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Realize that there is no need for a separate organization to manage "Human Resources." This is an outdated concept and it wrongly, unnaturally displaces responsibility for developing people from managers to bureaucrats. Put basic developmental tools in the hands of managers and demand high standards for your organization.
The main problem is a lack of employee engagement and managers that are not directly involved in organizational development. It’s important to address because organizational development should be a natural component of effective management, but traditional (bureaucratic) HR organizations keep front line managers disconnected from it.
This has stemmed from systemizing and automating mostly recruitment as well as terminations. In an effort to streamline, managers have become over-enabled by systems initially designed to support them to the point that they have been removed from the decision-making directly and therefore less or not at all responsible for the success of an employee hire.
Additionally, the job of legal compliance, contract management, affirmative action, and workplace policies has been placed in the hands of an organizational function typically called “Human Resources.” Just look at any job posting for an HR professional, which tends to be more about knowledge and competency in regulatory compliance and the law, and far less about leadership of human beings. A de facto legal department does not design or enhance effective “people” leadership. The leadership of people and compliance with policies and law are important, but must be uncoupled, and “HR” cannot be the name of either.
Start by eliminating the HR department – or at least setting a long term goal to do so by replacing it with something better. Then ask managers what they need to develop their people. Maybe kick-start this review of needs by using an experienced outside consultant to review and develop the core principles of the company’s approach to development. If nothing else, sit down together and talk about what outcomes you want for people and make a list (training, education, performance feedback, specific competencies, succession planning, career path, etc). Turn those into achievable initiatives as part of the normal planning/goal-setting and management framework.
As the need arises for certain discrete, administrative functions like legal compliance, contracts, benefits, compensation policy, etc. choose to assign these to existing departments (ie compensation to Accounting) or use outside consultants for one time services (ie employment contract templates).
Some tools or practices a company might need in the hands of managers in order to eliminate HR:
- Compensation policy. Use a 3rd party database service and link all job descriptions to those found in the database. Allow managers to increase (or recommend increasing, within budget limits) compensation for individual employees within the market range for that position. Make administration a budgeting function within Finance & Accounting. For a more radical and empowering approach attempt to replicate what companies like Morningstar, Crytek, and SEMCO have achieved with employee-managers that jointly set their own salaries and bonuses. As with any other tool, there is no one-size-fits-all approach, and the only important principle is that management is empowered to develop a process that they control and which closely involves all employees.
- Incentive compensation. Use a transparent, profit-sharing model covering 100% of employees tied to the same financial performance measure. Again, co-designing the system with employees is actually more important than the tool. The most meaningful outcome of this process is the transparency and alignment that such a policy engenders. This area in particular requires managers that can communicate openly and honestly with their people in order to get the most out of this process of co-design and its implementation.
- Personality Profile. Build a process into the Recruiting activity for establishing personality profiles, based on 16PF or similar methodology. Make that the core development document for that person.
- 360-Degree Feedback. Use a survey-based system to develop a workplace behavior model first to set up the question list so that it’s aligned with the company’s principles, perspectives, process, philosophy and people. Start by using a 3rd party to mediate 360-degree feedback but move toward replacing that provider with management and then to fully transparent reviews with peers, subordinates, and supervisors.
- Planning. Set long-range objectives as a management team covering all business areas: Financial, Operations, Customer, and People. From there at each level set goals from the bottom up.
- Employee-Led Goals Review. Employees review their goals and present status/progress and modifications to their managers/supervisors (not the other way around).
- Training. Use a common platform and let managers and individuals design custom curriculum.
A more gradual, methodical solution to the problems with HR and the need to implement a new tool set for managers, is to employ a systems based approach to traditional HR functions and needed outputs. Start by "reducing failure demand" in HR. This then enables you to identify what is the actual work that needs to be redistributed. The legal work can be outsourced, for example, and the managers then take on the management of the system to produce (only) the outcomes they want based on their goals for organizational development. Managers then can work together with employees to design the system from the internal organizational point of view. Studies of this approach show an average HR department reduced its of wasted capacity by by 50%:
In a systems-based approach to developing people from within the organization, only one question is necessary to tell managers what they need to know to act: “What stops you from doing the job?”
Certainly the biggest challenges, especially in larger organizations, come from the existing vested interests in “traditional HR” – both from the managers that are disengaged from their employees to the actual professionals in the HR department. The only true way to overcome this is a radical mindset for change and improvement, and the idea that there is a far more effective and empowering way to run an organization. More practically, both managers and HR professionals can come forward and be part of the change. Talent in the HR division can be reassigned to front-line roles, or to administrative departments that take over explicit functions. Managers that otherwise might have relied on HR for critical decisions can start to take ownership for what they want from systems and what “tools” they need to develop their people and to make informed decisions. From there the organization can co-design a system that fits their needs – not without people who know about HR – but simply without a centralized division called “HR” in its most common, traditional make-up
Organizations can start the process immediately by first deciding that they don’t really need HR, and then starting the conversation about what they need to develop their people. Not what they think they need from a conventional mindset about HR, but about their internal vision for engaged leadership and organizational success.
I am inclined to think that all organizations need an HR department because each institution does not exist in isolation; it usually operates in a society where laws, rules and regulations have to be observed. I think an HR department is supposed to tackle administrative concerns in order to facilitate things for the rest of the units in the organization. The managers in the different units of an organization are supposed to think strategic, and HR should be their partner and support for this task. Every manager has to take on HR responsibilities, especially in critical areas such as recruitment, selection, retention, development, evaluation, firing and separation of their subordinates, and in all these things, the HR department has to be close collaborator. I believe that they key to the success of organizations, especially in the long-run, are their people. People management is key to sustainability. The big challenge is how HR can be key to creating synergies within the organization. It is when different units in the organization function independently that goals become harder to achieve.
