A story in today’s Wall Street Journal, titled “Is It a Dream or a Drag? Companies Without HR,” focuses on several mid-sized companies that have decided to get rid of their HR departments or never even had one in the first place.
These companies include LRN, a training and consulting firm (which has also served as a source for several stories we’ve written here at the magazine). David Greenberg, LRN’s executive vice president, told the Journal that the 250-employee company did away with its HR department several years ago because “we wanted to force people issues into the middle of the business.”
The story notes that companies are jettisoning their HR function because they’re concerned it bogs down innovation and nimbleness with too many rules and too much bureaucracy — and that software can handle most of the transactional stuff. I should add that the story doesn’t cite much in the way of statistics or research to support its thesis — in fact, the only figures it cites are from a SHRM study showing that U.S. employers had a median of 1.54 HR professionals for every 100 employees in 2012, which is actually up from a low of 1.24 in 2009. Nevertheless, the anecdotes within the story are interesting and offer some food for thought.
Steve Miranda, managing director of Cornell’s Center for Advanced Human Resource Studies, notes the benefits of having HR staffers available to protect companies from running afoul of federal laws such as the FMLA. And the story cites restaurant chain Outback Steakhouse, which created its HR department in the wake of a $19 million settlement with the EEOC over a sex discrimination lawsuit.
Yet companies such as Klick Health (which has also served as a source for at least one HRE story) have forgone creating an HR department because they believe training managers and employees to handle conflicts on their own is a better approach, according to the story. CEO Leerom Segal said that instead of an HR function, Klick Health has two employees with customer-service backgrounds serve as “concierges” — it’s their jobs to ensure a “frictionless work experience” for employees. The concierges serve as part of what the company calls its five-person “mojo team.” However, a former employee told the story’s authors that he often worried about liability when he had to discipline or terminate a direct report during his time at Klick Health.
As regular readers of HRE well know, HR — at its best — does a whole lot more than just protect its company from liability. Smart HR pros help their companies attract, retain and develop their talent — no small thing in an era where innovation matters more than ever and employee tenure is shorter than ever. This is not something a piece of software can do, no matter how beautifully designed; it’s certainly not something a lawyer can do, nor can an outside expert substitute for an insider who truly knows the organization and its people. If you’re looking for greater proof of the value HR can add, just review some recent HR Execs of the Year or our HR’s Rising Stars feature.