X'Pressions
Why we hate HR
The human-resources trade long ago proved itself, at best, a necessary evil -- and at worst, a dark bureaucratic force that blindly enforces rules, resist creativity, and impedes constructive change. HR is the corporate function with the greatest potential -- the key driver, in theory, of business performance -- and also the one that most consistently under delivers. These HR folks, from employers across the nation, are neither evil courtiers nor thoughtless automatons. They are mostly smart, engaging people who seem genuinely interested in doing their jobs better. They speak convincingly about employee development and cultural transformation.
Why are annual performance appraisals so time-consuming -- and so routinely useless? Why is HR so often a pain for the chief financial officer, finding ever-more ingenious ways to cut benefits and hack at payroll?
Why do its communications -- when we can understand them at all -- so often flout reality? Why are so many people-processes duplicative and wasteful, creating a forest of paperwork for every minor transaction? And why does HR insist on sameness as a proxy for equity?
It's no wonder that we hate HR. In a 2005 survey by consultancy, just 40% of employees commended their companies for retaining high-quality workers. Just 41% agreed that performance evaluations were fair. Only 58% rated their job training as favorable.
In a knowledge economy, companies that have the best talent win. We all know that. Human resources executives should be making the most of our, well, human resources -- finding the best hires, nurturing the stars, fostering a productive work environment -- just as IT runs the computers and finance minds the capital. HR should be joined to business strategy at the hip.
Instead, most HR organizations have thrown themselves literally to the brink of obsolescence. They are competent at the administration of pay, benefits, and retirement, but companies increasingly are farming those functions out to contractors who can handle such routine tasks at lower expense. What's left is the more important strategic role of raising the reputational and intellectual capital of the company -- but HR seems to uniquely unsuited for that.
Here's why
HR people aren't the sharpest tacks in the box. To be blunt: If you are an ambitious young thing newly graduated from a top college or B-school with your eye on a rewarding career in business, your first instinct is not to join the human-resources dance.
Some enter the field by choice and with the best of intentions, but for the wrong reasons. They like working with people, and they want to be helpful -- noble motives that thoroughly tick off some HR thinkers.
"When people express their views and say, 'I want to work with people', I say, Good, go be a social worker.
"HR isn't about being a do-gooder. It's about how do you get the best and brightest people and raise the value of the firm."
And what’s the truth?
Most human-resources managers aren't particularly interested in, or equipped for, doing business. And in a business, that's sort of a problem. As guardians of a company's talent, HR has to understand how people serve corporate objectives.
Instead, "business acumen is the single biggest factor that HR professionals in the U.S. lack today," says Anthony J. Rucci, executive vice president at Cardinal Health Inc., a big health-care supply distributor.
As for me, there are three questions that any decent HR person in the world should be able to answer.
• First, who is your company's core customer? "Have you talked to one lately? Do you know what challenges they face?"
• Second, who is the competition? "What do they do well and not well?" And most important, who are we?
• "What is a realistic assessment of what we do well and not so well vis-à-vis the customer and the competition?"
Does the HR professional know the answers?
HR pursues efficiency in lieu of value. Why? Because it's easier to measure. The question is, what are you delivering? You're only effective if you add value. That means you're not measured by what you do but by what you deliver. i.e. not just to the value delivered to employees and line managers, but the benefits that accrue to investors and customers, as well.
Human resources can readily provide the number of people it hired, the percentage of performance evaluations completed, and the extent to which employees are satisfied or not with their benefits. But only rarely does it link any of those metrics to business performance.
HR isn't working for you. Want to know why you go through that asinine performance appraisal every year, really? Companies are doing it to protect themselves against their own employees.
Typically, HR people will pursue standardization and uniformity in the face of a workforce that is heterogeneous and complex. Why? The urge for one-size-fits-all, is partly about compliance, but mostly because it's just easier.
Employers keep their best people by acknowledging and rewarding their distinctive performance, not by treating them the same as everyone else. If I'm running a business, I can tell you who's really helping to drive the business forward. HR should have the same view. We should send the message that we value our high-performing employees and we're focused on rewarding and retaining them.
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.
Human resources, in other words, forfeits long-term value for short-term cost efficiency. A simple test: Who does your company's vice president of human resources report to? If it's the CFO -- and chances are good it is -- then HR is headed in the wrong direction. That's a model that cannot work.
"A financial person is concerned with taking money out of the organization. HR should be concerned with putting investments in."
Say what? Execs don't think HR matters? What about all that happy talk about employees being their most important asset? Well, that turns out to have been a small misunderstanding.
Today, HR organizations embrace the language of a "soft" approach, speaking of training, development, and commitment. But the underlying principle is invariably restricted to the improvements of bottom-line performance.
"Even if the rhetoric of HRM is soft, the reality is almost always 'hard,' with the interests of the organization prevailing over those of the individual."
However there is a glimmer of hope -- of the possibility that HR can be done right. And surely, even within ineffective human-resources organizations, there are great individual HR managers -- trustworthy, caring people with their ears to the ground, who are sensitive to cultural nuance yet also understand the business and how people fit in.
Professionals who move voluntarily into HR from line positions can prove especially adroit, bringing a profit-and-loss sensibility and strong management skills. Consider the e.g. of Yahoo, where the chief people officer, is building a group that may prove to be the truly effective human-resources department that employees and executives imagine.
She is instituting a weekly operations meeting that she coordinates with COO. Talent is always at the top of the agenda -- and at the end of each meeting, the executive team mulls individual development decisions on key staffers.
That’s what sends a strong message to everyone at Yahoo that we can't do anything without HR." It also signals to HR staffers that they're responsible for more than shuffling papers and getting in the way. They view human resources as the caretaker of the largest investment of the company.
Yahoo, say some experts and peers at other organizations, is among a few companies -- among them Cardinal Health, Procter & Gamble, Pitney Bowes, Goldman Sachs, and General Electric -- that truly are bringing human resources into the realm of business strategy. But they are indeed the few.
Moreover HR is far less involved in strategy than HR thinks it is. Give a thought to this one: What's driving the strategy disconnect? There are two problems: Many HR people, she says, bring strong technical expertise to the party but no "point of view about the future and how organizations are going to change."
And second, "it's very difficult to align HR strategy to business strategy, because business strategy changes very fast and it's hard to fiddle around with a compensation strategy or benefits to keep up."
Also nowadays, many plan to expand outsourcing to include activities such as learning and development, payroll, recruiting, health and welfare, and global mobility.
This is to say, they will farm out pretty much everything HR does. The happy rhetoric from the HR world says this is all for the best: Outsourcing the administrative minutiae, after all, would allow human-resources professionals to focus on more important stuff that's central to the business. You know, being strategic partners.
The problem, if you're an HR person, is this: The tasks companies are outsourcing -- the administration -- tend to be what you're good at. And what's left isn't exactly your strong suit.
The Human Resources function is crippled by what can be called educated incapacity: You're smart, and you know the way you're working today isn't going to hold 10 years from now. But you can't move to that level. You're stuck.
This is a unique organization in the company which should discover things about the business through the lens of people and talent. That's an opportunity for competitive advantage.
In most companies, that opportunity is utterly wasted.
And that's why we don't like HR.
by Mishu Jain, MBA IIITA.