Article in Business / Human Resources / Employee Relations
This decade represents great opportunity for managers, leaders and especially human resources professionals to reframe themselves and their efforts and build stronger relationships between individuals and organizations.

A Decade of Opportunity

By Mark F Herbert

It is a little daunting to look back and recognize that I have been working in and around the profession we now refer to as Human Resources (HR) for over three decades. Unlike many people, I came to my profession directly and by choice. When I entered HR, it was called Personnel and was definitely perceived as a support function not typically held in high esteem. In fact, when I shared my aspirations with my undergraduate advisor, he tried to dissuade me. I did take his advice and hedged my bets, graduating with a degree in Management with sub-specialties in both Personnel and what at that time was another emerging field, Materials Management.

I have always been fascinated by interpersonal relationships, as well as relationships between people and organizations. This is probably the byproduct of growing up in what now would be described as a dysfunctional family.

My aspiration was to work in the field of “preventative labor,” or more politically correctly at the time – positive employee relations. I grew up in a household very suspicious of the collective bargaining process and unions. I really didn’t see what value they contributed and felt they had outlived their purpose; this was in the seventies.

I got very lucky and landed my first position as a professional in the Personnel Department of a mining corporation in Southeastern Arizona. I didn’t realize it at the time, but the period I spent there was a valuable, real life “graduate” school and re-shaped my thinking in a way that still affects me today. The organization I went to work for had eight unions and thirteen collective bargaining contracts. Even the security force and the administrative staff were organized. The organization had been sued by the EEOC and was operating under a multi-million dollar judgment and decree that stipulated the recruitment and selection of staff for our skilled craft positions because of proven systemic discrimination against Hispanics and Native Americans. To add a little texture, we were foreign-owned by a South African conglomerate and most the executives were foreign born.

We also had a horribly adversarial relationship with the surrounding community. We owned among other things the property occupied by schools and the only community hospital. We had no issue imposing our economic and political power. Our relationship with the union leadership was pretty much open warfare; great place for a young guy too stupid to be afraid to learn a lot of things.

I had studied the history and evolution of collective bargaining in the United States from an academic perspective, but now I got a chance to live it, and living it was radically different.

The Advent of Legalized Collective Bargaining

Although I allude to it in the prior section, I think it is important to underscore the impact that collective bargaining has had on the profession of Human Resources.

Many of today’s employees and employers probably don’t realize that in the late thirties, 1935, with Norris- LaGuardia, for the first time it became illegal to require an employee to sign a contract never to join a union or association; and the Wagner Act (better known as the National Labor Relations Act) made the balance of power legally tilted hugely towards the employer. The stipulations of the NLRA are, I believe, in many cases outdated, but to a large extent they still govern the relationship between employers and employed and are not well understood. Although this could easily be a topic in and of itself I think it is important to mention it in the context of “shaping” the profession of Human Resources, even today.

This was a critical time for the HR profession because a new organizational “function” emerged. The new department or function was often called Industrial Relations and was split into two sub-functions: Labor Relations and Personnel.

Labor Relations guys were the “rock stars”. They were the ones who sat across the table and actually negotiated the contracts. They were typically portrayed (usually accurately) as steely-eyed, tough negotiators. To be the “chief spokesperson” was the pinnacle of success as an HR professional in an organized facility or company. You were relevant! The unfortunate thing is that the relevance was transactional and adversarial. The “spokesperson” represented the interests of management which were seen as very disparate from employees or labor.

This also spawned a whole new industry of “preventative labor” or Positive Employee Relations; which was really a code name for union avoidance. This was the field in which I aspired to thrive. The best way to avoid unionization was to create an environment where employees didn’t seek representation. Really sophisticated organizations expanded that concept into preventing any third party intervention, including unions and governmental agencies. Ideally, an employer doesn’t want anybody between it and its employees.

In order to do that, you actually had to examine your compensation, recruitment, discipline, and other systems. You had to either be fair or be perceived as being fair. You could say to a certain extent that this was the first time the idea of relationship and engagement began being considered.

