HR Big Mistakes and How to avoid them?
<Source: http://www.hcamag.com/asia>
Even the best actors make embarrassing blunders on camera. They forget their lines, fumble through stunts or drop accidental expletives. Luckily for them, they get second chances - but not so for HR managers. Unfortunately the out-takes of managerial blunders are not so funny. Businesses can go kaput, employees can be scarred and there's no negative cutter to edit out the bad bits. It could be argued though, that what appears to be a case of human resources mismanagement is actually the fault of an unresponsive board that prioritises 'people issues' last in their pursuit of power and profit. HR has long been trying to prove their value and validity in the boardroom. Some have landed a role as the CEO's supporting act, but others are still working as extras. In order for HR managers to wipe the slate clean and stop getting the blame for 'mistakes', HR consultants recommend that it's all a matter of getting into the main action, and proving you are Oscar-worthy.
Big-time mistakes
So far this century, there have been some colossal management whoopsies that have dragged both large and small organisations under the water, or left them gasping for air. An inquiry into the 2001 collapse of insurance giant HIH found that one of the main reasons for the company's demise and for the laying off of over 1000 employees was mismanagement, inept corporate culture and the lack of integrity in the company's internal processes and systems. The report,written in 2003 by Justice Neville Owen,stated specifically that "there was blind faith in a leadership that was ill-equipped for the task...Risks were not properly identified and managed. Unpleasant information was hidden, filtered or sanitised. And there was a lack of sceptical questioning and analysis when and where it mattered". He attributes these cultural failures to the lack of strategic direction of HIH - a matter Owen says should be determined by executives, and then endorsed by the board.
"Most businesses make decisions based on business needs with subsequent impact on HR, not usually the other way round - at least this is their argument to the marketplace, to regulatory bodies and to the courts of the land"
The recent trend in HR decision-making to outsource processes offshore is reportedly starting to backfire on a number of large Australian corporations. What is usually seen to cut-costs, cheapen labour and achieve more profitable returns has been shown to do the exact opposite, according to a recent study. Conducted last year by outsourcing firm, NeoIT, the study predicted that in 2005 over 40% of offshore initiatives will not yield anticipated savings. "The key reason for these disappointments will not be due to supplier capability but buyer preparation and management," the company explained in its study analysis.
Contrary to claims by offshore vendors that it can reduce the costs of Australian employees by up to 80%, hidden expenses bump the difference back into line. The costs of the transition, initial outlay, retrenchments,loss of productivity, software changes and contract management translate into companies breaking even, or losing out. Brian Young from Peoplefirst Solutions agrees that companies tend to forget about retaining intellectual property and maintaining quality when choosing to outsource.
General Electric Australia's commitment to offshore outsourcing has been criticised as a near-failure by the Financial Services Union (FSU), and AXA's offshoring projects have been said to be head-butting a number of difficulties. The recent managerial upheaval at National Australia Bank (NAB) can partly be blamed on "a poor culture of management and HR systems that rewarded short-term risk and profit taking", according to a FSU spokesperson. However, some of these matters are still before the courts.
"Most businesses make decisions based on business needs with subsequent impact on HR, not usually the other way round - at least this is their argument to the marketplace,to regulatory bodies and to the courts of the land," adds the FSU spokesperson.
It is easy for the public to point fingers at HR when organisations begin to falter, because employees take the brunt of it. On closer investigation, the blame for these mishaps could actually lie with boards that make rash decisions, and neglect aspects of human capital management in the process. But by drawing the attention of executive teams to where things commonly go wrong,perhaps they can focus on ways to do things right, and give more recognition to HR in the process.
Change management
Businesses are forever changing in terms of structure and size - both of which have very visible consequences for employees. But managers forget that changes in systems demand that just as much care and attention be given to the sensitivities of staff to make sure the transition runs smoothly. According to Deborah Mann, an organisation development consultant with The Training Link, the high capital investment incurred by changes in processes and technology means that organisations focus on the glitz and glamour of buying new toys and moving forward rather than how to engage employees with the new technology. "When it comes to issues with people like new learning and development programs or process changes, more emphasis is on the learning/technology rather than understanding whether the people want or need that technology," Mann says. "It's about introducing new technology and processes and actually bringing people on that journey in the business."
