There has been a step change in the role of line managers since Ian Reid, head of marketing at car repair firm Autoglass, joined the company two and half years ago. Its now much more about coaching my team to get them through the workload we face, Reid says. My time is split fairly evenly between keeping an eye on the marketing strategy and making sure I have the team that can deliver it. The team is so tight that if one person flounders, it can hold us all back.
The result is a very different relationship with HR too. Traditionally you only went to HR when you had a problem and, as line managers didnt want to be seen as failing, they didnt go to HR, Reid says. Thats no longer the case. HR advisers act much more as consultants now and the experience they have built up over the past couple of years has been quite radical. It has resulted in a significant business change.
So if, for example, Reid wants to stretch someone, his HR adviser is there to discuss how he might do that and to point him in the direction of development opportunities available. Im using HR a lot at the moment to work through some changes I am planning. I sit down with my HR adviser for about an hour at least once a month, Reid says. But if I havent used HR for a couple of weeks or months, that doesnt mean I dont need them.
Autoglass managers are not alone in experiencing this shift in focus from the task to the people who will deliver it for them. For years the personnel press has been reporting on the attempts of HR to push more of the day-to-day people management stuff out to the line, leaving HR to become more of a strategic resource and less of an emergency service.
Now research from Human Resources magazine and Hewitt Bacon & Woodrow suggests they might be succeeding. The research covers the structure and costs of HR in 132 firms from a range of sizes and sectors. It finds that on average line managers spend 45% of their time on HR-related activity.
It also shows that they get involved in a broad range of personnel issues. Recruitment and development figure highest with each accounting for about 11% of line managers time. But managers are also involved in employee relations, health and safety, organisational development and even reward management.
To many HR directors, these results come as no surprise they show the gradual success of some HR departments over the past decade in forging a more value-added role. We do expect line managers to be accountable for the people who report to them and that expectation has grown over the past years, says Carol Madeley, HR director of Autoglass. This has changed the business, activities and role of personnel, but it has been a relatively slow process.
Two decades ago it wasnt unusual for a line manager in a disciplinary situation to send the member of staff to personnel for a warning. But that would never happen now, says Madeley. UK business has moved a long way when it comes to the balance between personnel and the line, she adds. We have certainly absorbed this change in Autoglass. We have people working all over the country, 24 hours a day. To have a highly centralised personnel department that did a managers job would be crazy, she says.
At Autoglass, HR leaves as much as possible to the line. Managers are expected to be involved in recruiting their own people, providing induction and ensuring that they are trained properly. HR is there as a back-up to provide the tools, systems and advice, and to ensure these things happen.
Madeley likes to emphasise the idea of partnership between HR and line managers, but there is more to it than that. For example, disciplinary issues are also the line managers responsibility and ultimately it is a managers decision whether or not to dismiss a member of staff. But if any line manager were to dismiss someone without consulting HR first, that would be an issue, given todays legislation and given the values of the business we stand for, Madeley says. But not many managers would be foolish enough to do that.
HR is, effectively, the custodian of the Autoglass values, she adds. It upholds the way things are done in the company. Thats a very powerful position to be in when dealing with line managers who dont support us on the specifics.
At software company SAP, both HR director Lisa Clark and marketing director Peter Robertshaw recognise that the balance between what line managers and HR do for the workforce has changed over the past few years.
HR managers are consultants now, producing information that we can trust. Their job is to make sure managers use this information and also to focus on career development and bringing people into the business, Robertshaw says.
He puts much of the change down to the dotcom boom. We were in much greater danger of losing staff, he explains, and we needed HR to help us attract people. Now we are able to recognise talented staff, develop them and plan their success.
Good e-HR systems have helped too. I have information at my fingertips now. I can check my headcount, attendance and so forth without chasing HR, Robertshaw says. Its especially important at times like these when we must be on top of whats happening. As costs are reduced or opportunities come up, we need to be managing our people and our vacancies.
What he doesnt want managers to do is end up taking on all the people administration from HR. Yes, it is vital that we spend an increasing amount of time on people management, but that should be on inspirational and mentoring activities, rather than on the day-to-day chores.
