Human Resource Academy
Training & Development
Recruitment & Selection
Compensation & Benefits
Violence in the Workplace
Legal Letter Writing
Los Angeles Valley College
Human Resources Assistant Academy
Introduction to Human Resources Management
Rev. April 2014 Page 2
Introduction to Human Resources Management (HRM)
• Networking Game
• The History of Human Resources
• Roles within HR Management
• HR Daily Activities/Compliance Concerns
• Careers in HR/Salary Information
• The current climate and challenges of HR
• Ethical issues
• Review Handouts and Materials
Homework Assignment: Write a one page paper answering ONE of the following
1. Why do you want to have a career in Human Resources?
2. What is your “dream job” to achieve some day?
Rev. April 2014 Page 3
Common HR “Buzz Words” in Human Resources
Absenteeism – Any failure by an employee to report for work as scheduled or to stay at
work when scheduled.
Adult learning – Ways in which an adult learns differently than younger individuals.
Adverse impact – a situation in which a significantly higher percentage of member of a
protected group (women, African-Americans, Hispanics, etc.) in the available population
are rejected for employment, placement or promotion.
Adverse selection – Means that only higher-risk employees select and use certain
Affirmative action – Gives preferential treatment in hiring, recruitment, promotion and
training to groups that have been discriminated against in the past.
Affirmative action plan – A formal document that the organization makes available for
review by employees and compliance officers.
Alternate work arrangements – Non-traditional schedules at work that provide flexibility
Applicant pool – Consists of all persons who are actually evaluated for selection.
Aptitude test – Measures the general ability to learn or acquire a skill.
Arbitration – A means of deciding a dispute in which negotiating parties submit the
dispute to a third party to make a decision.
Auto-enrollment – Employee contributions to a 401 (k) plan are stared automatically
when an employee is eligible to join the plan.
Autonomy – Extent of individual freedom and discretion in the work and its scheduling.
Rev. April 2014 Page 4
Bargaining Unit – Two or more employees who share common employment interests and
conditions and may reasonably be grouped together.
Base Pay – Basic compensation that an employee receives, usually as a wage or salary.
Behavior modeling – Copying someone else’s behavior.
Benchmarking – Comparing the business results to industry standards. Measures your
practices to “best practices” in other organizations.
BFOQ (bona-fide occupational qualification) – A legitimate reason why an employer
can exclude persons on otherwise illegal bases of consideration.
Burden of proof – What individuals who file suit against employers must prove to
establish that illegal discrimination has occurred.
Business necessity – A practice necessary for safe and efficient organizational operations.
Closed Shop – Firm that requires individuals to join a uion before they can be hired.
Classification or grading system – A job evaluation method that groups jobs together into
a grade or classification.
Complaint – Indication of employee dissatisfaction.
Co-payment – Requires the employee to pay a portion of costs for bother insurance
premiums and medical care.
Coaching – Observation with suggestionsn or training and feedback given to employees
by immediate supervisors.
Collective bargaining – Process by which representative or the organization meet and
attempt to work out a contract with representatives of a union.
Commission – Compensation computed as a percentage of sales in units or dollars.
Comparable worth – Requires that jobs with comparable knowledge, skills, and abilities
by paid similarly even if the actual duties differ.
Rev. April 2014 Page 5
Compensation – The HRM function that deals with every type of reward that individuals
receive in return for performing organizational tasks.
Compensatory time-off – Time off given in lieu of payment for time worked.
Compressed workweek – A full week’s work is accomplished in fewer than five days.
Constructive discharge – When an employer deliberately makes conditions so intolerable
in an attempt to get an employee to quit.
Contributory plan – One in which the money for benefits is paid in by both employers
Cross-training – Training employees to do more than one job.
Cumulative trauma disorders (CTDs) – Muscle and skeletal injuries that occur when
workers repetitively use the same muscles to perform task. (e.g. carpal tunnel syndrome
is a CTD)
Decertification – A process whereby a union is removed as the representative of a group
Defined benefit plan – One in which an employee is promised a pension amount based on
age and service.
