The Limits of People Power

“Why We Hate HR” by Keith H. Hammonds, in Fast Company (Aug. 2005), 375 Lexington Ave., New York, N.Y. 10017.

In a knowledge economy, smart, creative employees are the key to success, and everybody in corporate America loves to talk about the importance of talent and “human capital.” There’s only one problem: the human resources department.

“The human-resources trade long ago proved itself, at best, a necessary evil—and, at worst, a dark bureaucratic force that blindly enforces nonsensical rules, resists creativity, and impedes constructive change,” argues Hammonds, deputy editor of Fast Company.

One reason is that “HR” isn’t seen as a promising career path by many ambitious executives. Another is that it attracts those who say they “like to work with people.” “Good, go be a social worker,” says Arnold Kanarick, former head of HR at The Limited and Bear Stearns: “HR isn’t about being a do-gooder. It’s about how do you get the best and brightest people and raise the value of the firm.”

Creating value ought to be HR’s highest goal, contends Hammonds. But “HR pursues efficiency in lieu of value,” and it does so chiefly because it’s easier to measure. Dave Ulrich, a University of Michigan professor who has become the “best-known guru” in HR, according to Hammonds, complains that corporate HR departments focus on readily quantifiable things such as the number of hours of training employees receive rather than the results of that training. According to Ulrich, the real question is not “What are you doing?” but “What are you delivering?”

HR also forces people into boxes. Its overlords “pursue standardization and uniformity in the face of a workforce that is heterogeneous and complex,” charges Hammonds. But “employers keep their best people by acknowledging and rewarding their distinctive performance, not by treating them the same as everyone else.”

For years, there’s been talk of giving HR a place in the councils of top management. That has happened at some big corporations—including Yahoo, Procter & Gamble, and General Electric—but it’s rare. Corporate leaders are partly to blame, but the problem is often a failure of imagination among HR executives themselves, Hammonds believes. They have plenty of technical expertise, but they need to think more creatively about ways to mesh their work with the corporation’s larger business strategy and to bring fresh ideas to the table. That’s hard to do in itself, notes Lynda Grafton of London Business School, and even harder to execute “because business strategy changes very fast, and it’s hard to fiddle around with a compensation strategy or benefits to keep up.”

If they don’t adapt, Hammonds warns, many HR executives may find themselves writing their own pink slips. HR’s technical administrative functions are among the easiest activities for a company to outsource—and 94 percent of large employers say they already consign at least one HR activity to outside contractors.