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HR's Five Deadly Sins: The Innovators

The human resources department is badly out of date and needs a thorough overhaul.
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Over 30 years ago, the personnel profession began to speak of an emerging age -- an era when it would add real business value and "have a seat at the table."

Over the past decades in virtually every professional conference and journal, presenters regale audiences with tales of the future. So how is the "transformed" profession doing?

In 2006,

The Economist

's "CEO Briefing," a survey of 555 senior executives across the world, rated HR as the poorest performing of eleven corporate functions. The same executives rated HR as tied for the least important function and second to last (only logistics was worse) as the business function most important for achieving corporate strategic objectives over the next three years.

At the same time, the respondents rated talent, global teaming and the like as the most important business issues for that same three years. The most important thing to get right is managed by the least important and poorest performing corporate function.

Ed Lawler 's University of Southern California's Center for Effective Organizations team's longitudinal study tells the same story at a deeper level -- when examining the profession at the behavioral level, it found HR has changed very little. Over the past 10 years, despite automating and outsourcing administrative tasks, the USC research team found that HR had not changed in the percent time spent in strategic versus administrative activities; is not perceived as having improved its position as partners that shape business strategy; and had not improved "business partner skills."

Okay, so HR doesn't isn't quite working to spec, but why? Because HR has never changed its model, it continues to deliver precisely what it was designed to deliver. Many talk about the need for higher quality HR professionals. I disagree. Many HR executives scratch their heads when they hear good reports about their people, but terrible ratings on overall satisfaction with HR. The problem is not the people; it's a model that is founded upon incorrect assumptions -- the five deadly sins.

No. 1: Lack of Any Clear Direction.

"Our mission is to put the right people in the right place at the right time." No it's not. HR's mission is to build and maintain the most productive workforce in the industry; it's about "our people being better than the bad guys' people."

Marketing must produce a stronger brand than competitors, manufacturing has to outperform competitors on quality and productivity and product development must make better stuff than peers. Why does HR get a pass?

No. 2: Creating "World-Class Programs."

Today's HR is accountable for offering great programs: world-class leadership development, not world-class leaders. Look at your company's HR strategy; it's not a strategy at all. It's a long list of disconnected programs.

In construction, buildings begin with a blueprint of the finished product. Plumbers, roofers and electricians build their assigned piece of the building. They do what is precisely what is needed and nothing else. Now, use the same metaphor to think about HR. Each subcontractor (i.e., HR department) is diligently building world-class parts, but no one knows if they are building a fire station, a warehouse or an apartment building. Nice program, but in service to what?

No. 3: Changing Department Names and Title Will Change Outputs.

In 1972,

The Handbook of Personnel Administration

was the profession's Bible. Page 4-1 of the Handbook displays the 1972 version of the typical personnel department. Thirty years later, the Corporate Leadership Council published a report on 21st century HR organizations. The two charts are virtually identical.

The only real difference is the department names (e.g. the Compensation Department became Global Rewards Center of Excellence and Employment is now Strategic Staffing). Oh, and the new "really cool" job titles: Personnel Directors are now Chief Human Resource Officers and Personnel Representatives have become "Strategic Business Partners."

Renaming a popcorn cooker "The Ice Cream Machine" will not change its function. Until it is redesigned, it will produce popcorn. Today's HR organization produces precisely what it was designed to produce 30 years ago.

No. 4: Make Employees Happy and They Will Be Productive.

Improving employee satisfaction will not improve business performance. In fact, the relationship is reversed: performance improvements cause satisfaction improvements. Help sales reps make quota and happiness will take care of itself. Yet, HR continued to serve as the happiness police, sticking "atta-boys" on computer monitors and sending birthday greetings.

No. 5: HR Serves Internal Customers.

When it comes to administrative duties (e.g., payroll, benefit claims), an internal customer model may make sense. But when it comes to improving business performance, "the customer is the customer."

The typical manager response to a business problem is a request for more training or compensation changes. Good consultants know that rarely is the problem is that simple. HR professionals who do what the internal customer says will fail the customer and the business.

Today, 75% of GDP of advanced countries comes from services. The world has changed from who has the best hard assets to who has the best people. In most industries where product commoditization is the norm, workforce performance provides a legitimate opportunity for sustained competitive advantage.

Yet, in most companies there is no person accountable for improving that asset or system for producing that change. General managers don't have the expertise to create workforce improvement systems. And HR sees its role as program administration.

Today's model doesn't work. More measures, calls for "better" people and administrative outsourcing will not move the needle. It's time for a new model.

Hall is managing director of Human Capital Systems (, a firm that designs systems for improving workforce performance. He is also an instructor in Duke Corporate Education's teaching network and author of The New Human Capital Strategy. Hall was formerly a senior vice president at ABN AMRO Bank in Amsterdam and IBM Asia-Pacific's executive in charge of executive leadership and organization effectiveness. During his tenure, IBM was twice ranked No. 1 in the world in Hewitt/Chief Executive magazine's "Top Company for Leaders." Hall completed his Ph.D in industrial-organizational psychology at Tulane University, with a dissertation on people management practices of Japanese corporations.