Under represented and underutilised—what needs to be done to maximise the HR function?
HR began its life as a purely administrative function, morphing into ‘Personnel’ and then in the 1980s evolving again into its current incarnation as ‘HR’. It hasn’t just been the name that has changed and over the past decades, HR professionals have evolved too—from backroom support functions to much more strategic frontline roles. We spoke to Mike Rawbone, HR Consultant, HR Associates (HK) Limited and HRA Recruitment to get his take on why it is essential for HR to keep evolving and what they can do to maximise the HR function within modern-day organisations.
Evolving HR functions
As employment law in Hong Kong has become more sophisticated, it has become essential for HR professionals to gain a comprehensive knowledge of the current Employment Law Ordinance. In reality, this necessitates attending legal seminars, training courses or both. Without such knowledge there is a high risk of inadvertently contravening the law—as is reported from time to time in Hong Kong. Typically, this relates to issues such as the minimum wage, overtime, annual leave, late salary payments and inadequate layoff arrangements.
Apart from the obvious legal ramifications, the attendant poor publicity also makes it more difficult for such companies to recruit and retain the best talent. The increasing trend for cross-border operations and subsequent transfer of talent from one location to another further complicates the issue.
Continued development of the HR function has created specialists in the areas of training, C&B, industrial relations and recruitment and according to Rawbone the tendency towards specialisation looks set to increase in the future.
More women in HR
Rawbone noted that over the last 40 years or so, males are leaving the discipline and more females are joining it. The Chartered Institute for Personnel and Development (CIPD) in the UK has a current membership split of 24% males and 76% females, representing a 6% increase in the number of female members from 10 years ago. The Institute of Human Resource Management (IHRM) report a similar split with 22% male and 78% female professional members in Hong Kong—a figure that has remained virtually unchanged over the past decade.
The UK figures clearly reflect a declining male presence in HR, whereas the HK ratio seems to be fairly static. Rawbone reflected that this may be the result of a disappearing manufacturing base and enhanced employee-friendly policies.
HR lacks ‘clout’
Although HR professionals are increasingly becoming business partners, Rawbone contends that many in Hong Kong lack the organisational ‘clout’ to really influence the decision-making process in the organisation. He said, “It is becoming increasingly common to find that HR reports through another function and this clearly has the potential for conflicts of interest between HR and, for example, the finance department—as the latter is profit- oriented rather than people-oriented.”
He added, “This trend might be a way of reducing costs yet, more to the point, it sends completely the wrong message to the employees about the HR professionals’ independence and their ability to influence change in the company.”
Such conflicts often arise when HR professionals take into account market rate to review employees’ wages whilst retaining and attracting new talent. Finance managers often tend to be more concerned with balancing the books and presenting shareholders with an acceptable profit forecast. Rawbone explained, “The only way forward for HR professionals is to produce tangible evidence such as salary surveys based on what competitors are doing. Management then have only themselves to blame if they do not then take this into account.”
HR massively underrepresented
Less than 1% of FTSE 50 Organisations have HR professionals as full board members, according to recent research published in Personnel Today. This figure seems at odds with the wishes of those in HR functions—who are now playing a much more strategic roles in their organisations.
The Institute of Directors in the UK reported that 77% of HR professionals think they should have a seat on the board, since talent management is a key priority and people are the company’s biggest asset. Rawbone contends that similar sentiments will ring true in Hong Kong.
The only way forward for HR professionals is to produce tangible evidence such as salary surveys based on what competitors are doing.
In the absence of a formal activity report, HR professionals should, as a minimum, convey statistics including:
- Staffing by function
- Monthly changes
- Leavers—with reasons
- New starters
- Interviews held and/or arranged
- Induction courses
- Training courses & costs
- Salary survey data—when available
- HR and market trends and best practices
- Changes to employment law
- Cost of recruitment advertising
Steps to enhance the HR function
a) Examine external positive practices
HR professionals need to network with peers to compare external best practices and add value within their organisation. A good start is to apply for membership to an HR professional organisation. In addition, there are a number of networking arrangements in Hong Kong, including salary clubs—useful for the comparison of annual awards, salary and benefit comparisons—as well as other networking groups organised by various HR publications and HR trade shows.
These can prove invaluable when talking to your own management and having accurate and recent data available. Using such avenues, HR professionals can gain better understanding of the progress the HR industry needs to make and recommended steps for improvement. For example, until 2006 construction staff traditionally worked a six-day week. One company decided to break this mould and introduce alternate Saturday working. A move that was quickly followed by most other construction companies in Hong Kong. The initiative resulted in better work- life balance, higher staff retention and improved morale not only for employees but for their families as well.
b) Understanding global trends
To become strategic business partners, HR professionals must better understand underlying trends in the global labour market. For instance, it is important to encourage improvements in staff retention as it seems to be a critical issue in Asia. Staff losses typically result in a loss of knowledge to the organisation, poor morale amongst those remaining, increased media and advertising costs, disruption to workflow, increased overtime, and increased costs for induction and training of new hires. There is also the need for management to invest a greater amount of their own time in the selection process. Although creating huge costs for organisations, Rawbone argues that staff turnover is not always understood in relation to the real cost. He said, “Very often due to the size of the organisation, departmental budgets obscure the full impact on overheads.”
