Network Consulting

In the history of HR, from the years after World War II to the late 1980s, the main role of the human resources department was to support the workforce. At first, this support was a way to prevent unions from forming in companies. Over time, it evolved into a strategy to develop talent within the organization. But as economic conditions changed, especially during the economic challenges of the 1970s and later recessions, HR started to focus more on cutting costs.

Faced with the need to navigate through economic challenges, especially during the significant impact of the Great Recession, HR departments were pushed to focus more on cutting costs. This meant tightening budgets for employee compensation and development, and putting more emphasis on operational efficiency. With job markets offering plenty of opportunities, cutting HR expenses was seen as an easier task, as there was less resistance from employees who had limited options for finding new jobs.

However, the economic landscape has undergone a radical transformation in recent years. The pervasive issue of employees being burdened with excessive workloads, coupled with heightened anxieties surrounding job security in the face of technological advancements like artificial intelligence, has precipitated a widespread epidemic of workplace stress.

This shift in the job market has been highlighted by significant conflicts within the labor force, including notable walkouts. The key concern in these conflicts was the demand to adequately fill vacant positions—a clear departure from the longstanding focus on cost-cutting that had shaped HR strategies.

In light of this significant shift, HR professionals find themselves at a crossroads, prompting them to review their priorities and adjust their strategies accordingly. The urgent need now is to focus on efforts aimed at retaining talent, preventing burnout, and nurturing a work environment that supports employee well-being.

Key to effecting this transition is a reversion to HR’s traditional role as advocates for employees. This means convincing top management to implement policies that prioritize the well-being of the workforce. It involves advocating for improvements in areas like pay, training, chances for advancement, and how the organization is structured.

However, effecting such changes requires more than just talking about them—it requires a strategic change in how HR functions within companies. At the heart of this effort is providing thorough data and analysis that show the real costs of turnover, absenteeism, and disengagement. By showing how these factors affect the company’s performance and profitability, HR can convincingly argue for investing in programs that improve employee well-being.

Certainly, addressing high employee turnover rates necessitates a comprehensive understanding of the associated costs. Firstly, there are direct financial expenses incurred in recruiting, hiring, and training new employees to fill vacant positions.

Moreover, indirect costs stemming from decreased productivity and disrupted workflows also contribute significantly. When employees leave, there is often a temporary loss of productivity as remaining staff members adjust to increased workloads or take on additional responsibilities. This can lead to project delays, missed deadlines, and decreased client satisfaction, all of which have financial implications for the company. For example, a report by Gallup estimates that the cost of disengagement due to turnover can range from 34% to 67% of an employee’s annual salary, depending on their level of seniority and skill.

Furthermore, turnover can have intangible costs related to employee morale and organizational culture. High turnover rates can erode morale among remaining employees, leading to decreased job satisfaction and increased stress levels. This, in turn, can contribute to higher absenteeism rates and decreased overall productivity. For instance, a study by the Center for American Progress found that the cost of turnover due to stress-related absenteeism can amount to billions of dollars annually for companies.

Moreover, as HR works to proactively address workplace stress by tackling its root causes, such as uncertainty arising from technological disruption and organizational restructuring it becomes evident that turnover can exacerbate these issues.HR can help through promoting open communication and offering support to employees navigating through changes. At the same time, HR should lead efforts to foster diversity, equity, and inclusion (DEI) within the workplace, creating an environment that attracts diverse talent and boosts morale and productivity. Additionally, HR should establish reliable metrics for measuring employee stress and prioritize addressing the underlying causes rather than just managing symptoms. Encouraging leaders to communicate plans proactively can help alleviate stress caused by uncertainty. Employees are particularly concerned about technological change and restructuring, highlighting the importance of HR’s role in managing these challenges.

In conclusion, the evolving dynamics of the modern workforce necessitate a fundamental reevaluation of HR’s role within organizations. By prioritizing employee advocacy over cost-cutting measures and championing initiatives aimed at enhancing employee well-being and inclusivity, HR can drive organizational success in an increasingly competitive and dynamic business environment.

Reposted from: https://hbr.org/2024/05/hrs-new-role