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The Debate Over Human Resources Departments Misses the Point

by Garrett Fisher
April 11, 2014

The Wall Street Journal recently published an article about how a growing number of companies are foregoing the concept of a human resources department, as they don’t make business sense. Another article in the past year that I read came from an HR executive talking about how they are “supposed to be the fourth executive” and need to do a better job to earn their apparently rightful spot on the C team. Yet another I read two years ago in CFO magazine espoused “human financial statements,” encouraging rudimentary presentation of financial metrics based on “human capital.” Every one of these articles is worthy of rolling one’s eyes. They all miss the point because the concept of human resources itself misses the point.

Each article spoke to some shade of the fact that the human resources department is not delivering in a logical, business sense. Whether it’s the ax, the plea to do better, or some modest innovation, the current way of doing things does not work. It is not a matter of having an HR department or not or being more convincing as a profession, the entire concept needs to be retooled. Companies have a massive need for expertise with their staff and yet current HR formats place the department at odds with the rest of the company.

There are two absolute requirements that human resources must do. The first is ensuring that employment regulations are not broken. The second is to eliminate possibilities for employee lawsuits. Both cost the company money and are bad practice. That is a simple proposition and, for companies of any reasonable size, must be managed by someone. Whether or not a company has an HR department, these two functions are a must.

The next task that many view HR as being indispensably useful is with regard to conflict mediation and having an objective place for employees to go. When it comes to conflict mediation, my experience as an employee and having overseen HR departments is that HR sucks at conflict mediation. Billed as experts in fixing things, results are deficient. While a 3rd party may cool heads, an employee and supervisor dealing with HR over an issue is likely trying to coerce HR into agreeing that the other party is wrong and forcing them to change. Solid understanding of personal differences and how to negotiate through them is something I have never to date seen. Further, objectivity is not something that is possible as an HR department is sworn to the company, not the employees. Whatever conflict arises, HR must do what reduces liability and cost for the company. Many times I have seen that involving terminating the employment of the person bringing the issue – which is damaging as HR bills itself as an objective ombudsman that is here to “help.” I will address a more capable solution to conflict mediation later.

Hiring is a pivotal function that a company owes itself to perfect. In the instances where I personally have interviewed with HR as a candidate, it has been rather superfluous. They would not be my manager and tend to talk of grandiose ideas of company culture and agendas that I would later see immediately discounted in my second interview with my proposed manager. Hiring is a function of technical and motivational expertise – matching people not only on skill and values, also on a complete subset of how they think and how those thinking patterns mesh with the proposed position they would accept. HR has a history of trying to push a culture and agenda outside of the actual operations of the company, which is a fruitless and poorly matched endeavor.

My personal and client experience has run the gamut from 0% human resource function to total HR overkill (billed as “People Development”). In my experience companies with larger HR departments had less satisfaction, higher complaint ratios, and obtuse agendas compared to those that had none at all. With companies that had no HR, the employee had a direct relationship with their supervisor and they made it work – it was sink or swim – with no one to rescue them and intervene if things were not to task. Am I suggesting that HR be eliminated? No, it instead needs to be completely changed. The following graph is a diagnosis of the current state of human resources.

The State of Human Resources


I identified three major influences to every employee in a company. Management/operations is the most influential, determining what an employee is doing in the first place. Finance tracks every dollar, hour, and piece of inventory in the company and exerts sizable influence. Human resources tries to act as a filter, controlling the workplace environment and company culture. As one can see, the employee is torn in three different ways and, ironically, there is some incestuous management of employees between finance and HR.

Finance departments already manage employee payroll. With large companies, payroll is complex: hourly or salary, overtime, breaks and lunches, withholdings, union agreements, minimum wage, garnishments, and so forth. The litany of laws is quite complicated and varies by state and finance already manages it. Finance is also paying all benefits and insurance bills and remitting retirement withholdings. That requires extensive knowledge of company policy and the benefits plan in order to know if the bill should even be paid.

So what is a proposed solution? Note the following graph.

A New Approach to Human Resources

The first thing you might notice is the obvious abolition of HR. Instead, a motivational specialist is proposed – someone who can dispense expertise on human motivation to everyone – and this person is put in between staff, finance, and management and also shown to be on the “same side” as the other parts of the company. No longer would HR be resisting or trying to change other areas, rather the function is symbiotic. Management is given control of culture, as company culture is a product of management style. Given the extensive influence accounting departments already have and the fact that employment issues are largely financial, employment regulatory compliance and liability reduction is given to the finance department. For companies that are large enough, those matters can be measured in specialized full-time positions. For those small enough, there are a slew of outsourced and association-based options available to ensure handbook, policy, and benefits compliance.

Large companies owe it to themselves to hire a motivational specialist. A motivational specialist is someone with a high degree of psychodynamic training that understands how people think, how they learn, what they value, what they are motivated to achieve. This specialist would undertake to validate that new hires match the departments they are entering – and that problem situations can be dealt with constructively. Instead of argumentative “conflict mediation,” it would be a matter of both parties learning more about how they function psychodynamically, equipping them with tools to functionally work together. It may also be a matter of constructive transfer within the company based on thorough evaluation of the people involved.

Imagine the possibilities if there was someone on staff that understood how employees think and communicate and can provide knowledge of how to smooth teamwork and interaction. Further, this same motivational specialist can understand destructive behaviors and work to minimize or eliminate them. While it sounds an awful lot like counseling or a therapeutic approach, it ostensibly has some of those components. Given the incredible expense of employee turnover and inter-employee friction, there is more than a financial case to invest in these kinds of experts. The possibilities are grand enough to be the difference between a successful company and a failure.

The motivational specialist would not deal with payroll, compliance, or culture. Rather, he or she would be an expert in people and getting them to function together. Management would set the company culture and vision and said specialist is one piece of the puzzle to execute it.

Breakdowns in employee trust are a significant reason for business failure and underperformance. Due to office politics and destructive behavior, employees are relegated to self-protective behavior to safeguard their income stream and reality becomes obfuscated. Is a position really needed? Will an employee confess they do not have any work and ask for more? Is the employee that looks busy doing so to protect themselves or because they are actually busy? Are reports of employee issues accurate or part of an agenda? As one can see with these questions, an endemic lack of trust undermines the ability for a company to function efficiently and productively. Because people are not granted tools and knowledge to function well with others, the sad outcome is the list of questions just provided. Workplaces are often toxic with components of the company working against each other instead of for a common objective. Unity of purpose is an incredibly powerful force once achieved.

The primary issue to this new form of human resource implementation is the lack of understanding that the need exists in the first place. Thus, there are not very many motivational specialists. A wholesale shift in what we think of human resources is necessary to effect a demand for the right kind of human resource professional inside of companies. It is logical that large companies would have full-time staff and, if demand was appropriate, smaller companies would engage the services of fractional-use consultants to deliver the same outcome. Hopefully we begin to appreciate the need to understand one another in the workplace so as to create the right kind of demand for human resource excellence.