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The coronavirus crisis thrusts corporate HR chiefs into the spotlight

by Ace Damon
The coronavirus crisis thrusts corporate HR chiefs into the spotlight

In a pandemic, a people director can make or break a company

March 24, 2020

Editor's note: The Economist is making part of its most important coverage of the covid-19 pandemic free of charge to readers of The Economist Today, our daily newsletter. To receive it, register on here.

When the financial crisis shook the business world in 2007-09, meeting rooms turned to the heads of corporate finance. A good CFO can save a company; a bad guy can bury him. The covid-19 pandemic presents a different challenge – and highlights the role of another corporate function, often unfairly dismissed as bland. Never before have more companies needed a headstrong HR boss.

The duties of personnel directors, as they are sometimes called heads of human resources, seem critical now. They must keep employees healthy; maintain your morale; supervise extensive experience of remote work; and, as companies shrink, consider whether, when and how to fire workers. Their trays are curved.

Once ridiculed as “payment and share” managers in the early 1990s, HR heads adopted compliance, keeping companies out of court (and documents). A subsequent sequence of corporate imbroglios raised their status, notes Patrick Wright of the University of South Carolina. After executive pay scandals at companies like WorldCom and Tyco in the 2000s, they became more involved in compensation. A decade later, successive failures, for example, at HP, the printer manufacturer that fired two bosses in so many years, left us with a bigger voice in filling the best jobs. In recent years, they have dealt with often very public "me too" problems.

The coronavirus crisis thrusts corporate HR chiefs into the spotlight

As the recruitment and retention of skilled workers became the chief concern of chief executives – four-fifths are now concerned with skills shortages, more than half in 2012 – HR chiefs' desks were getting closer and closer to the corner office. Today, many live alongside the boss. Shareholders are inviting more external HR heads to the boards. In the United States, their salaries remain lower than those of CFOs & # 39; but have increased 20% more rapidly since 2010 (see graph).

A higher profile implies new expectations. HR was once the domain of graduates in history and masters in labor relations; today many have business degrees. While most companies recruit them for HR jobs, others are choosing outsiders or unconventional candidates. According to Russell Reynolds Associates, an executive search firm, HR heads appointed for Fortune 100 companies between 2016 and 2019 were about 50% more likely than those previously hired to work abroad, in general management or in finance.

Before covid-19, restricted labor markets and skilled employees were pressuring employers to understand how to get the most out of their team, says Dane Holmes, former head of human capital management at Goldman Sachs, an investment bank, which now runs an HR analysis company. Diane Gherson, HR manager at IBM, reviewed the computing giant's performance management using big data. Now, the algorithms challenge the instincts of IBM managers in compensation and promotion and alert Gherson's team when the team is at risk of running away (usually before they realize it).

The pandemic makes these "people analyzes" more relevant. Beth Galetti, opposite Gherson on Amazon, an engineer with no HR experience before entering the e-commerce market, oversees 1,000 developers working exclusively on HR software. Amazon's pre-outbreak investment in digital induction for new hires is paying off. "We shipped 1,700 new corporate employees only on (March 16)," reports Galetti.

Covid-19 may prompt more HR heads to adopt such systems. In the short term, many have more pressing problems. Mala Singh, staff director at EA, a video game maker, represents the team suite in charge of responding to the pandemic. This now occupies 60 to 70% of your (long) day. His team has received desks, computers and even noise-canceling headphones. A greater concern was to balance work with child care. Singh told EA team caregivers to take the time they needed to adapt without using paid vacation. She is digitally monitoring employee sentiment, especially anxiety. In a creative business like EA's, "having someone stressed about their family situation doesn't allow productive work," she explains.

Many companies, especially outside the knowledge economy, face more difficult choices. HR leaders must strike a balance between a company's stated goal, which currently involves decent treatment of the team, and the end result, notes Dan Kaplan of consultancy Korn Ferry. The instinct is to cut costs through mass redundancies, as some hotel chains, airlines and others have started to do. Instead of reducing payrolls indiscriminately, says Bill Schaninger of McKinsey, another consultancy, good HR chiefs can use the crisis to reconfigure the company's workflow: what needs to be done by whom, what can be automated and what requires people to share the same space. Some workers who initially appear redundant can be redeployed or re-qualified.

Long-term people from the most resilient companies are already starting to look beyond the flattened curve. Although not much of a recruiter – times are uncertain – Gherson has started courting talent at rival companies. Now that everyone is working from home, she says, no one is listening to your calls. For an experienced HR boss, "it's the perfect opportunity".

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