e-HR – A Walk Through A 21st Century HR Department

As I enter the HR department I notice it’s distinctly different than when I retired as a VP of HR way back in 1998. It was quieter, smaller and had much less people than I had remembered. There were only a few HR staff people in the office – there were no regular employees wandering in and out asking questions and picking up forms. In fact, I later found out that most employees (and HR people) worked at home or were located around the world. In fact, now that I look around there were few waste baskets and not a paper “form” to be found. A paperless HR Department! WOW!

Why was I returning to HR after 10 years of retirement? It was to give the student I was mentoring from the HR program at the nearby San Francisco State University a view of a real HR department (as opposed to the theory they get in school.) The tour of the Department was led by a female intern named Irene, also from SFSU. 

I suggested we begin in the HRIS department but the intern giggled and said there was no centralized system inHR anymore. Everyone used technology and the large systems of client-server software we used to manage (SAP/Peoplesoft/Oracle) etc. were now accessed through the internet and managed by those firms. I was shocked! That must have saved millions. Actually no software of any kind resided in HR. Even the traditional windows and MAC software was on a server a thousand miles away.

The intern (Irene) asked where I would like to go after my false start in HRIS so I suggested we start in Benefits. She laughed again and said there is no benefits department! Ninety percent of it was gone and the rest was integrated into the new “Total Compensation” Department. Benefits had all been outsourced directly to providers. Information and changes are provided to the firms on a self-service basis by the employees. I responded with several but-but-but’s and asked how could employees possibly handle their own benefits? She responded that everyone had access to a computer or a kiosk at work but that most just did their benefits changes at home on their Web TV. It was an “idiot proof” program that allowed “self-service” changes to their benefits at any time an employee wanted. She said that the new HR philosophy was to treat employee’s like mature adults so self-service was the only option that would fit that philosophy. What about questions – can they still call the Benefits Call Center? She laughed and said that had just beenshut down last month for lack of use. Why wait for minutes on the phone when the extensive intranet coupled with a direct click connection to the vendormade answers easy to come by. 

She also mentioned that the major health providers and insurance companies had formed a partnership, so that all firms now essentially “bought a preset benefits package” to meet their needs – standard package A++, A+, B+ were available to companies. It turns out employee research had shown that employees wanted a good package but all of the companies existing packages were so much of a quagmire of confusing offering that employees didn’t even know when their benefits were superior to a neighboring company. Once companies realized that and after some bickering, the only decision required by the HR department is what percentage of each plan would our company pay for. 

Ok, I had to ask, what else in HR has gone away? My mentee popped in with a comment, Mr. Sullivan you certainly haven’t kept up with HR. Everything changes faster now. The shelf-life of HR knowledge is down from 4 years when you were in HR to 18 months. Now everything in HR changes so fast that we can now lead our organization in change. HR must change faster than the rest of the company, if we are to be leaders. We must mirror our product and our customer needs – and then do it faster cheaper and better than our competitors. I mentioned that I was happy just to become a business “partner” in 1998 but wasn’t being a business leader being a bit pushy? She snarled back (yes snarled) my professor says its people like you that kept HR back all those years. Being afraid to take risks, to show by leadership and doing and not by policies and rules. She said I bet you printed out your e-mails and needed help figuring out how to program your VCR. I felt like a jerk because she was right. A leader, not a partner – I liked the ring of that. We moved on.

Our next stop was compensation. Except, now it was called “Total Compensation” because the level of benefits are also now tied to performance. There was but one person there. I used to be in compensation so I was excited to see this person. I asked what they were doing. They said their job was designing non-monetary incentives. I had never heard of that. I asked where were the people that did job descriptions and salary surveys. More giggles came from the young intern. Well, then my mentee jumped in and challenged me. She said that salary surveys that were only done once or twice a year were always out of date and they were often so generic that they didn’t allow us to gain a competitive advantage over our competitors. The intern added – everything we do in HR must be 20% better than if the manager does it or we just stop doing it. With online salary surveys that are updated daily by a network of headhunters and our recruiters, we can get more accurate salary offers which result in a 50% increase over your (Jurassic Park, 1998) offer acceptance rates.

But what about equity I jumped in? Well, now a manager has a software package developed by Watson Wyatt Hay that gives the manager guidelines and lets them decide with equity comparisons generated by a software application. A salary change beyond the preset limits is still automatically implemented (without approvals) with the only “control” being that an e-mail copy is sent to the managers boss.

I started a response by saying “you can’t trust manages to make those decisions” and both of them in unison shouted at me! That kind of thinking will cause the company to crash in 1999 right after you left. Shame on you. That kind of thinking left our managers weak. The people decisions (hiring, pay, firing, etc.) are the toughest ones.

By being too control oriented, HR caused this company to falter and to have to lay off ½ the workforce. Weak decision making in “people” areas seeped over into product decisions and it really hurt us. You let managers make million dollar decisions in plant and equipment but we wouldn’t let them give the receptionist a $.50 raise. So now managers are responsible and make all, yes all, people decisions. You treated managers and employees like immature children and did the tough stuff for them. Now we are taught to treat managers and employees like mature adults who volunteer at our firm.

