Finally a good HR department

January 27th, 2013 at 7:00 am by David Farrar

My general advice to new CEOs is that their first initiative should be to abolish their company’s HR department. This will make them very popular with their staff and generally enhance their operational effectiveness. Each section manager should be capable of basic HR management and just have a lawyer or two on call for the difficult stuff.

But may be an exception to my rule. Stuff reported:

A few years ago, Google’s human resources department noticed a problem: A lot of women were leaving the company.

Like the majority of Silicon Valley software firms, Google is staffed mostly by men, and executives have long made it a priority to increase the number of female employees.

But the fact that women were leaving Google wasn’t just a gender equity problem – it was affecting the bottom line. 

Unlike in most sectors of the economy, the market for top-notch tech employees is stretched incredibly thin. Google fights for potential workers with Apple, Facebook, Amazon, Microsoft, and hordes of startups, so every employee’s departure triggers a costly, time-consuming recruiting process.

If employees are good, most employers are highly motivated to keep them.

Google calls its HR department People Operations, though most people in the firm shorten it to POPS.

The group is headed by Laszlo Bock, a trim, soft-spoken 40-year-old who came to Google six years ago.

Bock says that when POPS looked into Google’s woman problem, it found it was really a new mother problem: Women who had recently given birth were leaving at twice Google’s average departure rate.

At the time, Google offered an industry-standard maternity leave plan.

After a woman gave birth, she got 12 weeks of paid time off. For all other new parents in its California offices, but not for its workers outside the state, the company offered seven paid weeks of leave.

So in 2007, Bock changed the plan.

New mothers would now get five months off at full pay and full benefits, and they were allowed to split up that time however they wished, including taking some of that time off just before their due date.

If she likes, a new mother can take a couple months off after birth, return part time for a while, and then take the balance of her time off when her baby is older.

And did it work?

Yet it would be a mistake to conclude that Google doles out such perks just to be nice. POPS rigorously monitors a slew of data about how employees respond to benefits, and it rarely throws money away.

The five-month maternity leave plan, for instance, was a winner for the company. After it went into place, Google’s attrition rate for new mothers dropped down to the average rate for the rest of the firm.

“A 50 percent reduction – it was enormous!” Bock says.

Excellent. No laws needed. Just good incentives. An extra two months paid leave is a cheap price for keeping an employee, rather than losing them and the costs (actual and opportunity) of getting a replacement.

Under Bock, Google’s HR department functions more like a rigorous science lab than the pesky hall monitor most of us picture when we think of HR.

At the heart of POPS is a sophisticated employee-data tracking program, an effort to gain empirical certainty about every aspect of Google’s workers’ lives – not just the right level of pay and benefits but also such trivial-sounding details as the optimal size and shape of the cafeteria tables and the length of the lunch lines.

In the last couple years, Google has even hired social scientists to study the organisation.

The scientists – part of a group known as the PiLab, short for People & Innovation Lab – run dozens of experiments on employees in an effort to answer questions about the best way to manage a large firm.

How often should you remind people to contribute to their 401(k)s, and what tone should you use?

Do successful middle managers have certain skills in common – and can you teach those skills to unsuccessful managers?

Or, for that matter, do managers even matter – can you organise a company without them?

And say you want to give someone a raise – how should you do it in a way that maximizes his happiness?

Should you give him a cash bonus? Stock? A raise? More time off?

A science and research based approach to HR. Great stuff.

The group ran a “conjoint survey” in which it asked employees to choose the best among many competing pay options. For instance, would you rather have $1000 more in salary or $2000 as a bonus?

“What we found was that they valued base pay above all,” Setty says. “When we offered a bonus of X, they valued that at what it costs us. But if you give someone a dollar in base pay, they value it at more than a dollar because of the long-term certainty.”

In the fall of 2010, Schmidt announced that all Google employees would get a 10 per cent salary increase.

Setty says Googlers were overjoyed – many people cite that announcement as their single happiest moment at the firm, and Googlegeist numbers that year went through the roof. Attrition to competing companies also declined.

Not all companies can afford to do that, but if you challenge is staff retention nice to know what works – not one off bonuses, but pay increases.

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22 Responses to “Finally a good HR department”

  1. Falafulu Fisi (2,178 comments) says:

    Well, they should not be employing women in the age bracket 25 to 35 because in that group, they are likely to start a family. It is not discrimination. Google or any employer simply exercises its rights to decide and how it runs its business and its properties. The GOVT should get the fuck out of legislating about someone’s rights to choose of who he/she employs. Let the free markets decides.

    [DPF: Have you read the article? Nowhere is there any mention of Govt involvement? And Google hires 25 to 35 year old women because they are good at their jobs. If again you read the article you'd see Google gets great value from its employees and wants to keep them]

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  2. mikenmild (11,246 comments) says:

    Good employers provide things that employees want, like additional leave and flexible working hours.
    Falafulu wouldn’t employ women – well it’s quite unlikely that women would want to work for someone like him anyway. Thus his (imaginary) rules out about half of it’s potential employees.

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  3. big bruv (13,661 comments) says:

    Falafulu

    It is discrimination and there is nothing wrong with it. I simply would not/do not hire females in that age bracket. Nor would I hire a male who even hinted at wanting to take maternity leave.

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  4. mikenmild (11,246 comments) says:

    There is a reason in New Zealand that we call if parental leave, and recognise that anyone can have family responsibilities. Good employers embrace diversity and get loyal, committed employees as a result.

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  5. mikenmild (11,246 comments) says:

    BTW ‘My general advice to new CEOs’.
    How many CEOs are knocking at DPF’s door for advice, or is this opening line just self-parody?