Defined contribution plan – One in which the employer makes an annual payment to an
employee’s pension account.
Directive interview – Uses questions that can be answered by “yes” or “no” answer.
Disabled person – Someone who has a physical or mental impairment that substantially
limits that person in some major life activities, has a record of, or is regarded as having
Discipline – A form of training that enforces organizational rules.
Disparate impact – Occurs when there is a substantial under representation of protectedclass
members as a result of employment decisions that work to their disadvantages.
Disparate treatment – Occurs when protected-class members are treated differently.
Diversity – The condition that describes the variety of people who comprise the
contemporary work force.
Rev. April 2014 Page 6
Downsizing – Reducing the size of an organization’s workforce.
Due diligence – A comprehensive assessment of all aspects of the business being
Due process – Requirement that the employer use a fair process to determine employee
wrongdoing and that the employee has the opportunity to explain his/her actions.
Early Retirement – Retirement before the usual age of 65.
Employee Assistance Program (EAP) – program designed to help employees with
persona, family and work programs (short term confidential counseling).
Employee Engagement – The extent to which an employee’s thoughts and behaviors are
focused on the employer’s success.
Employment at Will – A common law doctrine stating that employers have the right to
hire, fire, demote or promote whomever they choose, unless there is a law or contract that
EEO – Equal Employment Opportunity – states that individuals should have equal
treatment in all employment related actions.
Equity – Perceived fairness of what the person does compared with what the person
Ergonomics – The proper design of the work environment to address the physical
demands experienced by people.
Essential Job Functions – The fundamental job duties of the employment position that an
individual with a disability holds or desires, but they do no include marginal functions of
Exempt – Employees that are not required to be paid overtime under the Fair Labor
Exit interview – Asks those leaving the organization to identify the reasons for leaving.
Rev. April 2014 Page 7
Flexible Benefits Plan – Allows employees to select the benefits they prefer from a group
of benefits established by the employer.
Flexible Spending Account – Allows employees to contribute pre-tax dollars to buy
Garnishment – A court order that directs an employer to set aside a portion of an
employee’s wage to pay a debt owed to a creditor.
Glass ceiling – Discriminatory practices that have prevented women and other members
of a protected class from advancing to executive level jobs.
Golden parachute – A severance packaged that provides protection and security to
executives who may be affected if they lose their jobs if their firm is acquired by another
Green Circle Job – One in which the incumbent is paid below the rate for the job.
Grievance – A complaint formally stated in writing
Halo effect – Rating a person high or low on all items because of one characteristic
Headhunters – Employment agencies that focus their efforts on executive, managerial and
Hot stove rule – Relating to discipline – immediate and consistent response to
inappropriate action by an employee.
HR generalist – A person with responsibility for a variety of HR functions.
HR specialist – A person with in-depth knowledge and expertise in a limited area of HR.
Rev. April 2014 Page 8
Illegal issues – Collective bargaining issues that would require either party to take illegal
Incentive – A compensative reward for an employee’s efforts beyond normal
IRA – individual retirement account.
Job description – Specified in written form the duties, tasks and responsibilities of a job.
Job posting – A listing of job openings
Job specifications – The knowledge, skills, and abilities an individuals needs to do the job
Just cause – Reasons justification for taking employment-related action.
Mentor – A guide/coach that assists with career development.
Mediation – Process by which a third party helps the negotiators reach a settlement.
Minimum wage – The federal minimum wage that must be paid in all States. Some
states, such as California have minimum wage requirements higher than the federal
Moonlighting – Work outside a person’s regular employment.
Negligent hiring – Occurs when an employer fails to check an employee’s background
and the employee injuries someone on the job.
Negligent retention – Occurs when an employer becomes aware than an employee may
be unfit for work but continues to employ the person, and the person injures someone.
Rev. April 2014 Page 9
Nepotism – Practice of allowing relatives to work for the same employer.
Nondirective interview – Uses general questions from which other questions are
Non-exempt employee – A person working in a job that is subject to the overtime
provisions of the Fair Labor Standards Act.
