Disassembling HR

Does today's market require us to redesign the human resource function by taking it apart? A strong case could be made for answering "yes."

Sunday, September 16, 2012
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If form follows function, it is essential that the HR function be disassembled and thoroughly restructured in recognition of current market realities.

At the end of the 19th century, businesses created an organization titled industrial relations. As it grew, few people really understood what it did or liked the way it worked. So, to be more modern, the function's name was changed about 50 years ago to personnel. But people still didn't like much about this consolidated function. So, to be more employee-centric, the name began changing again about 20 years ago to employee relations, then human resources, and finally, in some cases, just plain people. The problem is, the structure has never really changed along with the sign on the door. 

From what we hear, many people still don't like what this function does. They claim it is a bureaucracy that is more hindrance than help. They say it isn't there when you need it, it won't let you do what you want to do and it thinks only about its time-consuming programs that get in the way of line managers.

The mystery is this: Why should a group of people with useful skills, good intentions and a willingness to work be so denigrated? The reason is the result of an unclear mission and impossible expectations.

There are three questions I pose to shine a light upon this mystery. They are:

* What is the mission of the human resource function?

* Who are its customers? And

* What should HR people actually do?

When I put these questions to any group, they provoke such a maelstrom of indecision and disagreement that it becomes clear the situation as it currently exists is untenable. The conclusion must be that it is not possible for HR people to meet the expectations of their many diverse customers, who have little in common and often conflicting needs.

Disparate Expectations

Consider that employees, supervisors, managers and executives all have different expectations and need different things from the HR function and staff.

Employees, having almost no power, want an advocate who will protect their interests. This has led to the emergence of -- grown from the need for -- ombudsmen, which supports the idea that HR isn't objectively solving conflicts. This failure was the original basis for the rise of labor unions. I am not claiming that unions protect employees' best interests when they insist on work rules that take away motivation, one of the most fundamental of human needs. Nevertheless, employees at least feel that, with a union, they have an advocate.

Supervisors want a dumping ground for people problems and an umpire to rule on disputes. Unfortunately, supervisors are not always in the right. Accordingly, HR cannot make supervisors happy all -- or even much -- of the time.

Managers want HR professionals to take on their people-focused administrative tasks so they can focus on the things they like and were professionally trained to do. In this scenario, HR becomes the trash center. As I was told one time, "We put HR [practitioners] in the annex where they can't hurt anyone." While people may appreciate garbage collection, they don't invite the trash collectors to dinner.

Executives want HR to keep them out of jail while not consuming more than 1 percent of the operating expense of the company. In only the rarest of cases do top executives see HR leaders as strategic assets and invite them to The Table.

So, you can see from this that everyone is partly at fault when it comes to using and judging the HR function. When you add it up, very few expect HR to be a value-driven contributor. We can change this, though, by matching the HR services with their natural customers rather than force-fitting tasks into inefficient, dysfunctional structures. In this system, HR people can concentrate their energies and skills in a way that naturally adds value.

As it stands, though, the inherent flaw within the function is that it's basically charged with three general tasks. One is governance and record-keeping, requiring administrative aptitudes and interests. Another is employee relations, the emotional and psychological support of the workforce. The third is contributing to the business strategy, which is an intellectual challenge. No one can do all these three things well, simultaneously, from the same base. HR has evolved into a disparate collection of tasks no one else wants. We have created a function that is bound to fail much of the time.

The Solution

So here is what I propose. HR must be broken up. Not redesigned, but pulled apart forever. In its place there will be three distinct functions not directly connected because they have no inherent rationale to be in one structure. The three functions are:

* Governance and record-keeping (GR)

* Employee relations (ER) and

* Strategic development (SD)

GR: Industrial relations started in this mode around the end of the 19th century in response to harsh working conditions in the new industrial complex. There was some ambiguity about the function's role as it grew. As I've noted, this ambiguity has not diminished over the decades. Empathetic people who liked administrative work were hired to do that as well as provide some degree of care for the workers. The problem emerged as the function grew and they were asked to take on tasks for which they were not well-suited. In many organizations, HR grew and evolved simply as a dumping ground. This is a prescription for failure. Therefore, the GR function should return to its administrative core and become part of finance and administration.