    [DPF: I never said they knock on my door for advice. But I engage with a fair number]

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  6. thedavincimode (6,606 comments) says:

    My general advice to new CEOs is that their first initiative should be to abolish their company’s HR department. This will make them very popular with their staff and generally enhance their operational effectiveness. Each section manager should be capable of basic HR management and just have a lawyer or two on call for the difficult stuff.

    Wisely, many CEOs would ignore that advice because they appreciate that HR in any medium to larger sized business has to deal with not just recruitment, but reconciliation and/or standardisation of employment policies across an organisation or parts of it, meeting internal and external training requirements, integrating the HR dimension of marketing, sales and customer relations functions, dealing with OSH bullshit, the fire drills, managing employee review processes, gathering and collating remuneration information for decision-makers, ordering the stupid T shirts, listening to all the Days of Our Lives like personal grief and aggravation that comes with employing people and being someone that pissed off people can go and shout at. Lots of bits of that can be outsourced to varying degrees but in any sized busines, somebody has to be responsible for holding those strings together. That crap is an unnecessary and unwelcome diversion to any section, departmental or functional head who is worth his/her salt and if they are interested in doing that stuff they should probably be sacked.

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  7. toms (301 comments) says:

    So Google had to use a

    “…sophisticated employee-data tracking program…”

    to discover that

    “…“What we found was that they valued base pay above all…”

    Jesus wept.

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  8. Redbaiter (8,234 comments) says:

    “How many CEOs are knocking at DPF’s door for advice”

    Probably not that many, but it would still be considerably more than the number of CEOs who might seek the advice of a sneering half educated financially and economically illiterate Marxist moron like yourself.

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  9. mikenmild (11,246 comments) says:

    DVM
    A good summary of what HR people would tell you they do, but in my experience they talk about doing it but expect managers to do the actual stuff for them.
    Also. nice that Reddy’s been let back out to play, isn’t it?

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  10. thedavincimode (6,606 comments) says:

    in my experience they talk about doing it but expect managers to do the actual stuff for them.

    There is no law that says useless HR people can’t be sacked. Your experience is a reflection on the CEOs you’ve worked for meaning that they should have been sacked as well.

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  11. thedavincimode (6,606 comments) says:

    baitey boy

    I saw you there, looked at the red karma, and thought: “I just can’t be fucked”. BTW, recruit any fresh young boys when you were away?

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  12. Redbaiter (8,234 comments) says:

    TheDavaselinemode-

    Obviously the HR dept where you work values dull predictability.

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  13. thedavincimode (6,606 comments) says:

    Go on, admit it; you hit the red one didn’t ya! You old paedo you. :)

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  14. Redbaiter (8,234 comments) says:

    What would be the point?

    You with your “moderator’s” access rights, probably manipulate the votes anyway.

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  15. thedavincimode (6,606 comments) says:

    Oh, poor ‘baitey wants some likes. There ya go, just for you. Better?

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  16. Redbaiter (8,234 comments) says:

    This is a progressive blog.

    Dominated by Key supporting queers, SNAGS and urban liberals.

    Why would a Conservative expect up votes?

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  17. thedavincimode (6,606 comments) says:

    Why would a Conservative expect up votes?

    Now don’t be like that. Remember how proud you were a while ago when you got those likes on Slater’s blog?

    There, I gave you another one.

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  18. Redbaiter (8,234 comments) says:

    I was merely making the point that my views are far more popular than Progressives like you would lead people to believe.

    In fact it is just this kind of censorship through attempted mocking and denigration that encourages me to write what I do.

    Even though it might seem repetitive to progressive gate keepers like you, its a means of letting newcomers know that their views are not as uncommon as “liberal” censors like yourself (enthusiastically dolling out demerits that reveal your own bigotry) claim.

    (BTW, still as obsessed as ever I see. Obviously haven’t been to that shrink yet)

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  19. thedavincimode (6,606 comments) says:

    In fact it is just this kind of censorship through attempted mocking and denigration that encourages me to write what I do.

    Wot, you mean the same thing over and over again?

    The only thing that you haven’t repeated is saying Obama married a gorilla. Why did you say that BTW?

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  20. Redbaiter (8,234 comments) says:

    A typical progressive- so down on comprehension skills. Your silly question was answered in the comment.

    Gosh, I hope you were OK when I was away.

    Maybe I should make an extra effort to comment from afar just so the agony of the withdrawal you suffer is softened.

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  21. Paulus (2,589 comments) says:

    How did the Personnel Department morf into HR, with expected top seniority billing.
    I am aware that they make their Departments a mirror of their own personal heirarchical thinking.
    They then create a Department only employing people of their like thinking, as it enhances their own perceived performances (usually friends). They then work out how to run rings around senior management with big words and overseas sort of ideas – often successfully.
    One of New Zealand’s greatest commercial follies over the last 30 years of commercial feminisation –
    – typical stupid male thinking.
    Like a company wanting a new computer system – approved by top management, yes approved – great idea !, then passed to a committee, arranged by HR –
    When the committee makes a stuff, up as costs go out of proportion, as the wrong people are on the committee and the spawning sub committees, then HR can stand back and deny anything.
    Yes I have seen it.

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  22. mikenmild (11,246 comments) says:

    Paulus
    We like to change the names of lots of things:
    Personnel became Human Resources, who mainly decided that a new remuneration policy was required, one that coincidentally allowed much higher pay for HR specialists.
    Town clerks became chief executives, who were a lot more expensive
    Business administration became management, and cost a lot more
    Bureaucratic grunts (whatever they were called) became policy analysts, who were a lot more expensive.
    Basically, one takes a trade and turns it into a faux profession, complete with institute and award ceremonies and one can charge a lot more for one’s services.

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