For most of my long HR career in service industries, my colleagues and I believed our role to be an advocate for the employee. Those who spent their HR career in a collective bargaining environment may feel they advocate for the employer. In Repurposing HR: From a cost center to a business accelerator, I highlight the role of Advocate as one of eight StopOvers on the RoadMap – the process for becoming a business leader rather than a service provider. Here’s how I explained it…
“The HR profession struggles to emerge from the “people person” image. Many of us went into the field because we liked working with people. The reality is that human resources plays two advocate roles, which often conflict:
- HR is an advocate of the organization. Are the people decisions the best decisions to be made for the organization?
- HR is also an advocate of the employees. Are we treating our employees consistently and fairly? If we are not, it will have a detrimental impact on the organization.”
Fast forward a couple years. Let’s make it really powerful – we are fast forwarding beyond a time in US business’ history for which we should have been exceedingly embarrassed and learned the hard way about organizational ethics – the scandals of Enron and Worldcom, which set the stage for the 2002 Sarbanes-Oxley Act which, among other things, protected whistleblowers.
But we didn’t learn from that apparently because only a few years later, we find financial monkey business in the mortgage arena, which ultimately leads to the great recession.
Okay, enough history and back to the point of this article. Now we have Wells Fargo. After reading about the tales that employees are telling now that the whole world knows about yet another scandal, I can really only shake my head. When an employee says something like this….
“That’s really scary when you’re with a big corporation like this and HR doesn’t have your back,” said the current employee, who wished to remain anonymous so as not to get fired as well.”
…it is an indictment of my profession and one that calls into question the role of HR as an advocate.
It is easy to get complacent in one role or another. As an employee advocate, HR can slip into dysfunctional enabling and destroy accountability. As an advocate for the employer, one can become deaf to the plight of the workforce.
Advocacy isn’t that simple, and it rarely is one or the other. Let’s take this explanation of the aim of advocacy
“Advocacy in all its forms seeks to ensure that people, particularly those who are most vulnerable in society, are able to:
• Have their voice heard on issues that are important to them.
• Defend and safeguard their rights.
• Have their views and wishes genuinely considered when decisions are being made about their lives.”
In the case of Wells Fargo, it appear that HR did not do this well and leaned way too far into advocacy for the employer. I am blessed to have had a 40 year career in HR where I never felt pressure from my organization to do anything that violated my personal values. I would like to think I would have been strong enough to resist, had that occurred.
So what should HR do?
HR must be an advocate for the employee and the organization by understanding clearly that allowing something that is not right to transpire is bad for both.
The Wells Fargo CHRO has 23 years at the organization, moving into the top role via Compensation and Benefits. (Techically she is the Chief Administrative Officer and Director of HR, so has a scope that is broader than HR.) As an HR executive who came up through the Compensation ranks, it’s difficult to believe that she didn’t know what was going on with the pressure to sell alone. The CNN article also says that employees wrote “several notes to HR” and many called the Ethics Hotline.
On the page with her bio, there is also a link to the Code of Ethics and the Vision and Values.
A new and easier way to think about Advocacy?
So that balance of advocacy for the employee vs advocacy for the employer is perhaps confusing. What if we simplified it by saying that the HR advocacy role is simply to ensure that the actions of the organization are in alignment with the stated values and ethics.
I can’t imagine any organization being so stupid as to publish a set of values or code of ethics that allow wiggle room in honesty and integrity. Vision, mission and values statements are aspirational and usually public so they will espouse what the organization wants everyone to think they are. Assuming that is the case, can HR take up the mantra of helping the organization to live the stated values and ethics?
What would that have meant to Wells Fargo?
That would have been a simple formula to follow: “We strive to be recognized by our stakeholders as setting the standard among the world’s great companies for integrity and principled performance. This is more than just doing the right thing. We have to do it the right way.”
Here’s what Wells Fargo’s ethics code says:
Had HR sought to ensure alignment with the policies in place, perhaps the situation would have been caught before 5,300 employees lost their jobs for violating policy.
Does it make sense to simplify HR’s advocacy role to say “ensure that the behavior of leadership and the workforce aligns to the vision, values and code of ethics of the organization.”
That is a little easier. But it takes courage. Real courage. I can’t believe that the CEO and CHRO didn’t know. That makes me sad and angry.
Executives make decisions based on the financial statements, based on ratios, capital, and assets. And when it comes to us humans? Well humans are an expense. Where this may be true with some, and they these people should definitely be let go, this isn’t true for all. For HR to be integrated into the executive narrative we must have human resources be reframed as human assets and human capital.