Creating a Context

I think there are several things that have happened in the course of relationships between people and organizations that shape much of where we find ourselves today. I have always been intuitively aware of some things, and the appreciation for others has been a more recent phenomenon for me to explore and discover. I think the context is important to understand where we are today, how we got there and how we might “emerge” from our current environment where employee engagement is at historical lows and we see some pretty unpleasant adversarial displays occurring in the public sector relative to employee “rights” and the financial constraints being felt by many States and municipalities.

The Social Contract and Personal Competency

It seems that when we tried to distinguish ourselves from the feudal system two centuries ago, our founding fathers were struggling with two related concepts: personal property ownership and personal competency.

America was a place where you could reinvent yourself. You could own property, build a business, and leave it to your heirs. Our largely agrarian society and vast frontiers with what seemed to be an inexhaustible supply of land fit this model well.

We have held onto the concept of personal property ownership with a passion, declaring it to be one of the cornerstones of the American experiment. The idea that through your own achievement you should have the ability to accumulate and own property without regard to your prior economic or social status is one of the cornerstones of our capitalist ideal. We hear this principle invoked every day, especially when we feel that the government is inserting itself where it doesn’t belong.

The other principle that our forefathers were dealing with; the one we don’t hear nearly as much about, is the right of personal competency. The rights to build your skills, express yourself, and sell your products and services as you saw fit. The interesting thing is that this was not only an implied right, but a responsibility.

The Industrial Revolution impacted this principle in several ways. We shifted from an agrarian society to industrial, which created a new kind of feudalism. Our society moved from the fields to the factories, but we kept a certain degree of involuntary servitude alive. The parallels between our industrialization and feudalism don’t stop there. In the feudal system, the “serfs” were bound to the land, without them the nobility couldn’t feed their subjects.

As I mentioned in the preceding section prior to the legislation passed in the late thirties and early forties, we created a kind of industrial serfdom – collective bargaining was formally or informally outlawed. In so doing, we restricted the rights of personal competency.

It also seems in a way that over the next sixty years we gradually embraced a semi-feudal model. Large corporations in many ways replaced the feudal monarchs and nobility; we created a sort of corporate co-dependency, especially under the models of Theory X, Frederick W. Taylor and scientific management.

Corporate-think prevailed. Employees “couldn’t be trusted” or expected to make good decisions. We needed to dumb things down. Employees would do what they were told and in return the nobility (i.e. management) would take care of them, and we did. We promised lifetime employment in exchange for loyalty, we provided their healthcare and their retirement. I’m not going to say we did it willingly; organized labor played a huge role in providing these things as well as industrial safety, limitations on work hours, and other factors. It does seem though, in a way, we lost the equality factor, we began to “take care of them”, and they began to expect it.

I don’t mean to imply some sense of misguided entitlement here. Organized labor and others fought very hard to gain rights and a sense of economic equity that many of us take for granted today. Bluntly management didn’t give it up willingly. What it did that I believe was unfortunate was negotiated in affect a compliance model, management got to dictate many of the terms and conditions of work and define performance in terms of obedience and tenure.

Many of the collective bargaining contracts required employees to give up their personal right to negotiate and “partner” with their employer in return for economic security and benefit programs. What was troubling is that we didn’t involve employees in the discussions of much of this infrastructure or design. We treated them as dependents rather than partners in the decision making process.

When I entered the workforce I was surprised at the things we didn’t or wouldn’t talk to employees about. We rarely invited them to participate in decisions about how we did things. We didn’t talk to them about how we made decisions about the business, about their pay, or other related matters. It was on a need to know basis, and we had decided they didn’t need to know or didn’t care.

In the sixties, seventies, and eighties some interesting things came to pass. One of the first was international competition forced change in the U.S. Industrial sector. The Japanese and Germans began rebuilding their industrial base and to add insult to injury they were including techniques that were originally developed in U.S. universities. This new dynamic brought some of the concepts of personal competency back into the workplace.

