CASE STUDrThe new head of HR has triedeverything he can think ofto change his department’sreputation as an administrative backwater. Buthe’s still swimmingagainst the tide.WHYDOESN’T THISHR DEPARTMENTGET ANY RESPECT?BY ROBERT GALFORDDON’T KNOW WHICH PROBLEMto tackle first,” Luke Robinsonsaid, 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 excellent 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, managing partner of human resources atLoft Securities, had called Rose inpart because she was a friend, butalso hecause she was tbe vice president of buman resources at a successful puhlic-relations firm, and heknew that she was a first-rate manager. 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 financial 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 development processes. Robinson hadworked very effectively as HR director, belping tbe company’s consultants evaluate potential new recruits and putting together somevery attractive development programs. Tbe Powell Group, withRohinson’s help, had quickly hecome a rohust competitor for talent.Despite his success at Powell,Rohinson accepted tbe job at Lofthecause be thought it would be a rewarding 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 thefirm.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 1998CASE STUDYhrancy went with him. And withina year, two of the five remaining senior 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, theRobert Galford lives in Concord,Massachusetts, and works withsenior managers on performance,organizational, and career issues.He also teaches in executive education programs at Columbia University’s Graduate School of Businessin New York City and at Northwestern 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 perfectly good top manager. He was recruited from the outside, but by allaccounts his appointment was widely 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 attention to HR because it hadn’t hadto. Under Washington and the twoCEOs who came before bim, tbe department was simply an administrative 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 helping the company recruit new peopleor at changing the perception thathuman resources is just a hunch ofclerks processing henefits forms andtracking vacation days. It’s frustrating, 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 problem is, the most important bumanresources mandate-attracting andkeeping good people – wasn’t heingARTWORK BYVICTORJUHASZ 25 CAS^f StWDYWHY 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 allgram, assigning individual membersno such tbing!”But Rose hadn’t said much, justencouraged him with a “Thenwhat?” or a “Could you explain thatWashington, and it seems as if noone is quite sure how to move on.”“I’m trying to show them,” Rohinson complained. “But even Shargalldoesn’t know how to use me.”of his staff to develop relationshipswith tbe people in a particular areaof the company so that tbey wouldNot For Lack of TryingRose asked Robinson to outlinewbat be bad done since joining Loft,Loft’s executives seemed tobe listening, but they weren’treally paying attention.and he quickly deseribed a variety ofactions. When he had first joined thefirm, be had spent a good deal of oneheads. He also began aeomprebensive assessment of tbe quality ofon-one time witb eacb of the seniorexecutives, asking tbem about tbethe HR staff, hoth individually andcollectively, and replaced two underThroughout the luncb, Robinson’sfood remained almost untouched.When the waiter came to check onkind of people that made the comproductive employees with peoplepany successful and bow tbeyviewed tbe talent they currently employed. He bad also met with manyother employees-managers, hrokers, administrative assistants-andall the memhers of bis own department. And he bad spent time withmost of the HR group’s principalexternal contacts, including searcbprofessionals, eampus placementwho had solid experience in developthem, Rohinson looked at Rose’sofficers, henefits providers, and trainon and on.ing organizations.She frowned when he told herabout the executive committeemeeting he had participated in afterDuring 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 toceived because at the time they metbim that most of tbe people at Loftwere not accustomed to anyonewith little in the way of challengesor discussion. “Shargall and the othThe people at Loft were notattention,” was his takeRobinson said. “It’s not that I missaccustomed to anyone fromhave a voiee speaking for tbem witba bit more?” as he told his story.in HR. And he set up aregular scbedule ofmeetings between himself and eacb of tbefirm’s business-uniting professionals in service firmslike Loft. Finally, he drafted plans forclean plate and waved away his own.a program to help educate all theAn Uphill Battlecompany’s employees about the roleof HR-specifically, bow it couldcontribute to creating and upboldingthefirm’sstrategy for success.Rose had listened pretty muchwithout comment as Robinson wentAs they finished their cappuccino,Robinson leaned hack in his chair.“Well?” be prodded. “Well, what?”Rose asked. “I know tbat you’re doing 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 particular is a difficult area – althoughthree months on the job. He bad presented hisfindingsand outlined hismost internal-service functionswould argue that they are underapplans, tbinking tbey were well-repreciated 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,”ers were being polite, hutthey weren’t payingon the meeting now.She raised an eyehrowand murmured “ouch”consulting per se. But I was accomplishing sometbing in tbat world,and you know tbe saying. Those the HR department askingprobing questions. from the human resources department asking probing questions.So Rohinson bad taken a numbercbecks for tbe managingdirectors and vice presidents had heen inaccurately issued.“It took us almost a month to sortout the prohlem with payroll,” hethat it applies to me.”“No, no,” Rose laughed. “I’m surethat it doesn’t. But I will give yousome advice…”of steps. He establisbed a set of intersaid. “And I know it was a simpleHBR’s cases present common managerial dilemmas and offer concretesolutions from experts. As written,they are hypothetical, and thenames used are fictitious. We invitenal service standards, performanceguarantees, and ongoing customerclerical error, but it certainly didn’thelp my cause.”satisfaction measurement programsAnd she nodded in sympathyfor his department. He created “liswhen he told her how HR had misyou to write to Case Suggestions,tening posts”-that is, he sent amember of his staff to eacb of tbehandled an investigation of a disHarvard Business Review, 60 Harfirm’s locations on a regular hasis tohe joined the company. “But thatbold office bours and answer queswasn’t me,” Robinson said, his voicecrimination charge shortly heforevard Way, Boston, MA 02163, ^^ddescribe the issues you would liketo see addressed. tions or provide counseling. He implemented an “HR ambassador” pro when be confessed tbatthe year-end bonuswho can, do, and those who can’t,teach? Well, I’m beginning to tbink revealing his frustration. “The groupof people I’ve put together would doHARVARD BUSINESS REVIEW March-April 1998Copyright 1998 Harvard Business Publishing. All Rights Reserved. Additional restrictionsmay apply including the use of this content as assigned course material. Please consult yourinstitution’s librarian about any restrictions that might apply under the license with yourinstitution. For more information and teaching resources from Harvard Business Publishingincluding Harvard Business School Cases, eLearning products, and business simulationsplease visit hbsp.harvard.edu.