Then HR becomes less of an expense and more as a source of revenue generation and growth..
Yes, Chris – when you consider that there is nothing in an organization that is accomplished without people, it makes sense to treat human assets in a way that generates commitment to the organization. Thanks for your comment.
Carol, though it is true that the CHRO of any company should simultaneously advocate for the company and its employees, I think it is fair to say that most have advocated for employees almost to the exclusion of the company’s business interests. There is obviously a DELICATE BALANCE between the two that can easily be diminished when the CHRO does not have a sound business relationship with the CEO. When a sound business relationship exists, the CHRO can effectively approach the CEO regarding such sensitive matters. When it does not exist, HR is considered as an administrative afterthought and little can be done. In the case of Wells Fargo, the CHRO fell way short of even fulfilling its basic advocacy of being the employee’s representative.
For the HR function to have any meaningful advocacy for BOTH entities, it must first and foremost be considered as an equal business partner to the CEO and other line executives. When that occurs, much can be done to enhance advocacy of both by a business/employee-oriented CHRO. When it does not occur, little meaningful effect can be achieved on either.
Jack
Hi Jack – thanks for your comment. Yes, it is a delicate balance. I feel close to this situation somehow, as the CHRO started in the bank when I was in banking, and rose up through the same path – Comp and Benefits. That frame of reference leads me to believe that it wasn’t HR, it wasn’t, the CEO or the executive team that bears exclusive responsibility. Banking is an industry that grew up (exponentially) knowing that they had to “make” the employees do things, and believing that pay incentives were the ticket. Banking has been overwhelmed with legislation for the past four decades, and I’m not sure that Abraham Lincoln could have walked in as a CHRO and influenced these leaders who were driven solely by revenue, income, ROE and ROA to behave differently as leaders. Some got it intuitively, but most did not. And when you have 300k employees, and the corresponding number of leaders, bad things will happen. My guess, HR raised the red flag until they were told to drop it.
We have a wonderful retrospective opportunity to look at a travesty and learn from it. But I there is multiple areas of blame in this case – with the CEO, the CHRO, the executives, the industry and the fact that we, as business leaders, still haven’t figured out the people part of the business – the fact that people stuff isn’t easy and takes a different leadership skill.
That said, in the Marine Corps I learned the difference between accountability and responsibility. They told us, you can delegate responsibility but not accountability. Given the noise that apparently surrounded this problem for several years, the CEO set the stage, closed his eyes when he wanted to, and should not be allowed to resign with $134 million.
Carol, thanks for your great discussion here. It’s a really hard question, but I also wonder if we should be asking who HR is accountable to. If they are ultimately accountable to the CEO, who is ultimately accountable to Wall Street, then they have to answer to those priorities if there’s conflict between mission/ethics and financial performance. We’ve seen over and over that cutting corners is worse in the end, but the short-term increase in stock values and bonuses seem to override the bigger picture in many cases. Do we know of any case studies where a company handled a similar situation better? That might make a great comparison. Thanks!
Actually, I do. In 2004, the attorney general of NY started a campaign against land title insurance fees. There were three large title insurers; we were number three. The premise was that the title insurance fees were serendipitous – sort of like healthcare charges – you didn’t really understand what you were paying for. In truth, the charges were fairly made. Two of the companies continued the egregious practices; we did not. Our CEO had intense pressure to allow the practice to continue; the businesses were suffering in revenue. The CEO held his ground, and stated that illegal practices would lead to dismissal. The incentives in this industry were five figures at a minimum, so this was painful all around.
All of us in executive positions took his stand seriously. It was an interesting time to observe, as a HR development professional.
The rest of the story? Wells Fargo is here and probably will stay here. My company folded in the real estate, mortgage and credit crisis of 2008; the other land title companies bought what was left. I still struggle with the implications of this. There is more to our story; it isn’t a simple one but it is profound in this specific example.
The propensity for unethical and illegal practices seems to me to be getting out of hand, and that is scary to me.
Thanks for your comment, and for raising the question.
Carol, thanks for sharing this compelling story. It’s sobering to think that companies have a hard time surviving without resorting to illegal or unethical practices. But I’m glad there are some CEOs out there who have integrity. Amazing story!
Jeffery Pfeffer recently released “Leadership BS” which basically says all the “competency models” we teach to in leadership are worthless because the real competencies are antithetical. Tough book to read, but I’m afraid it tells a very real story.