Successful organisations have a more systemic way of thinking about improving their business. They commit to technology and process change and also take into account how their employees will have to change the way they work and think in their jobs. "Some businesses look at how the technology is new or leading edge, but they don't understand that in order for the business to function better they need to engage [staff] in that change process because they are the ones that can add real value," Mann explains. Managing director of The Training Link, Tia O'Shea, believes the reason people get overlooked with many sorts of change is because managers fail to look at it holistically from the business point of view. As a consequence, "the people who are doing the 'doing' get neglected when they're the people who are the core of the business," she says.
"From the employee's perspective, feeling valued while getting sacked is not that easy, no matter how humanistic HR seems to be"
Resistance to change
The common problem with change management is managers' lack of understanding around employee resistance to change. Principal of human resources at Goldman Sachs JB Were, Dianne Jacobs, says that in most cases where change is imminent, senior executive teams know of it well before employees do and have time to accommodate and adjust to the idea and logistics. When it comes to implementing the change, "they tend to be impatient because they forget the people they're communicating with are not yet thinking about the new beginnings as new opportunities," she says. Instead,employees see themselves disconnecting with the familiar and safe, and stumbling into the unknown. Her advice? Take it slow, and don't miss a beat. "People don't resist change per se, what they actually resist is loss. It's about understanding that people adjust to change at different levels and paces. It's not just the logical challenge of the change, it's the emotional journey," Jacobs says.
Jacobs knows all about change management, having been at the executive core of the 2003 merger between Goldman Sachs and JB Were. She attests that her team was highly committed to make sure the people issues were handled in a way that was of benefit to the individuals as well as the organisation. One of the biggest challenges was keeping track of the variety of changes taking place - something that has the potential to drag managers under. "Often during the change process, so much happens simultaneously. It's just a matter of making sure that you're keeping focus, and keeping priorities in the right order," she says. Now, post-merger, the kind of changes taking place in the organisation are incremental rather than transformational.Even so, employees must be kept abreast of what the changes are, their purpose, and how they will benefit the employee's role - otherwise resistance will rear its ugly head again. "It comes back to communication, having a shared vision, understanding that resistance happens for a reason. [Resistance] may not mean people lack commitment; people do develop resilience to change in certain ways.
| 10 Most Commonly Neglected People Issues |
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Redundancies
Carrying out layoffs is not a favourite HR pastime, but nor is it a mistake. The way in which redundancies are handled and their strategic reasoning, however, opens a Pandora's box filled with sinister possibilities that, if not avoided, can scar an employer's public reputation. What HR managers want to know is - how can we do it gracefully?
Redundancies are a business reality. If a company identifies a doubling-up of positions, or needs to shed weight to stay financially afloat, they must extinguish those roles that do not contribute significantly to the business. The difficult part is maintaining relationships and assisting the employee's exit so that bad feelings are kept to a minimum. "It's not always about throwing the biggest amount of redundancy dollars at someone. They also need other support, they need to be valued," Mann says. To manage this process adequately, many big firms are utilising outplacement services. This trend reflects the fact that boards understand the power of people, and the power of public perception.
'I think a lot of boards from the top down realise they need to show some emotional intelligence now in dealing with redundancies. They understand they're dealing with people that happen to be employees as well,' Mann explains. 'You need to give them context around why they're going - that the business has changed. It's having strategy around the communication, dialogue, and around letting them have an opportunity to stay if there are other real alternatives. It's a more humanistic approach.'
'Humanistic' must not be interpreted as 'soft' however, as Mann points out: "HR is not a welfare centre. HR needs to partner the business to be successful and profitable. It makes good business sense for you to value people. You can do all of those things [redundancies] and do it while still respecting and valuing the individual."
From the employee's perspective, feeling valued while getting sacked is not that easy, no matter how humanistic HR seems to be. In 2001, a new division under Reed Elsevier called Lexis Asia Pacific was dissolved after the 9/11 stock market crash, resulting in numerous redundancies. HC spoke with one ex-employee, who criticised HR for their 'wolf-in-sheep's-clothing' approach. It was stated that HR made every effort to seem 'on their side' during the process, but were actually unnervingly duplicitous. "They dressed it up as if they were there to help, but really they were there to keep us quiet," he said.
