April 20, 2014 Leave a comment
Short-term pressure for financial results is intense. Companies turn to outsourcing as they try even harder to hit their numbers. All company functions and departments have fallen under increased scrutiny – even HR.
A recent WSJ article (“Companies Say No to Having an HR Department”) highlights this point by providing a few examples of where centralized Human Resources departments have been eliminated (link). Part of the article’s appeal no doubt lies in implied irony and the fact that the mere mention of HR has broad appeal to anyone who has ever had a job.
In most cases, HR is the first line of contact for a job candidate. In this sense, HR at least temporarily becomes the face of the company. Once a new employee is hired, HR maintains a daily presence in the employee’s life by shepherding the on boarding and orientation. Be it benefits enrollment, relocation assistance, or clarification of work rules and policies, most employees quickly come to view HR as their first friend in a new neighborhood.
The varied nature of HR activities makes it a very interesting candidate for outsourcing. Under the outsourceable category, there exists a transactional piece of HR that can be serviced via self-service employee portals. Employees get used to, and may actually in many cases prefer, having their benefits and other employee data impersonally reside somewhere out “in the cloud”. So far so good, but this was the easy part. The rest of the picture is not as clear. In fact, far from it.
One of the justifications cited in the article for outsourcing HR is the concept of moving HR responsibility closer to the action by decentralizing it geographically and organizationally to become an increasingly on site activity performed by departmental managers and supervisors. In my view, this flies in the face of the primary value-adds of an effective HR organization. These are consistency and structure. As organizations grow, consistency and structure become obvious imperatives to support operations and protect the company.
Putting functions like compensation, hiring and firing, organizational development, performance appraisals, regulatory compliance, and benefits administration into the hands of line management pretty much guarantees that things very quickly turn into amateur hour with little hope for consistency and structure. It becomes a very hard to control free for all, Wild West-like, swashbuckling, Darwinesque and Dilbert-like compilation of HR practices that can put the company and its assets at risk when placed in the wrong hands.
So, the answer to today’s question as to whether I think companies should outsource, eliminate, or decentralize their HR departments is a resounding no. Good HR people add value and help businesses. I have seen it first hand, so I know it’s true!
Bread and Butter
Now here’s where employees who view HR in a certain way walk right into a good old-fashioned haymaker about to be thrown by yours truly. While appearing to be right-handed and thrown from over the top, this punch really comes from some down and dirty, out in the streets, Golden Gloves corporate experiences with HR.
“Some workers say they feel the absence of an in-house HR staff acutely, especially when it comes to bread-and-butter HR responsibilities such as mediating employee disputes and resolving pay problems.”
Bread and butter – really? Well, no – not really. In fact, stop and get a hold of yourself if you agree with that statement.
Because HR is that first friend, many employees mistakenly believe that the primary function of an HR department is to help them. While this may be part of the service HR provides to employees who look to HR for such support, it is not from my experience the primary reason HR exists. What many employees fail to realize is that a large part of what HR is there to do is to protect the company, its owners, and its assets. It is certainly not the only thing HR does; however, it is arguably one of the most important.
Protectors & Informers
A great example of HR as protector can be seen by those expecting HR to prevent bullying and legal harassment. HR is likely to address injurious behavior targeting a member of protected class because this constitutes illegal harassment. By addressing it, HR protects the company from lawsuits, fines, and potentially costly settlements. Absent HR perception of a legal or regulatory threat, a lot of questionable behavior goes unaddressed. Phone it in – it’s just real life in the trenches.
Enter HR as informer. Assuming confidentiality while venting to or kibitzing with HR can be risky business because at some point your information and views may be interpreted by HR as constituting part of its protective duty. While not necessarily recognized at the time by HR or employee to have much significance, sometimes these conversations later become increasingly relevant in HR’s view of its duty to protect.
Yes, when I finally write my first best-selling business book, all major corporate functions and their associated heroes, villains, triumphs, and tragedies will be there with us -even HR.