What’s the point of HR?

This is an audio transcript of the Working It podcast episode: ‘What’s the point of HR?’

Jamie Fiore Higgins
As I got more senior at the firm, I started observing more and more incidents that made me very uncomfortable, incidents of harassment and intimidation of colleagues. I, in fact, was assaulted by one of the guys who worked for me. I always did the right thing and initially reported it to my manager. And I was told time and time again, “Listen, you can go to HR, but imagine how difficult it’s going to be to continue to work with these people after you’ve ratted on them”. And so I was always dangled money and promotion for my silence. I had an incredible work ethic, but most importantly, I knew how to keep my mouth shut and look the other way.

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Isabel Berwick
Hello and welcome to Working It with me, Isabel Berwick. This week we’re talking about the overlooked human resources department. HR has an image problem. For some managers, the phrase “human resources” has become synonymous with the idea of needless corporate policies that get in the way of growth. And from the employee’s perspective, there’s often doubt about whether HR is to protect them or the company. So today I’m talking to Jamie Fiore Higgins. She’s an author and executive coach, and she spent 18 years at Goldman Sachs on Wall Street, rising to a senior management position. After she left, she wrote a book about her experience and now works as a coach. Jamie tries to help her clients achieve a better workplace balance than she did when she was an employee.

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Jamie Fiore Higgins
Goldman had this department called employee relations, which is part of human resources. Their tagline was, “If you see something, say something”. They even had a hotline to call if you were uncomfortable with anything from a potential unethical business practice to inappropriate behaviour in the workplace. I called a professional in that group that I trusted, because as a manager I was promised anonymity and I felt so good that I finally had the guts to just go for it. And the next day, our collective boss pulled me into his office. I naively thought it was to go over my weekly profitability report. And he told me that I went against the family and that he had treated me like a father all these years, and I was supposed to treat him with that kind of respect and that I’m never to go against the family, that I don’t take problems to human resources. So that really showed me, in my experience, what a farce the whole thing was in terms of HR. And while I do think HR is a very important role, upon reflection, that person I reported to . . . Let’s be honest. Human Resources is a cost centre, right? They’re not a revenue-generating part of the firm, at least at Goldman Sachs. Actually, it happens that the person I talked to who revealed my identity to my boss, he wanted a job on the business side. And guess what? He got one. So my feeling is, how can HR protect employees when they’re simultaneously being manipulated by the power of the people who are running the business? It’s impossible for them to be impartial.

Isabel Berwick
I’m amazed that I hadn’t heard this idea come up before, the idea of an independent or impartial HR. It just seems like a no-brainer now you’ve said it.

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I’m joined by Andrew Hill, the FT’s senior business writer. Andrew, welcome.

Andrew Hill
Thank you for having me.

Isabel Berwick
What do you think about Jamie’s idea of independent HR? That’s not something I’ve heard before.

Andrew Hill
Independent HR is something that would work in particular lines of what HR does. And there are agencies that companies can use in areas such as complaints and grievance and absence management. To take that perhaps less controversial example, you know, if you’re reporting in sick to your boss, that could backfire in two ways. Either the boss is a martinet who says you’ve got to come in even though you’ve got Covid and we want all the hours we can get out of you. Or it’s somebody who allows you to take so long off sick that you exploit that and don’t come back and the productivity goes down. So the absence management provides a sort of neutral sounding board for those kind of reports. And similarly, complaints and grievance would be an area where you’d want an independent voice.

Isabel Berwick
Do you think it’s common that people are afraid of going to HR that their boss might retaliate, as Jamie’s did, or that they might face repercussions? It seems pretty plausible.

Andrew Hill
Yeah, I think it’s pretty common. I mean, every time I’ve written about HR in even a slightly positive way, the vast majority of reader comments tend to be, “They’re the ones who are enforcing company strategy; they’re on the side of the employer, not the employee; do your job, ensure the paychecks arrive, and please avoid the patronising wokeness,” as one highly recommended.

Isabel Berwick
That’s a very FT comment.

Andrew Hill
That variety of comment comes up frequently, and that is a problem obviously for HR people trying to do the right thing.

Isabel Berwick
Yeah, ’cause you wrote in the pandemic an article that was very well read about how HR departments had become the heroes of the pandemic, essentially because they’d taken on so much in terms of ensuring employee wellbeing in that difficult time. What do you think the state of HR is now? Has that halo sort of dropped a bit?

Andrew Hill
Now, of course, facing various recessionary pressures, HR has to revert to its other role as sort of enforcer of the strategy decided by the board and becomes, at least in the eyes of lots of employees, the sort of conduit for bad news about lay-offs and redundancies.

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Isabel Berwick
I’ve also talked to Lush. Now they are a UK-based cosmetics company without a conventional HR department.

