It’s Time to Build a New HRHBR article by Peter Cappelli, July–August

Complaints against human resources tend to be cyclical. When companies are struggling with labor issues, HR is a valuable partner. But when things are running smoothly, managers wonder what HR is doing for them. Cappelli argues that HR leaders have an enormous opportunity to separate the valuable from the worthless and secure huge payoffs for their organizations. He outlines some basic but powerful steps they can take.

We can sum up our thoughts on Cappelli’s piece in two words: We agree. HR could be the ultimate differentiator in the competitive marketplaces of the future. But first “old HR” must be deconstructed. Great companies have been blowing it up for years, eliminating wasteful processes that don’t move the talent needle in their organizations. It’s critical to challenge historical norms, eliminate bureaucracy, deploy the latest data technology, and optimize organizational structures. And no matter what your job title is, we’re all in the HR business, because employees are at the heart of every organization’s success. Matthew W. Schuyler, chief human resources officer, Hilton Worldwide

The author’s thesis seems to be that because of its historical focus on people-related things, HR can show executives what they should care about and why. Cappelli cites a litany of initiatives HR has been involved in. But he doesn’t address the fact that HR strategies and initiatives fail

because they’re not linked to the business strategy in a meaningful and measurable way. Regardless of how much HR people may know or how honorable their intentions may be, no amount of cajoling or cheerleading will get business leaders to view them as value-added. Linda Brenner, CEO, Designs on Talent

The author didn’t mention “industrial relations”—which is surprising, given the role it has had in creating many of the dysfunctional processes within HR. It also would have been useful to discuss industrial relations’ changing nature (the decline of labor unions and the shift to knowledge worker unions) and potential for future strategic influence (consider how Germany includes union leadership on corporate boards). Without an examination of the influence of industrial relations, there can be no real overhaul of HR. Melinda Munro, owner, Munro Strategic Perspective

It’s important for HR to be part of an organization’s strategy-setting process. After all, how would you implement any strategy without the most vital component—the right human capital? But all divisions must realize that managing and developing people is their responsibility, too; it is not only the job of HR. Renuka Fernando, CEO and director, Nations Trust Bank, Sri Lanka

Budgets will play a key role in HR’s evolution beyond its administrative image. Only 12% to 15% of top orga-nizations are investing substantial amounts in improving HR processes. Such investments increase employee satisfaction, core competitiveness, and product innovation. Progressive organizations have already opened

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22  Harvard Business Review October 2015

Interaction

up the C-suite for HR as a strategic business partner!Nikhil Danak, founder and partner, UN2K24

At the end of the day, individual employees do most of the tangible work for organizations. HR personnel, however, have always been overly supportive of and biased toward the managers and the business leads, leaving the larger populace no real recourse. But isn’t one of the prime objectives of the HR function to serve as the champion for the individuals slogging away for companies? Addressing this may help us come to terms with the underlying reasons for the disdain for HR.Satya Brata Paul, manager, Aegis Limited

Cappelli responds: You raise an interesting point. In many countries the task of looking after the interests of employees is typically part of the HR function, as it once was in the United States. What changed in the U.S. was that corporations shifted from a governance model in which the leaders’ job was to balance the interests of key stakeholders (shareholders, customers, employees, and society) to a model in which it was to look after just the interests of shareholders. Are employees more cynical about HR because of this? Probably, to the extent that HR is the messenger for programs that are pitched to employee

interests but actually serve business purposes: “Learn stress management” (so you can handle the extra demands we’re piling on you), “make our systems mobile” (so you can be working anywhere),

“take charge of your own career” (because we aren’t going to help you). One might argue that in the U.S., the government has stepped in to force employers to pay more attention to employee interests. Regulations aren’t a particularly effective way to do this, but they do reflect public frustration with the lack of concern about employees, which can be seen in discussions about work schedules, parental and sick-leave policies, and the minimum wage.

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