In an earlier post, I talked about The Purpose of HR. Another way to look at the problem of HR in modern organizations is to ask the question, “Why have an HR function at all?”
The truth is that most, if not all of the functions that make up the PHR field of study can be outsourced in a heartbeat. Benefits? Let your broker and a few specialist companies deal with benefits. Compensation? There are plenty of competent consultants who can design comp programs, and almost any decent HRIS can make administration a no-brainer. Employee Relations? I know of several organizations who have adopted a call center approach to dealing with ER problems. Recruiting? That’s the easiest function to outsource because of the easy availability of employment agencies and headhunters. Everything in HR from onboarding to termination can be outsourced as easily as a manufacturing operation can be transferred overseas, which today is a relatively simple thing to do.
So, why bother with an HR department? Why bother having an internal function that rarely pays for itself and is perceived by many to be more of an obstacle than a valued service provider?
Well, if you’re a cost-control driven company with a bureaucratic HR department, I’d say, “Sure! Outsource the whole thing.” In this case, HR is an unnecessary expense that provides no value. Some business leaders are all about profit and loss, believe people are always replaceable and couldn’t care less about creating a great culture, no matter how many studies you show them linking engagement to profitability. HR exists in such an organization only out of habit or history. Get rid of it and move on. Let your HR people go find more fulfilling jobs elsewhere.
And where might those fulfilling jobs be found? In organizations that value HR because HR is focused on facilitating decision-making rather than processing transactions and making rules. As I stated in The Purpose of HR, the primary mission of HR is to facilitate, to make it easy for people to make intelligent choices. This applies to things as simple as helping an employee choose the right medical plan or helping the leadership team work through a tough decision. In a world awash with too much information, HR can help everyone in the organization make intelligent choices, from the entry level to the executive level. They can remove unnecessary hassles that waste time and reduce productivity.
On a practical level, HR has another vital purpose, particularly in a non-union organization. HR is the place where people go to talk about things they don’t think they can talk about with the boss. Many employees don’t like calling the Employee Assistance Program for a good chunk of the problems they encounter because they associate EAP’s with “serious problems” like drug dependency or family crises. They want to go to someone they know and trust to talk things out, to figure out their options, to consider the possibilities. HR should be the place where people go to make sense of organizational life, and there is no other function in a modern organization that can do that. How HR handles such visits is one key to understanding what differentiates an effective HR department from a bureaucratic, meddling HR group. HR’s goal is always to move the conversation out of HR so that the person with the issue eventually goes to the person they have the problem with. This is often a boss or a co-worker that the employee is reluctant to confront. HR can’t be their parents or play big brother/big sister and step in to take control of solving the problem. Every person who comes to HR with a problem should feel empowered to solve that problem when they leave. Needless to say, this service also has a very practical purpose: if the employee feels they have no one to talk to inside the organization, they might seek help from regulatory agencies or law firms.
HR provides value through facilitation and empowerment, not by processing electronic data or paperwork. If a transaction can be handled through self-service, do it. If the energy invested in administration distracts HR from facilitation and empowerment, outsource it (COBRA, for example). Things like FMLA and unemployment are borderline and depend greatly on organizational size and location. The bottom line is that an HR department has limited time and staff and an HR leader needs to separate what must be done internally from “would be nice” and definite distractions.
I believe firmly that HR’s reason for existence is strengthened by integrating HR, OD and Learning & Development into a single, united team. This increases the value of all three functions and supports the model of a facilitating, empowering HR function. It also puts HR in the business of providing what people need most in a modern organization: ongoing learning and teamwork skills. Such integration also facilitates skill sharing, so that HR people become more skilled at the arts of learning transfer and dialogue that are core skills of Training and OD professionals.
In an information-saturated world full of expert specialists who will often know more and be more current about a given HR subject area than internal HR professionals, it is critical that HR leaders realize that the strength of HR does not lie so much in functional expertise as in knowing where and how to get quality information. This means that the reason for HR cannot be functional expertise, which can be found elsewhere, but in synthesizing information with the needs of the culture to help the people in that culture make the best possible choices for themselves. If I’m a business leader, I’m going to value a function that reduces complexity instead of increasing it. Because HR is concerned with the human side of organizations—the most complex aspect of any organization—its most important function is to synthesize complex information impacting the human side so that all of the people in the organization are empowered to make effective choices.
Therefore, the reason for having an HR function is because any complex organization needs a function that facilitates collaboration. Like the Blue Hat in De Bono’s thinking model, HR is the neutral party whose only interest is to help people work together to solve problems. A great HR department is the glue that holds things together, focused only on strengthening the culture and the people in that culture. By providing services that allow people to make choices and through processes that help people make effective choices, HR becomes a function devoted to creating a culture of personal responsibility . . . a value-added reason for existence in any modern organization.