What do you think of when someone says ‘HR?’. For a lot of people, the ‘Human Resources’ department of their company is the group that makes them fill out a lot of forms, takes a bunch of surveys, and handles the admin of filling positions. More ominously, ‘HR’ is who you call, or who you threaten to call, when your slimy coworker or your boss maybe, is way out of line in their behavior. It’s almost a standing joke: ‘do you want to be reported to HR?”.
The function of HR, or ‘Personnel’ as it was called way back when, has changed a ton over the past few decades. In fact, as this article from the Harvard Business Review by economist Peter Cappelli documents, way back when they were actually pretty key to organizations management training programs, the mention of which sounds kind of retro these days.
As. Mr. Cappelli writes, HR matters most when labor is in scarce supply. Personnel departments had their heyday in years following the Second World War, when companies were all about fighting to find the best workers, signing them up for the long term, developing their capabilities and promoting from within. Almost none of that happens these days.
From the 1970s on, it has gotten pretty easy to find workers (some buoyant economic times excepted) and in general there is a looser relationship between employers and employees. Employers layoff workers, and workers leave if they can find a better deal elsewhere. Training doesn’t happen much, because workers don’t hang around for decades. And anyway, promoting from within is a lot less prevalent, replaced instead by external hiring, which is spearheaded by search agencies rather than HR departments.
Human Resources departments still exist these days, but in my observation management looks at them as ‘cost centers’ rather than as an integral part of an organization. That’s not a great place for HR to be, and its not a good strategy for companies either. Things need to change.
Mr. Cappelli has a long list of things that HR should be more pro-active on, from crafting flextime policies through to training managers in how to handle interviews. What I find the most intriguing is the idea that HR should increasingly be a center for the acquisition of business knowledge and analytics. For example, it is usually CIOs and their departments that use ‘big data’ to solve HR problems such as how to increase productivity. If HR is to be the leader on ‘people management’ it perhaps needs to move that function to its own mandate, or at least to work closely with those that do handle it.
Whether or not HR survives as an important function in North American companies depends a lot on where the economy goes more broadly. Things are looking up these days (particularly in the U.S.) and that means a tighter labor market and perhaps a greater need for people management in general. In the best case for HR departments, we could get back to a time when the economy gets strong enough and talent gets scarce enough that the structure of companies gets rethought once again. Might we go back to employer/employee loyalty, long tenures at jobs and significant in-house management training? In these days of out-sourcing and contracts, I am skeptical that that one happen. In the worst case for HR, the economy loses its footing again (not really a stretch to imagine) and not only will HR departments get cut in the short term, but the entire function of HR will continue to be questioned.
It’s a bit of a race against time: the time for an image makeover, based on a makeover of HR’s functions, is now.