I thought this might be a good post the day before New Year’s Eve. Consider these Key Lessons from Recent HR Fiascos that O.C. Tanner’s David Sturt and Todd Nordstrom posted on their company blog a while back some good reminders heading into the new year that what you think might work in the world of management and HR can easily backfire. So tread and think carefully before implementing your wonderful 2016 workforce-management ideas.
In all fairness and full disclosure, Sturt’s and Nordstrom’s first lesson isn’t really a fiasco unleashed by human resource professionals, but it does speak to HR’s compensation oversight and what can go very wrong with a good idea.
Remember Dan Price, the CEO of Gravity Payments, who announced his plan to raise the company’s minimum wage to $70,000 in order to do his part to lessen the pay gap between CEOs and the average worker? I spoke with Sturt about this. It seems Price had gotten hold of a Princeton University study back in 2010 indicating that, “when people were trying to meet their needs and they made generally less than $75,000, there was less contentment, happiness and a sense of well-being,” Sturt says.
But when you go over that amount, “the happiness quotient doesn’t rise in accordance and in step with raised increments,” he says. So Price brought top salaries — including his own — down while raising the minimum to a happy $70,000. Problem was, he didn’t run it by the other principles, including his own co-founder brother, who filed a lawsuit against Price that is now pending.
Sturt and Nordstrom write:
“As one disgruntled ex-employee of the company told the New York Times, it isn’t exactly fair for top performers to be compensated the same as slackers. That undermines motivation for people to go above and beyond. Whether you agree with this assessment or not is neither here nor there. At the end of the day, Dan’s good intentions brought him negative publicity, and he had to suffer the consequences.”
Then there’s the Amazon fiasco. We’ve all probably read the criticisms published in the New York Times of its hard/harsh-driving culture. What was behind it were all the metrics and measurements that were simply established to raise performance and productivity. Problem was, as the two write, “numbers don’t reveal the whole picture: not for employee engagement, not for performance, and not for [the] ability to lead and execute.”
The other culprit at Amazon, Sturt tells me, was HR itself. In his words, “Seems like HR got overrun there.” Amazon’s HR leaders did not have the self-confidence and guts, he says, to march into the offices of the CEO and other top leaders and voice their concerns — and they had to have had some, given their skills in people perceptions. “If HR isn’t stepping up,” he says, “then who is? Of course they’re taking their cues from the top, but it’s an important role for HR to be a company-culture fiduciary, if you will.”
Granted, he does see boldness growing among top HR leaders in general: “I do see it in personally strong chief human resource officers. You bump into them and you know their CEOs look at them as partners. You know they’re co-creating a culture that is both human and performance-driven.” Problem is, there still aren’t enough of them out there.
Sturt says he is seeing a fundamental shift among all top leaders, many of whom are now questioning, ” ‘What kind of place are we promoting as a place to work?’ ” And that, he says, “is creating an opportunity for HR leaders to really speak to that, and talk about principles and purpose; things that weren’t necessarily on the discussion board” a short while ago.
And No. 3 on this list of HR fiascos to mull? The fact that unlimited paid vacation and unlimited parental leave — and who hasn’t heard about this lately? (think Netflix, GE and, once again, Amazon) — come with strings attached. As Sturt and Nordstrom write,
“Offering all the paid-time-off in the world won’t fix your overworked employee problem unless the rest of your culture supports employees who take time off instead of punishing them.”
Sturt actually came back from a worldwide business tour and “saw the same kinds of things being played out in Bangalore, for instance,” he tells me. “They have the same problem we have in the states: If you really take that time, offered though it may be, you really aren’t a team player. [Those left holding the new parent’s bag, for example], are also left questioning why ‘I have to do your work.’ ”
His recommendation to HR?
“Just be mindful of the broader cultural norm you’re trying to set and weigh the initiative against it. You might make lots of changes without fitting them into the ultimate corporate goal.
“You may end up ‘Frankensteining’ it, with a bolt here and a stitch there, and you end up with a monster.
“Think before you say, ‘We gotta do this or we won’t compete’ [with all the bandwagon-hoppers].”
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