Down the corridor in HR, Clark believes there is probably still a lot more that managers could be doing for their people. At SAP we are very focused on the product, and people management tends to be what managers do after theyve done their day job, she says. We are trying to get them to see that [people management] is the biggest part of their job.
But she agrees with Robertshaw that the relationship between HR and line managers has changed dramatically. We take a much more consultative approach toward the line now, keeping managers informed and involved. We dont have the big-bang launches any more. Instead we ask managers what they think, how it would go down with their people and whether or not they have experienced anything similar, perhaps through a client, Clark says.
I dont call this HR, but good people management, she adds. And this easily makes up the 45% of what managers should do. What is important is that employees see us as approachable and efficient, and managers know that we give them the tools and the framework for managing their people.
Clark would like her team to become more involved with business issues at the outset, not just when it comes to talking about job details. But she is cautious about HR offering too much too soon. For HR to be a strategic player we have to build credibility at a basic level before we can go into the boardroom promising this, that and the other, she says.
The turnaround in the line managers role is closely allied to other changes in the way HR is structured, what HR professionals do and what the function is costing firms. For example, when it comes to how HR people occupy their working day, the HR/Hewitt Bacon & Woodrow survey shows that, like their colleagues in the line, a significant proportion of their time is taken up with recruiting and developing talent. On average, HR professionals spend 24% of their time on employee resourcing and a further 22% on HR development issues such as training, performance management and succession planning.
This is how it should be, says Chris Alderton, a senior HR consultant with Hewitt. Managing talent is the big strategic contribution that HR can make to organisations, he says.
Anne Minto, HR director of Smiths Group, agrees with him, but warns against focusing too narrowly on recruiting talent at the expense of developing existing people. We are here to bring on our people, she says. At Smiths, we have spent a lot of time on our succession planning because we felt that we needed to look ahead and its demotivating to people if they see that the whole of the top team comes from outside.
Looking at who delivers HR policy and practice, the research casts some interesting insights into the role and perhaps the future of outsourcing. The results suggest employers are still very cautious about outsourcing as, contrary to popular opinion, there is surprisingly little outsourcing going on.
The exceptions to this are payroll and pensions, which 20% and 30% of firms respectively say they outsource. The only other significant figure is training which 7% of firms outsource. But when it comes to recruitment, employee communication, health and safety and other possible candidates, figures are down to a few per cent of firms only. What is more, outsourcing accounts for less than 10% of total HR costs.
Interestingly, there seems to be some correlation between outsourcing and company size. On the whole the larger the firm, the more likely it is to outsource. But its not a road to Damascus experience for bigger employers and there is no sign that one or two large firms are accounting for all the outsourcing activity. Those that outsource, whatever their size, only outsource one or two activities, the research finds.
The cost implications of outsourcing are even more revealing as there seems to be little or no cost-saving associated with moving HR activities out of house. These figures have to be treated fairly carefully, says Alderton, as it could be that firms were already offering an expensive service.
Nonetheless, if you compare the HR costs of firms that outsource with those that dont, it could be cheaper to keep it in-house. Among organisations with fewer than 5,000 staff, the median HR cost for those that outsource at least one activity is just under 1.4 million and the average cost just under 3.3 million. There is a possibility however that these figures reflect implementation costs, as much shared service/outsourcing activity has occurred in the last year or two.
Richard Houghton, managing director of Xchanging HR services, is unfazed by the figures, admitting that HR outsourcing is still an undeveloped market. He compares it with the IT industry 10 years ago. It was the same story, but once a large number of respectable companies had moved down the outsourcing route, people saw that it was not putting the business at risk and followed suit, he says. We are at a very early stage in the life cycle of outsourcing HR.
Ben Bengougam, Dixons HR director, Europe, doesnt understand why outsourcing isnt saving money as well as enhancing the HR service firms offer. Dixons outsourcing activity is pretty much in line with the survey results and is largely limited to payroll and benefits, plus the employee assistance programme. But Bengougam maintains that, If firms arent getting a large element of efficiency from outsourcing, then their decision-making must be flawed.
