Is Human Resources Fatally Flawed?

Don’t think about it. Just answer me quickly: Is HR fatally flawed?

How many of you answered yes? When I first started writing this in April, I said yes too. Yes, this has been on my mind since April, sitting in my draft folder waiting for me to answer the question. And I can tell you, if I waited until I had a perfect answer, you may never have seen a post. In that time frame, I’ve gone back and forth but I finally come to the conclusion that HR isn’t fatally flawed but it does need some work.

Is The Tide Turning Against HR?

When I wrote this question back in April, I knew my answer but was afraid to post it. So I thought about it over and over again for almost five months. Here’s why I thought HR was through:

  1. Most of HR’s value could be outsourced – Heck, it already was in many cases. Everything from talent recruitment and selection to heavy lifting in critical employee relations and benefits matters were being taken care of (or very heavily influenced) by outside agencies and consultants.
  2. Unclear goals and ROI – If you are a small to medium sized company, you can’t afford to have an entire department sucking funds from your other profitable departments. At some point, HR will become a luxury department for large Fortune 500 companies (the same one’s that can afford to run advertisements simply to raise “brand awareness”).
  3. No input on business direction – You don’t get a seat at the table without having business savvy. You want to know why C-level titles or so inconsistent for HR? A true lack of business courage outside of the talent world. If you have nothing to add about marketing messages, sales forecasts, or budgeting issues, you’re of no use at the table. Let’s just put that to bed.

So I saw all of that and thought that in a decade or so, you won’t see robust HR departments outside of large companies. And even at those companies, HR would be in a precarious position if bad financials started influencing decision making.

Of course, my thinking changed.

The Light At The End Of The Tunnel

When you have a near death experience, one of the common experiences is the light at the end of the tunnel phenomenon. One of the other common experiences was a feeling of warmness, comfort and an almost enlightened state. Now some will tell you that it is your soul going on to its next destination or a series of chemical and electrical responses to your body shutting down. Whatever it is, when people come back from an episode like that, it is one of the few ways humans become permanently rewired.

What’s the connection to HR? I am convinced that HR is going to be transformed due to a soon coming near death experience. It is going to become a fad to integrate high performing HR folks directly with operation groups in organizations (it already has in some forward thinking companies). This will end up reducing HR to a complete administrative function and to the brink of death. People are going to scramble and eventually, a new way of integrating the talents of HR will hit someone and it will become the norm for decades afterward.

We won’t get there until something drastic happens though. People in HR are still too comfortable with the current system.

New HR: Now More Than Ever

HR doubters and haters are reading through this thinking I am just making the case for them. Only in their mind, HR just ends up dying at the end and everybody is happy. HR has heard this for how long, right? Maybe the biggest indictment on corporate inaction is the fact that the HR department you see today is still the best thinking we have on how to best manage our “most important asset.”

So I began thinking about what critical functions of HR I would want to keep if I wanted to put together a minimalistic but effective corporate structure. Here’s what I came up with:

  1. Workplace Process and Productivity Expert – I would want someone that could look at a workplace process and figure out all of the issues negatively impacting the productivity. While some would put this under supply chain management, I would want a person that could incorporate supply chain principles with organizational development to give a wide perspective.
  2. Functional and Effective Internal Ombudsman – This would be a person that becomes the next generation of employee relations. Someone who would be comfortable (and be given the authority) to call out management and employees on their detrimental actions and be compensated based on solving issues. An internal ombudsman will command respect (but not necessarily agree) because their recommendations and results will be explained and made public to all employees. Hard to wiggle out of that.
  3. Employee Life Cycle Manager – This person would be the guru on how to best integrate new people into an organization, develop careers internally and anticipate and plan exits for any number of reasons. As part of their internal career management, this person would also be in charge of all internal and externally coordinated training and development activities. If you thought of your company’s employees like a giant factory with thousands of moving pieces, this person would know where each piece is at  and will be in any given minute.

Those would be the functions I would choose to continue if I had to cut it down to the bare minimum with functions I could track ROI and clear cut goals on. Everything else I could outsource effectively if needed.

Obviously there are people in HR that cover these areas in various ways but I’ve yet to see an HR organization that organizes them around these sorts of functions.

Does this make sense? If it doesn’t, what does? And if you’re happy with how things are currently structured, what’s the argument against trying a different approach if your manager came to you with this idea?

