THE LAST UNSOLVED HR DEPARTMENTAL PROBLEM
Having spent more than 30 years working in the field of human resources as a practitioner, advisor, and educator, I’ve been given a lot of opportunities to observe and identify what makes a truly great HR department successful. During those 30 years I have seen many variations in the design of HR departments, both among leading and not-so-leading firms.
However, as advanced as some of those leading departments may have been, they too exhibited a design flaw that is a “universal” problem found in every large company’s HR department. That universal malady is the existence of functional “silos” within HR. Managers and employees both frequently complain about the confusing “maze” of functions and the “lack of accountability” for solving rather than “passing off” a people related problem!
A functional silo arises when each HR function acts more as an independent entity versus a component of a much larger system in spite of the fact that numerous HR activities and data needs overlap. In many cases, it seems as if there is little or no integration or interest from one function with regards to what the other is doing.
Lots of reasons have been put forth for why functional silos have come to exist, from management and reward systems that pit managers against each other thereby reducing cooperation, to dramatic increases in the “speed of work” that pretty much demand on the spot ad hoc solution development to emerging problems.
Regardless of the reasons why functional silos exist, we all must admit that they create a serious situation that must be rectified if HR is to continue its development as a professional function capable of leadership versus operational administration. After all doesn’t the strategic in “strategic business partner” mean we can’t act in isolation?
Functional silos cause nothing but frustration for customers of HR services including managers and employees. In many cases they create situations whereby our customers can only get a complete response to their issue by:
- Searching (or shopping) for the person with access to the information or answer they need
- Self managing and coordinating the disconnected services that we are charged with providing
- Submitting data to multiple functions and working with each independently.
The lack of coordination in HR is the classic example of rock bottom poor customer service and inefficiency. We all know it’s true!
A chain provides strength only when each individual link is strong and working in unison with the other links of the chain. If one link were to fail, the entire chain fails. An HR department is no different. All of the functions that make up HR are charged in unison with providing the services and support that enable our number one resource, talent, to achieve our business objectives. No HR department can achieve excellence in accomplishing that unless each link (HR function) in the chain is strong and working in symphony with the others.
Jack Welch of GE made “boundaryless” behavior famous, but that word can hardly be used in conjunction with HR departments. The situation within HR is so bad that one well-known Fortune 100 firm recently decided to remove their top 1000 leaders from the “control” of HR primarily because of this lack of coordination between HR functions.
The HR Paradox
Individual HR professionals are known for their cooperation and willingness to be a part of and support the entire company as team players. Unfortunately, that spirit is seldom translated into functional cooperation within HR. The fact that HR operates as a series of functional silos is no secret to either managers or HR professionals. If you want a high performing HR department you need a high degree of cooperation or cohesion between each of the department’s functional units. “Cohesion” is the technical term for building a common bond and getting team members to “automatically” cooperate without constant management direction.
Because HR is an organization that provides information services it is just like any other service organization in that its customers deserve “one-stop” shopping and a minimum number of “handoffs” between individuals in order to get what they want. If you want an answer concerning (for example) hiring a new employee in a typical HR department these days you might find yourself having to work independently with an internal recruiter, external recruiters, relocation specialists, HRIS, compensation and benefits analysts, and finance managers to name just a few. In each different function you might receive a partial answer but without a coordinated effort it is unlikely that it will mesh with the partial answers you’ve received from the other HR and non-HR functions.
If you manage an HR function and you strive for greatness, you must find a way to break down the silos and boundaries and better coordinate the services your department provides. This article will provide a framework that will enable you to accomplish that goal.
Why Is HR So “Uncoordinated”?
Individuals within HR can be selfish, territorial, petty, insecure and political. You could argue perhaps that these behaviors occur no more within HR than they do in other business units but I have found that, at the very least, HR professionals are less willing to admit their human frailties than most other business professionals. There are a variety of reasons why HR functions all too frequently act as independent “silos.” The most common three reasons for silo-like behavior within HR are:
- A lack of metrics – Because HR departments erroneously believe most human behavior is “immeasurable” and unpredictable they frequently operate on emotion using little or no numerical metrics. Without metrics and measurable performance standards it is easy to become insecure. This insecurity can cause information hording and CYA (cover your ass) behavior that reduces cooperation and attention on what you are doing. Unfortunately, when HR departments actually measure performance, they do it narrowly — within their own HR function using metrics that tell only a small portion of the total story. There is seldom a unifying metric (or performance index) that measures overall HR effectiveness. Without a unifying metric it’s harder to build cooperative behavior and a common goal.
- A lack of rewards – Most HR departments have no bonus or reward system for excellent performance. Even worse there is no “overall HR performance” reward that makes one function’s success dependent on the success of other HR functions. Teamwork and cooperation may occur naturally… but it occurs much faster when it is rewarded. Compensation departments routinely recommend rewards to encourage performance in sales and customer service but they are reluctant to recommend it as an option within HR. As an HR professional who wants to break down this resistance, you should realize that HR is just another customer service function within the organization. If customer service can be measured and be rewarded for their performance, HR should be able to as well.