What if a manager screws up I asked. Another scream from the intern. You never fired a single manager when you were here. Your HR staff was so afraid to take risks. We have a bad manager identification survey on our intranet that periodically surveys employees on the quality of their management. If employees aren’t challenged, recognized, get fair treatment or feel they don’t have open communication with their manager then the managers are given a quick fix program and if it doesn’t work they are fired. I jump in and say what about lawsuits. The intern, Irene, an aggressive young woman I might add, spouts back that post-exit surveys (6 months after leaving questionnaires) told us that the number one reason our best performers left was poor management. Our ROI analysis showed the increased productivity as a result of fixing or firing bad managers was 10x that of any possible legal costs – I never thought of it that way – I was impressed.

The aggressive intern popped in again, I bet you can’t guess the # 2 reason for the Hi-Performers leaving? I smiled and said the lack of job challenge! Finally she was impressed. You are right – but what did you do about it – I said once a year performance appraisals. She pounded her fist on the table and said how could you! We have actual performance data, customer, and team 360-degree feedback on the computer. With online data, employees can self manage their own performance in 90% of the cases. HR (PCC) gets involved in coaching the manager on the other 10% of the performance cases. In addition, every employee has a custom designed challenge plan to ensure they are continually challenged and are developing and growing as an employee – Wow I said out loud! And 25% of a managers pay comes from attracting/retaining and developing their employees said Irene. Managers take people issues seriously here.

As a result of strengthening our managers and our employees decision-making skills we make great people decisions and products. Actually, we have also learned to shift a lot of the HR responsibility to employees. The new HR VP Dr. Addie Sullivan says everyemployee is an HR person. They have taken this responsibility very seriously and as a result equity, sexual harassment and EEO complaints had plunged to near zero because every employee is the eyes and ears of the company. The intern added, remember when in “your day” they got rid of the quality control officers who were responsible for quality. (I did remember – errors went to near zero and waste went down too). Having someone else responsible for qualityallowed everyone else to get lazy. We don’t let managers and employees get lazy about HR issues. We make sure the managers and employees “own” HR issues. We help with advice when needed but HR doesn’t really do any direct HR work anymore!I was beginning to see the light of the new HR. 

I decided to be brave and ask my escort Irene a question that had been haunting me since I entered the office – What about the sign? The name outside the office when I came in. It didn’t say HR – it said PCC. My mentee jumped in with a response that made sense. HR departments have been renamed. They are now called “Productivity Consulting Centers (PCC) People come here for ideas on how to increase productivity. We no longer just “run” HR programs and hold managers hands as some HR people did.

We provide consulting advice, coaching and training in the best “people products and services” that lead to increased productivity. We only help in areas where we can actually increase productivity. For example, we recommend training because we have metrics to prove that it increases productivity and that has a positive ROI. We educate managers as to what pay systems increase profit and productivity. We train managers how to hire High ROI employees – employees that produce more per dollar of salary and benefits that our competitors. We help managers get the most bang and output from their people.

If our advice doesn’t work – the client pays only ½ the fee. We produce or we are out.

Irene

In fact, this year our company’s productivity exceeded our competitors by 19% and the 5 departments that utilized our consulting services the most had a whopping 68% increase in productivity compared to the year before and 90% higher than the 5 departments that used us the least. Our data appears in the annual report and since we have been tracking PCC (HR) and sharing it with investors our stock price has gone up 27% faster than the World 500 index. Great HR impacts market value – and we can prove it. What did the CEO have to say about all of this I asked? Not a lot – said the intern, she did it when she was HR VP before she took over the job as CEO – I said wow again but this time to myself. I was never ever considered for the CEO – I guess I was too much of a “partner” and not enough of a leader!

Well, I was ready to see some more so I suggested we go to employment. It was smaller than I expected and it was free of visitors and candidates. I asked why. The intern said most applicants and all managers have Web TV with a video camera both at home and at work. As a result, all interviews are now done long distance on the web. They are recorded so those not available can view them later. She added we now have IVR (interactive voice response) automated telephone interviews as well as online computerized “first” interviews on the Web which sort out candidates without the right experience levels and culture “fit”.

A web-based simulation game simulates the job they will do and assesses whether they have sufficient technical skills to go to the next step. The next step in the process is an in-depth simulator “game” on the web that allows potential candidates to be“final” screened to see if they prequalify for the job. The job simulator is so realistic (and it measures both current skills and the competencies for forecasting and assessing future problems) it beats any human interviews invalidity and reliability by 47%. The intern proudly stated that the simulations were so effective that interviewers (managers) could focus solely on whether the applicant was a good fit for our culture. These “putting them in the job” simulations reduced EEO complaints to near zero and resulted in the productivity of our new hires being the best in the industry ($10 in output (productivity) per every dollar of people costs spent (people cost include prorated HR costs, training costs, salary, and benefits). The highest productivity ratio in the industry she beamed. Our PCC advice is so good we get the most out of our people, they are the most challenged but also the highest paid. We have the lowest voluntary “performance” turnover rate (3%) of any firm and we recently topped HP as “Fortune’s” best place to work in the world. 

