What Does HR Do?

By Joel Myers

We recently met with a senior executive of a manufacturing company who, for economic reasons, had to reduce his workforce from 500 to 350 employees.  Although traumatic and painful, the measures worked; the company is profitable and is building back new business.

During that time of staff reduction, this executive was compelled to cut staff support to the absolute bare bones – eliminating 5 staff people from his HR function.  He retained only a payroll administrator and a receptionist.  Interestingly, upon reflection, he has concluded that even in the absence of his HR department, nothing essential seems to be left undone.  His question, “What did those people do?”

In today’s competitive, global environment none of us can afford to carry overhead expense that is not adding value beyond its cost.  Is HR an essential cost?  The answer is, “That depends.”

If you view your employees as a cost and if your HR department’s principal role is dealing with compliance issues or maintaining policies, you may want to consider alternatives.  For example, you can outsource things like workers compensation administration and investigation, payroll, and benefits administration.  You can train your front-line supervisors to deal more effectively with employee/labor relations issues.  You can retain an attorney or HR consultant to advise you on an ad-hoc basis.  You definitely can reduce your costs.

On the other hand, if you view employees as essential partners in your company’s long-term success, then HR’s primary role should focus on different areas; namely selection, assessment, development, rewards, and communications. 

Selection

Great employee performance begins before a candidate answers an ad or submits a resume.  It starts with a clear definition of the job, its role in the overall scheme of things and the performance indicators that will constitute success.  Armed with that, you know exactly what to look for and how much you should pay in order to derive a good return on your investment.

Assessment

How do you measure success – as a company and individually?  HR should be working as a member of the management team to find ways to quantify productivity and initiate strategies to improve it.  Also, HR should be continually working with individual managers to enhance the effectiveness of your performance appraisal process.

Development

No one is perfect.  That is, no one is as good as they can be at every aspect of their job.  Likewise, organizations don’t typically function at optimum effectiveness all of the time.  In both cases, development is needed.  This may involve technical training, human relations skills training, and/or organizational diagnosis and development.  Continually build leadership capabilities.  You won’t see a headline that reads, “Cruise ship runs aground, passengers at fault!”  The same is true in business. 

Rewards

“What gets measured and rewarded gets done!”  Trite?  Yes!  True?  Absolutely!  Align rewards with organizational goals and values.  Pay for performance.  Invest in compensation in such a way that you are achieving an acceptable return.

Communications

When employees are engaged in the business, good things happen.  They become committed.  In order to be engaged, employees must be treated as and feel like stakeholders.  This involves effective communications about substantive matters.

If you examine successful companies, large and small, they are paying attention to these five strategic HR areas to build a high-performance culture.  You don’t need a large HR staff to accomplish it; you just need to have the right priorities.

Return to What We Think