Can HR Regain Employee Confidence?

A Guardian article (‘HR is not your friend’: why frustrated workers are hiring reps of their own April 3, 2024) highlighted a troubling continuous trend: employees increasingly seek help from independent HR consultants, bypassing their company's HR department altogether. This points to a significant issue - a deep-seated mistrust of HR within many organizations.

Why is HR Stuck in a Cycle of Distrust?

I think that a part of the problem lies in outdated HR metrics. From my experience as a strategy consultant, most corporations were still using traditional performance measures that often prioritize cost-cutting - minimizing hiring expenses, benefits costs, and turnover rates. These metrics, however, fail to capture the value of a thriving workforce.

Furthermore, this focus on cost reduction keeps HR confined to a limited, non-strategic role. HR professionals become stuck executing policies, enforcing rules, and handling administrative tasks. They lack the agency to advocate for employee well-being or implement proactive initiatives that could foster a positive work environment. This lack of empowerment prevents them from addressing the root causes of employee dissatisfaction.

Here are my reasons on how traditional KPIs for HR can be problematic:

Time to Hire: This metric focuses on speed, potentially leading to rushed hiring decisions that don't prioritize quality candidates or cultural fit. Rushing to fill a vacancy can lead to higher turnover down the line.

Cost per Hire: A relentless focus on minimizing cost can lead to cutting corners in the recruitment process (e.g., fewer interview stages, lower pay offers). This can lead to a rushed interview process and lower pay offers, ultimately hurting the employer brand. This can also hurt candidate experience and ultimately lead to resentment towards HR. 

Source of Hire: While valuable, this metric doesn't tell the whole story. Focusing solely on cost-effective sources (job boards) might neglect high-quality referrals or networking opportunities.

Besides the above KPIs, most companies also track employee relations KPIs. While they are well-intended, these KPIs are equally susceptible to limitations, and here's why:

Turnover Rate: This metric tells you how many employees leave, but it doesn't tell you why. HR might prioritize reducing turnover without addressing the root causes of employee dissatisfaction, like a lack of growth opportunities or a toxic work environment.

Absenteeism Rate: This metric can be misleading. High absenteeism could indicate health problems, burnout, or low morale, but it could also be due to generous leave policies. HR needs to dig deeper to understand the reasons behind absenteeism.

Employee Engagement Score: Engagement surveys can be subjective and prone to bias. Additionally, low engagement scores don't pinpoint specific issues within the organization that HR can address.

Recalibrating HR: New Metrics, New Mindsets

To rebuild trust and become a true asset to employees, HR needs to adopt a more holistic approach. Here are some key areas for consideration:

Cost of Turnover with Experience Multiplier: Traditional turnover metrics only capture the immediate financial burden of replacing employees. A more nuanced approach would factor in the cost of lost experience. By assigning a value to the knowledge and expertise acquired by departing employees, HR can demonstrate the true financial impact of high turnover and the importance of employee retention strategies.

Employee Well-being and Growth Metrics: Alongside traditional metrics, HR should track employee sentiment and engagement. This could involve conducting regular surveys or holding focus groups to gauge employee satisfaction and identify areas for improvement. HR can also monitor participation in development programs and track internal promotions to showcase its commitment to employee growth.

The Obstacles In Recalibrating HR Metrics

Implementing the suggested changes to HR metrics and philosophy won't be without challenges. Here are some of the difficulties HR might encounter:

Shifting Leadership Mindsets: Convincing leadership to prioritize employee well-being over short-term cost savings can be difficult. HR will need to present data-driven arguments that demonstrate the long-term benefits of a happy and productive workforce.

Data Collection and Analysis: Implementing new metrics, like cost of turnover with experience multiplier or employee sentiment surveys, requires additional data collection and analysis capabilities. HR might need to invest in new technology or hire data analysts.

Resistance to Change: There may be resistance from within the HR department itself. People accustomed to traditional metrics and processes might be hesitant to embrace new ways of working.

