All great corporate functions treat criticism as an opportunity for improvement, but not HR.
After decades in HR, I have learned that our typical response to any form of criticism is not to welcome it. But instead, to instantly create a never-ending array of denials and excuses. And therefore, the purpose of this article is to test whether the following “bad news data points” will drive more solutions or more excuses.
HR champions retention, but HR has the highest turnover rate of all functions
For years, HR has been emphasizing the tremendous dollar damage created by employee turnover. So it is somewhat embarrassing to learn that LinkedIn data revealed that HR’s employee turnover rate is by far the highest among all corporate functions. HR’s turnover is 38% higher than the average corporate function turnover rate and 11% higher than the next-worst turnover function (research and development).
HR champions diversity, but it has the lowest rate of gender diversity
For years, HR has been the recognized champion of gender, racial, and national origin diversity. However, researchers have concluded that “most DEI programs don’t work.” And when it comes to gender diversity, men are seriously underrepresented because 71% of HR professionals are women (Namely’s HR Careers Report), and 65 % of HR professionals identify as white.
HR champions pay equity, but it doesn’t practice it
Namely, research found that male HR professionals earn 13% more than HR women. And that means that the pay rate for women in HR is only 89% of what male HR professionals are paid, which is only a slight improvement over the 84% national pay differential.
Despite years of trying, HR still isn’t rated as strategic
Even though it’s an almost universal goal for HR to become strategic. Over the decades, HR has literally never convinced a majority of business leaders to rate it as strategic. And the strategic rating for function is, unfortunately, a full 21 points behind the rating that finance receives.
Despite all our efforts, HR is still not trusted by employees
Being fully trusted by your own customers is also a major strategic goal at every HR function. However, a survey of major corporations (in tech) found that 70% of our employees don’t trust us. And among these 18 top companies, not a single company can report that a majority of its employees trust HR at their company.
Many of HR’s primary programs (recruiting, development, and wellness) have painfully high failure rates
Recruiting, the HR function with the highest business impact, has a painful new-hire failure rate of 46%. The learning and development sub-function, which is among the biggest spenders in the HR budget, has data that reveals that an amazing 90% of individual L&D programs fail to reach their targeted outcomes. And as a result, 75% of managers report that they are dissatisfied with their L&D function. Another costly HR program covers wellness benefits. However, when program impact data was collected on the effectiveness of 90 different wellness programs, the results were disappointing. The data revealed that the employees who participated in any of the available 90 wellness programs ended up being no better off than their colleagues who never used a single one of them (source: New York Times)
Calculating the dollar impact of each HR program on strategic business goals is the answer to turning failure around
I have found that program failures aren’t quickly identified in HR because so many HR subfunctions purposely avoid calculating or discussing their failure rates. The overriding reason why high failure rates are allowed to go on is that the costs of HR failures are never converted into their dollar impact on business goals.
The overriding principle in corporate America is that things that make (or cost) large amounts of money get immediate and constant attention from senior executives. For example, if executives at Google knew that the loss of a single top innovator engineer as a result of weak recruiting or ineffective retention was up to 300 times their annual salary, recruiting and retention failures would quickly be identified and fixed, or heads would roll.
To executives, it’s always about the money. Yet, for some reason, HR executives universally fail to calculate and report their function’s dollar impact on business goals.
Note: You can learn details about how to calculate the dollar impact of an HR program here.
“Criticism should be HR’s engine of change.”
Final Thoughts
In today’s fast-changing world, criticism must be treated as an opportunity to learn that can’t be missed. So you should treat the criticism that you receive as a chance to receive free objective feedback from internal supporters, outsiders, and your users. Using criticism will help to keep your team’s egos in check while at the same time avoiding groupthink. And finally, you should realize that criticism forces your team to respond to issues with data, instead of opinions.
I have found that smart talent leaders, rather than being suspicious or angry, actively seek out data that may reveal their failures. And make it as easy as possible for colleagues, outsiders and your users to anonymously criticize your work, your solutions, and your plans!
Note: You can learn more about additional high-impact HR programs that almost universally need improvement here.
Thank you for reading.
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