Monday, November 30, 2009

What’s UP (Weekly, Hot, Applicable Topic Summary - Unbiased Perspective)

Technology and the Human Resource Function

During the past 25 years, the organizational HR role has experienced a change in how it is utilized. Large and small companies alike have undergone a transformation in the HR role and the use of HR professionals. The Society for Human Resource Management (SHRM), with over 250,000 members, has provided development, training, certification, and guidance on the values and benefits of having qualified HR professionals in the company. Given the opportunity and leadership support, HR personnel can successfully lead (and have successfully led) organizational development and organizational learning initiatives. This week’s blog will discuss three areas of how the organizational HR role has evolved, and the implications for future HR contributions as a result of technological advancements. The three areas are: personnel administration; external hiring; and management of corporate policy violations.

Personnel Administration

Corporate HR staff remains accountable for employee administrative functions such as: overseeing payroll disbursements; processing hiring and termination correspondence; and developing personnel reports (i.e. company demographics, employee training metrics, and possibly company newsletters associated with public relations activity). Although HR staff may enter employee salary increases in official company records, this information is typically determined by line managers and/or leaders not in the HR department. In large companies, this information is automated and HR is not involved in the process at all. Further, there are computer software programs implemented in some companies that will allow employees to resign from the company without involving anyone else within the company.

In prior years, organization development and training required coordination of face-to-face classroom sessions which would impact employee productivity. Technology advancements have introduced convenience into employee training. Webinars, webcams, and online classes are used to help companies train employees, yet minimize their time away from work. The amount of effort and human intervention in conducting organizational training and development may be reduced.

Hiring External Employees

The second change in the HR role is in the external hiring process. In years gone by, HR played a significant role in the recruiting, interviewing, and selection process of new employees. HR personnel solicited candidates through want ads; participated in career fairs; scheduled interviews; and contributed to selection decisions. HR still participates in these activities; however, the degree of participation has changed. Soliciting talented professionals is done by websites like monster.com and career builder.com, and external search firms that use technology-based search engines to acquire and manage employee resumes and employee databases. These hiring activities are still done with guidance from HR.

Line level managers have taken a more active role in the hiring process. Whereas HR will solicit job openings and select interview candidates (based on keyword searches in one’s resume), the hiring managers determine who will be interviewed and selected. When selecting technology professionals, HR’s role may be reduced, especially if the HR professional has no knowledge or expertise of the technical skillset being sought. To streamline the interview process, it is a common practice to conduct a phone interview with prospective employees before investing time and energy in the face-to-face interview. To further streamline the process, companies may even employ the services of an external hiring agency to find the right candidate. Using an external agency may result in bypassing the HR department altogether. External search agencies have the appropriate experience in identifying talent. However, external search agencies may not understand the attitudes, behavior, and culture of the organization they are hiring talent for. This may lead to additional organizational productivity challenges.

Oversight and Prevention of Employee Wrongdoing

The third change in the HR function is how employee violations of corporate policy are handled. Employee violations of sexual harassment, discriminatory hiring and promotion practices, workplace violence, misuse of corporate resources, accessing inappropriate websites, and contributing to a threatening work environment were previously reported, investigated, and curtailed by HR. In today’s heightened security environment and concern over financial risk, major corporations have established an Office of Ethics (or some companies call it the Compliance Office).

It is important to note the corporate office of ethics does not generate any revenue for the corporation. The office of ethics is comprised of legal professionals. Their sole objective is to mitigate risk to the company. Either the office of ethics or the HR department may communicate information on corporate policy and corporate compliance. Employees may even report violations to either department. However, investigation, possible prosecution, and reporting of corporate wrongdoing are handled by the office of ethics. Also note that reports of wrongdoing are not typically shared. Where HR may have played an essential role before, the office of ethics is now the focal point for such issues.

Future Implications for the HR Role

The corporate HR role has changed. Technological advancements have replaced the need for a number of activities that previously required human intervention. In large, multi-million dollar companies, HR professionals may see their role diminishing. In small to mid-size companies, the HR role might be done by non-HR professionals. These smaller sized companies may be able to benefit from having an HR professional. Technology may help to streamline the HR function.

Without subscribing to a purely quantitative measuring stick in defining a large company versus a small company, perhaps an easier depiction is whether the company has an office of ethics or not. If a company has established an ethics office with legal professionals, it implies that there is a substantial amount of financial risk for employee wrongdoing. But it also may imply that the company acknowledges the fact that there will be employees who do not adhere to the corporate policy, and that there will be a need to minimize the financial penalty for such wrongdoing. The HR professional may not be trained in mitigating this risk, but they may be beneficial in its oversight.

More information on employee morale and productivity can be reviewed in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing).

