Archive for November, 2013

Let’s Get Rid of HR!

November 20, 2013

HR_Vital Function Image

An article entitled, “Why We No Longer Need HR Departments” by Bernard Marr was recently posted on LinkedIn. (http://www.linkedin.com/today/post/article/20131118060732-64875646-why-we-no-longer-need-hr-departments).  Bernard Marr is a self-described bestselling author and performance management expert residing in the UK.   Let’s be clear.  The term, performance management, in the minds of many, is simply another euphemism for a systematic approach to HR and Mr. Marr is a consultant who provides these services to his clients.  Thus, we were among the 3,000 or so people who thought Mr. Marr’s views on the need, or lack thereof, for HR to be interesting and poorly conceived, not to mention controversial.

 He points out several things in his article.  First, he attacks the nomenclature by suggesting  that no one could possibly take a department that refers to people as ‘resources’ seriously.  He follows with the notion that HR departments serve two masters; both employees and employers, and that this dual allegiance creates an inherent conflict of interest that underscores the need to do away with HR departments entirely.  I guess that happens after we rename them.

Then he suggests a few alternative ideas including outsourcing non-value adding HR management functions (without telling us what those non-value added items might be) and creating two different internal, non-HR, teams to handle “people issues” including a “people support team” to provide assistance to employees and a “people analytics team” to scientifically analyze and provide information to management on employment gaps, turnover and employee performance.

 That’s all very interesting, but really?  First, we’re not crazy about the “HR” label either, largely because the function has come to encompass so much than the traditional HR functions of recruitment, hiring and performance reviews.  In addition to those traditional responsibilities, onboarding, change management, performance management, compliance and risk control are all part of the daily fabric of HR departments.   So, while we happily agree with the many companies that are abandoning the terminology in favor of more pleasantly descriptive role definitions such as “People Management,” the fact remains that the functions performed by HR and/or their ‘people management’ counterparts are quite necessary for every business of any size.  There is nothing “non-value added” about avoiding a multi-million dollar lawsuit through effective and compliant approaches to day to day workplace dynamics.   Indeed, your house might not burn down tonight, but that doesn’t mean that having homeowner insurance coverage is a bad idea.

 Second, the idea that HR departments should be primarily serving the interests of employees is absolute nonsense.  Any competent HR professional will tell you that his or her function is to serve the employer and that HR is no different than any other department in the company such as sales (where selling the company’s products or services is solely for the benefit of the company) or engineering (where research, design and product development is done solely for the benefit of the company), or finance (where analysis and reporting is done solely for the benefit of the company).  It is true; however, that HR must be instrumental in assuring that the company has an engaged, satisfied and competent workforce ready and able to do the work of the company.  And, certainly it is true that HR must often walk a middle line where service to or for the benefit of employees has the intended end result of benefitting the company.    Happy employees usually stick around.  Companies that have tenured, competent and engaged employee bases are usually those that are most successful in the marketplace.  Thus, happy employees often make happy company owners and investors and there is no conflict of interest there, that we can see.

 Finally, on the subject of “people support” and “people analytics” teams, we wonder how effective people support teams will be when the support they advocate has the result of weakening the company   or, alternatively, how they will be viewed by their constituency base when the company fails to implement recommendations that aren’t appropriately aligned with corporate strategy and goals.  As to people analytics, this seems like nothing more than yet another term for the dreaded HR function to us.

 We do agree that there are certainly advantages to outsourcing some HR functions particularly those that may require expertise not readily available with current HR staff.  Change management programs are often outsourced along with development of training and onboarding programs.  Outsourcing is a growing trend, but outsourcing the entire HR function is not the real answer to the problem.  Ask the CEOs who participated in a recent survey conducted by the Conference Board.  They unequivocally stated that their number one concern is attracting and retaining competent talent and leadership so that they will be able to grow and sustain their companies in the future.   I’m sure that many of them are outsourcing some functions, but I’d be willing to bet they all have effective, engaged and active HR departments.

 Instead of focusing on companies where the HR function is broken or at least not as contributory as it should be, perhaps Mr. Marr and his supporters should start looking at companies where HR is their prize winning department. What is it that they are doing differently?

 Take, for example, Southwest Airlines. Most graduate schools, including Stanford’s Graduate School of Business, have extensively studied the low cost, no frills carrier and the mark it has made on the airline industry. If you do a Google search of Southwest case studies, you will find page after page of white papers on the success of Southwest and how HR plays a major factor in the company’s ability to beat out the competition, even among the legacy carriers such as United and American.  Southwest considers the HR role to be one of the most important elements of its management team and it shows. Year after year, Southwest tops the list of carriers with the best record of on time arrivals and departures while working with a smaller workforce than other carriers.  The reason behind Southwest’s success is a focus on strategic planning and leveraging employees to create a fun, yet productive, work experience that, not incidentally, also makes for a pleasant and fun customer experience while also boosting the bottom line. While the airline doesn’t refer to the department as HR, the roles it plays is the same.

 So, let’s go ahead and meet Mr. Marr halfway and rename HR to something more catchy and up to date.  But, let’s also recognize that while HR it has its share of problems, viewing it as the scapegoat for a company’s issues usually only perpetuates the problem.  Before getting rid of the HR department, check to make sure you aren’t “throwing the baby out with the bathwater.”

Learn more about C3 Advisors, LLC at www.c3advisors.com.  Find us on Facebook and LinkedIn.  Subscribe to our newsletter by emailing debd@c3advisors.com.

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