Workplace Issues

Time to Put HR under a Microscope?

A number of converging forces may offer good reason to rethink some of your people-related practices.
David McCannNovember 17, 2011

Shifts in business and social norms are putting pressure on C-suite executives to take a new look at their human-resources functions. So suggests Michael Gregoire, CEO of Taleo, a vendor of human-resources technology.

One change that has emerged quickly over the past couple years is a spike in the number of contract workers used at many companies, noted Gregoire at The Conference Board’s recent Human Capital Metrics Conference in New York City, where he was the keynote speaker.

“The whole idea of the full-time employee is getting a lot of pressure,” he said. At many companies, large percentages of the people coming to work sites each day are part-time and contract employees. He’s not a particular fan of the trend, observing that full-time workers are likely to be more engaged and vested in the company’s future. “You hear Steve Ballmer at Microsoft saying they have to be more cool, like Facebook. Well, something like that is pretty hard to [bring about] when half of your people are paid in a different way than the other half.”

Gregoire also observed that the quest to globalize businesses continues to present people-related challenges. Most companies want to set up shop in China, which requires local experts to skillfully execute the necessary labor arbitrage. “If you go into China and think you’re going to drop in an American or Australian solution consultant, you’re dead,” he said. “You need a local person who speaks the language and understands the cost structure.”

Social media, meanwhile, has changed the nature of hiring in many ways, perhaps few as dramatic as the emergence of referrals as the dominant method of finding new talent. Since 2005, the percentage of new hires identified that way has more than doubled, according to Gregoire.

At many companies, employees refer potential candidates through Facebook. Gregoire took to task Goldman Sachs, which still prohibits employees from using Facebook at work, despite having invested $450 million in the social-networking giant earlier this year. “That’s wrong. They’re missing the boat,” he said. “The chance that an employee who was referred will stay at the job more than two years is about 80%.”

A common trait among the best-run companies today, and the ones that are most engaged with their employees, is encouraging workers to use social media to refer former colleagues, friends, and family members to company recruiters, Gregoire insisted. People who will do that demonstrate that they like and trust the company, and those they refer are likely to have proven skill sets.

Corporate leaders also should be concerned about a continuing trend in the ratio of human-resources staff to employees. “I laugh when I see benchmarks saying the ratio should be 250 to 1 or even 350 to 1,” he said, noting that when he started out in the HR field more than 20 years ago, it was more like 60 to 1.

At the high end of the scale, “that person is just an administrator,” said Gregoire. “Who has a better view on talent — the HR generalist responsible for 350 people, or someone who is the manager of 10 people? Yet in exit interviews, employees say the number-one reason why they leave is that they [don’t like] their manager. It doesn’t make sense. We have to drive the HR professional into making more strategic decisions.”