42 thoughts on “Is Human Resources Fatally Flawed?

  1. Lance,

    Good points; and probably prophetic in many ways. So why is it?

    As an HR professional with more experience on the other side of the table, I can tell you it’s because HR MUST be approached as a business function, with all initiatives tied to business case ROI.

    And there is an ROI in recruiting and placing the right team members in the right seats on the bus; staying ahead of the business curve in our provision of this HR raw material.

    I’ve always said, if HR wants a seat at the ‘C’ level table, then PULL OUT A CHAIR AND SIT DOWN! Too often we equate the human resource function with administrative processing and the placement and processing of applications, etc….. . Why is it that we don’t consider the procurement function to be the administrative side….entering purchase orders, communication with vendors, order follow up, etc… all very necessary functions. No we equate materials procurement with the logistical planning and negotiations necessary to stay ahead of the manufacturing/production curve.

    Well what is HR, then? A large portion of the function is the procurement and development of people, the greatest material used by organizations.

    We, as a profession, need to take that same jump and apply our strategic expertise to the planning and implementation which will keep us ahead of the business curve.

    The three critical functions you mention are a good start; all business related with direct ties to ROI and the future success of the organization.

    Our industry needs to quit shrinking from the prospect of outsourcing some HR functions and embrace the concept; no, initiate and implement the outsourcing and propose and measure it against ROI! Otherwise someone else in the organization will do it for us.

  2. Interesting (and, of course, controversial) post. A few thoughts:

    First, I like Joel White’s analogy to procurement. Assuming that an enterprise believes that recruitment and talent management are key functions (or, if you must, “strategic”), then, as Joel implies, HR is as necessary to an organization as procurement (or accounting, or any other key support function).

    Second, I think that in the HR world there is far too much navel gazing. Much ink is spilled in endless discussions about how to get a “seat at the table” (a phrase, that in my opinion, should be banned due to severe overuse), and about how to make HR more “strategic.” Are some HR functions administrative, routine, even a little dull? Of course. But one can say the same thing about purchasing, finance, accounting, even some areas of marketing. HR folks should recognize this and move on.

    Third, one doesn’t need to look far to find many examples of how HR can add real value to the bottom line. The WSJ had two good examples of this yesterday (see my blog post; it includes links to both articles – http://bit.ly/3sDlT2

    Bottom line: I’m not convinced that HR is destined to become a “luxury department for large Fortune 500 companies” any more than any other corporate support function. Of course some aspects can (and should) be outsourced but, again, parts of other corporate support functions (such as accounting) are also outsourced. Will HR change in the coming years? Of course, but so will other parts of organizations.

  3. The one thing I’ve experienced with the HR departments I’ve come in contact with is their interaction with the various departments they work with. It’s never made much sense to me why there is someone outside of the area making decisions about who will work with me. I’ve always felt that dividing up HR into two sides would give it an immediate boost in effectiveness. The ‘boring’ admin responsibilities can (and in most cases are) centralized, but the talent hiring / evaluation folks should be much closer to the department. After all, how can you have a good sense of what kind of people would fit, if you yourself aren’t there to see the area ‘in action’?

  4. Really interesting article. I do think HR as it stands now is fatally flawed…but I know so many forward-thinking HR folks that I believe it will morph and change as needed. Many are calling for that early and often.

    I listen to both HR folks and candidates (active/passive/happy-with-their-current-job) and I think one of the fatal flaws HR depts have is that they talk/listen to others in HR too much and don’t listen to candidates enough. I feel the same about many active candidates in this current job market. There is much to learn from each other…

    And remember candidates are your future co-workers/bosses. If they don’t respect HR based on first meetings/interactions…they may never respect HR.

    I love the Ombudsmen position!

  5. There are organizations and people that are changing the way that HR functions and is respected in the work place. I just started a top tier MBA program that has the option to emphasize in OB/HR. I will get all of the classes/skills that are taught in a MBA program- finance, accounting, marketing, leadership, operations, but I will also get in depth OB/HR exposure and see how all of the pieces fit together. I think that this approach is one way that HR can make a difference. If we can walk into a meeting and talk the talk, walk the walk and show what we are doing to make everyone else life easier we are going to be welcomed back. I am excited to get back into HR at a company that values my new skills and get to work.

