Editor’s blog: What’s the point of HR?

The answer is none – ‘but it would be nice if we were represented at the meeting’. (I was told that joke by someone from the FT, so don’t blame me.)

I thought about it when I read our brilliant Global Salary Survey feature, one of the highlights of MT’s June edition. Its headline finding this time round is that in the UK we pay our HR directors more than anywhere else in the world – a whopping 327,300 on average. That’s just a whisker under the figure the average FD gets in the USA (342,284) – and in the States they pay FDs more than anywhere else. This revelation had our old friend and MT contributor Luke Johnson, serial entrepreneur and chairman of Channel 4, protesting: ‘I suspect that part of the reason why big companies in Britain are not as productive or entrepreneurial as they could be is because they misallocate rewards like this. Administrators are a necessary evil, but business-getters and leaders are the ones who create enterprises, not bureaucrats.’

You can sort of see where Luke is coming from. But then once you start to imagine how large organisations would fare without an HR ‘function’ you realise how quickly things might come unstuck. It’s all very well saying that HR doesn’t contribute – that it’s part of a corporate bureaucracy that just consumes revenue – but any medium to large size business that didn’t have it would find things very hard going indeed. Who’s going to do the tricky ‘people’ bits that line-managers can’t cope with? The finance director? IT? God forbid.

These days it’s not just payroll, pensions and working out maternity leave (not that any of these is insignificant). Any organisation that doesn’t realise its people form a vital part of its success is kidding itself. So what has HR ever done for us, to paraphrase the legendary scene from The Life of Brian? When it’s performing its job properly, there’s: 1) ensuring the right talent gets in through the door and that theorganisation hangs onto it; 2) learning and training, which makes any organisation collectively get better at what it does; 3) dealing with unhappy people carefully before things get out of hand; 4) keeping an eye on employee engagement levels which, as the economy cuts up rough, becomes even more vital than ever; and 5) making sure each and every member of the organisation understands what the culture and brand stand for. One could add to this list for quite a while.

But in practice, how many of us could say that the HR department does these things brilliantly and is listened to attentively at board level? (Certainly not Luke Johnson) Done badly, HR inhabits and perpetuates the grim old days of ‘Personnel’. Done badly, it’s a backwater where the semi-detached or those who haven’t cut the mustard get shoved because nobody can work out what to do with them.

Yet the most admired organisations only become so by doing it well.

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    Surely this just requires a very simple bit of logic?

    Do you, or does your chief executive, say that your people are your most important asset (or something to that effect)?

    If so, then:

    – Your people management processes are the most important in your business.

    – Your HR function as the owner of those processes is your business’ most important driver of strategic success.

    – You will want an HRD who can maximise the strategic opportunities provided by this driver

    – You will want to pay them more than you pay most of your other executives.


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    The problem is not HR.

    HR is a necessary and desirable part of any serious organisation’s strategy: all of us, these days, rely on our people.

    The problem is the very low grade implemention of HR, the triumph of process over common sense, the comfort zone of ‘policy’ as opposed to decisions, and a vicious circle of senior management not trust HR as a result.

    We all have to work much. much harder to resolve this. Like it or not, there is no choice.

    And there is so much at stake.

    Nick Jefferson

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    Sorry, my earlier comment (“Surely this just requires a very simple bit of logic?”), doesn’t seem to have been attributed.

    It is from:

    Jon Ingham
    Strategic HR consultant