Every time I took over a company requiring productivity improvements, I replaced the head of Human Resources within a few months. I will explain why.
First, I quote from the excellent book, Last Man Standing, about Jamie Dimon, arguably our country’s best banker. The author, Duff McDonald, describes Dimon’s taking charge at JP Morgan Chase, “Dimon also sent the head of human resources, John Farrell, packing after the two failed to see eye to eye. In a lot of large companies, human resources tends to take on a life of its own, introducing new programs and acting as if it were a business in and of itself. No so in Jamie Dimon’s world, where HR is about helping people get what they need, period.”
Every time I took over a company requiring productivity improvements, I replaced the head of Human Resources within a few months.
Mr. Dimon got it right. He didn’t like what he found, and he acted. Demanding responsive, high level HR quality is squarely the responsibility of the boss, something many avoid. Senior line executives spend their time on operations and finance and don’t pay much attention to HR. They off-load functions to HR which they could slot elsewhere, such as labor relations and communications, then often starve it for money and quality people so what starts out as average at best performance, deteriorates.
Role of HR
There is a positive role for HR. That is to counsel senior management and assist in hiring people consistent with corporate strategy and plans. That is the central reason to have an HR executive at a senior officer level. The HR executive can then also assist in succession planningand executive development programs – once top management agrees on substance.
Other HR roles should be handled by an administrator, and routine functions such as government reporting, benefits administration, pay and retirement administration and record keeping should be outsourced to a company specializing in HR administration. Keep head count down!
My view has not made me friends with HR bosses so let me tell you why I changed HR chiefs--top HR executives often don’t align the needs of the company with the work done by HR; they simply don’t insist that the work tracks the strategy of the company. As a consequence, the following occurs:
- Most HR people don’t know the products or services of the people they counsel and don’t communicate with them to find out.
- HR becomes a bottle neck as it improperly builds empires, aggregates power and becomes a political force.
- HR runs training and development programs based on what it considers important, often without consulting the businesses they support.
Making HR Relevant
What can be done to make HR relevant?
- The first thing is to put a successful line executive into the top HR job, not a professional HR bureaucrat who has moved up the inevitable career ladder by not offending his bosses. A sound line executive will know the company business and strategy and will also know what HR should do to support the line and staff. Rotate these executives in and out every three to four years.
- HR should put together its own strategic and operating plans which mirror the corporate plans. They must be in harmony. These plans should contain measureable performance benchmarks which are reviewed with top management on a periodic basis.
- The large numbers of low level HR people should be cut, their functions outsourced. Only competent and fairly paid senior people should be on payroll.
- The few remaining high level HR people should insist on attending operating group strategy and planning sessions so that they know what needs are developing and take an active role in meeting them.
If you find the kind of HR executive I’ve described as ideal, cherish her and provide the support she needs.
The right person will help you achieve high revenue and profit by finding the right people you must have to succeed in this tough market.