Open Enrollment –A time when employees can change their participation level in various
benefit plans and switch between benefit options.
Orientation – the HR activity that introduces new employees to the organization.
Outplacement – a group of services provided to displaced/laid off employees to give
them support and assistance.
Pay class – A grouping of jobs that are similar in their work difficulty and responsibility.
Pay grades – Used to group together individual jobs having the same job worth.
Pay survey – A collection of data about compensation rates for workers performing
similar jobs in other organizations.
Performance appraisal – Process of determining how well employees do their jobs
compared with a set of standards and communicating that information to employees.
PERKS – Special benefits for executives that are usually non-cash items.
Phased retirement – Approach in which employees gradually reduce their workloads and
Progressive Discipline – A program that proceeds from less sever disciplinary action to
very sever action (e.g. oral warning vs. termination). Each step in the progression
becomes more severe.
Protected class – Composed of individuals who fall within a group identified for
protection under equal employment laws and regulations (e.g. race, gender, sex,
Rev. April 2014 Page 10
Ranking – Consists of listing all employees form highest to lowest in performance.
Rater bias – Occurs when a rater’s values or prejudices distort the rating.
Realistic job preview – Process through which a job applicant receives an accurate
picture of a job.
Reasonable accommodation – A modification or adjustment to a job or work
environment that enables a qualified individual with a disability to enjoy equal
employment opportunity to perform.
Recency effect – Gives a greater weight to recent occurrences when appraising an
Red-circle rate – Occurs when the incumbent is paid above the salary range.
Retaliation – occurs when an employer takes punitive actions against individuals who
exercise their legal rights.
Right-to-Sue Letter – a letter issued by the EEOC that notifies a complainant that he/she
has 90 days in which to file a personal lawsuit in federal court.
Selection – The process of choosing individuals who have relevant qualifications to fill
Separation Agreement – Agreement in which a terminated employee agrees not to sue the
employer in exchange for specified benefits (e.g. lump sum payment).
Severance pay – Temporary payments made to laid-off employees to ease the financial
burden of unemployment.
Sexual harassment – Actions that are sexually directed, are unwanted, and subject the
worker to adverse employment conditions or create a hostile work environment.
Structured interview – uses a set of standardized questions that are asked of all job
Rev. April 2014 Page 11
Telecommuting – Working via electronic computing and telecommunications equipment
from a remote location.
Turnover – Occurs when employees leave the organization and have to be replaced.
Undue Hardship – Significant difficulty or expense imposed on an employer in making
an accommodation for individuals with disabilities.
Vesting – Rights of employees to receive certain benefits from their pension plans.
Wellness programs – Programs designed to maintain or improve employee health before
Wrongful discharge – Termination of an individual’s employment for reasons that are
illegal or improper.
Source: Adapted from Human Resources Management, by Robert L. Mathis, John H.
Jackson and Sean R. Valentine, 14th edition, Cengage Learning, 2014
Rev. April 2014 Page 12
Why We Hate HR
By: Keith H. Hammonds
Fast Company, Issue 97; August 2005
In a knowledge economy, companies with the best talent win. And finding,
nurturing, and developing that talent should be one of the most important tasks in
a corporation. So why does human resources do such a bad job — and how can
we fix it?
Well, here’s a rockin’ party: a gathering of several hundred midlevel humanresources
executives in Las Vegas. (Yo, Wayne Newton! How’s the 401(k)?)
They are here, ensconced for two days at faux-glam Caesars Palace, to confer
on “strategic HR leadership,” a conceit that sounds, to the lay observer, at once
frightening and self-contradictory. If not plain laughable.
Because let’s face it: After close to 20 years of hopeful rhetoric about becoming
“strategic partners” with a “seat at the table” where the business decisions that
matter are made, most human-resources professionals aren’t nearly there. They
have no seat, and the table is locked inside a conference room to which they
have no key. HR people are, for most practical purposes, neither strategic nor
I don’t care for Las Vegas. And if it’s not clear already, I don’t like HR, either,
which is why I’m here. The human-resources trade long ago proved itself, at best,
a necessary evil — and at worst, a dark bureaucratic force that blindly enforces
nonsensical rules, resists creativity, and impedes constructive change. HR is the
corporate function with the greatest potential — the key driver, in theory, of
business performance — and also the one that most consistently underdelivers.