Moreover, many HR departments in Hong Kong do not hold exit interviews try and find out why people really wanted to move elsewhere. Rawbone cited an example of a Hong Kong organisation which had 32% annual staff turnover but did not hold exit interviews and clearly did not fully understand the root causes. By analysing employee records it was possible to quickly determine that age and service were of critical importance: with 23 – 32 year olds representing 80% of the total leavers.
By conducting retrospective exit interviews, the organisation determined that the major cause of leaving was due to lack of personal development and training. Following the introduction of a training manager and a professional staff development programme, turnover was dramatically reduced to 12% in the first year.
A further time-consuming factor which is sometimes ignored when staff leave an organisation is the time taken for HR to process the relevant documentation relating to salaries, MPF and employee benefit providers— documentation which then needs to be repeated for the new starters.
Rawbone added, “HR professionals need to be aware of global and Asian trends in HR to get ahead of the game and understand the implications of these changes for the organisation. Key issues include paternity leave, annual leave entitlements and minimum wage issues."
c) Communicate with the Board
HR professionals have to provide basic information to the Board even when they are not asked for it. Rawbone contends that in some companies, senior management run the risk of being ‘blind’ to what HR professionals are actually doing and what is happening with the people they employ.
There seems to be a tendency to accept and do the things asked, even when it may be felt the solution or decision was incorrect.
In this way, HR professionals can enhance their reputation as a reliable source on people management information and, more to the point, they will be highlighting the impact of change.
It is important that HR professionals understand management decisions from the point of view of the employee so as to provide a balance between the employees and management. For instance, if a manager decides at short notice that all employees should work overtime, HR professionals have to take into account that this may not be practical for some employees due to prior commitments or family circumstances. They need to examine alternative strategies for management to consider such as rosters or shift work.
Culturally, according to Rawbone, many HR professionals and employees in Asia do not feel comfortable challenging their boss. He said, “There seems to be a tendency to accept and do the things asked, even when it may be felt the solution or decision was incorrect.” Above all, there needs to be a balance between the potential for unreasonable or excessive management demand and an unreasonable employee reaction to a request made of them. Perhaps an example here would be the tendency for some managers to stay very late in the evening and for them to have an unreasonable expectancy for their staff to do the same for no good reason.
d) Train future HR professionals
Most large organisations recruit HR graduates with a view to them developing their skills both with the company and via external training. Typically, after a few years the individual will have to make a choice on whether they continue as a generalist or move into a more specialist area of HR. This is not unlike other disciples where after an initial learning curve, a choice has to be made in terms of future direction if they are to be promoted and assume greater responsibilities. A successful HR manager will typically have been within the function for 10 -15 years and progressed through two, three or four specialist areas.
The fact is that each organisation must develop younger members of the HR team. This process should commence by providing clear role responsibilities and job scope, authority levels, guidance and learning. The process ideally should include external training courses as well as on- going mentoring within the workplace. Professional development cannot be achieved through academia and rote learning alone nor by just doing as directed—it is a complex process that should involve experienced HR professional guidance and mentoring at all stages.Apart from having a good standard of education and a genuine interest in people, prospective HR professionals need to be mature, resilient, worldly wise, persuasive and analytical. Rawbone explained, “At the same time, they need to recognise there is a bigger picture that will require them to understand how the organisation operates, its future direction and the strategy to get there.” He added, “To be successful, HR professionals will need to be proactive self-starters with good leadership abilities and be adept at problem solving—as there will be many.” Rawbone commented, “Alarmingly, an increasing number of senior management seem to think that there is no need to employ a senior HR specialist presumably on the basis that ‘cheap and cheerful is best’. In the end, the organisation will get what it pays for, which is likely to be a senior-level administrator who does not add value, is not a business partner and focuses on HR paperwork and processes.”
e) Keep management aware of HR value-adds
HR professionals should encourage a better understanding of the value and benefit HR brings to an organisation. Many management-level staff lack training in HR matters—including fundamental and basic employment law—and do not properly understand the function. HR professionals need to be willing to ‘market themselves’ and should work towards improving internal understandings and perceptions of their profession by arranging seminars, topical reviews— such as annual review expectations, conducting training on employment law changes and the appraisal process and so on.
An employee survey is also a worthwhile activity as this can highlight area of concern or matters which are of major concern to but are overlooked by management.
Future of HR
Step by step
Changes will not happen quickly. HR professionals need to reflect on how much they are really contributing. A successful strategy that has been adopted by some is to interview each director or member of top management to understand what they expect of the HR function. Firstly, this suggests that you care and that you are committed to improving the HR function. Secondly, you will clearly understand what is expected of the function. Thirdly you will be better placed to provide an appropriate service standard and meet expectations.
It is certain that there will be differences in the management team priorities—but at the end of the process, it should be possible to pull together a plan acceptable to all in terms of the HR role and the priorities for the function. This may mean that HR professionals have to drop initiatives they think important or pick up new ones. A good example here would be an HR department spending time to find a more flexible HR and payroll system only to find that after six months of effort, the management have no interest in the result as they want to introduce a fully integrated ERP system. Whilst not a perfect arrangement, communication is vital for all in the workplace and HR are no different. To understand what is expected of you is fundamental.
Paul Arkwright
Publisher