Integration with Existing Systems: New metrics might not seamlessly integrate with existing HR information systems (HRIS). This could create data silos and complicate reporting.

Managerial Accountability: Focusing on employee well-being metrics requires holding managers accountable for employee engagement and development. This might require a shift in management culture.

Despite these difficulties, the potential benefits of a more holistic approach to HR are significant. By overcoming these challenges, HR can evolve into a trusted partner for both the company and its workforce.

B Corp Certification: A Step Forward, But Not a Finish Line 

The rise of Benefit Corporations (B Corps) represents a growing movement towards prioritizing social and environmental responsibility alongside profit. Certification as a B Corp can be seen as a positive step in breaking down the distrust between HR and employees as it indicates a company's commitment to stakeholder well-being, which includes employees. However, I have noticed a concerning trend about the implementation of this commitment within some B Corps.

For instance, companies with a significant gig workforce have been awarded B Corp status, despite limited employee benefits and minimal opportunities for feedback. While a gig-based model can offer flexibility for some workers, it often raises questions about job security, healthcare access, and fair compensation. If a company with a large gig workforce receives B Corp certification, it can appear like a case of "greenwashing" or a superficial attempt to appear socially responsible. This may further deepen the distructs between employee and the companies HR objectives. 

How B Corps Can Live Up to Their Ideals

For B Corp certification to hold true meaning, it needs to be accompanied by a genuine commitment to human-centric HR practices, even for gig workers. Here are some potential solutions:

Expanding Worker Classification: B Corps could explore models that reclassify some gig workers as employees, providing them with benefits and protections.

Standardized Benefits for Gig Workers: B Corps could advocate for industry-wide standards for gig worker benefits, such as portable health insurance or minimum wage protections.

Stronger Feedback Mechanisms: Even with a gig workforce, B Corps can establish clear channels for feedback to ensure worker voices are heard and working conditions are improved.

Engaging 3rd Part Experts

In the same vein of B Corp certification, to achieve a more human-centric HR approach, companies can look beyond traditional HR consultants and engage independent third-party experts.Here are some suitable advisors who could assist in this transformation:

Academic Researchers: Universities often house research centers or faculty members specializing in HR practices, employee well-being, and organizational behavior. These individuals can bring a neutral perspective and data-driven insights to the table. They can also help develop new HR metrics and frameworks tailored to the specific needs of the organization.

Industry Associations: Many professional organizations, like the Society for Human Resource Management (SHRM) or the National HR Association (NHRA), offer resources and guidance on best practices in HR. They might have training programs or workshops specifically focused on implementing new HR metrics and fostering a positive work environment.

Employee Advocacy Groups: Organizations dedicated to employee rights and well-being can offer valuable insights into employee concerns and expectations. Partnering with such groups allows HR to gain a better understanding of employee needs and develop HR practices that address those needs effectively.

Technology Providers: Companies specializing in HR technology (HR Tech) can offer solutions for data collection and analysis, streamlining the process of implementing new HR metrics. These solutions might include employee engagement surveys, performance management platforms, or people analytics tools.

Culture & Change Management Experts: Experts in organizational culture and change management can guide the transformation process within the HR department itself. They can help address resistance to change, develop communication strategies, and ensure a smooth transition to a more data-driven and employee-centric HR approach.

When HR Isn't an Option: Strategies for Employees

While the guardian report mentioned that many employees turn to external independent services for help, I still believe it's important for employees to attempt to resolve issues through established HR protocols whenever possible. This not only avoids the complexities and costs associated with external intervention but also demonstrates a commitment to working within the system.

Employees can play a proactive role in fostering trust by advocating for open communication channels within the organization. This could involve initiating conversations with colleagues about shared concerns, brainstorming solutions together, and gathering cohesive support for issues they wish to raise. If comfortable, approaching a supervisor directly with a well-defined issue and proposed solutions can also be a productive strategy. However, if employees feel unheard through internal channels, seeking external help might be a necessary step.

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