Georgina Shaw
I suppose what’s different about our HR department is what it’s called. It’s always felt a bit strange to us to refer to people as resources ’cause we know that people are so much more than resources. So it’s always come under a slightly different name or a different purpose.

Isabel Berwick
This is Georgina Shaw, who’s a people partner at Lush.

Georgina Shaw
It’s the job title that’s probably most linked to what people understand to be HR, rather than having one central, disconnected HR department that can be quite rigid and forceful. The idea of that people partner function was to break all of that up, integrate “great people” people into the different areas in the business, and make sure that they are coaching that leader and be the best leader that they can be. So we’re often thinking as a department, how do we manage this situation so that there’s less reliance on HR in the future?

Isabel Berwick
Lush have put in place a formal process that people can use when they have a problem, and it’s called the resolution policy.

Georgina Shaw
The aim of the resolution policy is to help give people the tools that they need and equip people with the skills to be able to resolve things more reactively rather than feeling that need always to escalate it to a separate department that isn’t actually always connected with that day-to-day work anyway. The shop managers at Lush are much more autonomous and they are incredibly skilled and really well-equipped to be able to manage their teams. We give a lot of autonomy and decision-making power to managers. They essentially treat shops as their own business that they manage all of their own recruitment. So when it comes to managing conflict, there are options and depending on that manager’s confidence levels in managing conflict directly within that shop. We have had feedback that there was a lot of support for the managers, but there wasn’t necessarily that direct line for all employees. So we did change that about 18 months ago. So we recognise it’s not just managers that need the support. And also we have a very clear whistleblowing function as well which is completely independent from the people team and anonymous if needed, so that if something is happening there’s a direct line there to report something.

Isabel Berwick
This is their philosophy behind not having a conventional HR department.

Georgina Shaw
It’s building a culture where people are unafraid of moving through uncomfortable situations. I think people say, “I need help with a difficult conversation”. So we’re trying to rebrand those as they’re not necessarily just difficult conversations, but courageous and much-needed conversations. And I do think that at the moment when we’re thinking about HR in the wider world of work, there’s a lot of mistrust because often it can be seen as a governing body or a regulator within a business. And whilst that can be useful in the short term, it becomes a challenge when as a manager, if you’re passing on difficulties to HR, you’re sort of passing on your authority and your development with it.

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Isabel Berwick
Andrew, having listened to that, what are your thoughts on Lush’s philosophy? ’Cause I quite like this idea of being explicit about having these tricky conversations or courageous conversations at the managerial and employee level in a coached way.

Andrew Hill
Well, my sense is that you probably do still need your HR department, or at least some HR function, because in the individual case of Lush retail stores, clearly the dynamic in those stores could turn quite bad quite quickly within a small group. If you had a difficult manager or indeed a difficult employee, and you would need to have a very strong idea. And perhaps Lush has this, of some of the rules of human resources management in order to make that work, because you could not have a situation where individual stores were making it up as they went along. And she gives the impression that that is something that they’ve inculcated into the workforce and into the managers at store level. And so I like that idea, but I do feel that in a sense it’s the reverse of what we were talking about with independent HR. The reasons for having some independent line to a different department or even an independent agency in order to deal with some of these things is when things go wrong at the team level. And she acknowledges that by saying there is provision for whistleblowing, for example.

Isabel Berwick
Yeah, and speaking of whistleblowing, you know, this idea of a whistleblowing hotline, that’s not a new idea, is it? It obviously wasn’t in place for Jamie when she was at Goldman Sachs, but is that something that is used? Do you hear about that often?

Andrew Hill
Interestingly, I think a whistleblowing hotline, an independent one, is something that organisations that are in trouble often set up in order to demonstrate that next time things will be better. But it all rises or falls on what the action is then after the hotline has been activated. There are lots of cases of companies that even with a hotline, complaints to it get ignored, they’re not able to follow through. And then that becomes an industrial arbitration case or worse. Uber famously set up a hotline as one of the responses to Susan Fowler, the engineer who complained that her grievances about sexual harassment were not being taken seriously by Uber HR. So, an independent hotline I think was one of the responses there. They’re clearly a means of directing some of those whistleblower complaints to the right place, provided there is then a mechanism in place to act on them. Otherwise it could just be an unheard voicemail, for example.

Isabel Berwick
Yes, I mean who would want to leave their grievance on a voicemail that you don’t know who’s gonna listen? But that’s interesting, your point that a lot of these things are put in place after there’s been some sort of corporate crisis and they’re reactive. And actually what’s needed is sort of structural change. One of the structural things that Georgina talked about that I was interested in is the idea of “great people” people, being embedded with different departments, with more of a kind of training and development role, that aspect of HR really playing that up. I hadn’t heard of that before, but it sounds like a great and positive idea.

