Industry Outlook: Human Resources
Human resource professionals operate in a realm of increasing risk and uncertainty. From heading off lawsuits to navigating through healthcare turmoil—and staying on top of employee development and recruitment—HR leaders play a key role in business development and strategy.
Lois Baar, Holland & Hart, LLC
Johanna Barraco, ARUP
Robert Buckley, Minova
Catherine Burns, Gastronomy, Inc.
Aaron Call, G&A Partners
Ben Graham, Major Drilling Group, Int’l
Jeff Herring, University of Utah
Paul McFarling, Back Office Remedies
Ryan Nelson, Mountain States Employers Council
Brian Oscarson, Walker, Oscarson & Associates
Mark Paterson, Snowbird
Dan Walker, Clyde Companies, Inc.
Jeanine Wilson, Sutter Physician Services
A special thank you to Monica Whalen, retired CEO of Employers Council, for moderating the discussion.
Is developing the next generation of leaders within your organization a strategic business priority? And how can HR, in particular, assist in that endeavor?
BARRACO: We’re attempting to identify what trades we need, starting in the early stages of employment, to help develop them. Because we aren’t getting what we need just coming off the streets and hiring them. And our schools don’t seem to be preparing this next generation. So we have an active effort in employee development and succession planning and trying to develop their skills within ARUP. Because they just aren’t coming to us with those skills. The same thing with our entry-level candidates.
We grew ARUP by 23 percent last year. So we aren’t having issues getting new people. But we have spent a lot of time training them, because they weren’t ready. So it’s quite laborious. And retention is an issue—turnover is pretty high.
BUCKLEY: One of our big, global strategic initiatives next year is employee development—or being a great people leader, is the term I use. It’s all micro-learning, bite-sized kind of stuff on a cloud-based platform. And we have a coach for our people leaders.
For non-people leaders, employee development is a really big deal as well. Career development is one of the three most important things you have to do if you want to be an awesome place to work. So when I travel around and talk to our leaders and our employees, I just say, “What are you passionate about? What do you want to learn?” And I don’t make it tie to the business. If you want to learn fly fishing, we can find a way to help you learn fly fishing. Because when you’re passionate and you love work and you feel like, man, the company actually cared about me, then you’re more likely to stay and give discretionary effort.
OSCARSON: We come from the search side and a lot of the searches we get, people always say, “We love to promote within. We wish we had this talent within our company.” But they don’t have it. The development program is not as good as it could be or they don’t have the pipeline they want. And so they have to look externally. So many times companies get busy, leadership development isn’t a real priority or it’s not moving fast enough. And so when companies are doing as well as they are today, it’s really hard to keep up.
GRAHAM: We’ve learned a lesson that we have to go deeper than we think we have to. In the past, our leadership development was really limited to those people we felt could become a branch manager of a country. In the last about three years, we’ve had to go down about two layers below that, to our foreman level. Because we realized it’s going to take six years for them to get ready to run a branch. And in order to help them be ready in six years, we can’t be looking at people that are one step below, we have to be looking at people who are two steps below.
It just has to be a priority. We went from a business with $800 million in revenue and 5,400 employees to a business with $200 million in revenue and 2,000 employees, and yet we still had to continue that investment. And that was a hard choice when you’re talking about laying people off or do we run one more session of this. We elected to continue that. And it’s now starting to benefit us as we’re on the upswing. So that’s what we’ve had to learn: just go deeper than we think we really ever anticipated.
CALL: If development isn’t a significant, deliberate focus of your organization right now, your business will struggle, your people will struggle, retention will struggle, everything will struggle in this market.
How do you find great people? It’s not even close. Our best source of new candidates is internal referrals. And that’s a total change from where it was five to eight years ago. I think it’s because there’s this new emphasis on culture and development and becoming a great place to work. When we have openings, to be quite honest, we don’t have a super hard problem finding great people. Because we get lots and lots of internal referrals. And that’s because we’ve put a lot of emphasis on developing our people and making sure they feel valued by our organization. Therefore, they’re open and willing to bring people with them.