Salut Imelda, when I read what you write, it sounds so right! The problem is that it usually doesn't work.
First, I agree that there are legal frameworks and compliance issues that need to be addressed. Therefore just "killing HR" is a wrong solution to a complex question. The idea is to arrive at having no need for an HR. In order to take care of all the administrative, legal and compliance matters there needs to be clear processes, escalation points and interfaces. However, this is not the main value contribution of an internal HR and can be serviced cheaper and more effectively on the periphery of the enterprise - I believe.
To create synergies for the value adding elements of HR, HR Business Partners would have to be very entrepreneurially minded - which they unfortunately are not for the most part. It seems the more sensible way to repatriate the HR competencies directly in the team's value creation process, rather than have an HR intermediary serve them up as needed.
This approach sees HR as organisational competencies, not as a function.
It sees every person in the organisation as an HR person.
Just like it sees everybody as a leader in their own right.
"It is when different units in the organization function independently that goals become harder to achieve"
I think this is another clue for our different approaches.
In a classical organisational structure, size becomes an issue for teams. In the RH logic, we need to disaggregate the organisation into small, natural teams that contribute value. In that federation of teams, synergies and connections become natural, rather than "orchestrated" or "determined" by any central function or partner.
HR in itself has a classical architecture, whereas the businesses often are closer to a market logic (flexible and liquid) - therefore the gap between what HR lives, delivers and what is expected become ever bigger.
With the HR2RH logic, we'd turn the HR function into an enterprise first, to then migrate the competencies back into the line.
The big challenge with this mindset then is: how HR can become key to enabling synergies within the organisation, without need for HR.
A new interesting case for our cause:
How Medium is building a new kind of company with no managers
Read more: http://firstround.com/article/How-Medium-is-building-a-new-kind-of-compa...
Heiko, this is indeed interesting to see firms experimenting. But ultimately this is not a company without management, just better management. They say there are no managers but still there are people with "decision-making power" and "authority." There's a process of "airing tensions" led by a "trained facilitator." And at just 40 people Medium has already realized the need for "domain leads" in charge mostly of mentoring, hiring, and firing. Sounds like a lot of management going on there.
Fair enough, I'd still classify them as "on their way" ;-) And our Hack doesn't preclude Leadership either, it just redefines the means of control in my view. Who gets it, why, how and how long, without a central authority.
Agree with this in principle. HR and the Ulrich model took us some way to this but frankly I was working in the Ulrich model 20 years before it was proposed at London Underground. Its already out of date as social media is continuing its unstoppable erosion of artifical boundaries and communication protocols.
HR does need the skillset but not the organisation. You need experts just as you need experts in legal, accountancy etc but the function of HRM is so integral to what any organisation's management structure should be doing that it does not stand alone in the way that finance and legal do. If it wasn't how do so many decent sized SMEs manage to be successful without one (and Patrick's business)? IMO the HR dept is one of the causes of HR problems in the public sector and in industry. Find me an organisation with a high ratio of Industrial Relations Managers and I'll guarantee it has poor industrial relations. The public sector has by far the greatest proportion of HR staff to employees yet the most disatisfied staff, longest grievances, highest absenteeism etc.
HR skills need to be drilled into management through management, not through a HR training course menu.
Organisations need an HR expert for sure - at James River Corporation where I once worked after an acquisition they had a single global HR Vice-President who would just help staff locally on regular visits with ideas and initiatives but the focus was on low HR staff and high communication and participation. The culture improved considerably from the adversarial and grievance/dispute handling structure of the former owners where the system simply encouraged HR department and machinery of negotiation to take over from people talking to each other about problems.
CIPD should refocus on broadening its membership to all managerial people and stop so much concentration on career HR "professionals".
i'd disagree. no, let's say i agree with half your sentence :-)
You said, "Organisations need an HR expert for sure". I'd say: "Organisations need HR expertise for sure."
I think our goal of no "HR serves" as a reminder/wake up call/stretch goal to your claim.
Just yesterday I talked to the head of HR of a leading global pharma company. She told me they are revamping their Performance Management System, because the current one combines development and bonus in a bad way. She has even compiled a s***tlist from business managers about that system's deficiencies and fallout.
When I proposed a self-managed solution that would take care of all of the items on that list, guess what the answer was?
True, but actually, that would be too much change for the organisation to digest.
Or does it mean: What would I do, if that list didn't exist anymore?
I was wondering...
What do you think?
I agree with your point and found your experience amusingly familiar. I once got called in by a public sector organisation to help them with some design issues on their new performance management system. It was appallingly overcomplicated and bureacratic and my suggestions on simplifying it when the HR team had gone to so much trouble to get all the pretty charts, bells and whistles in it was not greeted favourably.
Performance Management is a human process, not a 'system'. The trouble is that HR is always so focused on defining mechanisms instead of outcomes that it gets bogged down in its perceived role as the masters of symmetry and won't let go of the solution to something like a self-managed approach that you have suggested.
Richard, I hear you. That's why usually we work with CEOs who are unhappy that HR doesn't provide and value and is delusional in thinking they do and deserve that fabled seat at the table. Fact is, very few HR people can think and act as (let alone enable) entrepreneurs. That however is what it takes for HR to revitalise its relevance.
I've just added some content to our shared Google Doc, focusing on the sections 3 & 4, the Problem and Solution. This is very much a rough draft and open to additional content and other edits. Really, all I've done is describe some ideas and practices based on what we do in our company, and I do not claim that it's totally right or comprehensive. I'm very interested in everyone's perspectives.
How do I get to see this document?
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