CEOs Decide: HR or No HR? That is the question!

CEOs Decide: HR or No HR? That is the question!

Recently there has been a considerable amount of active thought provoking discussions about Human Resources.  On LinkedIn a discussion between Bernard Marr and Josh Bersin has produced a flurry of polarizing feedback. Bernard Marr argues that the human resource function is outdated and ineffective (Marr, 2013).  Josh Bersin argues that the human resource function is now more critical than ever (Bersin, 2013).

Many agree that the term “human resources” is an outdated term describing the management of people the same way you would describe the management of financial and physical assets.  Josh Bersin, a thought leader in the HR space, makes the claim that HR is now more important than ever.  CEO-level research from The Conference Board and Deloitte both show that “human capital” and “talent” are now the #1 issues on the minds of CEOs.  Bersin research shows “that businesses today are constrained by their own ability to hire and develop leaders, coupled with a growing lack of technical and professional skills in the market” (Bersin, 2013).  Both authors more or less agree that organizations are in desperate need of strategic transformational human resource professionals to bring many organizations into the 21st century.  These kind of strategic policy and procedures cannot be effectively conceived and executed by line managers.  Is there a need to reskill and retool HR departments to be effective and add value? The answer is yes.

The People Function

Award winning and successful companies are executing exciting and innovative HR strategies.  The success of any organization depends on its people.  In today’s environment successful CEOs realize that they need people who ensure the organization attracts, recruits, retains and develops it people.  HR is the talent master and organizations need craftsmen of talent strategies.

Divergent Talent Strategies

Recently within days of each other, articles were published about two distinctly different talent management approaches by two large companies, Yahoo and Microsoft (The Economist, 2013).  Yahoo employees were reportedly increasingly unhappy about quarterly performance review processes introduced last year known as “stack ranking.”  The stack ranking technique was pioneered by General Electric and used under the leadership of Jack Welch, the CEO of GE from 1981 to 2001.  This is sometimes referred to “stack and yank,” a process whereby companies can identify their top and bottom performers.  Still today countless companies use the technique from Amazon to Oracle to PwC.  One of the main reasons this technique is still used by companies is to avoid lawsuits claiming unfair discrimination by showing that they have a clear basis for decision on pay and bonuses (The Economist, 2013).  Microsoft recently announced that it was abandoning the approach and is implementing a fundamentally new approach designed to encourage teamwork and collaboration.

The Road to HR Transformation

Before any organization can execute a strategic, transformational HR initiative, it needs a strong foundation in place to eliminate administrative burdens within HR.  Josh Bersin indicates 4 stages of HR Transformation:
1.    Personnel Department – Control
2.    Strategic HR – Serve Workforce and Automate
3.    Integrated Talent Management – Enable Decisions and Management
4.    Business-Driven HR – Drive the Business Strategy and Plan for the Future

If your organization is still using paper processes (and this includes many paper like substitutes like email) to execute basic processes for approvals, performance evaluations, time & attendance, or recruiting, this shortcoming must be addressed first.  Your organization cannot leapfrog from a personnel department to business-driven HR without passing the toll gates automating the back office functions, enabling an integrated recruiting and talent management system.  The key foundation for enablement is integrated human capital management software before any strategic transformation can begin.  That software enables HR to become more efficient and strategic.  It will enable data-driven decision making and predictive planning. Organizations that successfully transform HR into a strategic function will survive the new economy.

Bersin, J. (2013, November 18). Why We Do Need the HR Department. Retrieved November 20, 2013, from LinkedIn: http://www.linkedin.com/today/post/article/20131118164721-131079-why-we-do-need-hr-departments

Marr, B. (2013, November 18). Why We No Longer Need HR Departments. Retrieved November 20, 2013, from LinkedIn: http://www.linkedin.com/today/post/article/20131118060732-64875646-why-we-no-longer-need-hr-departments

The Economist. (2013, November 16). Motivating Workers: Ranked and Yanked. Retrieved November 20, 2013, from The Economist: http://www.economist.com/news/business/21589866-firms-keep-grading-their-staff-ruthlessly-may-not-get-best-them-ranked-and-yanked?frsc=dg%7Ca

Written by Erik Marsh

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