US business personality argues for division in HR departments
7 August 2014
A prominent US business advisor and author says human resources departments need structural change because they aren’t impacting business decisions.
Thu, 7 Aug 2014A prominent US business advisor and author says human resources departments need structural change because they aren’t impacting business decisions.
The opening line of Ram Charan’s controversial editorial ‘It’s Time to Split HR’, which was published in the Harvard Business Review, says: “It’s time to say goodbye to the Department of Human Resources. Well, not the useful tasks it performs. But the department per se must go.”
Charan goes on to say that he speaks to chief executives across the globe that are “disappointed” in their HR people because they don’t take an active role in assessing the strengths and weaknesses of an organisation: “Most of them are process-oriented generalists who have expertise in personnel benefits, compensation and labour relations. They are focused on internal matters such as engagement, empowerment, and managing cultural issues.
“What they can’t do very well is relate HR to real-world business needs. They don’t know how key decisions are made, and they have great difficulty analysing why people – or whole parts of the organisation – aren’t meeting the business’s performance goals.”
The editorial proposes HR functions are split into two strands: an administrative function that primarily manages compensation and benefits, and reports to the chief financial officer, named HR-A (for administration); and a function that focuses on improving the people capabilities of the business, reporting to the CEO and called HR-LO (for leadership and organisation).
Chavan isn’t clear which function would take on recruitment and resourcing roles, but implies its part of the HR-LO side of the business. He says HR-LO would be staffed by promising employees that have a “strong chance of attaining the top two layers of the organisation”.
The opening line of Ram Charan’s controversial editorial ‘It’s Time to Split HR’, which was published in the Harvard Business Review, says: “It’s time to say goodbye to the Department of Human Resources. Well, not the useful tasks it performs. But the department per se must go.”
Charan goes on to say that he speaks to chief executives across the globe that are “disappointed” in their HR people because they don’t take an active role in assessing the strengths and weaknesses of an organisation: “Most of them are process-oriented generalists who have expertise in personnel benefits, compensation and labour relations. They are focused on internal matters such as engagement, empowerment, and managing cultural issues.
“What they can’t do very well is relate HR to real-world business needs. They don’t know how key decisions are made, and they have great difficulty analysing why people – or whole parts of the organisation – aren’t meeting the business’s performance goals.”
The editorial proposes HR functions are split into two strands: an administrative function that primarily manages compensation and benefits, and reports to the chief financial officer, named HR-A (for administration); and a function that focuses on improving the people capabilities of the business, reporting to the CEO and called HR-LO (for leadership and organisation).
Chavan isn’t clear which function would take on recruitment and resourcing roles, but implies its part of the HR-LO side of the business. He says HR-LO would be staffed by promising employees that have a “strong chance of attaining the top two layers of the organisation”.
- There’s an on-going debate within in-house leaders about where resourcing functions should sit, with most people believing it should be within HR departments. What do you think? Is Chavan right? Please send your thoughts to [email protected].