And I am here to find out why.
Why are annual performance appraisals so time-consuming — and so routinely
useless? Why is HR so often a henchman for the chief financial officer, finding
ever-more ingenious ways to cut benefits and hack at payroll? Why do its
communications — when we can understand them at all — so often flout reality?
Why are so many people processes duplicative and wasteful, creating a forest of
paperwork for every minor transaction? And why does HR insist on sameness as
a proxy for equity?
It’s no wonder that we hate HR. In a 2005 survey by consultancy Hay Group, just
40% of employees commended their companies for retaining high-quality
workers. Just 41% agreed that performance evaluations were fair. Only 58%
rated their job training as favorable. Most said they had few opportunities for
advancement — and that they didn’t know, in any case, what was required to
Rev. April 2014 Page 13
move up. Most telling, only about half of workers below the manager level
believed their companies took a genuine interest in their well-being.
None of this is explained immediately in Vegas. These HR folks, from employers
across the nation, are neither evil courtiers nor thoughtless automatons. They are
mostly smart, engaging people who seem genuinely interested in doing their jobs
better. They speak convincingly about employee development and cultural
transformation. And, over drinks, they spin some pretty funny yarns of employee
weirdness. (Like the one about the guy who threatened to sue his wife’s company
for “enabling” her affair with a coworker. Then there was the mentally disabled
worker and the hooker — well, no, never mind. . . .)
But then the facade cracks. It happens at an afternoon presentation called “From
Technicians to Consultants: How to Transform Your HR Staff into Strategic
Business Partners.” The speaker, Julie Muckler, is senior vice president of
human resources at Wells Fargo Home Mortgage. She is an enthusiastic woman
with a broad smile and 20 years of experience at companies such as Johnson &
Johnson and General Tire. She has degrees in consumer economics and human
resources and organizational development.
And I have no idea what she’s talking about. There is mention of “internal action
learning” and “being more planful in my approach.” PowerPoint slides outline
Wells Fargo Home Mortgage’s initiatives in performance management,
organization design, and horizontal-solutions teams. Muckler describes
leveraging internal resources and involving external resources — and she leaves
her audience dazed. That evening, even the human-resources pros confide they
didn’t understand much of it, either.
This, friends, is the trouble with HR. In a knowledge economy, companies that
have the best talent win. We all know that. Human resources execs should be
making the most of our, well, human resources — finding the best hires, nurturing
the stars, fostering a productive work environment — just as IT runs the
computers and finance minds the capital. HR should be joined to business
strategy at the hip.
Instead, most HR organizations have ghettoized themselves literally to the brink
of obsolescence. They are competent at the administrivia of pay, benefits, and
retirement, but companies increasingly are farming those functions out to
contractors who can handle such routine tasks at lower expense. What’s left is
the more important strategic role of raising the reputational and intellectual
capital of the company — but HR is, it turns out, uniquely unsuited for that.
1. HR people aren’t the sharpest tacks in the box. We’ll be blunt: If you are an
ambitious young thing newly graduated from a top college or B-school with your
Rev. April 2014 Page 14
eye on a rewarding career in business, your first instinct is not to join the humanresources
dance. (At the University of Michigan’s Ross School of Business,
which arguably boasts the nation’s top faculty for organizational issues, just 1.2%
of 2004 grads did so.) Says a management professor at one leading school: “The
best and the brightest don’t go into HR.”
Who does? Intelligent people, sometimes — but not businesspeople. “HR doesn’t
tend to hire a lot of independent thinkers or people who stand up as moral
compasses,” says Garold L. Markle, a longtime human-resources executive at
Exxon and Shell Offshore who now runs his own consultancy. Some are exiles
from the corporate mainstream: They’ve fared poorly in meatier roles — but not
poorly enough to be fired. For them, and for their employers, HR represents a
relatively low-risk parking spot.
