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Why are some companies saying no to HR departments?

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There has been a lot of talk lately – mostly from US companies – about corporations shutting down their human resources departments and distributing the responsibilities to line managers, or outsourcing certain aspects.

This article from the Wall Street Journal outlines a few companies which have decentralised the function in order to streamline accountability, cut costs and build leadership, among other things.

In one example, LRN Corp., which helps organisations with compliance and ethics programmes, decided to get rid of job titles and department names – including human resources – in a restructure. The responsibilities of HR at that time – mostly recruitment and compensation – were suddenly put into the hands of line managers.

“We wanted to force the people issues into the middle of the business,” David Greenberg, LRN’s executive vice president, said.

Some might think these examples have a good enough reason to seriously consider getting rid of HR as a separate function, but it is really such a brilliant idea? Are some organisations trying too hard to do something different to boost efficiency, but actually hindering themselves in the long term?

Different is good and it is necessary. Even companies which do have a solid HR function are often trying new things. Just look at Amazon, which actually offers employees money to quit, in order to weed out the duds and keep the most loyal staff members.

I think trying new things is great. The ability to evolve and adapt is 100% necessary for any person or function in order to continue competing in a smaller pool. But getting rid of HR altogether? No, I don’t think it’s a good idea. It might work for some firms, but I’ll bet the reasons behind that are massively culture-specific and will pertain only to that one unique organisation.

Sure, the traditional HR department is changing. It probably doesn’t need to have complete autonomy over recruitment, or talent management, for example. In many cases, managers can take over certain aspects of HR and the HR software industry has made it incredibly easy for other members of the organisation to take over (or outsource) certain functions like payroll and benefits admin.

But the problem with doing away with HR is that you will suddenly have no single point of contact for all the things recruiters, HR managers or administrative personnel do every day. An HRMS can do a really good job of helping you manage data and other personnel information, but it’s not going to help settle a dispute or convince the CEO about the new direction of your talent management strategy.

And I’ll bet that at companies where HR is being phased out, the employees will notice the absence.

I suppose my overarching point is that getting rid of HR altogether seems like a way of getting out of actually spending the time to help HR do their job right.

And actually, the problem with HR in many companies is not usually HR itself, but managers who don’t effectively manage, making HR’s job harder. Or business leaders who don’t take the purpose of HR seriously enough, which is a stifling mentality which can trickle down throughout the rest of the organisation (sometimes being mistaken for disrespect, too.)

Rethinking the way HR works might be a good idea, as long as you don’t forget that a human resources department is key in helping you to solve a huge number of organisational, performance, efficiency and other people issues which will help the business become competitive and successful.  

If this is something which you are even considering, just make sure HR is actually the problem before you think about getting rid of it. 

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Rebecca Lewis
Human Resources Magazine Singapore

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