Restoring Trust in the HR
Profession
Thomas A. Kochan
MIT Institute for Work & Employment Research
Department of Work & Organization Studies
Sydney University
50th Anniversary Convocation
November, 2003
The Task Ahead
“We have to remember that corporate executives serve at
the pleasure and for the interests of shareholders,
employees, and their communities, not the other way
around….
Managing a company, not a share price, means balancing
the requirements of shareowners, customers,
employees, and communities…And these relationships
of sustainable value require real trust and candor”
Source: Carly Fiorina, CEO of Hewlett Packard, October, 2002
HR’s Responsibilities
• Restoring Trust in the HR Profession
• Building a New Social Contract at Work
• Opening the Door to the Next Generation
of HR Leaders
How we Got Here:
Twenty Years of Strategic HRM
• From Personnel Administration to HRM
• Goal: Become Strategic Partners with Top
Executives & Line Managers
• Reality: Perfect Agents of Top Executives
– HR Executive Survey of Priorities
– Ballooning CEO Pay: From 40:1 to 400:1
– An Inward Looking (inside the firm) Profession
Today’s Workforce Realities:
A Pressure Cooker about to Blow?
• Decade of boom & bust leaves working families with:
– Stagnant, declining incomes
– Increased inequality
– Longer working hours
– Less retirement savings; fewer health care benefits
– Broader job insecurity
– Loss of worker voice in society
• Current government policies producing:
– Further cuts in services & jobs
– Tax policies that further increase inequality
– Deep divisions over war policies
– Direct attacks on workers, unions, and core values
Job Satisfaction
56
Co-Workers
64.4
54.9
Interest in Work
Pension Plan
Health Plan
Wages
65
35.7
39.8
35.9
44.2
33.4
39.3
46.8
48.6
Job Security
New England
United States
SOURCE: The Conference Board
43.5
65.4
48.9
58.6
2003
1995
The Seven Top Priorities of HR Executives,
1996
1.
2.
3.
4.
5.
6.
7.
Helping their organization reinvent/redesign itself to compete
more effectively
Reinventing the HR function to be a more customer focused,
cost justified organization
Attracting and developing the next generation -21st century
leaders and executives
Contributing to the continuing cost containment/management
efforts
Continuing to work on becoming a more effective business
partner with their line customers
Rejecting fads, quick fixes and other HR fads; sticking to the
basics that work.
Addressing the diversity challenge
Source: Human Resource Planning Society Survey, 1996
Meeting the Challenge
• Critical Issues & Opportunities
– Building Knowledge Based Organizations
• Knowledge Workers
• Knowledge Based Work Systems
– The Dual Agenda: Work & Family Outcomes
– Building/Sustaining Productive Labor Management
Partnerships
• How to Get There
– Rebuilding External Alliances
– Becoming More Analytical
– Rebuilding Trust through Openness & Transparency
Managing Knowledge Workers
as Assets & Costs
• Working with Schools and Universities:
– Reversing the Decline in Science, Math, & Engineering Majors
– Balancing Technical and Behavioral Skills
• Working with other Firms & Unions
– Solving the under-investment problem by working together
– Engaging the workforce—building general and specific skills
– Joint union-management programs: a stable source of funding
• Managing Mobile Professionals and Technical Work
– Outsourcing and “Off-shoring Debates
– Projects with standard employees, contractors, and consultants
– Knowledge Worker Networks: Staffing Agencies, professional
associations, ethnic enclaves, universities, and firms…
“When I recruited MIT students they had
great technical grounding but not a good
notion of how the real world works, how
to get things done, and how to deal with
people!”
Source: Recently retired CEO
Building Knowledge Based Work Systems
“In the age of the knowledge-based
economy, every citizen must become a
new intellectual.”
-- Kim Dae Jung, former President of South Korea
Productivity/Quality Performance of Selected
Auto Assembly Plants
Productivity
Quality Automation Level
(hrs/unit)
(defects/100 units)
(0 - none)
Honda, Ohio
Nissan, Tenn.
NUMMI, Calif.
Toyota, Japan
GM, Mich.
GM, Mass.
19.2
24.5
19.0
15.6
33.7
34.2
72.0
70.0
69.0
63.0
137.4
116.5
77.0
89.2
62.8
79.6
100.0
7.3
Source: John Krafcik and James Womack, M.I.T. International Motor Vehicle
Program, March 1987.
The Dual Agenda: Work & Family
• Evaluate all HR policies against effects on:
– Workplace performance metrics
– Personal and family metrics
• Increasing use and effectiveness of “Family
Friendly” Policies
– Focusing on the design of work
– Addressing cultural norms
• Engaging all the stakeholders
– Employees, unions, professional groups, family
advocates (maybe even spouses!)
– Constructive engagement on public policy issues
Focused Labor-Management Partnerships
• The critical choice: Union Avoidance or Unionmanagement transformation?
– Traditional adversarial labor relations cannot compete with either
of the above alternatives
– Pace & scope of innovation has been too slow—union declines
continue
• Lessons from Partnership Examples
– Focus on bottom line results not structure & process
– Link to critical business and employee needs
– Management leadership remains critical—NUMMI, Southwest
Airlines as prime examples
Restoring Trust through Transparency
• Today’s reality: Information thirsty & savvy workforce
“Information is power”
• The Nike case:
“the Nike product has become synonymous with slave labor,
forced overtime and arbitrary abuse.” (Phil Knight, CEO)
• Negotiating in the age of the internet!
• The race is on: HR and the internet savvy youth!
The Next Generation HR Leaders
Women as a
percent of all
HR/IR
professionals
Percent
Women HR/IR
Managers or
Executives
1987
2002
64%
76%
53%
67%
A Final Question
Will we take up this challenge?
Or
Pass it on to the next generation of HR
leaders?
If so, bring on the women!