Others enter the field by choice and with the best of intentions, but for the wrong
reasons. They like working with people, and they want to be helpful — noble
motives that thoroughly tick off some HR thinkers. “When people have come to
me and said, ‘I want to work with people,’ I say, ‘Good, go be a social worker,’ “
says Arnold Kanarick, who has headed human resources at the Limited and, until
recently, at Bear Stearns. “HR isn’t about being a do-gooder. It’s about how do
you get the best and brightest people and raise the value of the firm.”
The really scary news is that the gulf between capabilities and job requirements
appears to be widening. As business and legal demands on the function
intensify, staffers’ educational qualifications haven’t kept pace. In fact, according
to a survey by the Society for Human Resource Management (SHRM), a
considerably smaller proportion of HR professionals today have some education
beyond a bachelor’s degree than in 1990.
And here’s one more slice of telling SHRM data: When HR professionals were
asked about the worth of various academic courses toward a “successful career
in HR,” 83% said that classes in interpersonal communications skills had
“extremely high value.” Employment law and business ethics followed, at 71%
and 66%, respectively. Where was change management? At 35%. Strategic
management? 32%. Finance? Um, that was just 2%.
The truth? Most human-resources managers aren’t particularly interested in, or
equipped for, doing business. And in a business, that’s sort of a problem. As
guardians of a company’s talent, HR has to understand how people serve
corporate objectives. Instead, “business acumen is the single biggest factor that
HR professionals in the U.S. lack today,” says Anthony J. Rucci, executive vice
president at Cardinal Health Inc., a big health-care supply distributor.
Rucci is consistently mentioned by academics, consultants, and other HR
leaders as an executive who actually does know business. At Baxter
International, he ran both HR and corporate strategy. Before that, at Sears, he
Rev. April 2014 Page 15
led a study of results at 800 stores over five years to assess the connection
between employee commitment, customer loyalty, and profitability.
As far as Rucci is concerned, there are three questions that any decent HR
person in the world should be able to answer. First, who is your company’s core
customer? “Have you talked to one lately? Do you know what challenges they
face?” Second, who is the competition? “What do they do well and not well?” And
most important, who are we? “What is a realistic assessment of what we do well
and not so well vis a vis the customer and the competition?”
Does your HR pro know the answers?
2. HR pursues efficiency in lieu of value. Why? Because it’s easier — and easier
to measure. Dave Ulrich, a professor at the University of Michigan, recalls
meeting with the chairman and top HR people from a big bank. “The training
person said that 80% of employees have done at least 40 hours in classes. The
chairman said, ‘Congratulations.’ I said, ‘You’re talking about the activities you’re
doing. The question is, What are you delivering?’ “
That sort of stuff drives Ulrich nuts. Over 20 years, he has become the HR
trade’s best-known guru (see “The Once and Future Consultant,” page 48) and a
leading proponent of the push to take on more-strategic roles within corporations.
But human-resources managers, he acknowledges, typically undermine that
effort by investing more importance in activities than in outcomes. “You’re only
effective if you add value,” Ulrich says. “That means you’re not measured by
what you do but by what you deliver.” By that, he refers not just to the value
delivered to employees and line managers, but the benefits that accrue to
investors and customers, as well.
So here’s a true story: A talented young marketing exec accepts a job offer with
Time Warner out of business school. She interviews for openings in several
departments — then is told by HR that only one is interested in her. In fact, she
learns later, they all had been. She had been railroaded into the job, under the
supervision of a widely reviled manager, because no one inside the company
would take it.
You make the call: Did HR do its job? On the one hand, it filled the empty slot. “It
did what was organizationally expedient,” says the woman now. “Getting
someone who wouldn’t kick and scream about this role probably made sense to
them. But I just felt angry.” She left Time Warner after just a year. (A Time
Warner spokesperson declined to comment on the incident.)
