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Human resources departments: I’ve never understood the point of them

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If there’s one lesson that has been provided by the economic turmoil of recent months, it is that if there’s an aspect of business that seems opaque, something you don’t quite understand, the chances are that you’re not the only one and you should spit it out. And it is in the spirit of this new age of frankness that I confess the following: I’ve never really understood the point of human resources departments.

Which is not to say I don’t know what they do: they are the “people people” who ensure that companies adhere to minimum wage requirements, rules relating to diversity, gender, sexual orientation and so on and generally try to prevent businesses being sued to death. But maybe because I’ve never dealt with HR myself — in newspapers we have managing editors to deal with hirings, firings and tellings-off — the amount of fuss that HR makes about itself, the number of job adverts published each week for HR staff, the panoply of HR conferences arranged each year in West London and the amount that HR directors are paid, seems to far outstrip their contribution to the world.

And I was intrigued to discover last week, on forcing myself to read the pile of HR trade magazines on my desk, that this confusion is shared by others, not least the profession itself. Indeed, you’ll find more neurosis between the covers of your average edition of Personnel Today than your average edition of Cosmopolitan. It seems that when those in the industry are not giving themselves awards, they are worrying about: a) the falling number of vacancies in HR; b) HR’s inability to demonstrate the contribution it makes in the way that finance, marketing, sales and logistics departments can do; and c) how many traditional HR administrative tasks are being outsourced, diminishing the status of HR in business.

HR can’t even decide on what to call itself. Recent suggestions vary from “personnel” to “human capital management”, “employee resources”, “organisational capability”, “talent management”, “performance management”, “organisational development” and “human relations”.

I guess this navel-gazing isn’t surprising, given the amount of flack that HR attracts. Often dismissed as “Human Remains”, the “business prevention department” or “Human Restraint”, in recent months Luke Johnson, the chairman of Channel 4, has described HR as “probably the very definition of a necessary evil for a 21st-century business”, a term that should “strike fear into the heart of every self-respecting entrepreneur”, while Stefan Stern, the business writer, has attacked HR for producing “too much paperwork, too many self-serving initiatives” and accused it of “pedantry, an obsession with process, an inability to see the bigger picture and a lack of courage to stick up for what is right”.

But the surprising thing, given all such attacks, is HR’s response: the consensus in the industry is that the only way to rescue HR is to elevate its importance. Some serious figures back the argument, not least Jack and Suzy Welch, who in a recent Business Week column wrote that “HR is the engine of an organisation’s hiring, appraisal, and development processes … Too many companies relegate HR to the mundane busy-work of newsletters, picnics, and benefits … Every CEO should elevate his head of HR to the same stature as the CFO.”

It is a difficult argument to stomach because: a) Welch, as the super-aggressive boss of GE in the 1980s and 1990s, did for many people’s career development what the Taleban are doing for human rights; and also because b) it is intellectually absurd. If you were to digest HR’s position, it is this: we don’t know what we’re for any more, we’re loathed, we’re disappearing and the only way to resolve this is to give us a position on the board. Well, I wish I could sing like Curtis Mayfield, but it’s never going to happen.

The truth is that HR is shrinking and we should embrace its demise. And if this sounds extreme, you should note that HR directors have singularly failed to get the elevated status they have been arguing for for decades. The few HR people on the boards of large companies usually have dual roles, such as “Human Resources and Corporate Affairs Director” or “Personnel and Services Director”. Also, HR is already shrinking: last week a report by Deloitte, the advisory firm, found that companies had recently got rid of 30 per cent of their HR people and argued that unless HR departments adapted to a new role, they could become defunct.

Besides, we know that businesses can work with smaller HR functions because they used to do so before. A few decades ago personnel departments were restricted to handling employee benefits, payroll, labour relations and disciplinary issues. And the fact is that, to judge from an article in September’s issue of Human Resources magazine, HR people themselves can’t see the point of most of what they do. The feature, published under the headline “HR over-manages staff so they no longer think for themselves” contained the following quotes from various senior HR people: “HR has totally engineered development to the point that we have stopped treating people as grown-ups. And we measure everything that moves a millimetre. It is ridiculous, we have to get back to common sense”; “I look at our policies and I think they are written for the tiny percentage of people that are badly behaved as opposed to assuming that everybody behaves in a particularly good way”; “We have got to crush the stifling hand of bureaucracy. We have got to push back at regulation … If HR wants to make a difference it could scrap 90 per cent of the ridiculous policies it has. I got an e-mail yesterday telling me how to wash my hands.”

Couldn’t have put it better myself. Get rid of 90 per cent of HR policies, 90 per cent of HR people and then wash your hands of it.