CASE STUDr

The new head of HR has triedeverything he can think ofto change his department'sreputation as an adminis-

trative backwater. Buthe's still swimming

against the tide.

WHYDOESN'T THIS

HR DEPARTMENTGET ANY RESPECT?

BY ROBERT GALFORD

DON'T KNOW WHICH PROBLEMto tackle first," Luke Robinson

said, sighing. Kate Rose, sittingacross the table from him sippingher coffee, gave bim a balf smile."You're definitely in a pickle," sbesaid. He rolled his eyes. "Thanks alot," be replied. "You bave an excel-lent grasp of the obvious. But whatshould I do?"

Robinson and Rose had been at tbecafe for almost two hours; tbe lunchrush had ahated long ago, and themidafternoon coffee drinkers werestarting to trickle in. Rohinson, man-aging partner of human resources atLoft Securities, had called Rose inpart because she was a friend, butalso hecause she was tbe vice presi-dent of buman resources at a suc-cessful puhlic-relations firm, and he

knew that she was a first-rate man-ager. Over luncb, he had recappedhis story.

A Rewarding Challenge?Before Robinson joined Loft justover a year ago, be bad heen a partnerat tbe Powell Group, a well-knownHR consulting firm. His specialtythere had heen working with finan-cial services companies, but whenPowell's own head of HR resignedabruptly for personal reasons, thesenior management team askedRobinson to take over HR and belpPowell retool its recruiting and de-velopment processes. Robinson hadworked very effectively as HR direc-tor, belping tbe company's consul-tants evaluate potential new re-cruits and putting together some

very attractive development pro-grams. Tbe Powell Group, withRohinson's help, had quickly he-come a rohust competitor for talent.

Despite his success at Powell,Rohinson accepted tbe job at Lofthecause be thought it would be a re-warding challenge. For most of its30-year bistory, Loft had enjoyed astellar reputation wben it came toattracting-and keeping - bighlyqualified people. But in 1995, whenCEO Philip Washington retired,things changed. Washington hadpersonified Loft's culture; it was hisleadership and charisma that peoplethought of when they thought ofdoing business witb the firm. And itwas tbat same personality and drivethat had attracted top people. Whenhe left, some of the company's vi-

24 HARVARD BUSINESS REVIEW March-April 1998

CASE STUDY

hrancy went with him. And withina year, two of the five remaining se-nior managers had resigned as well.

"It doesn't matter why those twoleft/' Rohinson told Rose betweenhites of gorgonzola ravioli. "But forthe record, one retired and one wentinto teaching. It wasn't becausethings were had at Loft. In fact, the

Robert Galford lives in Concord,Massachusetts, and works withsenior managers on performance,organizational, and career issues.He also teaches in executive educa-tion programs at Columbia Univer-sity's Graduate School of Businessin New York City and at North-western University's f.L. KelloggGraduate School of Managementin Evanston, Illinois.

transition at the top was one of thesmoothest I've seen. Bernie Shargall,the new CEO, was-and i s - a per-fectly good top manager. He was re-cruited from the outside, but by allaccounts his appointment was wide-ly supported. And I know fromworking with bim that he's highlyskilled and highly motivated."

The prohlem was, Rohinson toldhis friend, the new CEO didn't haveWashington's flair for attracting andretaining talented people. And thehuman resources department hadn'tbeen ahle to pick up the slack. Thecompany had never paid much at-tention to HR because it hadn't hadto. Under Washington and the twoCEOs who came before bim, tbe de-partment was simply an administra-tive function.

"Shargall, to his credit, recognizedthe prohlem," Rohinson said."That's why he hired me. But I'vebeen there a year, and I haven't heenahle to stop tbe slow bleeding: we'velost two other key employees in thelast six months. And what's worse, Ihaven't made much progress at help-ing the company recruit new peopleor at changing the perception thathuman resources is just a hunch ofclerks processing henefits forms andtracking vacation days. It's frustrat-ing, because you know as well as I dobow much HR can contribute."

Rose nodded vigorously. "In fact,'buman resources' made Loft tbecompany it is," sbe said. "The prob-lem is, the most important buman-resources mandate-attracting andkeeping good people - wasn't heing

ARTWORK BYVICTORJUHASZ 25

CAS f̂ StWDY WHY DOESN'T THIS HR DEPARTMENT GET ANY RESPECT?

performed hy Loft's HR department.Nor was it heing performed hy thesenior management group. It was allWashington, and it seems as if noone is quite sure how to move on."

"I'm trying to show them," Rohin-son complained. "But even Shargalldoesn't know how to use me."

