HR is often the bogey-man in the organisation. It comes from the contradiction that they deal with the employees on one hand, and they execute unpopular actions in the name of cost efficiency on the other. So they rename themselves to people officers, yet, everything stays the same.
The main problem with HR organisations is that they are cost centres. And as the saying goes, if you only have a hammer, everything looks like a nail. If you are a cost centre, you look at everything from a cost perspective. If we know this, it can help us understand the weird steps the HR makes and avoid the frustration that comes from thinking of HR as a unit that is to serve the employees. But it doesn’t make it acceptable in most of the cases.
Why is this perspective a problem? Being a cost centre means that your primary domain of interpretation is cost. It gets more tense in times of difficulties (economic crises, inflation, stagnating company performance). So when you should prove your people focus the most, you start acting the opposite. Do you know why Tesla outperformed the other car manufacturers in autonomous cars? Because they are a tech company which builds cars, while the others are car manufacturers that need a software code. How you approach a problem, defines your coping strategy.
Why does HR have this point of view? It comes from the industry revolution and the education system. Where people are just one part of the cogwheel, they do repetitive tasks, they are considered to be cost items that can be changed easily. It has been just recently that the work has started to become a part of your identity and companies start to look at their employees differently, acknowledging the human needs they have.
Sue was a mid level leader in a big company that had stable performance during the years. They managed not just to survive the economic turbulences that made many businesses decrease or even go bankrupt. They grew and they achieved great success stories, grabbing even bigger land in the competition. However, Sue had to deal with dissatisfaction in her team. In spite of the records the team achieved, they didn’t really get their share of it. The bosses thanked them for their effort, there was a nice dinner to celebrate the success, but individually nothing tangible and relevant was given. So the bosses had gained the big bonuses, while Sue’s team got no financial reward. Nevertheless, everything that the HR had introduced or had changed made the team more and more dissatisfied, causing more and more effort so that Sue could maintain the morale. People complained about many things.
There was a salary increase, but less than the margin increase, so proportionally employees got less from the common wealth than their share was. The salary increase was defined by HR, there was a fixed part and a moving part that served for differentiation. But in fact, there was no room for differentiation as the moving part was so little that it wasn’t enough to truly boost the salary of the high performing colleagues on one hand, while it generated unnecessary conflict among those of the average performance who lost their moving part in favour of the high performers.
Then the company provided the employees with mobile phones within a certain amount, while many of the colleagues would have chosen a better phone for their purposes that would have been more expensive than the threshold. After a while it was possible to fill in the additional amount for a better phone, but once again it was limited to a certain amount, which resulted in missing some of the high end phones many of the colleagues would have gone for.
For some, they were provided with company cars with personal usage as well, which were free to choose within a certain amount of money. But HR changed the rules so that only a few models could be chosen that made the cars uniform. It is easy to see that the same car doesn’t fit the different needs of a family with three kids or a couple with no kids.
HR was planning to introduce the 4-day workweek, but they investigated it via cost perspective. They were so employee focused that they had a survey they sent to all employees. But they were mainly interested in the acceptance of the different combination of working hours a day and salary (4 days, 8 hours for the same salary, or 4 days, 8 hours with less salary, or 4 days, 9 hours with the same salary). They simply missed the nature of life that those with children need to get their kids to school and back home, or that even if they have a free Friday, they cannot arrange everything as the doctor might be available only on Tuesdays, and things can get faulty and should be repaired on any day. All these topics created tension within Sue’s group.
As a result, people could not exploit the benefits, and these benefits became more of a set of annoying obstacles. The irony of HR initiatives was that HR truly tried their best to improve employee satisfaction, but since their primary goal was the cost level, they needed to introduce restrictions and limitations, which made everything odd. The good intention led to something bad. So HR was basically managing one of the big budgets, which meant they were more in the favour of the management and the owners and not the employees.
Also, in the end, many employees at HR have only a comparative advantage in their field of expertise. It comes mainly from simply doing it and not from the skillset. Thinking of conceptions and feasibility is at a totally different level than what business managers do on a regular basis. As HR people are conditioned not to deliver business concepts, they lack skills that are required to develop the necessary concepts. But what if you condition the HR staff differently?
What would a non cost centre minded HR look like? Their main KPI (key performance indicator) would be employee satisfaction. They would consider costs as necessary spendings to achieve that satisfaction. Big companies increase their prices to improve profitability which, at the end of the day, is for the owners’ wellbeing. I personally have never seen a price increase that aimed to create room for increasing the employees’ wellbeing, like higher wages or more workforce to foster work-life balance. In this scenario of employee satisfaction, HR would have a goal for which they would seek for every tool that is necessary. Because they would be interested in not just the cost side, but in the real goal as well. I really miss this logic in HR operations.
Many managers say that the real assets a company can have are its employees. And then nothing happens. While true leaders are to create a safe environment for their teams, because people perform better if they feel safe. Then employees welcome changes, they seek for opportunities and they start trying new methods. If you want to make a change compared to other companies, you really take your employees as the very first priority.
You can also rearrange your organisational setup so that the cost aspects are covered by finance and HR can focus on the right people.
