HR struggles with the credibility gap

by 30 Sep 2008

MANY CEOs still see HR as a hindrance, serving only to impose rules, regulations and bureaucracy on them, according to CEO of the RSPCA, Maria Mercurio.

Although HR has been instrumental for Mercurio over the last five years in reshaping the business model within the RSPCA, she said the biggest challenge for HR with many of her fellow CEOs is closing the credibility gap.

“Many CEOs are still not big fans of HR,” said Mercurio. “So they don’t actually see great value in HR. I try to tell them [that] I think there is a big credibility gap for HR professionals in the marketplace.”

Mercurio said one of the biggest mistakes those in HR make is taking the role of employee advocate rather than a business partner to the management team. She said she doesn’t believe that’s what HR is here for and that employee advocacy should be done through line managers and grievance procedures.

“The HR manager’s job is to make sure we have good policies, that we are developing our people, that we have a strong line management system in place, that we’re driving the right culture, that we’re on track, and that we’re delivering on our business outcomes from a people management and capability point of view,” she said.

Mercurio, who will speak at the Human Resources 2008 national conference in Melbourne, will discuss the HR revolution and where the future leads, using the RSPCA as an example. RSPCA is going through a big change process, transforming the organisation from a traditional amateur charity to a professional large organisation, and Mercurio has highlighted how HR has been instrumental in that transformation process.

She said that a strategic decision was taken early on to create an HR function and make it a key business partner.

“Creating the HR function was probably the smartest strategic decision I made in the early days,” said Mercurio.

Managing Director of FedEx, Australia and New Zealand, Rhicke Jennings, who will also speak at the conference in October, can’t believe that some CEOs still look upon HR as a hindrance. He believes it is an essential part of running a business. “FedEx is very much of a company that embraces HR and HR practices and they’re absolutely key to our effectiveness,” said Jennings.

FedEx New Zealand for example has been voted number-one employer and this could largely be attributed to the work done by HR, he said. “They have evolved to this best employer status, they communicate so well they’re goal oriented, they’re having fun and that translates into profits.”

Jennings believes, like Mercurio, that in order to close the credibility gap HR professionals have to think like a business partner and present everything as a business case.

“Clever HR initiatives actually save money and they produce a motivated workforce. Service improves and so it is up to those HR professionals to make business cases,” he said.

Within the RSPCA the HR department helped Mercurio to drive a consistent approach to change, develop the actual change model, drive a staff group to articulate values and come up with standards of behaviour.

“It was all staff-driven,” she said. “[It was] mentored and coached by HR, by helping us to develop the whole people-management framework and almost our business model to some extent.”

Government funding, changes in legislation, and competition in the marketplace are some of the external factors forcing the RSPCA to change its business model. “The marketplace is forcing us really to become much more efficient, much more professional, doing more for less – and HR has been one of the key enablers of that,” she said.

Five years ago the RSPCA was the only main company in its market, however now there are a number of other agencies who are competing for business.

“We’re competing for support from the community. We get 96 per cent of our funding directly from the community,” she said. “Therefore, we have found we had to increase and change our strategies to get people to continue donating to animal welfare.”

Mercurio emphasised some tangible bottom line results as a direct result from developing the HR function. One such example was the changes driven in occupational health and safety and the direct impact that had on Work Cover premiums. RSPCA’s Work Cover premium when Mercurio joined six years ago was $850,000 a year. This dropped to $150,000 last year– giving a $700,000 direct impact from increasing OHS awareness and aiming to reduce stress levels, thus reducing stress claims.

“We just drove a really strong safety culture and we just started to see an immediate reduction in accidents,” she said. “It was a $700,000 direct impact that goes to delivering animal welfare services that we were wasting. It was criminal really.”

Jennings said that it just takes an example such as this, in reducing legal costs for the HR department, to boost their credibility with the CEO.

“It just takes a few wins in order to establish credibility – where suddenly a CEO realises ‘This is great and this is a whole lot easier than the way it was before’,” said Jennings.

“There are issues where employers have regular legal costs for dealing with disgruntled employees and when you start adding up all the costs, it’s a huge amount of money that can be avoided if the right policies and approach and tactics are in place.”

The Human Resources 2008 National Conference will be held from 16-17 October 2008 at the Melbourne Marriott. Hear 10 award-winning case studies including: St George Bank; FedEx; Microsoft; TNT; Ergon Energy; Deloitte; and Mallesons Stephen Jaques. For more information visit www.lexisnexis.com.au/humanresources

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