"People don't resist change per se, what they actually resist is loss. It's about understanding that people adjust to change at different levels and paces. It's not just the logical challenge of the change, it's the emotional journey"
Due to the urgency of this cost-cutting restructure, the ex-employee observed that the layoffs were not strategic. "At Reed it wasn't strategic from an employee's perspective.There was no pattern to the redundancies - it was a flat chop. What I would question is the redeployment of people you've invested a lot of money in. Aren't managers meant to layoff people who are expendable?" he asks. Chairman of Reed Elsevier Australia, Max Piper, was branded as 'Max the axe' for a time, which did nothing for the company's attraction policy. Piper was unavailable for comment at the time this article was written.
Along with non-strategic layoffs, one trap that inattentive managers may fall into during a phase of redundancies is neglecting the employees who stay on in the organisation. If retained employees see managers displaying a lack of care and respect for their colleagues, their motivation and regard for the manager, boss and company will plummet.
Getting HR up to scratch
Where HR is not positioned as a strategic partner within a business, it may not be valued or trusted to give the support and advice which will help managers avoid making costly people-management mistakes. For HR to re-establish its value and credibility within the business it will require a delicate remastering of: "Relationships, communication, conversations, and appreciation from an HR perspective; demonstrating how HR understands the business needs and can add real value," says O'Shea.
The organisation's perspective on where HR is positioned in the business will influence whether they will take on a more strategic function. In a place where HR is viewed as more transactional than strategic, changing that perception will be difficult. "Work needs to be done on an ongoing basis. Someone who's viewed as a reactive and not a proactive strategic HR manager will not move forward as easily because they haven't established themselves with the rest of the business as adding strategic value," Mann says.
| Case study: successful change management |
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Merger of Goldman Sachs and JB Were The merger of Goldman Sachs and JB Were in 2003 faced media criticism for its predicted clash of cultures. Now, after a successful fusion the company is able to thumb its nose at critics, and revel in what was always going to be a successful merger. "We found we were bringing together complimentary strengths. Postmerger we found we could do things together that each on their own could not, and there was a very strong match in terms of people and culture," says principal of human resources for Goldman Sachs JB Were, Dianne Jacobs.
Ensuring success was the rigorously organised management team. Five key areas were addressed and monitored carefully throughout the merge, with people issues being among the top priorities. These were: "We were highly committed to make sure the people issues were handled in a way that was of benefit to the individuals as well as the organisation. We rely on people for their intellectual capital, skills and judgments, because it's the people that determine our success and make us distinctive," Jacobs says. Success, according to Jacobs, is attained by: "Understanding that change involves pull-factors such as greater potential and opportunities as well as a resistance. HR can drive the process by understanding that change is not a good experience for everyone, and that it's not only about the execution (due diligence and redundancies), it's also, from an organisational perspective, about leadership and culture." |
"Along with non-strategic layoffs, one trap that inattentive managers may fall into during a phase of redundancies is neglecting the employees who stay on in the organisation. If retained employees see managers displaying a lack of care and respect for their colleagues, their motivation and regard for the manager, boss and company will plummet"
Visibly adding value is the key to sufficient support, strategic capabilities, and respect rather than criticism. "If they haven't positioned themselves strategically then they're 'behind the 8 ball'. If HR is involved in forming and implementing strategies it will help, however if it's more involved in transactional it's much harder to get a voice," Mann explains. Some businesses still leave the people management up to the line managers, which is a traditional structure not in favour of getting strategic HR on board. This style of hierarchy might also reflect HR not having the skill sets to move them forward. "I'm not saying it's common, but it's there. The companies that thrive are the ones that have strategic HR people, where HR is a business function - not a back room function."
As HR managers come to understand that they need to position themselves strategically - mistakes, blunders and bloopers will hopefully be words of the past. O'Shea has confidence that as an industry, HR will move forward by getting on board, developing trust, and having continual dialogue with people in positions of power and interest. "It's promoting HR as the people that have the capability now and in the future to actually meet the needs of the business. From recruitment selection through to performance management, recognition, rewards, and even exiting. If you can offer that to your business and they can understand you can add value, then that's when you become an influential HR group." Influential enough to convince boards of their strategic value, not of their vice.