How can you pay the most and still be productive I interjected? Its easy workers work smart and produce more because they waste less time on approvals and rules that the HR “cop” used to place on them. I had to interrupt, what about the accountants, they have more rules than HR ever had. Without missing a beat she said they are all gone too. Replaced by a computerized audit system that warns managers but does not prevent them from making “outside the norm” financial decisions. Now that was ok, firing accountants. I always called them “historians” because they told me what happened last year as opposed to what I needed, which was what was going tohappen next year!

I was tired but impressed. What else had changed? Irene noted that no one has resumes anymore and everyone now has a web page with a “portfolio” of their work. Our computer periodically scans possible hire’s web pages for updated skill or projects. 

References are all done electronically by C check, very much like today’s TRW type systems. 

Most hiring is no longer fact to face. In fact a full 20% of our hires are “remote hires” where we never actually seethe candidate in person. A global marketplace and the need to make fast hiredecisions (to capture the best) forced the old style managers to give in to the“new way”. 

We recruit using new tools also. Push technology has allowed us to send a monthly e-mail newsletters and regular company job updates right to our target candidates. They no longer need to visit our web site – we can e-mail it to them at little to no cost to us. We also have frequent exchanges with potential candidates through e-mail, HRNETand chat rooms. We make strangers into friends over time. Without even meeting? I complain that the personal face to face touch is gone? Irene the intern shoots back with “yeah but the old system hired employees with an average performance appraisal of 3.8 and the new remote hire system hit 4.35 last month”. And it costs less and is faster because it cuts out travel expenses andscheduling problems. It’s just like those old “ATM’s” people used to use beforesmart cards. Initially people resisted but eventually, people learned to actually prefer the machine over the person because of the convenience.

How has College recruiting changed? Managers now use email and the web to bypass campus career centers. They do“virtual” instead of on-site job faires and go directly to the faculty and the students to find the best students. We e-letter (an e-mail newsletter) students with “wow” (exciting) stuff to get them interested in us early in their career. Faculty love it because we give them free access to our solutions and training as well as research data and projects via the net. Direct e-mail marketing, webpage “cookies” and data/resume mining software have made finding and communicating with a C++++ engineer an electronic “piece of cake”. It’s all so easy to use that the managers can now take complete responsibility for all recruiting and hiring. This also puts them in better touch with the market and the needs of their new hires because they can no longer shift the toughest people decision to the HR department… who to hire?

If managers do all compensation and hiring what is left for HR. I just assumed the way things were going that managers do all employee relations work but I wondered how so I asked. My mentee injected that a software program called “Decisis” had a decision tree that walked managers through all tough employee relations issues. It included questions to ask and various other checklists. It also had laws and court cases that could be easily accessed without a Philadelphia lawyer. It even had video clips and role plays on how to fire, discipline and motivate workers. It even has a “call” button that connects your directly with HR or an attorney if you feel you are in over your head. I asked if I could play on the system for a while and the intern agreed. Wow, what neat toys that allow almost anyone to be a better manager.

Now I’m beginning to see the big picture now. I asked the dynamic duo if I can take a shot at what training mustbe like. Online competency assessment tools, video clips, teleconferencing, skills/interest inventories electronic articles, books, and e-mail learning networks. The “twins” smile and shake my hand. But they smile and say you left out a low tech one – we give video and audio tapes to employees so they can train during their commute or at home(actually less than 40% of the employees come to work 5 days a week thanks to our “just produce baby” telecommuting flexiplace program. Managing “remote”workers is in fact one of the key areas the PCC people help managers with. It turns out its harder to motivate workers at long distance.

I’m both excited but exhausted. I suggest we get coffee. As we sit down I ask what happened to all of those HR people. Oh, that’s easy, the best (1/3) are still here as strategic consultants and they love it. One third became line managers (they have the highest success rate because of their people skills). The last third are happy to be gone. Most are “living in the past” as professors or working in the community as socialworkers – because they still really “like to work with people”.

We are HR leaders that are now heroes in our organizations. We now get promoted to be CEOs because we aggressivelyused technology which lets others, who are closer to the customer, do more. Ouruse of technology has given us a credibility we never had. We are no longerbegging to be included, people are now coming to us and asking “can I beincluded? Productivity Consulting Center now has a great ring, I’m glad Icame back to see it. I’m now left with one funny thought but “who will organizethe company picnic? But I don’t say a word – it’s only funny in a sad kind ofway!

Note – Nearly every example in this “dream” is currently in use TODAY in an actual U.S. company

© Dr. John Sullivan March, 1998 for the IHRIM journal

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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