Do You Need HR & HR Function?

HR function and its need for organizations

Over the last 2 decades, I have seen HR evolving. I got a chance to hear the views of business leaders and general employees around the need for HR.

One year of consulting gave me more opportunities to understand this from business leaders and employees of diverse geographies, sectors, and business sizes.

This article is a little hard-hitting. Read carefully: Especially HR practitioners. I will not be surprised to see some comments of business leaders who are probably better off accepting that they don't need HR. Similarly, I will not be surprised to see comments of HR professionals who believe that HR is about administration, compliances, and mechanical transactions.

I firmly believe that a true HR Function can lead to great value creation and a dummy function does a lot of dis-service to the profession.

In this piece, I will be covering the following three questions:

1. Does an organization require HR
2. Does an organization require?HR function?
3. When an organization needs neither HR nor HR function?        

1. Does an organisation require HR?

The answer to this question is a thumping 'Yes'.

When I say HR, I am talking about a mindset. That believes that human potential is maximised by creating a culture of trust, belief, innovation, and an overall positive work environment, where every individual feels valued. HR is a very distinctive value that believes that humanistic values can lead to the creation of Successful Business Enterprises.

We can inculcate HR values without having a separate HR function. The day every leader starts valuing the People for their unique Talent, HR is already there. The need for an HR function comes from the stage and size of the organisation.

There is a class of organisation where this is not required. I will talk about them in my answer to the last question.

2. Does an organization require?an HR function?

The answer to this question depends upon multiple factors. Some of them are:

a. Stage of the organisation growth?

During the early parts of organisational growth, it may be a good idea to take the help of an external HR team. It helps the key business leaders to focus early phase of explosive growth. It would be best if you have HR at this stage but not necessarily full function. Founders can set the tone for HR as a value, but they will be better of outsourcing it to some quality HR Provider.

During the growth and sustainability phase, it will be good to go for an internal HR function. At this stage, you need to build robust HR platforms. Alongside every manager working as an HR Leader, you need dedicated HR professionals to enable organisations and business leaders to deliver an excellent HR experience for all your stakeholders.

During stagnation or decline phases again, a better option will be to externalise the HR function. During this stage, painful decisions may be required to be taken, and an arms-length external HR can deliver a better outcome than an internal HR.

b. Size of the Organization

Whether to have an HR function or not also depends upon the size of the organisation. Large organisations will undoubtedly need to provide better HR delivery through dedicated HR Leaders. The same can't be said clearly about medium or small-sized organisations.

Small-sized organisations can deliver a better quality HR by outsourcing it to Good quality HR Providers, while internal business leaders can act as the custodian of HR Values.

Mid-sized organisations should opt for a hybrid model: lean HR Structure inside and outsourced model where they don't have their internal strength.

c. Poor?Supply of good HR practitioners?

There exists a large number of HR professionals who constitute the HR Talent Pool. A large chunk of them has nothing to do with core HR Values. They are comfortable running errands, administrative transactions and running possibly every HR Process without actually knowing why they are doing it. Many organisations are settling for a highly sub-optimal quality of so-called HR Professionals because either they don't know what a good HR is or cannot afford good quality. This phenomenon makes the supply pool very limited.

In such a scenario, My advice to all Board Members, Founders, CEOs will be to have a very lean function inside and outsource a large chunk of the HR function.

3. When an organization needs neither HR nor HR function?

There also exists some organisations where they should do away with HR. In these places, HR is a mere showpiece, and their job is to ensure that prospective employees need to be trapped somehow.

These organisations are based on:

- value of profiteering?

- Value of Mistrusting People

- Value of Exploiting People

These organizations are will be better off without HR and HR functions because their values are counter to fundamental HR values. In fact by doing away with HR Function they will be doing great service to HR Profession and the organizations which truly believes in having a value-driven HR.

Many organisations can make profits without adhering to core HR values, which is a choice they make. In the long run, which can be 30-50 Years, they will undoubtedly suffer. But short-run continuity and profiteering blind them to the need of HR (Core Values). Many organisations believe that there will be no long term in the ever-changing business scenario, so why to care about it.

Many of you reading this can readily see organisations around you that belong to this category.

Some of the symptoms you may notice in this class of organisations are:

- We have bought people, and it's our prerogative as Chairman/CEO/Founder/CXO to exploit people as per our whims and fancies

If not watched and controlled, people will loot the organisation because they are at their core thieves. Unfortunately, several so-called HR leaders recommend these sets of values to their business heads.

- Why should we invest in HR? We should be happy with dummy HR. We are making profits.

- Invest in beautiful world-class offices. Let people fall for the charm of our offices. These organisations think that employees don't care for the investment made in trust, care, meritocracy, fair & transparent career growth and social good. If you try to visualise, you will find many organisations posting pictures of their swanky offices, ponds, flowers, and campus greenery on media and social platforms. However, you will not see their leaders, Chairman, CEO having an honest conversation with their employees like Ratan Tata does.?

If you see the above symptoms in any organisation, you can suggest that they do away with the HR function or rename it to Employee Exploitation Function.

I am not against investment in infrastructure. I am saying that first invest in Human Values if you want HR, and then infrastructure can follow.

Summary:

Fundamental Human Values drive HR. Any organisation can adopt it if they believe in these values of Trust, Integrity, Fairness, and Human Potential. The question to have a separate HR function is very fluid. It depends on many factors such as the stage of growth, size of the organisation, and Fundamental Values.

If you want to understand the quality of HR and HR functions you have, you can write to us at [email protected]