Friday, January 16, 2009

The State of HR

As I was recently noting down some great quotes from various blogs, articles and research papers I’ve come across on the topic of HR, I started ordering these quotes logically to develop an argument. When it was done, I was so pleased with the result that I decided to share these quotes here, as it flows so well you'd almost think this was an actual post. Call it a "mix made out of text"!

Keep in mind that with the exception of the few bits and pieces in [square brackets], all the content of this posting has been written by other people, and the source are indicated in brackets. Full credit to them! In fact, I highly encourage you to read the sources of these quotes in their entirety.

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Human resource (HR) groups, perhaps more so than any other business unit, are constantly challenged to play a more strategic role in the organization, but only in a cost-effective manner, while simultaneously continuing to perform a broad range of transactional activities. While human resources as manifested in finding, attracting and keeping key talent, for example, is certainly strategic, the bulk of a typical HR group’s centers on more mundane activities like processing payroll and administering benefit plans. These tasks are necessary and important but in themselves not strategic. Balancing strategic ambitions with the need and desire to achieve operational excellence is a perpetual HR challenge. Several unassailable factors are contributing to the need for western organizations to improve their strategic HR capabilities. These include aging workforces and shifting demographics in many western countries (i.e., less workers), subpar and in some cases broken educational systems (i.e., less capable workers), and the rise of global competition, which means western firms are no longer always the leaders in their markets. Current economic conditions make this situation more acute. (Source)

When change comes, the organizational fabric is stretched and gaps begin to appear. Gaps are opportunities for someone to step in and make a difference in the way the fabric is rewoven. […] What can HR do about it? On the one hand, not much. For those of us committed to running kindergartens rather than being strategic business contributors absolutely nothing will change. (Source)

[On the other hand],“I would think the need [for strategic HR] is exacerbated by the economy,” Lepeak said. “Organizations are in turmoil, some of them are on the edge of bankruptcy, executives are being pushed out. How do you recruit new talent when you’ve got a tarnished image, or keep from losing all your best people? How do you keep productivity up? You should be looking to HR to help address these problems, and to put in changes that can keep them from happening again in the future.”

Though HR leaders have made progress in becoming strategic players, most still see executives’ lack of understanding of HR as an impediment to progress. Seventy-eight percent either somewhat or totally agreed that making HR more strategic would require “a significant change in the mind-set of executives and business unit leaders.”

Lepeak said that although shortsighted executives are part of the problem, much of the responsibility lies with HR departments themselves.

“The HR people may feel that executives see them just as a back office group that runs the payroll, and they may complain that they’re not being offered a seat at the table,” Lepeak said. “But sitting back and waiting for the opportunity isn’t a good idea. In most cases, if you step up and show value, you’re going to be invited in, not pushed back. If you’ve never taken the initiative, it’s kind of your own fault.” (Source)

“Of real concern is HR’s apparent lack of readiness to meet their top challenges over the next three years.” […] “Failure to change may threaten the very existence of organizations, forcing executives in those companies to remove responsibility for human capital management from HR.” (Source)

HR would seem to be unaware of its own shortcomings. 70% of those who working in HR stated that their profession is either respected or highly respected within their organization, while only half of those not working in HR – 36% - felt the same way. Furthermore, 33% of non-HR respondents felt that HR is inconsequential, unimportant, or not even on the radar within their organization.

Troubling statistics to say the least…

Much of the negative sentiment towards HR, I have to believe, is due to the fundamental lack of business acumen within the HR function. HR typically isn't fluent in the language of business and this makes it difficult for it to be seen as an equal to other organizational functions such as finance, operations, sales, or marketing.

To be honest, it isn't all HR's fault… it was brought up this way. For decades HR (i.e. Personnel) served mainly as internal record keepers for all the paper work that goes along with having employees. For the longest time this was fine as the US was predominately a manufacturing economy that relied on unskilled workers to perform basic manufacturing tasks. However as the US has evolved into a knowledge economy the needs of HR have evolved as well. Sure, all the prior duties (recordkeeping, compliance, payroll, etc.) of HR are still important, but the game has changed and HR is now being asked to serve as trusted advisers and consultants to the leaders within an organization.

Clearly this has caught HR off guard. Many HR pros are being put in a position where a thorough understanding of their organization's business model is needed to be able to leverage the HR function to add value to the bottom line. Unfortunately many of these individuals have never held positions outside of HR and don't fully comprehend how their organization utilizes its resources to create value and earn a profit.

[…] As most people initially enter HR in an administrative role this knowledge and potential isn't fully engaged and eventually turns into a rusty saw that hasn't been used in years. It is usually at this point that the rusty saw is called upon to fell a large forest of trees. (Source)

[HR people] pursue standardization and uniformity in the face of a workforce that is heterogeneous and complex. [...] In its drive for bureaucratic "fairness," HR is actually threatening the reputation, and so the effectiveness, of the company's finance professionals.

The urge for one-size-fits-all, says one professor who studies the field, "is partly about compliance, but mostly because it's just easier." Bureaucrats everywhere abhor exceptions -- not just because they open up the company to charges of bias but because they require more than rote solutions. They're time-consuming and expensive to manage. Make one exception, HR fears, and the floodgates will open.

There's a contradiction here, of course: Making exceptions should be exactly what human resources does, all the time -- not because it's nice for employees, but because it drives the business. Employers keep their best people by acknowledging and rewarding their distinctive performance, not by treating them the same as everyone else. [...]

Instead, human-resources departments benchmark salaries, function by function and job by job, against industry standards, keeping pay -- even that of the stars -- within a narrow band determined by competitors. They bounce performance appraisals back to managers who rate their employees too highly, unwilling to acknowledge accomplishments that would merit much more than the 4% companywide increase. (Source)

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For more on the future challenges of HR, I recommend these readings:

1 comment:

Etienne Laliberté said...

Another related post I just came across:
http://bobsutton.typepad.com/my_weblog/2009/02/bud-crystal-bashes-heads-of-hr.html