In an insightful discussion with Sarah Green from Harvard Business Review, Wharton Professor Peter Cappelli, author of "Why We Love to Hate HR and What HR Can Do About It," delves into the historical evolution, current challenges, and future potential of the Human Resources function.
Cappelli begins by tracing HR's origins, noting its emergence in World War I with employee selection tests and its subsequent growth with scientific management (Taylorism). Historically, HR (then "Personnel") served to explain human behavior and management needs to engineers and financially-oriented business leaders. Its influence has waxed and waned with economic conditions; it became crucial during periods of strong unions or tight labor markets but was often seen as a "thorn in the side" during downturns when managers felt they could "abuse people and they don't quit." This historical pattern established HR as a department that often makes demands others resent.
The core of the "love to hate" dynamic, according to Cappelli, stems from HR's role as the "nagging" department. HR is the one function that tells everyone, from the lowest clerk to the CEO, "how they're supposed to behave" – conducting performance reviews, delivering bad news, or avoiding inappropriate conduct. This guidance often clashes with managers' strong opinions and desire for autonomy, leading to friction. While HR aims to act as a "general manager" considering broader organizational impacts (e.g., a raise for one employee affecting others), Cappelli notes a crucial failing: HR often doesn't adequately explain *why* these policies exist, leading to managers feeling obstructed rather than supported.
Cappelli offers several key areas where HR could improve its standing and impact:
1. **Demonstrate ROI:** Historically, HR has been poor at proving the return on investment of its policies. In a business world increasingly focused on financial metrics, HR needs to quantify the effectiveness and cost-benefits of its practices (e.g., hiring methods, retention bonuses). Without this, practices are dismissed as mere "best practice" without proven value.
2. **Embrace Data and Analytics:** With the rise of "big data," other departments like the Chief Information Officer are starting to analyze HR data. HR risks obsolescence if it doesn't take ownership of this analytical function to answer critical business questions.
3. **Support Project-Based Work:** Companies are moving away from grand, long-term strategies to faster, shorter, project-based engagements. HR needs to shift its focus from aligning practices with broad strategies to actively supporting these dynamic projects, including managing contract workers and deciding when to hire externally versus promoting internally. Cappelli criticizes HR for "straying too far toward outside hiring," neglecting internal development.
Conversely, Cappelli identifies areas where HR wastes time and diminishes its authority:
* **Generational Research:** Focusing on "millennials," "Gen Z," etc., is often a waste of time. There's little evidence these generational differences profoundly impact management, and even if they did, HR's role would again be reduced to "nagging" supervisors to adapt.
* **Diversity Initiatives (without authority):** In most companies, diversity is a culture issue that requires top-level leadership, not just HR initiatives. HR often takes responsibility for programs it lacks the authority to implement effectively, leading to more persuasion and less tangible results. This applies to other programs too, where HR tries to "nag" managers into compliance without the power to reward or punish.
Finally, Cappelli offers a global perspective. He notes that HR was once a "glamorous profession" in the U.S. in the 1950s because internal careers meant HR controlled professional advancement. Today, HR's influence varies significantly:
* In **India**, HR is powerful due to skill shortages, strong unions, and complex labor laws, making it critical for business success.
* In **Japan**, HR has historically been a path to the CEO role due to its control over internal careers and networking.
* In the **U.S.**, HR has weakened in recent years due to relatively high unemployment and an oversupply of skilled labor, especially during the Great Recession, when employees were simply "glad to have a job," making HR less "necessary."
In conclusion, Cappelli argues that for HR to reclaim its influence and escape its "nagging" reputation, it must demonstrate tangible value through data-driven insights, adapt to modern organizational structures like project-based work, and focus its energy on areas where it can genuinely impact the business with authority, rather than taking on responsibilities it cannot enforce.