Its time to let "HR" go

Ethics-as-a-Service:

A former COO of a global bank recently posted on LinkedIn that HR must take the reins of leadership and commit to subordinate effectiveness to “ethics”, “humanism” and “sustainability”. He wrote that this calls not only for new ways to imagine our organizations, but for a profound, inward journey. He added that HR must shed the chains of dependency on those in power, nurture a dual loyalty towards both the business and the ideals of its profession, and unify practitioners across organizations in a shared quest for what is right and go.

This provokes contemplation on how we found ourselves in the bottom of the pit. Ethics, humanism, and sustainability should not be the institutional responsibility of HR, rather the top priority for any individual who calls themselves a leader. The decline we face did not occur overnight, and asking HR to add another ‘ethics-as-a-service’ layer, is not going to fix the moral degradation of corporations. There is a fundamental problem with how human resources (HR) has evolved over the years. Numerous missteps made over the course of a century have resulted in a function that I believe is fundamentally broken and it is time to blow up HR as we know it.

The Origins

The term “personnel management” or “personnel administration” was used to refer to the function that dealt with hiring, training, compensating, and maintaining employees in the early 20th century. Some of the early companies that had personnel departments were Ford Motor Company, General Electric, and Standard Oil. Originally, it was created as a “personnel function”, to take care of the needs of the industrial workforce, such as ensuring fair wages, safe working conditions, and social welfare services. This was and is a crucial, complicated and foundational function for smooth functioning of an early 20th century organization. The scope of work of the early personnel function was largely influenced by the industrial relations movement, the scientific management movement, and the human relations movement in the early 20th century.

However, as with everything, work evolved and so did the scope of work for HR. In the mid 20th century, HR was still mainly a personnel function, however moving from simpler to complicated problems of larger conglomerates in transnational or global scope. These problems could be solved by applying best practices, rules, and procedures, and by relying on experts and authorities.

Moving from the Simple to the Complex

As the 20th century progressed, HR started to face more complex problems that had no clear and predictable solutions. For example, HR had to cope with the changing needs and expectations of the workforce, the increasing uncertainty and volatility of the business environment, the growing interdependence and interconnectedness of the organizational systems and processes, and the emerging challenges and opportunities in the field of people management. These problems could not be solved by applying best practices, rules, and procedures, or by relying on experts and authorities. Instead, HR had to adopt a more adaptive, creative, and human-centered approach to cope with the complexity and chaos in their role. Dave Snowden’s work in complexity is a great way to understand the difference between these types of problems and how different types of systems and problems require different approaches and methods to deal with.

Gifts from the Consultant friends that never stops giving

Besides, external consultants too, had their hands in shaping the HR function’s destiny through their highly paid advice, with the intention of never stopping to add additional layers of scope and in the process never stopping to bill more fees. For example, they introduced or promoted models, frameworks, or tools to HR, such as competency models, balanced scorecards, employee engagement surveys, and more, that added more complexity and bureaucracy to the function. These models, frameworks, or tools often required HR to collect more data, use more software, follow more steps, and produce more reports, without necessarily improving the outcomes or the experiences of the employees or the managers. In fact, some of these models, frameworks, or tools were found to be ineffective, outdated, or even harmful to the organization, such as the forced ranking system, the nine-box grid, or the annual performance review. External consultants sold these ideas to the CxOs as ways to make their life easier, by promising to improve performance, productivity, or profitability.

Outsourcing ‘Humanism’

As we entered the 21st century, the core of the HR function still remained ‘administrative’ in nature, however it was buried in multiple, unrelated layers of expectation to deliver on all fronts that have ‘human’ in them. Businesses (top management) delegated and outsourced almost all vital aspects of human-leadership to a convenient function that was also conveniently renamed with the term ‘human’ in this role! For instance, they asked HR to design and implement performance management systems, create and maintain organizational culture, and handle diversity and inclusion initiatives, while they themselves may lack the skills, the time, the awareness, or the commitment to effectively lead their employees.