Part of the problem is that Time Warner’s metrics likely will never catch the real
cost of its HR department’s action. Human resources can readily provide the
number of people it hired, the percentage of performance evaluations completed,
Rev. April 2014 Page 16
and the extent to which employees are satisfied or not with their benefits. But
only rarely does it link any of those metrics to business performance.
John W. Boudreau, a professor at the University of Southern California’s Center
for Effective Organizations, likens the failing to shortcomings of the finance
function before DuPont figured out how to calculate return on investment in 1912.
In HR, he says, “we don’t have anywhere near that kind of logical sophistication
in the way of people or talent. So the decisions that get made about that resource
are far less sophisticated, reliable, and consistent.”
Cardinal Health’s Rucci is trying to fix that. Cardinal regularly asks its employees
12 questions designed to measure engagement. Among them: Do they
understand the company’s strategy? Do they see the connection between that
and their jobs? Are they proud to tell people where they work? Rucci correlates
the results to those of a survey of 2,000 customers, as well as monthly sales data
and brand-awareness scores.
“So I don’t know if our HR processes are having an impact” per se, Rucci says.
“But I know absolutely that employee-engagement scores have an impact on our
business,” accounting for between 1% and 10% of earnings, depending on the
business and the employee’s role. “Cardinal may not anytime soon get invited by
the Conference Board to explain our world-class best practices in any area of HR
— and I couldn’t care less. The real question is, Is the business effective and
3. HR isn’t working for you. Want to know why you go through that asinine
performance appraisal every year, really? Markle, who admits to having
administered countless numbers of them over the years, is pleased to confirm
your suspicions. Companies, he says “are doing it to protect themselves against
their own employees,” he says. “They put a piece of paper between you and
employees, so if you ever have a confrontation, you can go to the file and say,
‘Here, I’ve documented this problem.’ “
There’s a good reason for this defensive stance, of course. In the last two
generations, government has created an immense thicket of labor regulations.
Equal Employment Opportunity; Fair Labor Standards; Occupational Safety and
Health; Family and Medical Leave; and the ever-popular ERISA. These are
complex, serious issues requiring technical expertise, and HR has to apply
But “it’s easy to get sucked down into that,” says Mark Royal, a senior consultant
with Hay Group. “There’s a tension created by HR’s role as protector of corporate
assets — making sure it doesn’t run afoul of the rules. That puts you in the
position of saying no a lot, of playing the bad cop. You have to step out of that,
see the broad possibilities, and take a more open-minded approach. You need to
understand where the exceptions to broad policies can be made.”
Rev. April 2014 Page 17
Typically, HR people can’t, or won’t. Instead, they pursue standardization and
uniformity in the face of a workforce that is heterogeneous and complex. A
manager at a large capital leasing company complains that corporate HR is
trying to eliminate most vice-president titles there — even though veeps are a
dime a dozen in the finance industry. Why? Because in the company’s
commercial business, vice president is a rank reserved for the top officers. In its
drive for bureaucratic “fairness,” HR is actually threatening the reputation, and so
the effectiveness, of the company’s finance professionals.
The urge for one-size-fits-all, says one professor who studies the field, “is partly
about compliance, but mostly because it’s just easier.” Bureaucrats everywhere
abhor exceptions — not just because they open up the company to charges of
bias but because they require more than rote solutions. They’re time-consuming
and expensive to manage. Make one exception, HR fears, and the floodgates will
There’s a contradiction here, of course: Making exceptions should be exactly
what human resources does, all the time — not because it’s nice for employees,
but because it drives the business. Employers keep their best people by
acknowledging and rewarding their distinctive performance, not by treating them
the same as everyone else. “If I’m running a business, I can tell you who’s really
helping to drive the business forward,” says Dennis Ackley, an employee
communication consultant. “HR should have the same view. We should send the
message that we value our high-performing employees and we’re focused on
rewarding and retaining them.”
