Let employees determine the criteria against which HR success is measured and rewarded
A recent poll by HR magazine found that approximately 50% of HR professionals think HR directors are worth 150,000 or more, even in these difficult times. It was interesting, though, that the results were so finely balanced, some thinking that salaries should be constrained and others that they should not.
For me it is about delivery: does the HR director really deserve that kind of reward or not, based on their performance. Now here is the problem with HR - how do you measure performance? That is, how do you clinically determine the contribution of HR to the bottom line in such a way that it is not only transparent but also demonstrates real added value to the business.
I think each business could probably come up with the appropriate metrics to do this, and given past history they would obviously do this through their remuneration committee at board level. I feel increasingly uncomfortable about board members determining other board members pay and bonuses, through these cosy remuneration committees. I would prefer to see the employees determining the criteria themselves, through some kind of employee council. I think that if a representative cross-section of employees, created by some mechanism or another, could be established to determine the criteria of HR success, then a large salary and/or bonuses, based on these criteria, would be more palatable and equitable, rather than be seen to be part of the directors' ‘light touch' decision-making on behalf of their colleagues on the board. This could also have the effect of making HR more metaphorically accountable to the employees, which could have the indirect consequence of enhancing the perceptions of HR as a function, if the HR director could achieve their objectives in light of employees' expectations of the role.
Today, in my view, HR is not necessarily perceived by employees in the positive light it may have been seen a decade ago. There are many recent historical reasons for this, from' jobs for life' disappearing, to the outsourcing of many parts of functions that were previously ‘in-house', to a more robust top management style of treating employees as disposable assets, with the constant re-organisations and restructurings orchestrated by HR. All of these are taking place in a world of intense international competition, not only from the developed world but also from the emerging BRIC countries - Brazil, Russia, India and China. Unfortunately, HR is being held accountable for these changes, which have had a profound effect on the job security, pace of working life and adaptability of employees. If employees could be engaged in determining the criteria of success for the remuneration of the HR director, we might have a better alignment between the objectives of the HR function and employee expectations. Of course, HR directors are responsible to the board as well, so some mechanism that took into account their expectations should be incorporated into the process.
We hear a great deal these days in HR speak about employee engagement; I can't think of anything more engaging than the consumer of HR services having a say on their performance and letting them establish the criteria of HR director success. We need to find novel solutions to new problems, or as the saying goes: ‘If you always do what you always did - you'll always get what you always got'.
Cary Cooper is professor of organisational psychology and health at Lancaster University Management School; and co author of Employee Morale