As HR directors move away from the traditional 'hire and fire' function of what was once called 'personnel management', to focus on the more strategic elements of business development, line managers have voiced their concerns at having to take on people questions, and are consequently losing confidence in their HRDs.
Exclusive findings of Roffey Park Institute's Management Agenda Report, revealed to HR magazine, show while overall ratings of HR departments from line managers improved this year from a dip in 2011, one element of HR performance showed the opposite (see Graph 1, last column). Between 2010 and 2011, agreement with the statement 'HR produces relevant and timely initiatives' increased a little (55% to 59%), but this year it decreased significantly, to 50%. And when asked if they 'strongly agreed' with the statement, less than a fifth (18%) answered in the affirmative.
Dilip Boury, researcher at Roffey Park Institute and author of the report, explains: "This is, of course, based on the perceptions of line managers. They believe where HR adds value is in the transactional - but this is not where HR departments achieve the best outcomes for the business. When HR directors become strategic, line managers will need the appropriate training to understand why and I don't think employers have been having these sorts of conversations with them. It is a change management issue."
David Pardey, head of research and policy at Institute of Leadership and Management (ILM), adds: "I wasn't surprised when I heard this finding - but then I asked myself, 'why am I not surprised?'. We have found a problem - 60% of line managers don't want to be managers. They struggle with people issues and, although it is central to their role, they find it the hardest.
"They are not too enthusiastic about managing staff: people, unlike budgets, can fight back. Managers in the UK are traditionally weak at performance management. Employment law is a minefield. Line managers are beginning to believe that HR departments, who they see as enablers but not focusing on these issues, are taking a back seat."
But the 2012 poll of more than 4,000 UK line mangers has revealed a slight increase in the proportion of managers that feel HR adds value to the business, is influential, is proactive, is credible and is customer-focused (see Graph 1).
This time last year, managers' views of many areas of HR dipped, with a disappointing 40% of managers of the belief their HR department was 'out of touch' with their needs.
In 2011, there was a higher rate of redundancies and downsizing (in which HR played a key role). This may well have limited its ability to make a more strategic contribution. This has been seen to bounce back in this year's findings. But over the past year, while uncertain, business performance was stronger in organisations where managers had more positive perceptions of their HR function. As Boury explains: "There is a definite lack of understanding about what HR directors do - but line managers are not naïve. Perceptions of HR are strongly related to better handling of redundancies and fairly strongly correlated with change management, leadership effectiveness, performance management, employee development/talent management and business ethics - all business-critical areas for any organisation, we would argue."
For the past three years, the survey has compared the views of the HR function from managers both inside and outside the department. HR managers have, unsurprisingly, consistently been more positive about their contribution to the organisation than non-HR managers (see Graph 3). The disparity between HR and non-HR is increasing year on year. In 2010, on average, HR had a 20% more positive perception of itself than non-HR; in 2011, the difference had risen to 27% and this year the discrepancy is 28%.
"This may relate to two aspects," muses Jabbar Sardar, director of HR and organisational development at children's court advisory service, Cafcass. "First, that HR roles are well defined, clear in remit and can see the impact they have on the organisation through performance management, workforce planning or talent management.
"Second, that management roles are not clear or there is a lack of engagement from managers with the overall business objectives/ priorities within the organisation."
Boury adds: "While looking at the average scores does disguise convergence in some areas, this overall picture indicates that HR and non-HR need to work harder to align their views.
"For the first time this year, managers were asked to rate how much value HR added in a number of areas that fall within the function's remit. We found HR professionals were seen as adding most value to the interpretation of employment law and to the management of redundancies - perhaps more tactical areas driven by the external environment," Boury said (see Graph 2, above).
But at the same time, HR directors were seen as adding less value in all other areas - especially career development, staff retention, workforce planning and organisational development. These appear to be areas of strategic value where HR could contribute to managing people needs of the business, so, as Boury explains, there is still more for "HR to do to step up strategically".
In this lies a dichotomy: while interpretation of employment law and handling redundancies are where HR is seen to add most value, these were less strongly correlated with positive perceptions of HR overall.