Feedback to the bi-monthly blog entry is always welcome.

Monday, November 23, 2009

What’s UP (Weekly, Hot, Applicable Topic Summary - Unbiased Perspective)

Addressing the U.S. Unemployment Rate

Since January 21, 2009, President Barack Obama and his administration have attempted to rectify a multitude of issues plaguing our nation. He should be commended for his efforts. The next challenge on the administration’s agenda is the U.S. unemployment rate. According to U.S. Department of Labor Statistics, the reported unemployment rate has surpassed 10%. This number is based on unemployment claims. It does not include those who are unemployed, but have not filed for unemployment assistance.

This week’s blog highlights two critical elements that must be addressed in order to reverse the existing unemployment trends. The two critical areas identified are corporate mergers and acquisitions; and offshoring jobs to other countries. The attitudes and behaviors in Fortune 500 companies when laying off American workers may influence the attitudes and behaviors, and operations of small to mid-size companies – thus adversely affecting the overall health of our economy.

Mergers and Acquisitions

I am fortunate to have spent over 30 years in Corporate America. The business strategies, operations, and relationships I experienced are priceless. During the very first-six months of my career as an educated (yet somewhat naïve) junior executive, I noticed the stiff competition within the industry I worked. In a meeting with my director, I asked why our company didn’t merely acquire or “buyout” one or two of the smaller companies within our industry. This would increase our market share and decrease a percentage of our competition. The response I received was “federal regulatory agencies would not permit a company of our size (and influence) to grow too large. It may result in an attempt to monopolize the market and/or deter fair competition and trade.”

The acceptance of multi-billion dollar corporate mergers and acquisitions has evolved in the U.S. corporate landscape. Thirty years ago, federal agencies were more vigilant in monitoring corporate operations that could potentially harm fair trade and competition. During the past eight years, less government oversight has facilitated a trend in merging, acquiring, downsizing, offshoring, and eliminating businesses. The banking and lending industry is an example of how merging/acquiring companies within that industry have affected our economy.

The Case Against Corporate Mergers and Acquisitions

Corporate mergers and acquisitions are not good for the U.S. economy for three reasons. First, when two separate companies exist and compete in the marketplace, there are two separate groups of employees at each company. In addition, competitive pricing provides consumers with viable options. When those two companies merge, there is no longer a need for two employees doing the same job. Someone is eventually released.

Second, the released employee may feel resentment toward the company and choose to purchase goods and services from another company within the industry. Even worse, the released employee may no longer have the financial resources to purchase goods and services from any company, thus decreasing revenue generation throughout the industry. Third, if there is no competition (or limited competition) within an industry, a company may price goods and services however they deem appropriate for being profitable (i.e. price gouging) – without any consequences. As a result, the business strategy of merging/acquiring other companies is not a means of maintaining a sound U.S. workforce and strong economy.

The Dilemma of Offshoring U.S. Jobs

The primary goal of every business is to make a profit. Companies must generate enough revenue to cover its expenses. A popular company strategy is to “offshore” a portion of the organization to a business entity in another country. This entity may be an affiliate of the corporation or a separate entity altogether. A company may implement this strategy in an effort to reduce employee operating expense by utilizing a workforce whose salary, healthcare, and medical expenses are far less than the expense incurred in using the American workforce. Further, the company may have identified favorable tax laws in another country or a workforce with comparable knowledge, skills, and abilities as the U.S. workforce.

This strategic approach provides a short-term benefit. The salaries and healthcare expenses for U.S. workers are eliminated which will result in improved profitability. However, just like in the case of corporate mergers and acquisitions, the attitudes and behaviors of released employees may result in a drastic reduction in revenue, thus defeating the objective of downsizing in the first place.

Based on leadership’s prior behavior, integrity, and interaction with their environment, the method(s) by which a company executes an offshoring or downsizing initiative may result in a “boycott” of the company. This may be done not only by released employees, but also by released employees’ friends and family members; vendors; suppliers; and possibly even employees chosen to stay at the company (the anxiety and questions of who’s next to be released can be de-moralizing). Above all, the reaction of the investment community will determine corporate long-term success of failure. If the company’s investors are not comfortable with the potential profitability of the company, the company will fail.

Therefore, any incentives, plans, or other attempts to reduce our national unemployment rate must consider addressing these existing ineffective corporate practices. These practices have significantly contributed to the unemployment rate, and will continue to do so. Finally, this “big company” approach to laying off workers has trickled down to the small and mid-size companies, and the national unemployment rate is higher than the reported statistic of 10% because of it.

More information on employee morale and productivity can be reviewed in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing).

Feedback to the bi-monthly blog entry is always welcome.