  6. Fortunately, my firm has long adopted Norcross’ model of giving department’s input in the process of selecting personnel who will ultimatley join their teams. In fact, HR’s role has evolved into being more of a facilitator than a dictator of who gets in where. It’s proved a very useful strategy in selected team members with presently no disadvantages. The success of that strategy is evidence that an HR department’s effectiveness and efficiency largely depends on the strategies its management, what policies they decided to implement and how they inferace with other departments.

  7. Is this a question or an assumption? My first response is this: it only hurts if you believe the question. HR is not for the thin-skinned or weak. You gotta love it, because it will kick your ass everyday of the week, and then again when you can’t sleep.

    Here’s what I have to say to those who question the value of HR, I say take a look at what it’s really like first:
    1. No other function has as many ‘cooks in the kitchen’ as HR does, but HR is left ‘holding the bag’
    2. Companies have historically undervalued HR, because (and this is the horrible hateful truth), they don’t value their people. If they say they do, it’s lip service. Very, very few believe it and live it. Period.
    3. HR is a function with 12 different areas: HRIS, payroll, benefits, training, compliance, employee relations, recruitment, performance, OD, M&A, culture, and ER branding, but companies expect the manpower of 1-2 HR staff to handle it all from posting the job ad to OD design and deployment. It’s the equivalent of a company hiring a CFO and expecting them to handle A/P, then having the audacity to ask why the CFO isn’t effective.
    4. Too many people not knowing what they don’t know about HR and thinking they have something to add to the discussion. Until you can fire an employee in this economy and have them write you a personal note thanking you for maintaining their dignity; stop an executive from bullying or sexually harassing staff and maintaining theirs and your job; renegotiate the benefits package so employees keep their level of coverage AND the company saves money when the CFO told you to “cut benefits, those people don’t deserve it”; prevail on a discrimination action that saves the Company millions of dollars (the plaintiff’s alleged damages) because you used your HR 6th sense and managed and documented the employee’s tenure from the first sign of trouble; until anyone can say this, then back off. You don’t know what you don’t know. Manage your own function and give HR the respect they deserve, because they earn it every single day.

    No. I’m not bitter. I’m angry. I’m an HR executive. I’m also an employee and I have the vantage point that few in the company and even the executive washroom have: full-access to exactly what the C-suite is saying about employees and it’s not pretty. We have to make a decision. Be one of the greedy few at the top who talk a lot of trash and like to look like and sound like they know what they’re doing, or do it. Walk the proverbial talk and take action by working both sides of the management fence to take a stand for the employees. This takes finesse. This takes experience. This takes guts. Who do you want on your side? A “business partner” that interested in their own success or someone who gives a $hit about your well-being?

  8. I don’t really know what to attribute to the slide of HR, but it has clearly slid down the ladder so that it has basically become an administrative function. Do I need HR to pick who is working on my team (no) – I just need them to remove the chaff. Do I ask HR about big layoffs (no) – only after the consultants have been through with their cost models and told the CXO folk exactly what they will do.

    Is there an real ROI for HR? It stands to reason that hiring better people will produce a stronger company, but how does HR ‘take credit’ for these peoples’ success – by the virtue that they picked them out of a list of resumes?

    Unfortunately, the key answer here is that corporate America really doesn’t care about it’s workers as people, they care about them as profit/loss centers. There are a lot of people looking to step into any job, so why would I keep someone for any other reason than the impact to the corporate bottom line?

    For HR to remain relevant it needs to “grow a pair” and stop being the lapdog of executives who care little about their ‘Human Resources’. No one is going to ‘give’ you a seat at the table, you have to earn it by driving business value and the business value has to be explicit.

    Of, course, if you don’t really care about your employees, then HR is purely and admin function and one that can be easily outsourced.
    See my post on the changing nature of the employeer / employee relationship: http://virtualjobcoach.com/blog/?p=1773

  9. Clearly, there are as many opinions as perspectives (and we all bring our own unique perspective based on past experiences).

    I feel HR is entering a new dawn. Technology is allowing us to focus on the things that really matter.

    And, they all boil down to: Employee Engagement.

    If HR does nothing else than siginificantly raise the needle on this all-encompassing metric, we’ve done our job.

