· 2 min read · News

HR should be asking the question: is the business in tune with society?


The public's trust in banks has plummeted from 41% in 2008 to 21% in 2012. And according to commentators HR magazine has spoken to, bankers – in particular traders – have virtually no trust in the HR function, seeing it as a “problem” that’s only about “sacking with a smile” and stopping banks from being sued.

The irony is, had HR had more influence, it could have played an essential role in preventing some of the behaviours that have caused the erosion of trust in the City.

Here's why: HR is the custodian of the organisation. As Hugh Mitchell, chief HR and corporate officer at Royal Dutch Shell, puts it, HR is increasingly the part of the organisation that asks the question: is the business in tune with society? For today's business can no longer exist in isolation.

Its employees, potential recruits and customers all reflect society. Not only that, but, as the nature of business changes, collaboration is playing a stronger role – and that means collaboration with all manner of stakeholders, from local communities to crowd-sourced partners.

It is clear that in banking HR has not been playing this role. But the public may be fixating on the wrong issue: the excessive reward structure. True, the latest round of bonuses goes no way towards convincing us the banks have taken any of the lessons to heart, what with payouts of up to £10 million at Goldman Sachs, for example. There are ways to reform this structure. But it would take a brave bank to unilaterally transform the system. In such a global sector, to do so without consensus could prove a fatal business move.

Instead, the only way to eliminate what Simon Hayward of Cirrus calls the "amoral environment" is to change the belief system. While this has to come from the top, HR is vital in acting as catalyst for such cultural change.

Unfortunately it's not just traders who have a low opinion of HR. Research by Roffey Park Institute, unveiled exclusively in HR magazine, finds line managers losing trust in HR. Beginning to see a pattern here?

A clue to one of the reasons can be found in both the research and the words of Mitchell. In its quest to focus on the strategic agenda, HR has taken its eye off the basics. Roffey's Andy Smith says HR needs to "sweat the small stuff in order to gain entry to the more strategic stuff". Or as Mitchell says, you only get to play in the strategic added-value space if you run a good shop.

Where this all comes together is in leadership. It is here that HR must take control. It must ensure leaders are being constantly developed in tune with the drivers of the business, with what will make it successful in the future and with the external environment. So my call to HR directors is to ensure you control the leadership space. Only then will you have true influence.