Human Resources Deconstructed

Human Resources Deconstructed
By Brenan German,
President, Bright Talent Resources, Inc.

When I am meeting with clients, networking, chatting with friends, I find myself spending time  educating people on human resources and all the things that the human resources function accomplishes for a business.

What we don’t know – we don’t value
Often times when in personal or professional circles I hear the phrase “I hate HR.” I ask why and typically the remarks have to do with controls and compliance or reference the function as too administrative and not strategic. Or it’s a cost center and provides no value because HR is always in the way of progress. Other times, HR is viewed like the dentist, everyone hates going but glad to have a contact when an issue erupts. It’s an interesting profession to say the least.

As I’ve matured as a professional, I have found myself defending less against these remarks and more in support of these remarks. The problem is education and perception. The latter being reality for most which is derived from experience. When looking at the evolution of HR, I can understand these perceptions because it’s what they know…HR has done a poor job marketing itself and educating management about its strategic value.

People are important in every business
I believe it is time for radical change. Let’s start with the term “human resources” or the more modern term “human capital.” Human Resources generated out of Personnel which was a nice evolution but feels to have run its course. Human Capital generated from Human Resources, I assume coined by a business analyst, it has not universally stuck (unless you’re a business analyst). Although these terms are nice business terms, they do not adequately represent the very thing they describe. If there is a function that is concerned with the labor of a business, it is concerned with people, not an asset or genus.

If we look at the word people, the word gives more purpose to the function that is concerned with the actual meaning: people. Traditional HR functions have been concerned with the ‘life cycle’ of an employee. From the point of hiring to the point of retiring (or firing). I share in the thinking of Josh Bersin of Bersin by Deloitte, this employee lifecycle has changed and, in many instances, shortened. Companies and people rarely get ‘married’ anymore, rather, they ‘cohabitate’ until the partnership no longer makes sense. With that in mind, the people function has to evolve to keep pace with this reality.

HR should be about people not paperwork
Traditional HR is an administrative function by design however it is this design that carries flaws and hinder the function from being perceived as more strategic. If we begin to dismantle HR, we begin to see a clearer picture of the people function. For example, payroll and compensation. Many HR functions handle payroll and compensation, some only compensation. I argue payroll and compensation is a financial function and should be moved to the Finance group.

Benefits are a commodity, governed by regulatory industries that limit variance between supplier services. If we look at healthcare and retirement plans, these are better managed under the function that specializes in handling indirect spend which is procurement. I suggest the benefits function move under the Procurement function. Similarly, HRIS is a system often merged with ERP for continuity and cost benefits and it makes sense to transition this function to the Information Systems group to manage.

Great Companies care about People and Culture
If these services are deployed to these other groups this will free up the function to focus on people and the thing that matters most to management which is productivity. This will leave the People Function to focus on 5 areas:
1.     Workforce planning
2.     Performance management/Employee relations
3.     Organization Development
4.     Community
5.     Talent Acquisition

These five areas allow the People Function to specialize in the discipline of finding, developing, and retaining great people. Which, along with the CEO, sets the tone for company culture. Therefore we have created the function of People & Culture – a highly strategic, consultative group that will partner with leadership to define and nurture values and performance, on an ongoing basis.

If you’re wondering why Talent Acquisition is listed last that is because it is a question mark. Strong  arguments can be made to transition this function as well out of the People Function as a stand-alone group. Additionally, other questions have to be answered such as what type of leader runs this new People & Culture function and how does this function keep pace with the speed of business. These are other articles waiting to be written but, for now, it’s time to start reconstructing HR into People and Culture.