Andrew Hill
There’s always a danger when you name anybody, be it a chief risk officer or a great-people person that everyone else thinks. Well, I don’t have to worry about risk or I don’t have to worry about the people part because there’s somebody embedded here who deals with that. And so, I do think that good human relations should be embedded in every manager. And indeed, I think there’s a reciprocal responsibility on the part of individual employees to participate in that, whether it be performance appraisal, feedback, other good things that we’ve talked about on Working It in the past. And of course, that is one of the criticisms of HR, is that in a way, if you put all the people stuff away in one department, everyone else just gets on with what they consider to be the right operational things to do and they ignore some of the things that they should be helping people with day to day.

Isabel Berwick
So HR just seems to have so much under its umbrella. Where is it going as a corporate function? I mean, what is the future for HR? Everything seems to have been lumped into HR. Obviously diversity, equity and inclusion has been a big part of their work in the last couple of years since the Black Lives Matter campaigns. But I don’t know, I just feel there’s a sort of existential angst around it. Am I imagining that?

Andrew Hill
No, I don’t think so. There is definitely an interesting point that we’ve reached, and it partly is as a result of some of the additional pressure placed on HR, not only by the pandemic that we’ve talked about, but also, as you say, by Black Lives Matter, #MeToo. The diversity function was already well embedded before those campaigns. On the positive side, and I’m generally a fan of HR, Nick Bloom of Stanford has told me in the past that he feels that companies that had a good HR department were better able to manage their way through the crisis. It was one of the reasons why companies were able to switch to remote work and indeed back to hybrid efficiently, were the ones that had a structure in place to handle that. And you know, there’s a bit of growing evidence of people who’ve had HR experience rising to the top of companies. So Leena Nair from Unilever, who was the head of HR there, became the chief executive of Chanel, Mary Barra, CEO of General Motors. She had wide experience across the company, but that included two years in human resources. So there is some evidence of that being valued in the promotion process.

Isabel Berwick
So if we’re serious about the future of work being about connection with people and empathetic leadership, you know, all of these things play into the strengths of HR, I would imagine. So Andrew, what’s your advice to listeners who are having a terrible problem, they don’t know whether to go to the HR department or not. How can you gauge if you’re gonna get a good hearing?

Andrew Hill
I think probably if you’re within a corporate culture, you find out fairly quickly how HR behaves and what kind of role it has within the company. I mean, I’m a trusting person who would probably say I would use all the policies that were available, whether that at the extreme was a whistleblower hotline or less extreme, being able to escalate something to the HR department. But I understand also the suspicion. In the end, some part of HR is about making sure that the organisation functions well, and occasionally that is gonna be at least perceived by individuals as being against their own individual self-interests.

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Isabel Berwick
I’m really fascinated by HR ’cause it used to be called the personnel department when I started work many years ago in the early nineties, and they’d send you a letter when you started work and they’d send you a letter when you finished work. But, there’d been a few times at the FT when I’ve had cause to sort of go and see HR because of personal issues. And you know, I’ve seen very fat files about myself. And so, these people hold a lot of information about us. And I’m really interested to know how they operate and how they should operate in the forward-looking workplace. And I think some of the things that Lush has going for it in terms of being explicit about solving problems at a grassroots level, I really like that: not having to escalate and not having to be reactive. The idea of whistleblower hotlines is great, but they probably only work in the wake of a corporate scandal, as Andrew mentioned about Uber, for example. You know, do these things work all the time? Should HR exist or should all managers be great managers? And should there be an independent function on top of that to oversee everything, as Jamie Higgins put forward? I don’t know. I’d be interested to hear from the listeners, but I’m so pleased to have had this discussion with Andrew ’cause I think we’re at a really pivotal moment in terms of how we, as people, are in the workplace. And I think existential dilemmas that surround HR sort of reflect where we are with the general air of uncertainty in the workplace.

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Isabel Berwick
Thanks to Jamie Fiore Higgins, Georgina Shaw and Andrew Hill for this episode. If you’re enjoying the podcast, we’d really appreciate it if you left us a rating and review on Apple Podcasts. And please do get in touch with us. We’re at workingit@ft.com or directly with me @isabelberwick on Twitter. If you’re an FT subscriber, please sign up for our Working It newsletter. We’ve got behind-the-scenes extras for the podcast and some dedicated stories you won’t see anywhere else. Sign up at ft.com/newsletters. Working It is produced by Novel for the Financial Times. Thanks to the producers Anna Sinfield and Flo de Schlichting, executive producer Jo Wheeler, production assistance from Amalie Sortland and mix from Chris O’Shaughnessy. From the FT we have editorial direction from Manuela Saragosa. Thanks for listening.

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