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Anne Donovan, President of Xenium HR, joins the HR for Small Business podcast to discuss her career in human resources and the role it played in business leading up to present day. The discussion later turns to the role HR currently has in business and people practices and where the focus of HR is going in the future.

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Brandon: Welcome everybody! This is the HR for Small Business podcast, I am Brandon Laws and I am with Anne Donovan, the president of Xenium. Welcome, Anne!

Anne: Thank you, glad to be here!

Brandon: You have a unique perspective, having been in HR your whole career and now a leader of a company that does HR consulting. I thought it would be kind of fun to talk about the past and future of HR, and what it means. So, give us some perspective from your career and first-hand look: what did the past 10-20 years of HR look like? What place did it have in business?

Anne: You know, it’s really evolved a lot. When I first started in this business, HR was perceived more as the compliance department, to help an employer avoid getting sued and to get the administrative work, such as onboarding and benefits paperwork, done. It was really focused on just the admin side. Now, snapshot forward, we really see HR perceived as a business partner and helping managers and leaders of the business really frame up the culture of the organization. How do we recruit and hire the best talent, and how do we retain them? That’s really the big push we see in HR today.

Brandon: When you look back on your career, you’ve had many different roles and you’ve seen other HR professionals and colleagues have different roles. In the spectrum of HR, what are some of the things HR was, and maybe still is today, responsible for?

Anne: When I first started as an HR Generalist, which was really my first position in the Xenium framework, HR is responsible for a lot of employee relations. And that’s still true today. I think you need a really solid consultant who can help when things go sideways, and that is definitely still a part of it. What I see more of now is that HR is tasked with not just stating what the rules are—the attitude of If you do this, that’s against the rule. If you do that, that’s okay. I think HR has been perceived as the department of “no.”

“I think HR has been perceived as the department of ‘no.'”

-Anne Donovan

Brandon: Exactly, more policy-driven then; more philosophical now.

Anne: Exactly. So now, what I look for in an HR Business Partner when we’re hiring new people into our company, is people who think on their feet and think like business people—not just HR compliance people. And that’s when we really start to stand next to our managers and leaders as colleagues, saying Here are some things to think about, and here are some options as opposed to You can’t do that.

Brandon: It’s interesting in our business when we first engage with a business that’s thinking about engaging with us for HR, maybe they already have HR, or maybe they don’t. But HR will sometimes fall to a financial person. Why is that? It’s a model people have been practicing for years, why does HR fall under a financial person’s responsibilities?

Anne: I think that’s because it’s always been perceived as just an administrative function. So the leader, whether that’s the CFO or the accounting manager, will lead it. Also, it hasn’t been perceived as really a strong part of the company, so it will be scooted under as one of the many things the financial person has to lead. So now, it’s becoming much more of a department in and of itself. Oftentimes it reports to the top leader of the organization, because the finance people, while sometimes they have a great knack for doing both the financial and the HR, but many times that’s not their core competency and what they really want to focus on. In that case, it’s really important to have the people side of the business reporting to the top leader of the company.

Brandon: So HR is really not a “one size fits all” for every company. Every company is a little different in terms of their size and their available resources. What’s a common structure for HR? You could maybe talk about the different types of companies out there as well.

Anne: You bet. So, what we see, in terms of the clients that we serve, is that the small business generally doesn’t even have one person dedicated to HR. It usually is under the financial person or the accounting manager, or it’s a free for all and no one really owns HR.

At about 50 employees, oftentimes companies will assign one individual to be the end-all, be-all department of one, as we call those folks. And that’s a hard job, because you have to do all of the administrative work, all of the generalist, and even stretch to the strategic, if you’re wanting to do things right.IMG_7395

What the Xenium model does, oftentimes, is wrap around those individuals and help with technical support, supervisor and leadership training, and a little bit of the best practice background that we have. So you can kind of get the best of both worlds. It’s hard to be the department of one.

Brandon: With the department of one, to sum that up, it’s kind of hard to scale it.

Anne: It really is.

Brandon: You’re trying to not only do administrative, compliance-oriented things, but you’re also trying to be strategic in nature too and push new initiatives forward. At
present day and going forward, what are most companies thinking about in terms of HR? What new initiatives are they pushing? How are they trying to structure the department? I know it’s kind of a big question.

Anne: That’s a great question. What we’re seeing a lot today is the culture initiative. Companies are recognizing that it’s not just about hiring people, giving them a salary and benefits package, and saying Good luck with that, hope everything goes well. Employees expect an environment that is engaged, where they have a professional development plan. It’s about money, but it’s about a lot of other things too, and in this market, it’s hard to find really good people. So you do have to have more than just a paycheck and a
benefits package to attract the best and brightest.

And then once they’re onboard, how are you going to keep those folks? If you want top performance for your company, you’re going to have to hire top performers.

Brandon: This is just an interesting observation I’ve had over the past couple of years, but when I know there’s a change happening, you can start to see title changes in HR reflect it. VP of People, of Growth, you name it! I’m seeing these titles out there, where HR Generalist used to be a pretty common title. So obviously, business leaders are thinking that HR is more strategic than we’ve treated it in the past.

Anne: Absolutely. And we’ve changed our titles too. We used to be HR managers and HR account managers. We now call them HR Business Partners and Strategic HR Partners, because we know that to have that proverbial seat at the table, you can’t just be an administrative function that is quoting state and federal law about what you can and can’t do. You have to be creative, you have to think like a business person and be on that side of the table with your leaders and managers.

Brandon: So in the next 10-20 years, I know that’s really far out, but maybe starting with the next 10 years—where do you think HR is going?

Anne: I think over the next 10 years that this concept of how to do workforce planning and retain the best and the brightest will be the number one thing in HR. People competing for talent will be the most important thing to help companies be successful.

