Realize that there is no need for a separate organization to manage "Human Resources." This is an outdated concept and it wrongly, unnaturally displaces responsibility for developing people from managers to bureaucrats. Put basic developmental tools in the hands of managers and demand high standards for your organization.
The main problem is a lack of employee engagement and managers that are not directly involved in organizational development. It’s important to address because organizational development should be a natural component of effective management, but traditional (bureaucratic) HR organizations keep front line managers disconnected from it.
This has stemmed from systemizing and automating mostly recruitment as well as terminations. In an effort to streamline, managers have become over-enabled by systems initially designed to support them to the point that they have been removed from the decision-making directly and therefore less or not at all responsible for the success of an employee hire.
Additionally, the job of legal compliance, contract management, affirmative action, and workplace policies has been placed in the hands of an organizational function typically called “Human Resources.” Just look at any job posting for an HR professional, which tends to be more about knowledge and competency in regulatory compliance and the law, and far less about leadership of human beings. A de facto legal department does not design or enhance effective “people” leadership. The leadership of people and compliance with policies and law are important, but must be uncoupled, and “HR” cannot be the name of either.
Start by eliminating the HR department – or at least setting a long term goal to do so by replacing it with something better. Then ask managers what they need to develop their people. Maybe kick-start this review of needs by using an experienced outside consultant to review and develop the core principles of the company’s approach to development. If nothing else, sit down together and talk about what outcomes you want for people and make a list (training, education, performance feedback, specific competencies, succession planning, career path, etc). Turn those into achievable initiatives as part of the normal planning/goal-setting and management framework.
As the need arises for certain discrete, administrative functions like legal compliance, contracts, benefits, compensation policy, etc. choose to assign these to existing departments (ie compensation to Accounting) or use outside consultants for one time services (ie employment contract templates).
Some tools or practices a company might need in the hands of managers in order to eliminate HR:
- Compensation policy. Use a 3rd party database service and link all job descriptions to those found in the database. Allow managers to increase (or recommend increasing, within budget limits) compensation for individual employees within the market range for that position. Make administration a budgeting function within Finance & Accounting. For a more radical and empowering approach attempt to replicate what companies like Morningstar, Crytek, and SEMCO have achieved with employee-managers that jointly set their own salaries and bonuses. As with any other tool, there is no one-size-fits-all approach, and the only important principle is that management is empowered to develop a process that they control and which closely involves all employees.
- Incentive compensation. Use a transparent, profit-sharing model covering 100% of employees tied to the same financial performance measure. Again, co-designing the system with employees is actually more important than the tool. The most meaningful outcome of this process is the transparency and alignment that such a policy engenders. This area in particular requires managers that can communicate openly and honestly with their people in order to get the most out of this process of co-design and its implementation.
- Personality Profile. Build a process into the Recruiting activity for establishing personality profiles, based on 16PF or similar methodology. Make that the core development document for that person.
- 360-Degree Feedback. Use a survey-based system to develop a workplace behavior model first to set up the question list so that it’s aligned with the company’s principles, perspectives, process, philosophy and people. Start by using a 3rd party to mediate 360-degree feedback but move toward replacing that provider with management and then to fully transparent reviews with peers, subordinates, and supervisors.
- Planning. Set long-range objectives as a management team covering all business areas: Financial, Operations, Customer, and People. From there at each level set goals from the bottom up.
- Employee-Led Goals Review. Employees review their goals and present status/progress and modifications to their managers/supervisors (not the other way around).
- Training. Use a common platform and let managers and individuals design custom curriculum.
A more gradual, methodical solution to the problems with HR and the need to implement a new tool set for managers, is to employ a systems based approach to traditional HR functions and needed outputs. Start by "reducing failure demand" in HR. This then enables you to identify what is the actual work that needs to be redistributed. The legal work can be outsourced, for example, and the managers then take on the management of the system to produce (only) the outcomes they want based on their goals for organizational development. Managers then can work together with employees to design the system from the internal organizational point of view. Studies of this approach show an average HR department reduced its of wasted capacity by by 50%:
In a systems-based approach to developing people from within the organization, only one question is necessary to tell managers what they need to know to act: “What stops you from doing the job?”
Certainly the biggest challenges, especially in larger organizations, come from the existing vested interests in “traditional HR” – both from the managers that are disengaged from their employees to the actual professionals in the HR department. The only true way to overcome this is a radical mindset for change and improvement, and the idea that there is a far more effective and empowering way to run an organization. More practically, both managers and HR professionals can come forward and be part of the change. Talent in the HR division can be reassigned to front-line roles, or to administrative departments that take over explicit functions. Managers that otherwise might have relied on HR for critical decisions can start to take ownership for what they want from systems and what “tools” they need to develop their people and to make informed decisions. From there the organization can co-design a system that fits their needs – not without people who know about HR – but simply without a centralized division called “HR” in its most common, traditional make-up
Organizations can start the process immediately by first deciding that they don’t really need HR, and then starting the conversation about what they need to develop their people. Not what they think they need from a conventional mindset about HR, but about their internal vision for engaged leadership and organizational success.