  10. Lance,

    I “officially” left the HR profession in 1993 but have stayed connected to my HR colleagues via social and business networking sites and SHRM. It’s amazing to think that the conversation about HR that was going on in the late 80s and early 90s is still going on and HR is still waiting for that seat at the table. Your insights are spot on and you are part of a new breed of HR professionals who will sit tall at that table when you get there. Great post!

  11. Stay Out Of My Sandbox – you make excellent points about the function of HR — but in a mature / progressive organization, which most companies are not. Generally, HR is in place primarily to protect the organization, not to help a company “value its people” and become an “employer of choice.”

    Until HR is perceived as a proponent of both the employer and employee, the comments here will essentially stay the same. HR is viewed by most people as record-keepers and rubber stampers…only they can change that perception.

  12. Fantastic comments. I feel very strongly about this topic so I will contribute to the discussion a second time.

    Please understand that I am an HR professional; and yes, I care about people very much, BUT:

    Human Resources is NOT, is the vast majority of cases, given the role of employee representative or ombudsman. We are engaged (and hired) by organizations and businesses to contribute to the overall effectiveness (if you’re gov’t or non profit) or efficiency (if you’re a business). In other words the ‘bottom line’ or what ever name you call it.

    Yes there are HR positions/roles out there which do want you to “represent” the employee, but that is a rare exception.

    Will states above, “Unfortunately, the key answer here is that corporate America really doesn’t care about it’s workers as people, they care about them as profit/loss centers.” Yes there are many companies which could wear that description, but the vast majority do value their people. If you want them to understand how to value their people more, than show them how it affects the bottom line (or the top line and saves monies). Public companies have a responsibility to their investors/owners/stockholders, and anything and everything they do must be justified in that light. Added shareholder value. Does that mean treating their employees like dirt? No. But if cuts need to be made or shifts in resources need to be made to meet market conditions, that needs to be the overriding factor.

    Can they effect these changes AND treat people with dignity and respect? Sure they can. But guess what. It is up to you, the HR professional to show them with a business case, why treating people better in this scenario will increase the bottom line by minimizing lawsuits, time consuming complaints, etc…. . It is not the businesses responsibility to go broke because they refuse to reduce staff or resources. It’s not their money.

    Folks, if you are an HR professional in a business and you don’t like the emphasis always being the bottom line, then find an HR position in an altruistic non profit somewhere.

    In a profit centered organization, if you are not contributing to the bottom line, then you are support staff/function. The procurement manager does not, by his own volition and altruism, begin buying “green materials” because it makes him feel better. Now if she can make a case for where it contributes to the bottom line…….. .

    Take a look around at that “C” level table. If you will not see someone there who represents a function which does not affect the bottom line. Human Resources is NOT an administrative function or process. We are not the processing of payroll nor the provider of benefits information, etc…. We are responsible for these functions.

    We are, however, the strategist and business savvy executive team member who institutes electronic pay systems or innovative benefit plans or employee assistance programs (at the company’s expense); because we demonstrated how they will impact the bottom line!

  13. I loved your article and I agree with it. I read his Fast Company article in ’97 titled “Why we hate HR” and I don’t think much has changed since then. http://www.fastcompany.com/magazine/97/open_hr.html

    HR is not respected and has to change.

    The roles you have described as staying sound great and could be done via another department.

    I am in HR and often I am embarrassed about the state of our function.

    I know there are some very good strategic HR departments out there doing very good work – but in my experience they are few and far between.

  14. Whether one agrees with it or not, it’s a vital part of keeping the profession fresh by continually questioning our value and raising new ideas.

    Just a broad comment – many management (not HR) theorists talk about outsourcing non-essential and non brand related components of the business and HR gets thrown into the mix. Those same people advocate that one should not outsource things crucial to the point of differentiation or the key drivers of the business… With this in mind, yes lets discuss outsourcing but I don’t think I’d want to be “outsourcing” something as crucial as people management.

  15. Jonathon – I think it can be argued that people are/should be “managed” by their managers–not HR–in terms of career development, training opportunities, and plans for growth. While HR might identify and promote training opportunties for an organization, it is — or should be — a manager’s responsibility to provide growth opportunties for their subordinates. HR as a recruiting function in an organization makes no sense to me, as they do not have the needed position knowledge or insight for hiring recommendations.

  16. Jonathon – IMHO, “outsourcing,” in it’s best-defined use for HR means leveraging technology and vendors to outsource the admin, transactional, mundane stuff (a lot of having to do with benefits). This allows the internal HR dept. to focus more on business contributions and strategic areas, like “people management.”

