8 Ugly Numbers… That Highlight HR’s Failures

A Think Piece – Posing the question, “Is it time to take a closer look at failures in HR?”

Understanding The Many Benefits Of Failure And Criticism

With few exceptions, throughout my career, I found that HR professionals are positive individuals who don’t even want to talk about failure. That positivity also means they are uncomfortable with the criticism that comes along with failure. However, I find that perspective to be a serious miscalculation. Because “criticism is the engine of change,” it is beneficial as it harnesses outsiders (with fresh eyes) to help you understand every aspect of what went wrong.

The many benefits of failure include:

It makes you stronger
It tells you what not to do again
It forces you to innovate
It reveals the root causes of failure
It’s an excuse to interact with executives
It keeps your ego in check
It illuminates the path to success
It forces you to focus on output quality
It provides you with fresh criticism
It forces you to use metrics and collect data

“It’s fine to celebrate success, but it is more important to heed the lessons of failure.”― Bill Gates

The Eight Major Failure Areas In HR

The remainder of this article covers eight major failure areas in HR. And within each of these eight areas. I provide at least one “snapshot data point” supporting the argument covering why that HR area deserves closer examination. 

HR failure #1 – New data suggests that… HR’s current benefits expansion means higher costs but perhaps no real impact – although HR leaders might not be aware of it. Since COVID, HR has essentially advocated a new form of corporate paternalism. HR has been striving to take care of more and more “worker needs and wants.” Even though meeting these new wants might not impact worker productivity or retention. So, in most of HR, it is still a common practice to propose and implement these new “soft wellness benefits.” Without any data proving that they produce the desired results and have a positive ROI (the dollars of business impacts outweigh the program’s costs). And because these programs can be costly, the HR cost area that used to be called “fringe benefits.” Have now reached 30% of the average worker’s paycheck. 

Consider this new data a benefit’s wake-up call – unfortunately, the benefits function has done little to prove the business impacts of each of its offerings. But that omission is about to change. Fortunately, one major university recently concluded a comprehensive analysis covering the measurable impacts of 90 of these new “soft” benefit programs. The 90 different benefits that were analyzed include sleep apps and digital wellness solutions. Courses/seminars that cover coaching, mindfulness, massage, resilience, relaxation, time management, and financial health. 

And if you have time to read this eye-opening study, you can find it by clicking here. Fortunately, the New York Times has summarized its results. The NYT reported that employees who participated in these 90 different programs were no better off than colleagues who did not use them. As a result of this startling discovery, I recommend that every major corporation begin researching the employee saved, scheduled impacts, and the ROI of each existing or proposed HR benefit program.

HR failure #2 – HR has still not been rated as strategic – HR has continually failed even to get a majority of our business leaders to rate HR as strategic. And new survey data reveals that HR’s strategic rating has risen only a mere 1% since 2018. And our 46% strategic rating is, unfortunately, a full 21 points behind finance.

HR failure #3 – HR is still not trusted by our employees… despite all of our efforts – being fully trusted by your employees is a major goal of every HR function. However, a survey of major tech companies found that 70% of employees don’t trust HR. And not a single one of these 18 top tech companies had a majority of its own employees say that they trusted HR at their company. And that “don’t trust” percentage rose to a whopping 83% at Intel.

HR failure #4 – Hiring, our most impactful sub-function, has a painfully high failure rate – unfortunately, for years. The Conference Board has rated hiring as a top executive challenge in its annual C-suite survey. The fact that hiring has remained a top challenge for so many years is by itself an indication of the failure of recruiting. The failure rate of new hires is a second failure area. Extensive research by Leadership IQ has revealed that the average hiring failure rate is an astonishingly high 46%. And only 19 percent of new hires actually achieve unequivocal success. The third major failure area in recruiting has been the consistent “overhiring” over the last few years without effective workforce planning. As a consequence of this overhiring, many companies have been forced to initiate painful, large-scale, costly layoffs. The most essential remedial action for recruiting leadership is to begin measuring the on-the-job performance of new hires and the factors that accurately predict it for each job.

HR failure #5 – Training and development produce expensive failures – this function is among the largest spenders in the HR budget. However, research shows that an amazing 90% of individual training programs fail to reach their targeted outcomes. This is partly because 90% of the provided content doesn’t significantly change employee behavior. Therefore, 75% of managers report that they are dissatisfied with their L&D function. Instead, L&D must learn to calculate the ROI of each of its programs. Then, keep only the programs that have a direct, sustained, measurable impact on participant productivity.

HR failure #6 – Our diversity results have been embarrassing – one DEI expert concluded, “Researchers have studied the effects of diversity training for years, and they’ve found a resounding theme: most DEI programs don’t work.” Other research supports this conclusion. Less than 2% of HR leaders reported that they were confident that they were actually achieving their DE&I goals. Employees also support that conclusion because 62% of workers rated their DEI programs to be ineffective. Today, with the increasing level of pushback on DEI programs, Now is an ideal time to make DEI a 100% data-driven function.

HR failure #7 – Turnover has skyrocketed, but HR still has no answer – HR’s haphazard, mostly intuitive approach to stopping the great resignation has had little effect. Employee retention has remained the number one operational priority. And perhaps the costliest turnover area is new-hire turnover. Research by BambooHR found that as many as 33% of new hires leave in the first month. And after three months, 68% of your new hires will have left. Instead, what is needed is a data-driven approach that identifies the major causes of turnover and the most effective tool for minimizing each cause. Employees also need to be prioritized for retention so that the highest-impact employees receive the most attention.

HR failure #8 – The execution within HR also frequently fails – unfortunately, HR often stumbles in its ability to execute. That problem is illustrated by the fact that 84% of HR professionals report that their recent HR Projects have been unsuccessful. And with such a high failure rate of new programs. Every HR function needs to research the” critical success factors” in successful HR operations.

“The difference between average people and achieving people

                   is their perception of and response to failure.” – John C. Maxwell

Final Thoughts

HR needs to learn from other innovators if it wants to become an innovative function. And that lesson is “rather than treating failure as an enemy, embrace it as a powerful learning and motivation tool.” So, in that light, I find that the beginning of each year is the ideal time to examine and learn from last year’s failures. A good starting place is to require each subprogram within HR to begin measuring and reporting its failure rate. The subfunctions to target include hiring, retention, onboarding, L&D, performance management, diversity, and internal movement. In my experience, HR can’t become strategic until it first systematically identifies each of its major failure areas. And then, after each failure, it conducts “failure analysis” in order to identify which factors contributed to each failure.

“I have not failed. I have found 10,000 ways that don’t work.” ― Thomas Edison

Author’s Note

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About Dr John Sullivan

Dr John Sullivan is an internationally known HR thought-leader from the Silicon Valley who specializes in providing bold and high business impact; strategic Talent Management solutions to large corporations.

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