Value creation is the ultimate goal of every organizational function and the organization as a whole. However, value can only be created if the company is able to identify the right strategic orientation as well as to set and achieve strategic objectives, which will ultimately become a cornerstone for building competitiveness in the current and potential markets. As all the functions and business units have to align their goals with the company’s strategic orientation (vertical integration), it is also crucial to adopt a strategic approach to human resource management, as Keith Hammonds suggests in the article “Why we hate HR”. Although the author rightly emphasizes the need to apply more business-oriented policies to managing people in organizations, some of the allegations that are made in the article can be rather questionable.
It is hard to deny that in some instances HR professionals tend to forget that the main focus of human resource management is to use human resources in order to maximize value by applying techniques and policies, which are best aligned with the overall business strategy. Therefore, the most effective practices may be forgone in favour of standardization and efficiency pursuit. However, efficiency and cost reduction currently present the core of the business strategy for many organizations. Hence, there is a strong correlation between company and HR objectives. Such orientation is also a response to outsourcing initiatives, which aim to reduce expenditures for HR in the company. Thus, human resources specialists face a dilemma, whether to comply with the efficiency and cost-reduction trend and to align their strategy to the overall business orientation, or to pursue innovative, sophisticated but often expensive programs of human resource development.
Second allegation made by the author refers to the absence of appropriate measures of human resource impact on the final outcome and the value created. The current emphasis of HR is to measure the inputs, such as hourly training and employee satisfaction, and to correlate them with the existing assumptions about the drivers of employee performance. Although monitoring outputs is a more efficient method of performance measurement, it is hard to establish clear relationship between HR initiatives and employee performance. Unlike other functions, such as operations or finance, in HR it is nearly impossible to establish ceteris paribus conditions, thus isolating employee performance from the effect of other environmental factors, in order to observe a clear correlation between inputs and outputs. Therefore, human resource specialists have to make assumptions about the drivers of workforce efficiency, and to monitor HR performance by measuring their inputs into the system.
Lastly, the article suggests that standardization of treatment for all employees by HR departments undermines the main objective of human resources to leverage on the diversity of the workforce and to create favourable conditions for people to develop their talents and competencies. Although this is an important aspiration, in reality clear adherence to the business strategy demands HR specialists to align the objectives of heterogeneous employee groups with the interests of the company. In order to make everyone look in the same direction, it is often necessary to demand conformity and to establish standard appraisal techniques, which can communicate company expectations and orientation. Therefore, even though standardization may seem to be detrimental for employee performance, it is surely a necessary evil, which helps HR managers to align company expectations and strategy with employee performance.
Although Keith Hammonds makes valid points about human resources in her article, the characterization of the function in general as “stuck” may be true for some organizations, but certainly an overstatement for the others. HR is indeed a unique business area, which can become a source of competitive advantage for many companies all over the world. Even though its benefits may not be apparent at the moment, the log-term success and future competitiveness of a company in the market place and especially on the global arena will be strongly correlated with its ability to embrace effective human resource management practices.