- Vertical training and promotion – There are few transfers or promotions between HR functions. Most companies have no cross training programs as a potential growth channel for their employees. Implementing cross training programs throughout the organization will provide diverse functions with the opportunity to learn about the needs and the problems of the other HR functions, and more readily identify where overlaps and hand-offs in service occur.
The Top 20 Steps To Increase Inter-Functional Cooperation And To Knock Down The HR Functional Silos
If you decide to undertake the task of building a “silo-less” HR department there are a variety things you can do. Here are some steps that I have used/ recommended to begin the process.
- Make sure all HR functions share common goals and outputs – Set one or two super-ordinate goals for the whole HR department. Design these goals so that each function can impact whether the goal is met. (A super-ordinate goal is one that is powerful enough that all want to achieve it but that can’t be met by individual functional effort alone). This goal should be so compelling that HR employees will subordinate their own personal goals and the goals of their function in order to meet them. Examples of superordinate goals might include: get the firm listed on “great places to work” lists, win an HR Optima award, get the department written up in HR Executive or increase the firm’s revenue per employee by $25,000. If you involve each function in the setting of the superordinate goal you’ll increase the chances of it being met.
- A unifying HR index encourages working together – Develop an HR index that reflects the overall performance of the HR department. Make sure that most HR functional units and individual contributors can impact a majority of the items in the index. An example of what key performance metrics might be included in the HR index follows.
- Revenue per employee – Dollars generated per employee used as a measure of overall people productivity per period
- Overall HR success rate – Percent of the overall corporate HR goals that are met per period
- Responsiveness – Average response time to requests by request type (again using a random sample of users)
- Errors – Average accuracy of answers provided to users of HR services (obtained by using “mystery shoppers” to request information)
- Recruiting – Average time to fill for key jobs (Average number of vacancies is not an HR performance measure, but rather a measure of corporate growth, the time to fill such positions is an HR metric.)
- Retention – Retention rate of the (ranked by performance) top 20%, average 70%, and the bottom 10% of employees (Low retention/high turnover among the bottom 10% is a positive thing!)
- Bad manager turnover – turnover rate among managers who rate poorly on management satisfaction surveys
- Performance of new hires – The average performance appraisal scores for new hires (compared to last year’s average) at various benchmark stages
- Diversity – as measured by diversity ratios in hiring, promotion and employee retention
- Manager satisfaction with HR – as measured by a survey of managers asking them to rate
- HR’s contribution to meeting their performance and business goals (compared to other overhead functions)
- Customer satisfaction – Satisfaction with all HR services as measured by surveying a percentage of all users of HR services
- Overall employee satisfaction – as measured by periodic employee survey
- Employee satisfaction with their management – Employee satisfaction with the quality of their management
Remember that setting team metrics helps focus people because it sends a message to HR employees about what is important and what is less important
- Rewards that encourage cooperation – Make at least 5% (ideally 10%) of each HR employee’s pay based on meeting the target numbers for the overall HR index. Also ensure that any individual rewards that a team member gets are automatically increased when the over-all HR team meets its goal (spurring both individual effort and cooperation amongst team members). Make sure that all individual rewards are increased if the team reaches its overall strategic goals.
- Make sure that functional metrics overlap – Make sure that the individual performance metrics that are used by each individual HR function include some “common” metrics (i.e. the same metrics appear in each HR functions list of performance metrics). Common metrics should include response time, user satisfaction, accuracy in answers and manager satisfaction with the individual HR function. Track “silo-busting” success and report your successes to all in order to encourage continued silo-busting activities and team cooperation. If your firm has a 6 Sigma program, use it to set consistent standards for quality across each disparate HR function to provide a “common ground” for comparisons and a shared experience for all.
- Cross-departmental rotations – Require that HR functions periodically rotate employees (start with key employees) between each of the functional HR units. Familiarity breaks down barriers and helps individuals understand the unique problems faced by other HR functions. Rotations can be permanent, for a short project duration, half-time each day or one day a week.
- Cross functional promotions – Change the HR internal promotion process so that the “promotion line” requires individuals to go through other HR functions in order to eventually become an HR manager.
- Field rotations – Require HR employees to spend at least one week a year working in a “line” department facilitate the understanding of customer needs. Field experience also helps HR employees to understand why employees and managers sometimes “dislike” HR as a result of dealing with disjointed HR functions. In contrast, employees and managers can learn that HR professionals do understand the business and don’t mind getting their “hands dirty.”
- Learn from managers of supply-chain related functions – Invite managers from your company’s supply chain process to offer suggestions on how to improve the coordination and the problem “handoff” between the different HR functions. Supply chain professionals are the undisputed “coordination of services” experts.