    Lorraine – agree with everything you said, except HR is crucial to recruiting and hiring. We use the right screening & testing tools to qualify people and we help ascertain cultural fit – you do not need position knowledge for this. After being a key component of the hiring process, we then continue it with a good “on-boarding” program.

    In both of these areas (and numerous others), if we prove our “worth” and “add value,” we “get a seat at the table!”

  17. I think everyone has raised some great points. I definitely agree that there will always be a need for an in-house HR team, even if their job description changes and evolves as new technologies and approaches are used. I think that, at this point, outsourcing traditional HR functions, such as recruitment and hiring, makes a lot of sense in a lot of cases. It’s often cheaper and easier to use a third-party’s help in those areas. For instance, OneWire (www.onewire.com, where I work) sources positions across the board for finance companies throughout the country. I think OneWire is a great alternative for companies because 1. it eliminates the cost of executive search, which is almost impossible to afford in this economy, and 2. allows HR representatives to focus on their employees and management tactics. With the job market as it is, HR departments are constantly swamped with resumes and can be overwhelmed–it takes their attention away from current employees. A lot of the comments have gone back and forth about whether or not companies, and HR departments as extensions of those companies, care about their employees as people. I am a big believer in focusing on the well-being of employees and making sure that their needs are addressed, and I think HR departments that include those functions are fantastic. So I think the responsibilities need to be split: let outsourced companies handle the recruiting and hiring, and let HR focus on its current employees.

  18. Interesting article, Lance. As the function continues to evolve, we see organizations viewing HR roles as incredibly strategic business partners. More and more firms consider the CTO or CHRO as the one executive member with the greatest ability to ensure enterprise-wide growth objectives are achieved. Given the current workforce climate, HR is being looked upon to evaluate all areas of labor related spend, not just full-time employee populations, making retention of strategic HR professional critical to organizational success now more than ever.

    [URL]http://blog.yoh.com/2009/08/human-capital-management-definition.html[/URL]

    Mike Zambon, Blogger at http://www.TheSeamlessWorkforce.com

  19. I was particularly struck by your suggestion of a Workplace Process and Productivity Expert because I’ve worked with a number of organizations where the head of HR has taken the lead in integrating the Baldrige model, which is definitely a process model. In fact, I would encourage HR leaders to become familiar with Baldrige, which they can do by reading the Baldrige Criteria and the application summaries of Baldrige Award recipients (http://www.quality.nist.gov). They will find compelling evidence of the strong and vital role played by Human Resources in these world-class organizations – and hope for their futures.

    Baldrige.com: http://www.baldrige.com

  20. Lorraine – I am definitely all for managers taking on those roles… in fact, it is our role in HR to make ourselves redundant – an empowered manager who looks after the finer points of people management is fantastic! However, it’ll never happen, except in rare circumstances.

    And Mark, I agree. Though in the reply to a blog I was speaking very broad and didn’t go into the nitty gritty of which parts of HR could and couldn’t be outsourced. Some make sense. I think though the essence of the blog entry was that most functions could be outsourced, if not all… well HR Guy actually identifies parts that he now believes shouldn’t, but yes, I think that outsourcing EVERYTHING HR is not the way to go.

  21. This is a fascinating topic but I still haven’t heard any reason HR is anything more than an administrative function (and therefore can be pretty easily outsourced). Mark’s post I think represented some of the issues – “This allows the internal HR dept. to focus more on business contributions and strategic areas, like “people management.””
    Am I crazy, or does this read like a really bad marketing PPT? (lots of words, no content) Also “you do not need position knowledge for this” would seem to indicate that the tasks are (again) administrative.

    I would think that HR needs to tie itself to a solid business metric. More specifically, one that everyone on the board agrees has direct impact on the bottom line. I just can’t think of what that metric would be – accepts/offers? tenure? turnover? happiness? speed to be productive? All well and good, but I don’t see the solid line connecting these and ‘typical’ HR functions.

    Please tell me what I am missing.

  22. Pingback: Bring out your dead! ~
  23. This extremely well written well thought out article hits home two very important points. Our positions can and already are being outsourced, and if we are going to continue to have an impact we need to keep our skills, knowledge and abilities razor sharp. Bravo!

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