Brandon: That is strategic, because you have to think differently when your competition is going after the same pool of people. That’s why I think there’s a lot of emphasis on the attracting and retaining talent.

Anne: Yes, and it’s not just about money. It’s about creating an environment where people feel they’re doing meaningful work, and that they have someone or the company in general looking out for their professional development, because people—millennials especially—are not going to just stay in the same position. They want to grow and know that there’s a dialogue within their company about how they’re going to get to their next level.

Brandon: When you talk about supporting that vision, how do you think an HR structure will look?

Anne: I think the titles will continue to evolve. As the company gets bigger, obviously there are more resources to support this, but there may be factions where you have business partners who work on employee relations and best practice compliance, and then a whole other person or department who’s working on culture and organizational development and all of those things that are the softer side of making a great company.

Brandon: One of the last questions I have for you is what new responsibilities, if HR doesn’t have the responsibility today, what do you think they will have in the future?

IMG_7889Anne: I think that HR is going to need to develop and attract really dynamic people, because this competition for talent means that we can’t just have standard onboarding practices where you fill out a set of forms and say There you go, good luck. It’s going to require people who think like business people and who are really dynamic individuals themselves and are recruiters, so that when candidates are in the process, they are delighted by the experience they have with their recruiter, with the person who welcomes them to the company the first day, with the person who’s going through their benefits package, and then all of the opportunities that HR can create for those employees to continue to develop once they’ve gotten entrenched in the company.

Brandon: Given that we’re talking about HR and talent and all those things, from the time you were in school learning about HR and got your certificate and started in the workforce, what do you think has changed about that educational process with HR? I’m sure you were learning more about compliance-oriented things back in college, do you think schools are teaching more about the strategy of retaining talent, figuring out ways to recruit, and culture?

Anne: Absolutely. We’ve had challenges sometimes with making sure that we can find the right people for the Business Partner role we hire for, because it requires more than just understanding the law or just understanding how to navigate through an employee relations issue. It’s really got to be more creative and more focused on how are we going to help solve business problems as opposed to just following the rules. Following the rules is important, as we all want to do the right thing for our employees and our company, but the answer can’t just be No you can’t do that. It needs to be How can we help the business solve a problem and also help support these really valuable employees? And that requires people who think.

“Following the rules is important, as we all want to do the right thing for our employees and our company, but the answer can’t just be No you can’t do that. It needs to be How can we help the business solve a problem and also help support these really valuable employees? And that requires people who think.”

-Anne Donovan

Brandon: Absolutely. What do you think has changed, going back 20 years before now? Where do you think the perception has changed for business owners about HR?

Anne: I think in the past, business owners have seen HR as a necessary evil. Not everybody, but certainly our experience is the attitude of Oh I don’t want to get sued, so I need to talk to an HR person to make sure that I don’t get sued. Now I think people realize that people who are really good at HR and are trained in it have a seat at the table and can really make a difference through the execution of really good HR practices, whether that’s strategic planning and workforce planning or gracefully managing a transition for an employee, and that it’s really important. It’s not as simple as just coming up with These are the reasons why this person needs to leave, here’s the final paycheck. It’s a lot bigger issue than that. We care about people. Our value proposition is that it’s about people, and helping folks come into the organization gracefully and, if necessary, leave the organization gracefully.

Brandon: Going forward, how do you want it to be perceived? Not only to business owners, but to employees as well?

Anne: That’s a great question, Brandon. My hope for our industry and our company is for employees and leaders to see HR as a resource of support, as a thinking partner, a place to go when there’s a question about people or the culture of the organization. I hope that HR is not only at the table but they are leading alongside the other managers and are making other managers better at what they do in a way that that manager couldn’t have foreseen before they worked with that HR person.

“My hope for our industry and our company is for employees and leaders to see HR as a resource of support, as a thinking partner, a place to go when there’s a question about people or the culture of the organization. I hope that HR is not only at the table but they are leading alongside the other managers and are making other managers better at what they do in a way that that manager couldn’t have foreseen before they worked with that HR person.”

-Anne Donovan

Brandon: So before I cut you loose, what’s your favorite part of HR?

Anne: I love the people side of HR. I’ve never been drawn to the compliance and the kind of day-to-day of HR, the necessary parts of it. But I love people development. I love watching people like you, who have come into our organization 6 or 7 years ago, and watch them grow and develop. When my head hits the pillow at night, that’s what makes my job meaningful.

Brandon: That’s great. I’m not an HR person myself, but watching people grow is really the most fun part of HR, isn’t it, the coaching and developing and really focusing on the professional development for people. I think if you can grow people within your organization, it’s a lot easier to build a business that way than it is to attract talent from the outside.

Anne: That’s a great point, Brandon. You’ve got to do both, but we have found our most success has been with people we’ve hired who are smart and capable, but we’ve been able to train them along the way. We have so many examples. I am one of them! I’ve been here almost 24 years now, and I attribute it to Bill Stoller and his willingness to work with me and give me opportunities even before I thought I was ready. That is a pretty special place, when you have that kind of development opportunity for somebody where they can dedicate their career to one company.

Brandon: Before we end, what is a piece of advice you would give to someone who is aspiring to be an HR professional?

Anne: Great question. I would say think outside the box, remember that it’s about people, and to surround yourself with mentors who look at the practice of HR as a way to support both businesses and people in a creative, dynamic way.

Brandon: And what about the business owner who’s skeptical of HR?

Anne: I would say to the business owner who’s skeptical of HR, open your mind to the possibility of what a really good HR person or HR team could bring to your business, as it can have pretty transformational impact.

Brandon: Anne Donovan, president of Xenium, thank you for being on the podcast.

Anne: It was a pleasure, thank you!