Sardar says: "Providing change-management advice, support and leadership is a key HR function. So while this may manifest itself in the organisation through the eyes of managers as 'dealing with redundancies and employment law', the wider perspective also covers staff engagement, development and business as usual, whenever there is any change." In other words, if HR carries out its traditional transactional role that, according to the ILM's Pardey, line managers apparently resent, it will still not win the respect of the line. This was achieved when it added more value in strategic areas such as organisational development, staff retention, career development and performance management - rather than when it added value to employment law and redundancies.
Boury explains: "The findings show HR is seen as adding most value in areas that contribute least to positive perceptions of the function. In order to improve how it is viewed in the organisation, perhaps HR needs to focus more on its strategic role and less on its transactional one."
And where an HR director is on the board in a more strategic role (in the organisations of 56% of the managers surveyed), Boury describes perceptions of the HR department as "consistently higher".
He adds: "If the board is bought in with HR, it is easier for HR directors to make their case clear. It helps HR build a business case and a more strategic contribution."
But Sardar argues: "While it is always preferable to have HR at the highest level within the organisation, the actual barometer for any HR influence is impact. How does HR impact within the organisation across its key functions and how is it valued? Having a board-level position simply provides HR with the influence and ability to fully understand the business strategy and then translate the people requirements to see through an effective workforce plan that delivers."
Pardey adds: "If HR is on the board, it will have a more visible presence in the organisation, line managers will be able to see what the HR department is doing - and it helps if there is a top-down culture, which leads to bottom-up trust. In other words, an organisation that puts HR on the board must believe it is important.
"HR on the board will show the rest of the business it is a valuable and equal partner and other board directors will see the value and communicate it to their own line managers."
But if HR directors were to stop their transactional services, fully focusing on strategy, it would follow unhappy line managers would, according to the emerging trend shown in the research, have a lower satisfaction rating in the department, as they are forced to take on more of people strategy.
It is a complicated Catch 22 - but Boury explains it is a public relations issue as much as a strategic one.
"This serves to demonstrate there is a perception gap about where the HR function ends and where the line manager function begins. HR is clear about what its role is and what it wants from the business, but line managers are not so sure.
"It is a reputation-management issue. It is about HR being really clear about what it does and publicising it to show the importance of areas such as organisational development and retention to increase their credibility." But if HR has proved to the board it is effecting positive change and has the buy-in and support from business leaders, does it really matter if HR and the line can't see eye to eye?
"HR will always have differing perceptions," says Sardar. "Some managers will always see HR as a transactional, procedural or legislation-led service, whereas most managers these days will see it as a value-adding service.
"I know from experience within Cafcass that managers value HR support around training, development, workforce planning and performance management. These have all become key areas, over more traditional HR strengths around employee relations."
Pardey takes the argument one step further. "Generally speaking, organisations are collections of people - and they are only as strong as their weakest person. CEOs have to have managers with people skills and the tools to motivate. HR has to be their partner in facilitating this. It is not one function's fault.
"Either HR helps line managers develop the confidence and skills to manage people, or it puts in place a bureaucratic system to do this. People management is central and line managers have to be good at people management."
Survey methodology
The Management Agenda survey is in its 15th year and is updated annually through a consultation exercise conducted with Roffey Park consultants and researchers.
Interviews and discussions draw on their experience of working with people and organisations to prioritise research themes for inclusion in the survey. To minimise the length of the survey, previous Agenda findings were also scrutinised to identify questions that might be omitted this year, due to saturation of data. The wording of questions that were retained was kept the same as in previous surveys, to enable trend comparisons.
The survey, a self-completion questionnaire, consists of 68 multiple-choice, closed and open questions.
Online and paper versions are produced and the survey was open from 10 July to 20 September 2011.
Email invitations with a link to complete the survey online were sent to 4,000 UK managers. Paper copies of the survey were available for completion at Roffey Park by course participants and visitors.
In addition, a link to the online survey was available for public access on Roffey Park's website and on desktops in Roffey Park's learning resource centre.