In an article published earlier in the Harvard Business Review, the author outlined some of the basic problems with HR Departments and how to fix them. Why We Love to Hate HR…and What HR Can Do About It by Peter Cappelli gives a great historical overview of HR’s role from WWII through the 1970s and up to today. The article reflects a looming issue for many companies: a good economy.
How top executives feel about HR pretty reliably reflects what’s going on in the U.S. economy. When the economy is down and the labor market is slack, they see HR as a nuisance. But sentiments change when labor tightens up and HR practices become essential to companies’ immediate success.
But Cappelli outlines how the most recent recovery has done little to raise the profile of HR within most companies. Consider this:
[B]usiness leaders didn’t put a lot of stock in HR during the 2001 and 2008 recessions, because employees—keenly aware of how replaceable they were—stayed put and more or less behaved themselves. Because companies had a large pool of job seekers to draw from, wages stayed flat and productivity rose. More employees were working harder for the sake of security. And that remains true in our “jobless recovery” from the latest financial crisis. Although 83% of people in a Salary.com survey said they would look for a new job in 2014, the number who are actually quitting has not yet spiked. So it’s still easy for leaders to push back on all those annoying HR policies. They seem superfluous.
According to a report published near the beginning of the 2008 recession, only about a third of HR departments said they were consulted on company decisions about which people to let go. That’s a stunning lack of influence in an area where HR has the most expertise of any function.
Cappelli has good advice for HR departments, but these statistics reveal a massive strategic flaw in the leadership for most companies. And a pretty big opportunity as well.
Workforce strategy is more and more a norm that involves far more than keeping employees happy, enforcing policy, and settling disputes. In everything from IT to engineering to manufacturing and administrative jobs, workforce strategy brings together full-time staff, contingent labor forces, job training, and even management of insurance, taxes and payroll. For example, Nesco Resource manages many such programs in a variety of capacities from safety training to actual onsite management. Working closely with HR managers, staffing firms can help a company manage growth in an up economy while minimizing risk for volatilities that lie ahead. As this trend increases, HR departments can utilize resources to best align a workforce with the company’s strategic initiatives.
For business owners and CEOs the message is clear: most of your competition is not implementing much strategy when it comes to workforce. By leaning on HR departments to create a workforce strategies using internal resources and external partnerships, businesses can navigate growth more nimbly, take on more risk and reward, and, in some cases, more effectively compete on price.
The HBR article contains an interesting piece of history. HR departments were considered the most glamorous positions within companies in the middle of the 20th Century. Utilizing HR for workforce strategy may not be a return to those glamour days, but it is an opportunity to gain a strategic advantage over your competition.