Human Resources used to mean processing payroll, sending birthday gifts, arranging company outings and making sure forms were filled in.
But human resources' role has evolved from administrative to strategic.
Human resources now employs people, trains them, compensates them, develops performance management policies and develops retention strategies.
Human Resources' Origins
Since the human resources practice began in the the early 1900s, trends in the labor market have heavily influenced the role.
The early 20th century witnessed high levels of labor unrest in response to employers' ability to hire and fire at will. Frequent strikes forced companies to institute "personnel departments" to oversee employee grievances, such as wage-related issues between manager and employees, and handle administrative activities.
These responsibilities changed as economic conditions changed. HR departments built organizational practices, using employee management and development strategies, that aligned with organizational goals.
Where Does HR Fit?
Current debates about the role of HR take a different tone.
Adi Ignatius argues in Harvard Business Review that HR managers have become too focused on administrative functions, such as policy making, managing processes and record keeping functions. HR departments lack the vision and strategic insight companies need to drive employee innovation and talent.
Another controversial post in HBR reported on CEOs who said they would like their Chief Human Resource Officers to fulfill a similar function to CFOs — sounding boards and trusted partners. These CEOs wanted to rely on HR's skills in linking people and numbers to diagnose weaknesses and strengths in the organization, find the right fit between employees and their roles and advise on the talent implications of the company’s strategy.
As HR comes under increasing scrutiny, remember that the issues that mattered yesteryear remain HR's main focus. For example, even though elaborate succession plans are rarely used, companies keep creating them.
Instead of copying practices of a decade ago, HR should focus on crafting company- and industry-specific policies that respond to today's challenges, such as low employee engagement and high employee turnover rates.
Traditionally, HR has had difficulty supporting business strategy. Companies seldom have long-term plans with straightforward talent requirements. By its very nature, HR strategies focus on the long term. Developing talent, heading off regulation problems, building company culture and addressing morale problems all take time, but HR departments need to take the driver's seat when it comes to anything employee related.
What Data-Driven HR Looks Like
Like many organizational roles, HR needs to move to a more analytics-driven strategy — to predict what skills employees will need, to monitor and act on engagement levels, and to prevent talent churn.
Companies such as Google, Microsoft and Apple are on the front lines of HR innovation, largely because they have a specific need for talent. Google’s Head of HR, Laszlo Bock, shared some of his insights into the HR practices at the world's biggest tech giant:
“It’s our people, it sounds corny, but we believe that by hiring for the best, by nurturing an engaged environment, it helps us drive innovation.”
Google’s success has been largely attributed to its data-driven HR function. The company replaced HR's subjective decision making approach with an algorithm-based decision making process. The people analytics team has direct insight into employee surveys, draws insightful correlations and can provide recommended actions going forward.
A number of Google’s people management practices highlight the data-driven approach, such as project oxygen, retention algorithms, predictive modeling and effective hiring algorithms.
A Risk-Based Approach to HR
Shifting the strategic focus to managing people drives innovation. Doing this well impacts the decisions the firm can make. Businesses can't produce superior results unless managers are making good decisions. Business success often lies in the discretionary effort made by engaged employees who are willing to give their best.
Networking product provider Juniper Networks reinvented the way the business viewed its HR practices. The Executive Vice President of Human Resources at Juniper, Steven Rice, realized that without invigorating Juniper networks’ HR department, the company would quickly lose valuable employees to competitors. Rice believes that HR leaders tend to be overly risk-averse, which hamstrings the entire HR industry.
"I sometimes see folks in this field [who] let fear drive them to mediocrity," Rice said. “But it's necessary to take risks to move forward.”
Rice constantly questions assumptions about HR and chooses to focus on business outcomes. He believes that greater personalization of technology is one of the driving forces behind several of the organizations’ HR initiatives. For example, Juniper Networks overhauled its performance review practices, opting for a more continuous approach. It has since revamped several other processes, from corporate learning to employees surveys.
Rice believes in constantly pushing the HR envelope as a way to ensure the business is driving as much value, creativity and innovation as possible.
What’s Next for Your HR Department?
Is it time for your HR practices to be revamped?
Becoming people focused and testing avant-garde practices is a riskier road to take, but will benefit your employees in the long run. Employing people analytics is a strategic focus for a number of organizations — how would it benefit yours?
Understanding people, engaging and motivating your people nurtures an innovative work environment — and isn't that what we all are looking for?