ER: Employee relations demands emotional and psychological aptitudes. This is a rare set for a business organization whose purpose is to generate a profit. ER people are the corporate huggers who are badly needed in the high-stress marketplace of the 21st century. Where to place this function is a perplexing decision. I believe it belongs in operations for a very valid reason. Productivity suffers when people are distressed. Operating managers have to face the fact that their success does not solely rest on the management of facilities, equipment and material. The greatest and only leverage potential lies within a motivated, engaged workforce.

SD: Strategic development is essentially an intellectual challenge. Within this function are two related skills. One is analytics, the science of disassembling the many elements within a situation to discover an actionable combination, and alignment that will produce the best result. Given this intelligence, the development side then applies learning science and methodology to support the forthcoming investment decision. This function should report ideally to the chief executive officer just as the intelligence officer reports to the general in the military. CEOs need to accept that talent management is their primary responsibility.

This arrangement ignores two functions: staffing, and compensation and benefits. What is most important about staffing management? It is neither the cost of hire nor even the time to fill a job. It is about fit. If people are not placed in jobs that suit their talents and ambitions, their contributions will be dysfunctional, or sub-optimized at best.

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Staffing fits best with employee relations. When someone is hired, there is a short-term connection between the recruiter and the applicant. Upon arrival in the new job, that bond is broken. It has been suggested that the recruiter should stay in touch with the new hire at least until he or she settles in; perhaps six months. It is somewhat like product management. That being the case, the staffing function should be part of employee relations, whose job is already to provide support.

Health and welfare benefits should be disconnected from compensation and assigned to GD. Any benefits that tie to performance would stay with compensation and become part of a total-rewards strategy. The objective of a reward is to stimulate performance. Therefore, compensation needs to be redesigned away from a heavy emphasis on structure and redirected to its purpose -- performance enhancement and reward, which now is part of ER.

I might go so far as to turn some responsibility for lower-level pay back into the hands of profit-and-loss line managers, with some oversight, and hold them accountable. As it is now, they usually shift the blame for pay problems back to the compensation function. If managers can be accountable to manage millions of dollars in nonhuman costs, can't they not also be trained and supported to manage rewards equitably?

Final Thoughts

One immediate reaction to my scheme is that we cannot disconnect the departments within the human resource function from each other. However, let me point out that, in most organizations, there is only minimal cross-functional communication and virtually no coordinated scheduling of initiatives or services. In many large HR functions, the people in one department do not even know who is heading another department.

Chief human resource officers are bound to fight this notion because it eliminates their current position. This does not mean they are out of a job. If the HR leader is a good strategist, there is a high-level, mission-critical job waiting in SD. It does mean that, in this scheme, there is no need for a highly paid executive to manage a function that can't seem to find its raison d'etre. HR is the only function that continuously asks what its role is. Remember, form follows function; not the other way around. Get the function right and form will follow.

Finally, no one has to be laid off to accomplish this restructuring. The exception would be if, in pushing a function out to operating units, we discover that some of the current HR work isn't necessary or should be outsourced. Operating managers don't support work that doesn't add value.

When something is inherently flawed, there is no point in continually readjusting it. If your automobile has a bent frame, there is no value in repainting it or even putting in a GPS system. It must be abandoned in favor of a vehicle that is capable of taking you to your desired destination safely and swiftly.

This model may not be perfect. Nothing in life or organizations is. Still, in this scheme, employees can be recruited, trained and supported in a manner that greatly improves their ability to perform at their peak and fulfill their growth potential. For the corporate side, this structure offers the greatest return on investment.

Jac Fitz-enz is the founder and CEO of Human Capital Source, based in San Jose, Calif. Send questions and comments about this feature to

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