NELSON: In the world that we’re in, if I have an iPhone 7 and wait a few months, I can get an iPhone 8. There’s always this ability to upgrade to something else. And if we’re not providing value to current employees, there’s going to be someone or something that comes along, like a new phone, and they can upgrade. A company may try to entice them away with some new flashy benefit or relationship.
So there needs to be that investment in the development of individuals internally to keep them beyond just a paycheck and benefits. Give me another reason to come to work besides producing a widget or providing a service. Is there something that keeps me with your company that allows me to grow personally and individually, in addition to professionally? If we can tap into that, we’ll have much more loyalty from individuals.
HERRING: We run an engagement survey every other year, and we find that the drivers of engagement and those intrinsic motivators truly are socialization. What are we doing and how do we connect with what we’re doing? But the next one after that is development. Am I growing personally and professionally? That’s the next driver in that commitment, at least for us in a public area. A distant third is generally pay and compensation. So if you can invest in those other two areas, and be fair in the third, that’s what we’re finding has the greatest retention value and engagement and commitment from employees.
Company culture is now used as a competitive advantage by some employers. How can HR maximize this trend? Are you doing that?
CALL: The fallacy is that culture is HR’s problem to fix. It’s a top to bottom, side to side issue. I heard a speaker once say that your culture is what your employees believe when senior leadership isn’t around. Senior leadership’s really good at standing up and saying “this is what our culture is” and “this is our mission statement, our values and our vision,” and they try to create culture on paper. Culture’s really more of a subculture. And it’s really what people believe your company is about.
A great leadership team will realize that culture’s really developed at the middle-manager level. And if there’s not total transparency and alignment from top to bottom, and if the glue is that middle-management level, then what a CEO might perceive as their competitive advantage as culture, it actually could be acting against them. And they’re almost always the last to find out about it.
WALKER: In construction, we’ve got project teams out in the field. Culture is defined by the entry-level supervisor managing the hourly employees. If the culture doesn’t filter down through that supervisor, it doesn’t get to the frontline. We have been trying to figure out how to hire and train these supervisors so they can create and represent the culture that we want them to, not their culture.
WILSON: The way I describe our culture at new employee orientation is I tell them a culture is us. All of us together. And I try to paint the picture of a school of fish. The school of fish, they’re moving, they’re shifting all together. That is our culture. I say, “There’s 30 people in this new employee orientation—there’s 30 different life experiences, 30 different ways of looking at the world, 30 different ways of solving problems, 30 different perceptions of reality. And as you come into that school of fish, it changes slightly. We morph slightly. But we continue to work together as a team toward the same goal. As people leave, it changes slightly. But, together, that is our culture. You are part of the culture.”
I try to instill within them that they own it, they’re part of it, they create change on their own. And I challenge them to step forward if they see something that needs to be changed. So that whole culture, as we continue to shift and change, it’s because everybody’s participating in the culture, as opposed to letting it happen to them.
BAAR: From an employment lawyer’s perspective, I’d say that “culture” is a catchall phrase and it can mean so many different things. In an investigation I did about six months ago in a company where someone had complained about discrimination, the culture was something you had to get into, you had to cross this line. And it involved giving up who you were. And for a person of color or a woman in a male-dominated area or a male in a female-dominated area, it can mean not being who I am. And when the leaders of the company describe it using platitudes and heavy-duty, semi-moralistic tones, it can feel oppressive for younger people who may not feel like every value they have fits in there.
It’s really important not to exclude people or to have people feel like they’re on the margins. And what you said about everybody bringing their individual strengths and factors into the equation, that’s hard to do. So sometimes when we see charges of discrimination, we hear, “You know what the culture means at my company? That means giving up who I am.”
Would you characterize the current workplace climate as one that’s fraught with more or less employee complaints, claims, conflict, et cetera?