Not For Lack of TryingRose asked Robinson to outlinewbat be bad done since joining Loft,and he quickly deseribed a variety ofactions. When he had first joined thefirm, be had spent a good deal of one-on-one time witb eacb of the seniorexecutives, asking tbem about tbekind of people that made the com-pany successful and bow tbeyviewed tbe talent they currently em-ployed. He bad also met with manyother employees-managers, hro-kers, administrative assistants-andall the memhers of bis own depart-ment. And he bad spent time withmost of the HR group's principalexternal contacts, including searcbprofessionals, eampus placementofficers, henefits providers, and train-ing organizations.

During those meetings, be hadgotten tbe sense tbat recruitingwasn't Loft's only problem. Thereseemed to be conflicting opinionsahout wbetber Loft was, in fact, agood place to work. And it seemed tobim that most of tbe people at Loftwere not accustomed to anyone

The people at Loft were notaccustomed to anyone fromthe HR department askingprobing questions.

from the human resources depart-ment asking probing questions.

So Rohinson bad taken a numberof steps. He establisbed a set of inter-nal service standards, performanceguarantees, and ongoing customer-satisfaction measurement programsfor his department. He created "lis-tening posts"-that is, he sent amember of his staff to eacb of tbefirm's locations on a regular hasis tobold office bours and answer ques-

tions or provide counseling. He im-plemented an "HR ambassador" pro-gram, assigning individual membersof his staff to develop relationshipswith tbe people in a particular areaof the company so that tbey wouldhave a voiee speaking for tbem witb-in HR. And he set up aregular scbedule ofmeetings between him-self and eacb of tbefirm's business-unitheads. He also began aeomprebensive assess-ment of tbe quality ofthe HR staff, hoth individually andcollectively, and replaced two under-productive employees with peoplewho had solid experience in develop-ing professionals in service firmslike Loft. Finally, he drafted plans fora program to help educate all thecompany's employees about the roleof HR-specifically, bow it couldcontribute to creating and upboldingthe firm's strategy for success.

Rose had listened pretty muchwithout comment as Robinson wenton and on.

She frowned when he told herabout the executive committeemeeting he had participated in afterthree months on the job. He bad pre-sented his findings and outlined hisplans, tbinking tbey were well-re-ceived because at the time they metwith little in the way of challengesor discussion. "Shargall and the oth-

ers were being polite, hutthey weren't payingattention," was his takeon the meeting now.

She raised an eyehrowand murmured "ouch"when be confessed tbatthe year-end bonuscbecks for tbe managingdirectors and vice presi-

dents had heen inaccurately issued."It took us almost a month to sortout the prohlem with payroll," hesaid. "And I know it was a simpleclerical error, but it certainly didn'thelp my cause."

And she nodded in sympathywhen he told her how HR had mis-handled an investigation of a dis-crimination charge shortly heforehe joined the company. "But thatwasn't me," Robinson said, his voice

revealing his frustration. "The groupof people I've put together would dono such tbing!"

But Rose hadn't said much, justencouraged him with a "Thenwhat?" or a "Could you explain thata bit more?" as he told his story.

Loft's executives seemed tobe listening, but they weren'treally paying attention.

Throughout the luncb, Robinson'sfood remained almost untouched.When the waiter came to check onthem, Rohinson looked at Rose'sclean plate and waved away his own.

An Uphill BattleAs they finished their cappuccino,Robinson leaned hack in his chair."Well?" be prodded. "Well, what?"Rose asked. "I know tbat you're do-ing many good things. But you'refacing a hattle that few before youbave won. Do you bave any idea howbard it is to turn around a reputationcreated hy someone else? HR in par-ticular is a difficult area - althoughmost internal-service functionswould argue that they are underap-preciated as well. Does Loft respectits IT department? Its accountants?Look around you. You're probablynot alone."

"I have to tell you, I'm thinkingahout throwing in the towel,"Robinson said. "It's not that I missconsulting per se. But I was accom-plishing sometbing in tbat world,and you know tbe saying. Thosewho can, do, and those who can't,teach? Well, I'm beginning to tbinkthat it applies to me."

"No, no," Rose laughed. "I'm surethat it doesn't. But I will give yousome advice..."

HBR's cases present common man-agerial dilemmas and offer concretesolutions from experts. As written,they are hypothetical, and thenames used are fictitious. We inviteyou to write to Case Suggestions,Harvard Business Review, 60 Har-vard Way, Boston, MA 02163, ^^ddescribe the issues you would liketo see addressed.

HARVARD BUSINESS REVIEW March-April 1998