Human Resources

Renewing the role of HR

The history of HR

In the past, Human Resources meant processing payroll, sending birthday gifts, arranging company outings, and making sure forms were filled in. These days, the role of Human resources has evolved from an administrative one to a strategic one. Human resources has become the process of employing people, training them, compensating them, developing performance management policies, and developing strategies to retain them. Since the practice of Human Resources began in the the early 1900s, the role has been heavily influenced by trends in the labor market. During the 1930s, for example, HR became a hinderance, which mirrored the economic downturn at the time. Typically when employees know they are easily replaceable they do everything in their power to remain at work. Employees generally work harder, and are more more likely to accept lower (or static) wages.

The early 20th century witnessed severe labour unrest due to employers being able to hire and fire at will. Frequently occurring strikes forced companies to institute ‘personnel departments’ to oversee employee grievances, such as wage-related issues between manager and employees, and handle administrative activities. The personnel manager was responsible for employee attendance, labour-disputes and general compliance with employee health and safety requirements. Changes in the economic conditions of the 21st century brought about the need for HR to take on additional responsibilities. HR began actively participating in business decision making. Often sharing a seat at the management table, they helped determine when to downsize, outsource, retain and recruit suitable talent. HR staff participated in managing the cost of employee benefits, such as insurance and pension, and in handling other issues and activities. HR departments had direct oversight on building organizational practices using employee management and development strategies that align with organizational goals.

Should we get rid of it?

Recently, however, there has been much debate about the role of HR. According to HBR HR managers have become too focused on administrative function, such as policy making, managing processes and record keeping functions. HR departments lack the vision and strategic insight companies need to drive employee innovation and talent. Little has been done in the past few decades to examine the true value an HR department brings to the company. In a recent HBR article, a number of CEOs said that they would like to be able to use their Chief Human Resource Officers the way they use their CFOs - as sounding boards and trusted partners. They would like to rely on their skills in linking people and numbers to diagnose weaknesses and strengths in the organisation, find the right fit between employees and their roles and advise on the talent implications of the company’s strategy. As the HR function comes under scrutiny, it’s important to remember that the function still tends to focus on the issues that mattered in the yester year. For example, even though elaborate succession plans are rarely used, companies keep creating them. Instead of copying what large corporations did a decade ago, HR should craft company and industry specific policies that respond to today's challenges, such as low employee engagement, and high employee turnover rates. Traditionally, HR’s biggest difficulty has been supporting the business strategy. Companies seldom have long-term plans with straightforward talent requirements. By its very nature, HR strategies focus on the long term. Developing talent, heading off regulation problems, building company culture, and addressing morale problems all take time, but HR departments need to be in the driver's seat when it comes to anything employee related. In today’s fast moving world, constantly measuring and determining what the business requirements are, what capabilities are required, how the marketplace is changing and what talents are likely to be needed in the future, is core to the business long term success.  

The HR revolution is already here

According to HBR article, The HR function needs to move over to a more analytics driven strategy, with which they can more accurately predict what functions need which skills next, engagement levels, and how to prevent future talent churn. Its function then becomes more supportive and insight focused. Tech companies, such as Google, Microsoft and Apple are now on the front lines of HR innovation, largely because they have a specific need for talent. In a Fast Company article, Google’s Head of HR, Laszlo Bock, shared some of his insights into the HR practices at the world's biggest tech giant.

“It’s our people, it sounds corny, but we believe that by hiring for the best, by nurturing an engaged environment, it helps us drive innovation.”

Google’s success has been largely attributed to the fact that they have the world's first data driven HR function. HR at Google is undoubtedly different from other HR functions that have plagued the 20th century. The company replaced the subjective decision making approach with an algorithm based decision making process. The people analytics team has direct insight into employee surveys, draws insightful correlations and can provide recommended actions going forward. A number of Google’s people management practices highlight the data driven approach, such as project oxygen, retention algorithms, predictive modeling, and effective hiring algorithms

When the strategic focus shifts to people management, it drives innovation. Accurate people management impacts the decisions the firm can make. Businesses simply can't produce superior results unless managers are making accurate people management decisions. Discretionary effort by employees who are engaged and willing to give their best is at the heart of business success. Juniper Networks, a prominent networking equipment provider, reinvented the way the business viewed people management practices. Steven Rice, the Executive Vice President of Human Resources, realised that without invigorating Juniper networks’ HR department, the company would lose valuable employees to competitors - quickly. Rice believes that often HR leaders tend to be overly risk-averse, which falters the entire HR industry.

"I sometimes see folks in this field [who] let fear drive them to mediocrity," he said. “But it's necessary to take risks to move forward”

Rice constantly questions the assumptions about HR, focusing rather on the business outcome. He believes that greater personalization of technology is one of the driving forces behind several of the organizations’ HR initiatives. For example, Juniper Networks was one of the first companies to overhaul its performance review practices, opting rather for a more continuous approach. Several other processes have since been revamped, from corporate learning to employees surveys. He believes in constantly pushing the HR envelope as a way to ensure the business is driving as much value, creativity, and innovation for the company as possible.  

What’s next for your HR department?

So is it time for your HR practices to be revamped? Are you ready to take that plunge every employee has been asking for? Becoming people focused, and trying avant-garde practices is a riskier road to take, but no doubt something that will only benefit your employees in the long run. There are plenty of cases where companies have started to remove their annual performance review, for a process that is a lot more agile and employee centric. As shown above, people analytics is increasingly becoming a strategic focus for a number of organisations. By understanding your people, engaging with them and motivating them, it nurtures an innovative work environment. Data can be incredibly insightful, and gives the HR department the ability to predict exactly where the company needs better engagement practices, and where the skill gaps may be. Impraise allows your HR department to apply people analytics in an effective and efficient manner. Understanding each employee, team and department is key to unlocking the potential of your workforce. 

Photo Cred: Negative spaces