) were aware of their firm's policies related to dealing with suppliers and clients. Only half of those surveyed (53%) had any knowledge of their employers' general HR guidelines, and a full 24 percent reported no knowledge at all of any workplace policies. A basic lack of understanding, or even awareness, of such HR policies puts the organization at significant risk for organizational confusion, lost business, and even lawsuits.

  Although they may be comprehensive, complicated and difficult-to-under-stand policies don't benefit the employees, and they certainly don't benefit the organization. To gain maximum compliance and acceptance of workplace policies, HR leaders should simplify language to explain the policy and its reasoning. The legal team can still provide the required legalese, but only after they have partnered with HR to craft a sensible, easily understood summary of the policy and its guidelines and ramifications.

• Get to know technology—By their own admission, HR leaders don't consider themselves to be experts when it comes to technology. The 2012 Alcatel-Lucent study found that only 29 percent of HR decision makers consider themselves outstanding in terms of technology expertise. In this age of smartphones, social networking, and always-on connections, understanding the tools and applications that the workforce is using, both in and out of the office, allows HR to be relevant to the employees and a successful partner to the IT organization. The consumerization of IT, the emergence of BYOD in the workplace, and the demands of workers to enjoy a more flexible working arrangement all require ongoing adjustments to existing company policies. Only by understanding the technologies that workers are using every day can HR accurately reflect the appropriate policies and procedures to govern their use.

Embracing technology also allows the HR professional to increase the amount of focus put on strategic endeavors. In a 2005 keynote presentation addressing the 10 HR trends that are changing the face of business, Dave Mackay, the Chief Operating Officer of the human resources services organization Ceridian, pointed specifically to the importance of understanding emerging technology and the benefit to the HR function:

• Bridge the skills gap—The global economic crisis of the past several years has delayed the impending retirement of those workers that are part of the baby boom generation. These workers, born between 1946 and 1964, represent a full third of today's workforce. Financial uncertainty, family obligations, and, in many cases, a desire to keep working have all converged to keep these workers on the payroll lending their skills to the organization. However, as this cohort continues to age and their 401(k) values continue to rise, today's enterprise is facing an unprecedented mass exodus in talent. Such a rapid and abrupt dissolution of knowledge capital from within the enterprise could spell significant difficulty for the organization that fails to respond. According to Jackie Greaner, Talent Management and Organization Alignment Practice Leader for North America at the human resource consultancy firm Towers Watson:

  Organizations are running much leaner than ever before, and there are not a lot of extra people to pick up the slack when someone exits. Companies need to do a better job of identifying critical skills and planning for their inevitable loss.²⁰

  North Carolina-based Duke Energy understands the issue and is working quickly to respond. More than 60 percent of employees at the company are considered baby boomers, with more than half of their workforce becoming eligible for retirement in the next five years.²¹ Realizing that traditional mentoring programs can require many years to begin having a significant impact, Duke Energy is using software and scenario-planning tools to capture institutional knowledge and facilitate its dissemination across the organization. By leveraging these advanced tools, the organization has developed a knowledge database of manuals, drawings, and other informational assets about its stable of power plants. This repository of information is augmented by the inclusion of audionarration recorded by the most senior engineers at the company. According to Arnold Fry, Manager of Substation Engineering Standards and Power Delivery Engineering at Duke Energy:

  In the old days, a younger worker would shadow an older one, who stood over his or her shoulder and said this piece is rated at that voltage. This type of mentoring is fine when you have the time, but now there are too many older workers ready to retire, and far fewer younger ones to come up the ranks. Now when people retire, their experience is preserved and can be passed on to future generations. And you are able to access knowledge from multiple people.²²

  Leveraging their knowledge and experience within the organization to identify critical skill sets and pockets of essential know-how, HR is an essential player in the development of strategies designed to address future deficiencies. Accelerated learning programs that leverage big data analytics in the enterprise, collaborative-based mentoring assignments that pair more experienced workers with their younger counterparts, and even flexible working arrangements with retired boomers who still have the desire to participate in the workforce can all be employed to ensure that the organization effectively maintains the level of impact required from its human capital. Although preparing the organization for the habits, desires, and expectations of the next generation of employees is important, the HR professional must also ensure that these workers are ready to walk in the shoes of those who came before.

There is no denying that HR is a challenging job. Responsible for managing the human capital that an organization needs to function, HR professionals often find themselves relegated to the backseat when strategic organizational decisions are made. The HR professional walks the delicate line of implementing and enforcing company policies and procedures designed to protect the organization, while also striving to create a positive and inclusive company culture that attracts new talent and satisfies the existing employee base. Worsening economic conditions have required that organizations around the world reduce staff, freeze hiring, and mandate that their employees do much more with much less. Often seen as the mouthpiece of an uncaring and out-of-touch management team, the human resource professional is the one left to communicate these unfortunate realities to an increasingly disenchanted workforce.

However, despite the bleak outlook faced by many companies, there is an opportunity for forward-thinking organizations to break down internal silos, work across the aisle, and prepare for a brighter future. The human resource department is in the best position to take up this mantle and lead the charge. No other internal organization understands the state of the workers better than HR. No other internal organization has as wide a view across the internal silos of a business than HR. No other internal organization is as prepared to get the most out of the oncoming throngs of digital natives just beginning to enter the workforce. Although the function does have areas in which to improve, it has a strong foundation on which to build. As cultural stewards of the enterprise, no other department is as well equipped to walk the tightrope of dual advocacy for both the employer and the employee.