Instead, human-resources departments benchmark salaries, function by function
and job by job, against industry standards, keeping pay — even that of the stars —
within a narrow band determined by competitors. They bounce performance
appraisals back to managers who rate their employees too highly, unwilling to
acknowledge accomplishments that would merit much more than the 4%
Human resources, in other words, forfeits long-term value for short-term cost
efficiency. A simple test: Who does your company’s vice president of human
resources report to? If it’s the CFO — and chances are good it is — then HR is
headed in the wrong direction. “That’s a model that cannot work,” says one top
HR exec who has been there. “A financial person is concerned with taking money
out of the organization. HR should be concerned with putting investments in.”
4. The corner office doesn’t get HR (and vice versa). I’m at another rockin’ party:
a few dozen midlevel human-resources managers at a hotel restaurant in
Mahwah, New Jersey. It is not glam in any way. (I’ve got to get a better travel
agent.) But it is telling, in a hopeful way. Hunter Douglas, a $2.1 billion
Rev. April 2014 Page 18
manufacturer of window coverings, has brought its HR staff here from across the
United States to celebrate their accomplishments.
The company’s top brass is on hand. Marvin B. Hopkins, president and CEO of
North American operations, lays on the praise: “I feel fantastic about your
achievements,” he says. “Our business is about people. Hiring, training, and
empathizing with employees is extremely important. When someone is fired or
leaves, we’ve failed in some way. People have to feel they have a place at the
company, a sense of ownership.”
So, yeah, it’s corporate-speak in a drab exurban office park. But you know what?
The human-resources managers from Tupelo and Dallas are totally pumped up.
They’ve been flown into headquarters, they’ve had their picture taken with the
boss, and they’re seeing Mamma Mia on Broadway that afternoon on the
Can your HR department say it has the ear of top management? Probably not.
“Sometimes,” says Ulrich, “line managers just have this legacy of HR in their
minds, and they can’t get rid of it. I felt really badly for one HR guy. The chairman
wanted someone to plan company picnics and manage the union, and every time
this guy tried to be strategic, he got shot down.”
Say what? Execs don’t think HR matters? What about all that happy talk about
employees being their most important asset? Well, that turns out to have been a
small misunderstanding. In the 1990s, a group of British academics examined
the relationship between what companies (among them, the UK units of Hewlett-
Packard and Citibank) said about their human assets and how they actually
behaved. The results were, perhaps, inevitable.
In their rhetoric, human-resources organizations embraced the language of a
“soft” approach, speaking of training, development, and commitment. But “the
underlying principle was invariably restricted to the improvements of bottom-line
performance,” the authors wrote in the resulting book, Strategic Human
Resource Management (Oxford University Press, 1999). “Even if the rhetoric of
HRM is soft, the reality is almost always ‘hard,’ with the interests of the
organization prevailing over those of the individual.”
In the best of worlds, says London Business School professor Lynda Gratton,
one of the study’s authors, “the reality should be some combination of hard and
soft.” That’s what’s going on at Hunter Douglas. Human resources can address
the needs of employees because it has proven its business mettle — and vice
versa. Betty Lou Smith, the company’s vice president of corporate HR, began
investigating the connection between employee turnover and product quality.
Divisions with the highest turnover rates, she found, were also those with
damaged-goods rates of 5% or higher. And extraordinarily, 70% of employees
were leaving the company within six months of being hired.
Rev. April 2014 Page 19
Smith’s staffers learned that new employees were leaving for a variety of
reasons: They didn’t feel respected, they didn’t have input in decisions, but
mostly, they felt a lack of connection when they were first hired. “We gave them a
10-minute orientation, then they were out on the floor,” Smith says. She
addressed the weakness by creating a mentoring program that matched new
hires with experienced workers. The latter were suspicious at first, but eventually,
the mentor positions (with spiffy shirts and caps) came to be seen as prestigious.
The six-month turnover rate dropped dramatically, to 16%. Attendance and
productivity — and the damaged-goods rate — improved.
“We don’t wait to hear from top management,” Smith says. “You can’t just sit in
the corner and look at benefits. We have to know what the issues in our business
are. HR has to step up and assume responsibility, not wait for management to
knock on our door.”
But most HR people do.