However, other HR directors believe the research findings hit at something much more fundamental. It sounds a grand idea to be pulling things out of the business, but I think [suppliers] are being over-bullish about the future of the market, says Minto. It may make sense for the very large global companies to go that way but firms with multi-site operations will find it very difficult if they want to retain an HR presence on site.
In contrast, both the research and anecdotal evidence finds HR much more enthusiastic about the future of e-enablement. As many as 61% of respondents said they were planning some form of e-HR, citing costs, a better service and the need to free up HR time as the main drivers, although 3% said they were going down the e-HR route because they had been told to.
Most of the e-enablement is due to take place over the next three years and the target areas are likely to be HR information systems, recruitment and payroll. However, communications, company cars and occupational health services also figure high on the list.
HR directors are keen on e-enablement because they see it as being at the heart of the changing shift in the relationship between HR and the rest of the business. Moving much of the transactional stuff back to managers and even, in some cases, to individual employees has changed the nature of the work a HR manager does. Its a point that Clark at SAP makes. It allows HR consultants who are dedicated to a particular part of the business to say to a line manager, Dont ask me, instead let me show you how the system works so that you can find out for yourself.
E-enablement is not necessarily about reducing the amount of face-to-face contact HR professionals have with line managers, but it is about altering what they talk about. We dont want line managers ringing us up regularly for details of their staff salaries, says Anne Ridge, HR director of Britannic Money. But she would, perhaps, like their input into HR strategy. Its important that we work in partnership with the line, she says.
A further mark of the slow revolution that is still taking place in personnel is the link between HR services and employee attitudes. The research shows that most HR departments think their customers managers and staff are broadly satisfied with what they do. The only exception to this is the area of performance management and development where a quarter of firms think their staff are probably dissatisfied with the service they receive from HR.
Many responses to this question will be based, not on a personnel managers hunch about how staff feel, but on the regular employee attitude surveys they carry out. As the need to manage talent effectively has grown over the past few years, so too has the emphasis that firms put on measuring employee attitudes. Its linked to the desire to become an employer of choice and has become a vital part of the balanced scorecard approach many organisations use for judging their success.
Clarks targets are based on the results of the annual employee attitude survey, which focuses on people issues. Its a big thing at SAP, she says. I set my strategy for the year based on feedback from the survey and I am given goals to improve in these areas each year, she says.
But its not about the HR department itself, its about making sure SAP has the right framework for compensation and benefits, for example, and that as far as our staff goes, we know what we are talking about, Clark continues.
Most of the HR/Hewitt Bacon & Woodrow research is good news for HR directors and they can congratulate themselves on a job well done. But there is one rather gloomy cloud hanging over this rosy picture of transformation costs.
Over the past decade HR has made huge strides in terms of costing its service and measuring its value to the organisation, but this research suggests that maybe it has not come far enough. To start with there seems to be no correlation between the number of employees and a firms HR costs. The average HR costs for a firm with 1,000-2,500 staff is a little over 4.6 million; for firms with 2,500-5,000 staff it is 1.7 million; and for firms with 5,000-10,000 people it is 8.1 million.
Even more surprising, says Hewitts Alderton, is the apparent cost of all the HR activity that is delivered by line managers. Looking at the median figures, this can account for anything from 25% to nearly 60% of total costs, and in more than one in three firms this line management activity accounts for more than 50% of total HR costs.
This is significant, Alderton says. If you are running a $4 billion (5.7 billion) business and you think your HR costs are about $50 million (71.6 billion), you might not baulk at that. But if you factor in your line management activity and the cost leaps to $125 million (179 million) then it might well move up the priority list when it comes to cost savings.
For all the progress HR has made on costs, there is still a great deal of unease among some personnel directors. Ridge at Britannic Money is determined to have a breakthrough here and is working closely with her finance director to come up with more accurate ways of measuring the cost and benefit of HR. This is a business where we measure everything we do, mortgage applications, completion dates, turnaround times. The problem with measuring people is that the intangible benefits are enormous, she says. Intellectually my chief executive understands this, but emotionally it doesnt make sense to him. I know that the only way through to him is with facts and figures.