This delegation of human-leadership to HR is ironic for several reasons. First, it implies that human-leadership is not considered as a core competency or a strategic priority for leadership, and that they can simply outsource it to another function. Second, it suggests that the top management could not trust or empower their employees to manage their own performance, culture, and diversity, and therefore needed HR to scale up the monitoring and controlling. Third, despite all the lip-service, the human dimension does not share the same valued respect as other business dimensions do and that it is treated as a secondary or peripheral issue.

Wrong Incentives in a Broken System

Most HR and business leaders understand that their ‘human-management’ system has been broken for a while. And despite many brilliant minds working in this space, we have not made progress towards reinventing and simplifying this century-old people-system. On the contrary, as discussed above, multiple stakeholders have all the incentives to keep the system broken.

As a result, HR leaders are in an impossible position today, with really low approval ratings from both sides of the organizational aisle: management on one side and employees on the other. According to a survey by Gallup, only 22% of managers and 13% of employees are satisfied with the performance of their HR department. Employees often see right through the utter hypocrisy in certain decisions that HR has to implement, such as layoffs, pay cuts, performance ratings, and more, and resent HR as the frontline of these decisions. Managers, on the other hand, may not trust or appreciate the value that HR brings to the organization, and view HR as a cost center, a compliance function, or a hindrance to their goals.

Is it Time to Blow up HR, as We Know It?

So as we find ourselves at a crossroads, staring into the deep abyss of a broken system, there is little point in adding more layers of ‘ethics’, ‘humanism’ and ‘sustainability’ to HR, except for making it more bureaucratic and adding HR professionals to the payroll to manage the HR bureaucracy. After more than a century of delivering on ever growing people related expectations, it is time to retire the current form of this ‘catch-all’ HR function.

Instead of trying to fix HR, we need to rethink the whole concept of people-leadership in organizations. We need to ask ourselves: What is the purpose of HR? What value does it create for the organization and its stakeholders? How can we align the interests and incentives of HR with those of the employees and the managers? How can we empower and enable people to lead themselves and each other, without relying on HR as a mediator or a regulator?

The Future of Work: Beyond HR

We are living in one of the most exciting times in human history, and I believe we can venture out and innovate different models of work that do not rely on HR as the crutch for people-leadership. Thanks to technology, we do not need as many middlemen (HR as well as people-managers as we know these roles) to convey and transfer information back and forth.

The pandemic has allowed us to leapfrog at least a decade or two into the future, both in terms of understanding how the future of work looks like as well as the technology to support that work. Many organizations are already experimenting in the fringes with models that do not require HR to be the crutches for people-leaders.

With real time feedback and sentiment tech, coupled with nudge-tech, and now LLM based NLP (natural language processing tech) we can have meaningful conversations at speeds and quality unimaginable even 10 years back.

A decentralized and self-managed approach, where teams and individuals have more autonomy and responsibility for their own development, performance, and well-being, supported by peer-to-peer feedback, coaching, and mentoring, as well as by digital platforms that enable learning, collaboration, and recognition.

These models are not only more efficient and effective, but also more human and humane. They can be designed to respect the dignity, diversity, and potential of each person, and they foster a culture of trust, transparency, and accountability. They also allow people to express their creativity, passion, and purpose, and to contribute to the common good of the organization and the society.

Sure, government regulations may require certain models to continue, but based on how fast EU responded with robust regulations to tackle AI I am hopeful. We could create safe, sandbox experiments within government regulations to explore newer models.

I do not know what the future holds and how things will evolve, but I know that when people are talking about needing to outsource ‘humanism’ from the ‘human leader’, we have a problem beyond repair, and we have to start talking about it.

https://cognitive-edge.com/blog/complexity-and-the-cynefin-framework/ : https://www.gallup.com/workplace/236483/why-hr-teams-need-rethink-employee-engagement.aspx