CALL: The people who are coming out of college feel like there’s more mobility in the workforce; they don’t feel stuck as much. And so if they’re in a bad situation, employees nowadays are much more willing to just leave and go somewhere else, rather than sort of stay in it and my only choice is to sue my employer and sort of take it up that way. There’s just this feeling that employers are either taking care of their people or their people are choosing to move on. I don’t feel like there’s as many inner battles going on as maybe there once was.
BARRACO: We just implemented a platform where employees can enter a suggestion, complaint or concern. We implemented it in February. They can get to us anonymously, and we can respond to them and give them an answer. In the past, if comments and suggestions were anonymous, we couldn’t get back to the employee directly. We have 3,600 employees at ARUP, and since February we’ve had 300 suggestions and issues that have come through to HR that we’ve been able to get back and address. Rather than have somebody just leave us because we aren’t listening, responding to them, it has been a very effective way to communicate back and forth with people and open up that environment where we can have conversations.
HERRING: Giving employees a voice is what’s really important, at least when you talk about liability, in my experience. Oftentimes what people want is to be heard and listened to. We have gotten a lot of tools in the toolbox to deal with certain situations, but if it just goes to a “my way or the highway” discussion and people don’t feel heard, that’s where you lead to greater chances of employment litigation.
WILSON: Or if they lodge a complaint to the supervisor or the manager, and nothing happens—it’s just radio silence. Or then they suddenly start to feel like they’re being ostracized or they’re being ignored or they’re a problem child.
GRAHAM: We’re at a great crossroads of technology to help us have tools to share and get employee feedback. And a combination of 25 year’s worth of training to get rid of the jokes, the things that used to be appropriate. I mean, our industry’s very blue collar. And we see less and less every year of what would definitely fall out of line in most of your companies; it is falling out of line in ours. There’s also more of an openness to different employees, to diversity, and all of that is hopefully decreasing the tension in the workforce. I don’t know whether that translates into a decreased claims, but it is a more open and inclusive world we’re living in. And that’s flowing through into the workplace.
NELSON: I can’t say I’ve noticed an increase or decrease in the volume of claims within the companies that we work with. But what I have seen is an increase in claims that are driven by perception, where there’s no factual support for what the harassment or discrimination claim is. It’s often how they were treated on their way out. Or that they weren’t heard. And resolving those claims typically ends up in a mediation situation where we’re just simply listening and trying to help that person ease through that crisis or that vacuum of not being heard. So I’ve seen an increase in that, where the claims are just factually not substantiated. And it’s driven by perception.
WILSON: You’ve got to train those frontline leaders, and even the executive leaders, to recognize when something might go south or when there’s a key word they heard in a conversation, or an action that somebody took, that their ears need to perk up. As long as they are to that level, where they can say, “Oh, maybe I need to go talk to Jeanine or maybe I need address that,” if they can do that, that’s 90 percent of the battle. It’s the ones that think, “Oh, he’s just being Joe.” No. If you can get them to that level of understanding and have, again, a culture or an expectation of the way that they manage people and what the values are in the organization, I think you’re good.
PATERSON: I’ve told managers to think before you act. Come talk to me and plan the action so that you get it right the first time and we’re not cleaning up a mess. I love making managers sit through unemployment hearings or sitting with our attorney and squirming over it, when we do get the rare one, to experience the thing firsthand. That’s the best learning experience they can get when it comes to how not to deal with your people.
McFARLING: Small businesses, mid-sized businesses still don’t understand the rules. It’s just mind boggling some of the things that people do simply because they don’t have the knowledge. They still have the mentality—and this is purely my experience—that I’m the owner, I’m going to do what I want to do, it’s my way or the highway. And I’m trying to get them to see it from a different perspective. Would you rather spend time selling your product or service or do you want to be in court defending yourself all the time? And they’re still scratching their head, like, why am I getting sued all the time? Because they’re mistreating their people. And they’re not considerate when they’re laying people off or terminating them. And they’re not doing the progressive discipline. They’re not trying to retrain people.
