Wells Fargo was in the news recently due to an internal process and security breach. 5300 employees were fired for opening 1.5 million fake bank accounts which inflated their sales numbers and therefore their commissions. The employees moved customer funds into these new accounts without their knowledge or consent. Wells Fargo is on the hook to pay $185 million in fines and $5 million back to affected clients. And these were not powerful executives that executed this scheme, most of the employees were bank tellers and junior sales executives.
So once again, an organization has to audit their internal processes and find out if the issues were systematic and ultimately how such a large oversight in procedure could occur. Wells Fargo’s upper management was completely out of loop on how work was actually being done. High employee expectations and pressure to deliver results was causing employees to use unfair means to achieve those goals. Overall, there was a lack of accountability and access management in the organization. So how can HR play a role in reducing the occurrences of these types of organizational failures? And should HR hold any responsibility for these failures?
Why Accountability should be HR’s Responsibility?
An organization is a collection of their people and it cannot operate without them. When an organization’s people behave unethically it reflects on the entire organization. HR is the first business unit that a potential employee interacts with and HR has a huge impact on the hiring decisions and the culture of the organization.
HR has perfected the transactional role it has played in organizations and made a huge difference in finding the right employees to help an organization grow and meet their goals. HR has put onboarding processes in place so that an employee feels engaged more quickly with the organization. But there are still gaps in procedures leading to potentially reputation damaging events. And when an organization tries to get to the bottom of what happened and who is ultimately responsible, it becomes very difficult to root out the procedural gaps. However as shown by the many scandals in business world, it seems that there is a need for tracking accountability in an organization however complex it is. And human resources is most suited for doing so, as it is the one business unit solely responsible for people. As for HR, it is time to look at how work gets done in organizations and change it.
How Work Gets Done in an Organization:
Work gets done in an organization through assigning people with tasks and providing them with relevant system and process access so as to accomplish strategic goals of the business. An organization hires people based on their competencies and skill sets that make them capable of handling certain responsibilities with authority. A ‘baseline contract’ is signed to bring employees onboard and start performing work for the organization.
Figure 1: An Organization’s environment is dynamic due to changing factors that impact the baseline contract for which employees are hired
An organization’s environment however is dynamic, as shown in Figure 1, due to various factors, such as increased organizational learning, tenure in the organization, and the changing business environment. New competencies are acquired due to accumulated learning over the increased tenure in organization. With new competencies, the authority an employee may have changes. Regulations, competition and market forces constantly change the strategic objectives of the organization. As such, with constant changes occurring to the baseline contracts, tracing back what happened and what led to mistakes is often lost and so is the accountability.
The Missing Piece of HR:
The auditability of changing baseline contracts to give a clear picture of any event’s accountability is the missing piece of HR. Through job descriptions and contracts signed during an employee’s onboarding, HR is able to define and verify the competency and authority. However, as employees keep working in the organization their accountability keeps changing. This is something that needs more visibility to understand the true inner workings of an organization.
When you hire someone there are three main aspects to building their job or baseline contract:
- Competency: Skills needed to meet your organization’s goals
- Authority: How much decision making ability is given
- Objectives: Goals you ask them to work on
None of the three aspects of their initial job remain the same due to changing objectives, organizational learning, and responsibilities they may undertake that increase their authority. Their job will change and so should their contract with the organization. At StarGarden, we have labeled this construct the ‘Active Contract’.
Building Active Contracts in Organization:
Active contract is the visible aspect of the informal agreement or contract that’s conscripted between managers and their team members or between team members themselves, to enable completion of work in an organization. Active Contract is the key building block to successfully automate and audit your organization’s systems and processes.
Figure 2: Active Contracts keep track of Changes to Baseline Contracts to fill in the Accountability Gap in HR’s tool kit
Think of the Active Contract as an auditable job description. The jobs we are hired to do are constructed by merging our organizational authority and the competencies we bring to the job, with the objectives and goals of the job and what we are compensated for the job. So by reviewing the Active Contract, you can audit what employees have authority to do and also ascertain their competencies and qualifications.
Once we have a clearly defined Active Contracts, we can use this as a building block for process automation and workflows. Every task can be constructed online through a workflow tool and the appropriate resource brought into the process at the correct time based on their authority and competency.
With the Active Contract in place, the organization can distribute the work and tasks based on the defined authority and competency structures. The overall strategy of the organization is translated into automated task workflows and delegated automatically to the right resources as required. Everyone is driving towards the same strategic goal simply by doing the tasks that they are most suited for. And when failures occur, an organization has a mechanism in place to find the root cause of the failure. Contracts and automated processes can then further be adjusted. HR can and should play a more strategic role in the definition and management of the employee contract with the organization.
Image Credit: quarterly.insigniam.com
About the Author:
Marnie Larson is the CEO of StarGarden Corporation and oversees its operations in Canada, US and New Zealand. She has over 20 years’ experience in the software industry and specializes in HCM, Business process automation and Workflow technology.
References:
- http://money.cnn.com/2016/09/08/investing/wells-fargo-created-phony-accounts-bank-fees/
- http://www.hrdive.com/news/before-the-client-cheating-scandal-revelation-where-was-hr-at-wells-farg/426127/
- https://www.washingtonpost.com/business/economy/wells-fargo-settlement-over-phony-accounts-raises-questions-about-oversight/2016/09/09/2a780788-76ab-11e6-be4f-3f42f2e5a49e_story.html