Have We Finally Outgrown HR?
January 23, 2020
Not that long ago, I was moderating a panel of chief people officers in San Francisco. The discussion spanned career paths, the future of work, diversity and inclusion, and a host of other topics germane to leading people teams in today’s world of work.
One of the more spirited exchanges was during a discussion about the term “human resources” (HR). None of the panelists had HR in their title. None of their teams were titled HR. The shared view was that just as the field had moved beyond “personnel,” the term “human resources” no longer reflects the discipline’s broadened scope and strategic value.
This evolution in nomenclature is not unique to HR. Software engineers used to be programmers. Account representatives used to be sales reps. Even within the field of HR, we’ve seen the gradual shift from “recruiting” to “talent acquisition.”
The evolution of HR
Historically, the field of HR heavily focused on compliance and operational support. Responsibilities mainly centered around ensuring employees got paid, employee relations issues were minimized, and the organization’s exposure to risk was minimized.
The scope of responsibility was rarely given the respect equal to its importance in building a successful organization. In a quest for the proverbial seat at the table (and equal footing with executive peers), some HR teams became more focused on their legacy mandates and earned a reputation (fair or not) as internal cops — often avoided, and occasionally feared. This perception has been shifting over the last decade.
The evolution of HR can be traced back to a decision by one of the pioneers of modern HR, former Google SVP of people operations and current Humu cofounder and CEO, Laszlo Bock. He explained to me in an email exchange why he reframed Google’s team as “people operations”:
“When I joined Google in 2006, it was clear: Conventional business language wouldn’t fly in the engineering-driven culture. While 'HR' would be seen as administrative and bureaucratic, ‘operations’ suggested the ability to get things done and use math. So people operations it was. To illustrate the point, on meeting Urs Hozle, then SVP of infrastructure and one of the first 15 employees of Google in my first week on the job, he took one look at my bio and said, ‘Great title.’
“We built people operations around the principles of using data-driven decision making, of relentless experimentation, and of enriching the field of people management with the best ideas from across disciplines: psychology, economics, technology, and academia.
“And the name suited us well — it was the start of a movement in management that I’m proud to have been a part of. But the truth is, the name doesn’t matter. What does matter is the commitment to rooting decisions in science, in being respectful of the privacy of individuals, and of approaching people management in a truly human way — which at Humu we refer to as a little bit of love.”
“You better not do that, HR is here.”
As a career HR practitioner, I’ve lost count of how many times I’ve heard that phrase. I’m not alone. The legacy perception, driven by the compliance focus, is that HR’s job is to police employees.
“The truth is HR did themselves a disservice in the pursuit of a ‘seat at the table.’ They became police for the org and lost the respect/trust of workforces. Any name change that implies some employee advocacy or treats ‘people’ as people should be welcomed.”
While there are indeed HR teams that earn that policing stereotype, the reality is there is a new camp within HR that’s far more focused on driving strategic business outcomes. Yes, compliance is still necessary, but it’s no longer the leading capability or contribution.
These 21st-century HR teams bring a much broader skill set to their role. People leading these functions possess business acumen on par with their peers across the C-suite. Their teams leverage data that inform their strategy and allow them to address people challenges before they become a crisis. They’re embedded in the business and embraced as part of the teams they support. Rather than striving for ownership with centralized command and control structures, their decentralized business partner models focus on empowering and enabling.
It’s just a name, right?
I was keen to start a conversation with my peers on whether the term “human resources” has become outdated, and there were passionate arguments on both sides. Many HR practitioners are currently struggling with this very question in their organizations.
The leading alternative, one we already see a lot of, involves the word “people.” There are a range of variations: people team, people & culture, people & places, people operations. Some prefer variations of talent: talent, talent & culture, talent operations. Others are partial to employee experience and human capital. Moreover, of course, some feel strongly that the field should remain human resources.
To some people outside of HR, the idea that we refer to our employees as “resources” feels, well, a bit inhumane.
Rob Harol, a product management executive, resents the notion of being referred to in the same manner as the servers that run his company’s website. “The term ‘human resources’ has always felt so cold and mechanical to me. If companies truly value their people, they should refer to us as such.”
Ultimately, what’s most important is elevating the impact and capabilities of the field. A name change without that shift would be cosmetic and not likely to change perceptions.
So what’s changed? That answer depends on whom you ask. There is a significant delta between the capabilities and impact of best-in-class teams and those still rooted in 20th-century views and practices. As you might expect, your experience within that spectrum will largely dictate your answer to this question. For illustration, and with the caveat that 21st-century HR is just emerging, let’s explore some of the capabilities of modern HR.
Analytics and data. Modern HR teams are armed with data. Lots of it. They also understand data alone can be meaningless. Extracting insights from data that allows HR teams to adapt people strategies can be transformative. From Virgin Media to Capitol One, companies are turning to data to solve problems ranging from workforce planning, turnover, recruiting, and more. According to the Corporate Research Forum, 69% of large organizations have people analytics teams. Many modern HR functions have people analytics teams (or individuals) who are tasked with extracting insights from an increasingly complex HR technology stack.
Employer brand. A study by the Harvard Business Review showed that a bad reputation can cost as much at a 10% premium per hire. The maturation of employer brand has transformed HR into a creative field. Leading HR organizations have employer brand strategies that mirror their peers in marketing, complete with conversion funnels, persona maps, and personalized digital engagement strategies. Companies investing in enhancing and actively driving their employer brand are seeing significant impacts on metrics including cost of hire, time to fill, quality of hire, and retention.
Diversity, inclusion, and belonging. The business benefits of having a diverse organization is well documented. A report by McKinsey showed that companies in the top quartile for racial and ethnic diversity are 35% more likely to have financial returns above their respective national industry medians. Leading HR functions are driving cultures that embrace “culture add” mind-sets and proactively tackling topics spanning pay equity, inclusion, and belonging.
Regardless of where you stand on the best name for the function, great HR is transformative. As the sophistication and impact of leading teams continue to drive the evolution of the field, we may soon be in a position everyone can agree on — the name doesn’t matter because the work speaks for itself.
Want more on this topic? Listen here to go deeper on this discussion in an episode of my 21st Century HR podcast.
Lars Schmidt is the founder of Amplify, an HR executive search and talent consultancy. He explores modern HR & recruiting practices in regular Fast Company and Forbes columns and his podcast, 21st Century HR.
This post was originally published on Fast Company.
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