Recently, I wrote about a survey reported in HRO Today saying that employees felt HR departments were not looking after their interests, which is certainly true, and employees were unhappy about it. And then an article by David Segal in the New York Times asserted that everyone seems to hate HR now, certainly a step worse than not looking after employee interests, and HR people themselves hate their jobs.
Wasn’t it just a couple of years ago that it was congratulations all around for HR steering organizations through the pandemic?
Whether employees hate HR more than any other functions isn’t clear (does anyone love accounting?), there is evidence that they are more irritated by it now than in the recent past and that HR people are more stressed out than those in other functions. What happened?
The problem behind last month’s story was employee expectations being unrealistic, assuming that HR was an advocate for employees when dealing with employers. The problem behind the current story also has to do with the expectations but this time in the executive suite, which has shifted back to a pre-COVID mindset.
We have now had a run of six years of the tightest job market since the 1960s. What had been a buyer’s market for almost 40 years has reversed. Employees see that. They have experienced for the first time in most of their lives that they could quit and pretty easily find a new job.
On the other hand, their bosses in the C-suite I believe saw this tight labor market as temporary, a pandemic phenomenon that we just had to wait out. Now that the unemployment rate has ticked up over 4%, which would have been astonishingly low any time in the 40 years before 2017, their priority has returned to the perennial goal of cutting: Lay off employees because investors always want to see that, squeeze budgets, especially in HR, push up workloads, and come back to the office.
What puzzles most outside observers is that the economy is still doing fine, in particular GNP growth has been higher than expected. So why is the focus on cutting? It’s not surprising that employees are unhappy. Where does this put the HR function?
It seems to me that HR is now increasingly like the public relations and investor relations departments: trying to sell a skeptical audience on a story that is probably not true. Employees are expecting better treatment, including wage increases that at least match inflation, while their employers are pushing cutbacks as if we have been on a drunken spending spree and business is crashing. The even more recent challenge is the head-spinning reversal on DEI issues: We were all-in up until a month or so ago, but now we are much more likely to be quietly walking back that agenda. HR has to explain and then enforce these decisions, and employees are inclined to “shoot the messenger.”
The Wall Street Journal reported a salient example of this pivot at Bank of America, which, like some other investment banks, had put in place rules to protect junior employees from egregious working hours. Apparently, the superiors of current junior employees have now been telling those employees to ignore the rules on overwork and only report the hours they are supposed to be working. So, we see the return of 100-hour work weeks. In response to the story, the company said that it takes the rules about hours seriously and will enforce violations, but by the way, lots of people want these jobs, implying that they must not be so bad.
There also appears to be a divide within HR between the front-line staff, who see individual employee complaints, and the senior team hanging with or near the C-suite. Whether they want to or not, the senior group has to reflect the pivot of the C-suite team but the staff, who are close to line employees, know the employee issues are real. It reminds me very much of former speaker Tip O’Neill’s description of the Catholic church, where the priests identified politically with parishioner issues (and tended to vote democratic) while the bishops and cardinals identified with issue of the church as an institution (and tended to vote republican).
The position of HR in this is very difficult and not unlike the public relations team at Bank of America: We have to assert that despite the layoff announcements, the organization is doing fine, don’t worry (too much) about your job; the new restructuring plan we are now starting will take us to a better place than last year’s restructuring plan; yes we are still committed to the ideas of DEI, we’re just going to be committed in a very general and quiet way that you can’t see. We also understand you are stressed out, but hey our wellness plan will help with that.
Perhaps the most insightful point in the New York Times article was the reminder that arguably the first HR department was created at National Cash Register at least in part because the company founder thought that employees did not care about their work because they thought (rightly) that the company did not care about them. Its HR department was created to try to care for at least some employee issues because it made sense for the business. Now the job of the HR department is to handle the morale issues caused by this strategy pivot back toward squeezing labor costs. It’s not a fun position to be in, especially given the fact that so many people in HR went into their roles because they wanted to help people.
Peter Cappelli is the George W. Taylor Professor of Management and Director of the Center for Human Resources for the The Wharton School.