At the same time many businesses embraced strategies counter to re-embracing personal competency. We began using outsourcing and moving production offshore to reduce costs and avoid regulations, not exactly investing in relationships. We began to notice that some of the costs of “taking care of our employees” were becoming an issue. You saw the beginning of employers recognizing that the rising cost of healthcare is becoming a challenge, experimenting with managed care, cost- shifting, reducing benefits, and other strategies. You saw organizations that had practiced no layoff policies begin to downsize their workforce and aggressively outsource and offshore.

The advent of new defined contribution programs such as 401k plans replaced defined benefit pension plans. Organizations reduced or eliminated retiree health benefit programs. The government even got in the act, requiring corporate health care programs for retirees to be primary rather than secondary to Medicare.

The key here is that in effect we took away people’s personal competency- and to a large extent we haven’t returned it.

It is becoming very fashionable to return to discussions of personal responsibility today, what we don’t hear much about is giving employees the tools and the context to make educated decisions.

Most of the solutions I continue to hear discussed are very compliance based. We want to shift cost or responsibility, but we hear little about educating the employee/consumer about how to navigate the system. They need and deserve to be treated as partners in shaping the new processes.

The Civil Rights Era

The Civil Rights Act of 1964 and the various amendments to it since have also played a major role in the evolution of HR as a profession. Just as the collective bargaining legislation made it illegal to discriminate against people for joining a union, it became illegal to discriminate against people because of their gender, their race, their color, their religious beliefs, or their national origin. That was followed with protection about age, military service and much later family status and related areas.

There are a couple of take-aways here for HR professionals

    Pretty scary that up until then it was legal to discriminate on those bases
    The “interpretation” of those rules and regulations gave “HR” people power

We had “power”; there were these mysterious laws and regulations like Affirmative Action and discrimination that we guarded like gold. The power was in treating these factors like our exclusive province. Unwashed managers couldn’t be expected to understand these policies and regulations. We got to move from clerical to “wizard” status and determine whether the “rules had been met to address performance deficiencies, who could be hired, and how compensation was determined. The government participated by creating a series of reporting and regulatory agencies to threaten management noncompliance. I have also referred to this as the “Lawyer full employment” act because a set of “plaintiff’s attorneys” emerged and the threat would be whispered “we could be sued”.

The idea that we would actually give managers a basic understanding of these laws and processes or that many of them are grounded in good interpersonal relationships was considered heretical. I remember at my mining company job that we were constantly arbitrating hiring decisions that were legally mandated; when I argued successfully for giving union leadership the same basic training we gave supervisors, the grievances evaporated. They realized we were following the law, not arbitrary and capricious company policy. The sad part was it took me six months to sell the idea.

Management in general and “human resources” specifically was very reluctant to deal with employees as partners and to help them understand the legal environment had changed. This compliance mentality that line management and employees don’t need to know this information prevails today.

The Total Quality Era

I admit to being old enough to remember when total quality was hip, when we recognized that building quality is actually cheaper than inspecting it in or “fixing” it retroactively. I am even old enough to remember when we called it “Japanese” management. The ironic part is that the techniques were originated at Harvard University in the 1940’s. U.S companies just refused to implement them because:

    We were the only dominant economy after WW2

    Rugged capitalism and scientific management don’t lend themselves to actually talking to rather than at your employees.

TQM as it was known was not an HR function! Much like legislation intervened to give HR some “power,” the Quality function in most organizations pre-TQM was not exactly a powerhouse. TQM and “Quality Function Deployment” and “lean manufacturing” were housed in Operations. For years, many nonmanufacturing functions saw it as totally irrelevant to their industry.

The interesting part is that much of TQM, Lean, and other systems rely heavily on communications, trust, integrity, and linkages. The foundation of TQM is building quality into the process and understanding that it is systemic. In order to do that the models rely heavily on involving the people who actually do the work in evaluating processes and making improvements. We actually saw the creation of cross functional teams, joint employee/management efforts to improve processes, and a lot of great infrastructure.

