Something rotten in the land of Den^W... HR

There will be no prizes for knowing the three fundamental factors of production, which of course are land, labor, and capital. My background is in software, which as an industry differs mainly from other industries in the sense that it is greatly immaterial, and with the democratization of IT systems, also the capital-related entry barriers have fallen. The implication is clear: anyone with a laptop and a shed can get into the software business, assuming enough competence. This essentially means that out of the three factors above, labor is most crucial. And within labor, one could use the term of human capital as the thing to focus on: you need highly competent and specialized people in order to ship great software.

The above naturally raises human resources to a pedestal and would seem to justify the whole Human Resources discipline, which itself is barely half a century old in the academic sense. Many pure software companies, i.e. companies with their roots firmly in software development, seem to acknowledge this these days. But then there are the other companies. Based on empirical evidence as well as many discussions with friends who have either been part of HR or who have suffered from bad HR in different companies, the conclusion is clear. Something is still fundamentally wrong with how human capital is managed these days in companies.

So, what is the purpose of HR. A quick googling will give us a Wikipedia definition:

... an organization's human resource management strategy should maximize return on investment in the organization's human capital and minimize financial risk. Human resources seeks to achieve this by aligning the supply of skilled and qualified individuals and the capabilities of the current workforce, with the organization's ongoing and future business plans and requirements to maximize return on investment and secure future survival and success.

It thus seems that HR would need to have a fairly good understanding of not only the current, but also the future needs of the company. So HR must be tightly linked to all other functions in a company: business (the bread'n'butter execution stuff), research, corporate-level stuff, etc. This just gives HR a view of the current situation. But the above definition states also that HR should have an intrinsic and very thorough understanding of the corporation's strategy and future directions, so as to be able to pre-emptively attempt to facilitate the future moves of the company and make them as smooth as possible. But let's face it, many HR employees seem to be very detached from business; some even have a certain proudness associated with the fact that they "don't need to understand that nerdy stuff." So unfortunately I remain ever so slightly skeptical of how well a large HR would truly be able to grasp the present, let alone the future, of a business.

One thing that isn't mentioned in the above definition is that HR should attempt to ensure that all employee-related issues are performed in a legal way. Meaning that when team leaders from other units recruit and manage their employees, HR should be there to support and address the needs of the leaders so as to keep everything legal. That is also why strangely enough when layoffs are about HR seems to stroll a nice and neat line of specialists to sit by the table to ensure that everything goes according to protocol. But very often HR also enforces various policies and to an extent restricts the movement of leaders, not because of legal issues, but because of company policies. Which again is fine, as long as the policies are good and can be justified. But as with every other organism, HR tends to have to fight for its survival: it must have a raison d'etre, lest it be relieved of its own headcount. So the incentive to create artificial work and enforce strange policies is there.

But surely HR must have a good deal of role in recruiting new employees? Perhaps, but my hunch is still that it is fairly limited. In interviewing candidates, I just cannot understand HR's role: as was established above, more often than not an HR person has simply no possibility to credibly judge whether someone has the required competences to survive and succeed in certain tasks. The best they can often do here is match the required buzzwords of recruiting leaders to that of the buzzwords in potential candidates' CVs. But this again may be counterproductive: I would much rather interview people whose CVs I personally selected as I am fairly capable of seeing from a CV whether a person might fit the profile regardless of the fact that they might have missed some key buzzwords.

Fortunately these issues have been acknowledged and I've heard of multiple projects where HR has attempted to devise various types of taxonomies for understanding what types of competencies are needed in different roles. My personal favorite story is of a position which required competence number 123: Humor. The person who came up with that certainly had a fair bit of humor. ;)

So yes: human resource management is an important field and the possibilities there are endless. But no, it is very often not done correctly. And in fact in many larger companies Human Resources units are ridiculed for been hives of bureaucracy, inefficiency, and for creating artificial work and hoops through which people must jump. Hopefully a new breed of HR will slowly emerge in the future. A breed that actually understands that human capital is a very critical asset and potentially a great source of competitive advantage. Because as of now, many HR units are merely destroying the competitive advantage...