I was sorely tempted to write an April Fool’s piece today but instead I opted for a history lesson on ‘The HR Department’. In case you were still wondering, this is not a site for HR people – or at least not the majority of those in conventional HR roles. As far back as I can remember there were soothsayers predicting that HR was at a ‘crossroads’ and had to decide which path to take. In 1991 I decided to take a very different path to the one that the other 99% of the ‘HR profession’ thought was a safer bet. So let’s go back 20 years and remind ourselves what the current thinking was then.
The precursor of the UK’s CIPD was the IPM (Institute of Personnel Management). Its president was Barry Curnow who wrote a piece for Human Resources magazine (Summer issue) entitled -
“Measuring the intangible – performance criteria in jobs without a bottom line”.
Barry, obviously having a penchant for self-immolation, did not present the most positive face that one might expect from a professional body’s titular head. But even in 1991 Barry was totally out of touch with the real world, which was increasingly demanding a ‘total quality’ approach to management that had to exclude all muda (a Japanese term used in the Toyota Production System for an activity that is wasteful, unproductive and adds no value) and personnel people were definitely starting to be seen, at best, as a necessary evil and, at worst, as the PC (political correctness) police.
Two years later I was asked to speak at the IPM’s annual conference on the radically new theme of ‘The added value of Personnel’ (HR was still not on the scene). Someone had finally decided that the Personnel department should at least acknowledge it had a bottom line. Although it had not yet registered with the 500+ members in the audience: the majority of whom had bemused looks on their faces, as though I were speaking a foreign language.
The keynote conference speaker that year was Dr. Richard Pascale (“The art of Japanese Management”) who told his audience -
“In the US people in personnel take on a psychological contract to be a victim.” (reported in Personnel Today, 9 November 1993).
So the US experience was no different apparently.
By 1995 the response from beleaguered personnel departments, to all of this damning criticism, was to re-invent themselves as ‘HR’ – because it sounded more like the sort of department that might actually have a ‘bottom line’. Yet the guy who had taken over Barry Curnow’s role, the infamous Geoff Armstrong, was having none of it. In a book review in Personnel Today (23 February 1995) he predicted –
“In my view, it is wrong to tie strategic people issues to the HRM bandwagon. They were around before HRM was invented, and will still be around long after its faddish label has faded.”
Whilst over-staying his welcome at the CIPD, and building a sycophantic regime that even Colonel Gaddafi would envy, Armstrong arguably did more damage to the cause of business-focused HR professionalism than any other person. Certainly it set back the CIPD’s development by at least 10 years, IMHO.
Meanwhile observers such as Thomas Stewart in Fortune magazine (15 January 1996) had a simple solution to the HR department ‘problem’ -
“Why not blow the sucker up?”
and added -
“Human resources has come to the proverbial fork in the road. One path leads to a highly automated employee services operation…. The other leads straight to the CEO’s office.”
What he didn’t cover in any detail was what the HR director would do once they got there (having never been a strategic HR director himself). Stewart is now the MD and editor of Harvard Business Review (HBR), a journal that has also failed to come up with an answer to maximising HR’s impact on the bottom line, despite publishing many questionable ‘solutions’ in the meantime (Prahalad and Hamel’s ‘core competence’ theory being probably the worst culprit, IMHO, although W. Chan Kim and Renée Mauborgne’s piece on ‘Blue Ocean Strategy’ gets my personal award for the most crass HBR article of all time). I think it’s high time he blew that sucker up as well.
Then Dave Ulrich turned up on the scene with his own HBR article entitled “A new mandate for human resources” where he argued -
“In recent years, a number of people who study and write about business have been debating whether we should do away with HR. The debate arises out of serious and widespread doubts about HR’s contribution to organizational performance. And as much as I like HR people, I must agree that there is a good reason for HR’s beleaguered reputation. It is often ineffective, incompetent, and costly; in a phrase, it is value sapping. But the truth is that HR has never been more necessary.”
This was a very clever article. Ulrich knew his audience. At a single stroke he wrote off HR departments as ineffective but then held out the prospect of a promised land, for the very same people who were so obviously ineffective, with his magic wand that would transform them all into strategic, business partners. He also remembered that when ‘personnel’ people were struggling in 1991 they were happy enough to just change their name rather than their modus operandi. So he offered them an opportunity to pull the same stunt again, with new titles, only to suggest a full decade later, in …
… at a conference hosted by PwC, that HR had failed to make his model work, rather than admit he had produced a seriously flawed model (which remains fundamentally flawed despite his more recent amendments).
Which roughly brings us up to the present day.
So what are the key items on the organisational, HR agenda now, when HR no longer pretends it does not have a bottom line?*
- Human capital management and reporting
- Evidence based (HR) management methods
- Tougher professional standards for HR people (SHRM is currently working on this)
- Demonstrating added value and ROI
So, after two decades, HR has arrived right back at the same historical junction. Of course, some HR departments have already tried to get away with their re-naming stunt once more – this time calling themselves ‘Human Capital’. Others are stuck on a vicious, circular path that always leads back to the transactional ghetto still fooling themselves that efficient transactions have something to do with value – but they are no longer fooling anyone else.
For personal development linked to this topic visit the Consummate Professional Series
*But see Ulrich’s 2003 book “Why the bottom line isn’t!”