So I’m right there in the trenches trying to educate these people and get them to think differently, that if they want to run a successful business, they need to start following the rules. Because what they are doing is oftentimes wrong. But if they had a culture that was supportive of their people and encouraged feedback—a good relationship goes a long way toward avoiding litigation and lawsuits and things like that. You’ve just got to treat people fairly at all levels and be consistent.
It’s a really different perspective from what I’m hearing here, where everybody’s in a large organization, they’ve already established the procedures, the policies; you’re on top of what to do and what not to do. I’m sort of at the starting point for a lot of people.
That brings up another point. Does every company need an HR department?
HERRING: I don’t think it’s practical that everyone would have an HR department. But what we do need is the ability to understand at least the basic levels of what it means to be HR. Because if you have an employee, you’ve got a supervisor, you’ve got HR whether you want it or not. That is your human resources. So, really, it’s increasing the capacity and the understanding and the tools that supervisor has.
PATERSON: I tell people my title is director of human resources, but I don’t manage human resources. You manage human resources. I’ve got 250 of you in this company who manage the human resources. The minute you have two people in a company, you have a human resource issue. But now you need someone to partner and help the processes and consult and direct and support.
I’m as much a risk manager as I am a human resource manager. We’re managing the risk of not getting sued and making sure the work gets done and people don’t get hurt and all the other things that come with that. HR is a partner. We’re here to facilitate the business of business.
BURNS: We’re really careful about the way the oysters are received and the way they are stored. And we’re super careful about where the tomatoes are put and how ripe the avocados are. And your people are just like that, but you don’t think about it the same way. You’re going to be really careful about your drilling equipment and how everything is done. But then we have to look at the people the same way. They are a lot of different parts and you have to manage them in different ways. And your people doing that on the frontlines have to know that. Because those are the people that are going to walk out and talk to your customers. And if they’re not made whole by the people who supervise them, then they’re not going to treat your guests the way that your guests need to be treated.
So you’ve got HR, whether it’s good or bad. Those are the human beings that work there. That’s what HR is.
GRAHAM: I think there’s transactional HR that not everybody needs. Somebody’s got to process the new hire forms, the paperwork, and all the little piddly stuff, all the things that just get in the way of the business, that you have to have right. And some of that includes the risk management and the legal compliance and all that.
One thing that sometimes we, as HR professionals, do is associate our value with making sure all of that is done. And we’ve got to get that done. But when a company gets to a certain size, you need somebody who cannot have day-to-day responsibility for that transactional work, but can think about how do we deploy this biggest asset that we have, which is our people? A greater value we can bring to our companies is if we can get out of the transactions and focus on those strategic decisions. Because we’re all using the same avocados and we’re all using the same drills. How do we get better? And if nobody stops to think about that, that’s where some companies plateau. And that’s where a true HR professional helps you beyond the transactional stuff. That keeps you out of jail, but it doesn’t help you to get any better.
BARRACO: We’re actually moving toward predictive analytics with workforce data. Data helps us, more than anything, really make change happen at that operational level. You can’t really argue with the data if it’s good, solid data.
The area where HR gets into trouble is with all the anecdotal information. So who’s complaining, Johanna? One or two? Are you blowing this out of proportion? So I don’t deal with anecdotal information. There is value there, but I put that into perspective when dealing with the C-Suite.
In 2015 we overhauled the entire compensation system. So I quantified the issues, I showed them the risks, and then we built the new compensation system. Right now we’re trying to understand what turnover means, what retention means, what quality of hire really means, and quantify that. In our more complex labs, where they’re doing genetics and mapping genomes, you need some pretty high-level skills. So how can we retain those skills? And how does that contribute back to the bottom line? What does productivity look like?
HERRING: We’ve invested three FTEs in my HR for business intelligence, to get into the data. We’re not quite into the predictive analytics, but we’re harnessing and mapping the data for workplace planning, for correlating turnover and performance and satisfaction. I really think that data is that next step into making some of these business decisions. It’s not fool-proof, but it’s certainly a next step of thinking and where we’re going as a workforce.