- Isolated databases – Most HR databases and software are designed for a specific function. There is no clear integration between the databases of the different HR functions and as a result, no individual can solve a manager’s or employees “complete problem”. HR must work with IT to ensure that every HR database is integrated with each of the others and that each HR function has access to every other function’s information and database. Information hording must be eliminated.
- Language and acronyms – One time tested way of avoiding outside criticism (and to remain an independent silo) is to utilize your own functional “language” and acronyms that outsiders cannot understand. If HR is to be integrated it must minimize the use of acronyms, outlaw psycho-babble and provide online glossaries and dictionaries so that others outside the department can easily learn and understand what is going on.
- Set department maximums on “transferring problems” by standardizing processes that overlap functions – Customers tend to prefer one-stop shopping and managers and employees are no different. Provide cross training and set procedures so that no customer of HR can be transferred between more than two functions in order to get an answer or to solve a problem. Where possible, provide a single unified number or web site so that managers don’t have to “guess” about “who” to call.
- Communications and information sharing – Provide open access and shared information sources so all of your HR employees know what is happening and team members feel like they are part of the action and decision making. Develop communications and information sharing systems to ensure that a best practice or learning from one HR function is rapidly transferred to the other HR functions. It’s equally important that failures or “bad news” is also shared rapidly, so the other functions can avoid the same problems.
- Outlaw territorial and selfish behavior – I’ve seen HR managers sabotage or delay the programs of other HR professionals until they got their “buy in”. VPs of HR must punish “boundary” building or protecting behaviors and “model” boundary less behavior. Talk to people at GE (the leaders in this area) about how this can be accomplished.
- Make “cooperator’s” heroes – Seek out individuals in HR that exemplify cooperation and integration. Provide individual recognition and rewards for those that serve as “role models”. Make sure every individual in HR is rated or ranked on “boundary less” behavior. Distribute the ranked individual results to all so that peer pressure will build on the “non-performers.”
- Measure cooperative and supportive behavior – processes like forced ranking and rewards that focus on individual excellence can cause employees in HR to be selfish and self-centered. If you want cooperation and “helping behaviors” to occur more frequently, you need to directly measure the extent that individual employees proactively help others both when they are required and when they are not required to help others. The best way to improve cooperative behavior is to survey employees and managers. Instead of asking them if they are satisfied or happy with a service, instead ask them to identify and rate the individuals (or people with a certain job title) that went out of their way to help them and that help directly resulted in improved business results. Individuals that” went the extra mile” include those that proactively shared information, best practices, provided tips, coached and that dropped their work and chipped in when the person doing the rating needed help. Obviously you should recognize and reward individuals that “went beyond the call of duty” and helped others to improve their business results, especially when they were not required to help.
- Hire “cooperators” – When recruiting team members make sure that recruits have a shared vision, similar values and have exhibited “boundary less behaviors” at previous jobs. Recruit and select individual team members that share the practice of helping others first (i.e. who are unselfish). Have a planned program to drop “high maintenance” territorial team members. Talk to people at Southwest Air are famous for hiring employees that “put others first”.
- Walk them downstream to show them their impact – you can improve the performance of individuals by showing them the impact that their work has. “Walking them downstream” simply means that you show employees that their work matters and how the quality of their work directly impacts the work of others and the final end product.
- Provide transparency and open access to information – people get suspicious when they don’t know what’s going on because they are kept in the dark. By providing open access and shared information to all, everyone knows what others know. By openly sharing best practices and problems, you are much more likely to have others help and there is an overload of work or when they see a problem.
- Develop a sense of community – Develop HR department mission and vision statements that highlight integration and cooperation. Make sure that every function’s yearly goals overlap with those of related functions to help develop HR departmental cohesion. Provide opportunities to work on cross functional teams and hold events that help members from different functions to get to know and form a bond with their lynch pin counterparts in other related HR functions. Provide opportunities for shared fun in order to give team members something to talk about and to build relationships within the team.
- Integration management – Provide the team with a strong manager that anticipates and rapidly resolves team conflicts. Develop systems and rules to ensure that integration issues are rapidly identified and confronted in a “non-personal” manner. Make someone accountable for integration.
HR faces many challenges but the one that can easily be classified as the “last major unsolved HR problem” is the selfish and territorial “silo” behavior within most HR departments. The first step toward remedying this issue is understanding the problem and its impacts. To identify the impact of the problem, robust metrics will be needed. These metrics when combined with rewards for positive changes will play a vital role in knocking down the HR silos.
Finally, communication to all employees on the inter-related nature of their jobs, and the successes that have been achieved in knocking down the silos must be frequent. The senior HR manager must take responsibility for developing a sense of urgency in addressing the problem and a feeling of “inter-dependence” between the different HR functional units. For in tight budget times… it may truly be “united we stand but divided we fall!”
© Dr. John Sullivan May 2002, updated 1/22/15