Hunter Douglas gives us a glimmer of hope — of the possibility that HR can be
done right. And surely, even within ineffective human-resources organizations,
there are great individual HR managers — trustworthy, caring people with their
ears to the ground, who are sensitive to cultural nuance yet also understand the
business and how people fit in. Professionals who move voluntarily into HR from
line positions can prove especially adroit, bringing a profit-and-loss sensibility
and strong management skills.
At Yahoo, Libby Sartain, chief people officer, is building a group that may prove
to be the truly effective human-resources department that employees and
executives imagine. In this, Sartain enjoys two advantages. First, she arrived with
a reputation as a creative maverick, won in her 13 years running HR at
Southwest Airlines. And second, she had license from the top to do whatever it
took to create a world-class organization.
Sartain doesn’t just have a “seat at the table” at Yahoo; she actually helped build
the table, instituting a weekly operations meeting that she coordinates with COO
Dan Rosensweig. Talent is always at the top of the agenda — and at the end of
each meeting, the executive team mulls individual development decisions on key
That meeting, Sartain says, “sends a strong message to everyone at Yahoo that
we can’t do anything without HR.” It also signals to HR staffers that they’re
responsible for more than shuffling papers and getting in the way. “We view
human resources as the caretaker of the largest investment of the company,”
Sartain says. “If you’re not nurturing that investment and watching it grow, you’re
not doing your job.”
Rev. April 2014 Page 20
Yahoo, say some experts and peers at other organizations, is among a few
companies — among them Cardinal Health, Procter & Gamble, Pitney Bowes,
Goldman Sachs, and General Electric — that truly are bringing human resources
into the realm of business strategy. But they are indeed the few. USC professor
Edward E. Lawler III says that last year HR professionals reported spending 23%
of their time “being a strategic business partner” — no more than they reported in
1995. And line managers, he found, said HR is far less involved in strategy than
HR thinks it is. “Despite great huffing and puffing about strategy,” Lawler says,
“there’s still a long way to go.” (Indeed. When I asked one midlevel HR person
exactly how she was involved in business strategy for her division, she excitedly
described organizing a monthly lunch for her vice president with employees.)
What’s driving the strategy disconnect? London Business School’s Gratton
spends a lot of time training human-resources professionals to create more
impact. She sees two problems: Many HR people, she says, bring strong
technical expertise to the party but no “point of view about the future and how
organizations are going to change.” And second, “it’s very difficult to align HR
strategy to business strategy, because business strategy changes very fast, and
it’s hard to fiddle around with a compensation strategy or benefits to keep up.”
More than simply understanding strategy, Gratton says, truly effective executives
“need to be operating out of a set of principles and personal values.” And few
In the meantime, economic natural selection is, in a way, taking care of the
problem for us. Some 94% of large employers surveyed this year by Hewitt
Associates reported they were outsourcing at least one human-resources
activity. By 2008, according to the survey, many plan to expand outsourcing to
include activities such as learning and development, payroll, recruiting, health
and welfare, and global mobility.
Which is to say, they will farm out pretty much everything HR does. The happy
rhetoric from the HR world says this is all for the best: Outsourcing the
administrative minutiae, after all, would allow human-resources professionals to
focus on more important stuff that’s central to the business. You know, being
The problem, if you’re an HR person, is this: The tasks companies are
outsourcing — the administrivia — tend to be what you’re good at. And what’s left
isn’t exactly your strong suit. Human resources is crippled by what Jay Jamrog,
executive director of the Human Resource Institute, calls “educated incapacity:
You’re smart, and you know the way you’re working today isn’t going to hold 10
years from now. But you can’t move to that level. You’re stuck.”
That’s where human resources is today. Stuck. “This is a unique organization in
the company,” says USC’s Boudreau. “It discovers things about the business
Rev. April 2014 Page 21
through the lens of people and talent. That’s an opportunity for competitive
advantage.” In most companies, that opportunity is utterly wasted.
And that’s why I don’t like HR.
Keith H. Hammonds is Fast Company’s deputy editor.
Copyright © 2004 Gruner + Jahr USA Publishing. All rights reserved.
Fast Company, 375 Lexington Avenue., New York , NY 10017