HR Going Extinct

Adapt or Perish: Why HR Is Going Extinct

By Sahil Mehta on July 29, 2015

Attention: the world has changed and HR is failing to keep pace. If you’re in HR (or People Operations, Talent, Human Capital, etc.), I’m glad I have your attention.

Don’t take my word for it — it’s not hard to find articles discussing the failure, pain and altogether removal of HR. Business leaders debate and discuss splitting and fixing HR.

The Harvard Business Review was more direct in a recent edition  their headline? It's time to blow up HR and build something new."

Someone will always be responsible for “people issues” at a company. If HR disappears, responsibility for those issues will move to managers, who will likely neglect them until another function steps in. In any case, HR in its current state is becoming expendable and must adapt to survive.

HR needs to retool with modern technology and re-envision its core responsibilities in order to focus on larger organizational challenges.

The good news? There’s an immediate need for what HR is hypothetically offering: ensuring the right talent is in place and retaining that talent with rewards and development.

More simply, HR must get two things right:
  1. Find good people
  2. Keep them happy

HR has Failed

Time for the bad news  the solution is not so simple. HR has failed in many organizations on both accounts, leading to skepticism and hostility from management and employees alike.

Gallup recently reported that nearly 7 out of 10 of American employees are not engaged in their jobs. Even worse, a quarter of them are actively disengaged with their employers. These employees undermine others and make work miserable for their colleagues.

HR lives in a new a brave new world it is woefully unprepared for.

Two trends stand out  first, there's an increased demand for high skill workers created fierce competition for talent, causing concern amongst senior leaders about finding and retaining talent.

Second, a new social contract of work exists between employees and employers. The talent your company dearly needs wants an experience most companies aren’t delivering.

Two Responsibilities, Two Trends, One Expensive Failure

HR’s failure comes with a steep price tag. Consider lost productivity while you hire and ramp up a new employee. Even if others pick up the slack in the meantime, there’s more strain on existing employees. Not to mention that every employee takes their institutional knowledge and relationships with them when they leave. (To run a custom calculation of what attrition might be costing your organization, take a look at our cost of employee turnover calculator.)

When you finally hire the right person, your work is not done.

Failure to engage employees is costly, and HR can’t afford to foot the bill.

Gallup estimates the cost of disengaged employees in the US alone at $450 to $550 billion (yes, billion) each year.

First Step: Unlearn HR

HR was traditionally designed around compliance, rules and administration of payroll, timekeeping, and employee recordkeeping. The goals were to minimize costs, maintain compliance, and avoid lawsuits.

This work remains important, but is easily automated and outsourced. If HR continues to focus on administrative work streams, they will find themselves out of a job.

Luckily, a new challenge exists, and addressing it can make HR more important than ever before.

The Challenge

There is a significant gap between what employers offer today, and what employees desire from their work. The result? A lose-lose for both groups: employees are disengaged and unhappy at work, and consequently less productive and more likely to leave, costing businesses billions.

Most strategies employers implement fail to get at the heart of what employees want.

Employees want to contribute, to be recognized for contributing, and grow. Current practices don’t provide that. These key responsibilities will be shifted to another part of the business if HR does not automate more administrative tasks and free up time to adapt.

Skilled job seekers are in demand and they expect more than a paycheck. Employees want purpose, development, and work with meaning; if organizations fail to provide it proactively, employees will leave.

As we said above, the social contract at work changed. In the past, employees stayed with companies for decades in return for job security, training, and pensions. After recessions and a short-sighted focus by leaders on shareholder returns rather than the creation of meaningful work, employees have little loyalty to their employers (and who can blame them?).

If HR does not adapt, skepticism towards the function will get worse. We’re at the beginning of major changes to the workforce. In 2015, for the first time, millennials were the largest generation in the workforce and also the least engaged.

You’ll find hundreds of think pieces on the generational gap in the workplace with a simple Google search, but employees of all generations can agree on their disdain towards antiquated workplace practices.

HR is an ideal candidate to adapt and solve these issues. HR’s pending extinction makes it a necessary candidate to adapt if they expect to survive.

The Way Forward

Pressure presents both a challenge and an opportunity. So far, HR has failed to step up and deliver.

Without changing, HR will have squandered the opportunity to change its reputation and increase its impact. This is unacceptable  it’s time to aspire to be more than a cost center with debatable value and a candidate for corporate extinction.

It’s far too early for the end of HR  but the function must adapt if it is to survive.

Written by Sahil Mehta

Sahil Mehta

Sahil leads Business Development at Bonusly. He's passionate about making work better. Before Bonusly, he was part of the People Operations team at Google, and a Human Capital Consultant with Mercer. He received his BS in Industrial Engineering and Management Sciences from Northwestern University.