The bigger the organisation, the more likely its employees will consider HR colleagues to be strategic. Good news for HR, right?
Think again, for while a greater proportion of employees in larger companies consider HR to be strategic, those same employees rate their HR departments lower on every other measure than employees of small and medium-sized organisations, according to Personnel Today’s 360-Degree Appraisal of HR survey. In short, the smaller the organisation, the more useful and influential its HR department is deemed to be.
“With a large company, the decision-making process can be a lot longer because there are a lot more people involved,” says Sharon Benson, HR director at the small pharmaceuticals firm Trinity-Chiesi. “Here, being the only one means you make your decision and you live and die by it.”
Before her appointment two years ago, HR was a part-time function at Trinity-Chiesi, meaning Benson came in with virtually a blank sheet.
Since then, her department’s activities have become increasingly aligned to the business, from implementing a competency framework to building employer brand.
But for all the headway Benson has made, Trinity-Chiesi is by no means the norm among small and medium-sized companies. More often than not, HR in smaller organisations focuses primarily, or even exclusively, on administrative tasks. So, as the Personnel Today survey illustrates, HR in smaller organisations may be viewed as more useful, but can be limited in remit.
Smaller businesses tend to have more straightforward people issues, according to John Maxted, managing director of Digby Morgan HR Search and Selection.
“In small companies, [HR managers] are going to be involved in the transactional, process and administrative aspects of HR. In medium-sized companies, they will get involved in the more interesting end of HR, but still be embroiled in the administrative aspect. Large organisations will embrace the strategic partner model and have a team of highly specialised, commoditised positions, such as resourcing, reward and talent management,” he says.
Large employers are also increasingly going down the shared-services route, which makes the transactional aspect of HR more efficient, freeing up HR staff to focus on more strategic issues.
Leeds City Council, which employs 32,000 staff, is a case in point. Leeds has a corporate HR function managed by a chief officer, with HR managers based in each service department.
“A big priority for us is creating the capacity to enable us to concentrate on the strategic role,” says Helena Phillips, head of HR and service development. “We are looking at shared services and have started a programme around that to make HR even more efficient.”
The structure addresses one of the key challenges for HR in large organisations: remaining close to the business.
“We understand their priorities and how they deliver the council’s corporate objectives, and we can support them in terms of workforce planning and management skills,” says Phillips. “The difficulty is a lot of the transactional activity still happens in local teams and you can get drawn into individual casework and the more detailed operational issues, such as grievances and disciplinary work.”
With greater size also comes complexity, says Ben Bengougam, HR director at electricals group DSG International (DSGi), which employs 42,000 people in 15 countries across Europe.
“The challenge is around communicating the values – it is a logistical issue,” he says. “I think the most important thing is to actually spend time close to our employees and customers.”
DSGi’s senior managers are expected to spend time regularly in stores – something Bengougam says he does on average three or four days a month.
In companies the size of DSGi HR can really influence the bottom line – their smaller counterparts are more concerned with “the process of their business rather than the people”, says Julian Stringer, director of HR advisory firm Kudos Consulting. “They’re worried about the next order, or the next contract, rather than how people can be developed for the organisation.”
Day-to-day issues such as disciplinaries and grievances dominate the workload of small business HR, adds Stringer. “In that sense, they’re more in touch, but I don’t think they necessarily add value.”
If you are focused on developing your own career in HR, size most definitely matters. Generally speaking, smaller companies will not offer the scope to influence the business that larger organisations will, says Maxted. But for high-fliers wanting to broaden their experience, small firms can offer the means to move beyond the transactional aspect of HR and, in some cases, really make a mark, as Benson has done at Trinity-Chiesi.
“It’s more entrepreneurial,” says Maxted. “There is the opportunity to feel more close to the business, work with key people and have more diverse experience.”
Previously one of a team of HR managers in a large firm, Benson says she is much more of a generalist now – though with a much smaller budget. “You have to be more creative because you don’t have that big pot of cash.” On the plus side, it’s far more exciting. “You can change things more quickly,” she concludes. “Impact is more immediate and more visible.”
View from the top
According to Personnel Today’s 360-Degree Appraisal of HR, it is not just the size of the company that affects how it is likely to perceive its people function. Our survey also found that, the more senior you are, the more likely you are to rate HR.
When asked whether their HR department offered good value for money:
90% of HR directors/department heads said ‘yes’
77% of HR managers said ‘yes’
41% of directors/department heads outside HR said ‘yes’
24% of managers outside HR said ‘yes’.