Sadly many non industrial organizations saw the application of these processes and concepts to not be relevant to them. My own experience with TQM and related systems as well is that they were viewed almost purely “technically” and from a process or transaction standpoint. We missed much of the relational opportunity they presented. As HR was rarely involved beyond a support role we didn’t integrate those models with hiring, compensation, performance management, etc.

Where We Are Today

It is April of 2011. Our economy is still in the crapper for most people. Worldwide employee engagement is at historical lows. Turnover costs the U.S economy $5 trillion a year, presenteeism costs us another $200 billion, and we spend another $100 billion annually on training that doesn’t create sustained change. Our health care system is gobbling up increasing quantities of our GDP and 60 % of those costs are behavioral and controllable by individuals, but most healthcare “reform” doesn’t address that.

And yet:

    I see rants about how awful HR is or whether we need HR people at all

    I see questions about what kind of “software” guarantees the best hires

    I see questions about the “ratio” of HR people to employees represents “best practices”

    Seems like everybody I know is a black belt or ninja or samurai in some fricking “system”

    Most of the HR professionals I know are experts in compliance

It’s disappointing to see that many of my colleagues in the HR profession and their “clients” still operate much the same way they did when I graduated from college.

The Human resources professional of the next decade needs to have some essential skills:

    We need to know our craft, that is possess technical skills in areas including selection and placement, performance management and rewards, communications, training and development, and yes, compliance with the myriad of rules and regulations governing employee/employer relations; but compliances is a task not a role definition.

    We need to be highly skilled facilitators. We need to deploy basic management competencies so that everyone in management and leadership recognizes that basic competencies like setting clear expectations, giving and receiving feedback, taking appropriate corrective action, and coaching and developing staff are their responsibilities, with no exceptions.

    We need to be excellent project managers. We need to understand the businesses and organizations we serve and build linkages between our employees, business goals, and the larger interests of the enterprise or organization.

Engagement, sustained engagement is about alignment and relationships not compliance. It benefits the bottom line, period. The data is in. Human resources professionals in concert with others have a major role to play in defining and implementing true engagement strategies

For any of you that remain in doubt about the relationship between employee engagement and business strategy, I have some data to share:

    Hay Group studies show that high engagement can improve revenue growth by 250 % and reduce turnover by as much as 40%

    70% of organizations with high engagement exited the downtown with higher levels of employee motivation than pre-recession.

    90% of the Fortune Magazine Worlds’ Most Admired Companies have developed and maintained an explicit employment brand. An employment brand is systemic. It permeates the entire organizational culture at every touch point from recruitment and selection to interactions with customers, community and other shareholders. It lives at the C level, not in HR.

    The World’s most admired companies incorporate building human capacity, teamwork, and customer loyalty into their performance rewards and management programs.

Organizations that embrace employment branding see a direct connection between not only engaging with employees and customers, but also with community-

    A 2010 study by Cone indicated that 80% of Americans indicated they would switch brands to a supplier or retailer associated with a good cause assuming price and quality are equal or close. If you are in a “commoditized” market you might want to pay attention to that!

    Another study by the Minnesota Council on Foundations is in 2008 indicated 87% of employees’ surveyed feel a stronger sense of loyalty when their employer is associated with philanthropic endeavors or programs.

Engaged organizations that build on this new kind of relationship between individuals and the enterprises for which they work and relate outperform their competitors in every key performance indicator.

Gallup in a recent study stopped just short of saying that engagement may be the most important long-term measure of organizational success and sustainability!

Emerging countries such as India and Brazil enjoy significant advantages in key engagement building blocks like trust in both middle and senior management, and have much higher reported levels of engagement across the board than we do in the U.S. The keys to engagement aren’t just systemic, they are relational! Technology and systems are enablers, but they don’t replace competent leadership, trust and collaboration. Organizations are about people, not things.

We haven’t been presented with an opportunity like this since Congress legalized unions!

“In my dream the angel shrugged and said, ‘this time if we fail it will be a failure of imagination’, and then she gently placed the world in the palm of my hand”

Brian Andreas

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About the Author 

Mark Herbert
Mark is a Principal in the management consulting firm, New Paradigms LLC. His background includes over thirty years of combined C level exe

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