As an employer in an era of uncertainty, how are you planning for your organization’s healthcare budget and your healthcare strategy? And how are you planning for 2018? 2019?
WALKER: We initially took a shot at wellness. And we’re still doing wellness. But I have a demographic that’s 40 years old on average across 3,000 participants. So wellness only has so much impact. So then we introduced high-deductible plans with some sort of a funding HSA mechanism. And that only carries you so far.
In a recent visit with our carrier and our broker, we started to think, we’ve got to be more proactive in figuring out how to reduce the inflationary nature of claims or we’re all going to be out of business. Our company’s eaten the increase two years in a row. But how many years can we do that? So we began to brainstorm: what can we do to teach the participant to take responsibility for first-dollar cost, even beyond a deductible plan?
One of the things we’re looking at now is directing participants to look at where surgeries are held. Where can we get that at the best value at the lowest price? I had a situation where a participant needed some serious things done. And the question was asked: How much will that cost? And the person on the other line said, “Oh, you’re almost to your deductible.”
BARRACO: So don’t worry about it.
WALKER: So don’t worry about it. So we’re trying to teach our people to be responsible for first-dollar cost. Teach them how to make good decisions. Because if we don’t start making better decisions across our participant line, our plans are just going to run out of control. In 10 years, a $40,000 person will be paying all of their salary for a benefit.
BARRACO: Consumerism has to be part of our strategic approach. And that means educating our employees. Have any of you heard of Healthcare Blue Book? It’s an app for the employees to use. And we actually incent them. It’s color coded: red, yellow, green. So if they’re sitting with their primary care provider and say they need to have a knee replacement, we can look up what type of a scope needs to happen. And it shows which facilities are paying green. And we’ve also linked into the quality of those facilities. So employees can then talk to their provider and say, “So what do you think about this imaging center?” And they can have that conversation right there while they have cost information in front of them.
The trick is teaching them to be cognizant of that. But then we give them money back. So you go for an MRI at this green facility, we’re going to give you $500. Because you really saved us $3,500. And we’re transparent with that information with our employees.
CALL: I think employers in some areas have done themselves a huge disservice. And I may get stoned for saying this, but when you pay 100 percent for coverage, your employees don’t feel any impact of a renewal. And when you fully fund an employee’s HSA, why would they not use it? So when you talk about strategy, employers need to be really smart about being known for having really good benefits, but employees need to understand that there is a humongous cost associated with this. I’m going to bear the majority of the cost because that’s part of who we are, but if I pay for everything, who cares if they go to a red facility. Right?
That may be counterintuitive to the way some firms think about healthcare, but we found that when employers get so rich on benefits, utilization skyrockets. They’ve become that employer where people are like, “You’ve got a major condition? You should go work for so and so. They’ve got great benefits.” You’ve got to be thoughtful about how it all fits together.
BURNS: We used to pay 100 percent of the managers’ insurance. For five or six years now we have not been doing that, and it’s made it a lot better. Then last year we switched to an HSA. It was a big switch. It’s been a really good education for people to understand that we’re funding it—I mean, we’re adding money, but not fully at all. We’ve just been providing better education. And people are paying more attention to what’s going on in there. And you’re absolutely right—you want them to have some skin in the game and understand that healthcare’s not just an employer’s responsibility. It’s your responsibility. And if you do risky things or you live a lifestyle that’s damaging to your health, it’s going to cost you more.
GRAHAM: It comes to trust, too. Because, to be honest with you, they’re not going to go with the idea that it’s going to help the company if you go over here to this facility versus mine. Right? They’re going to Primary Children’s if that’s what they’re told. But if you’ve had that relationship and you established communication ahead of time, then they start to buy into it. You have to have that trust ahead of time or else they’re going to do what’s in their best interests. And it’s hard convincing someone that saving the company money is in their best interest when it comes down to a choice between what they perceive as your best interest is in saving yourself money as a company, my best interest is getting the medical care I need. And mine’s going to win.