Many years ago I was a “company doctor” helping companies recover from trading losses and avoid liquidation. Most of them had lost their way, tried to buy new business through expensive advertising, diversified too much away from their core competences or just employed too many people. The first target CEO’s tried to go for when trimming staff were service functions like HR. Thus removing the very people they needed most to bring the company back on track.
So why can’t an organization function well without an HR department? The simple answer is that I have seen large companies without any HR specialist and it is not a pretty sight. The organization is in a constant onslaught through the courts – rectifying the actions of line managers who think they can hire and fire at will. Such a company also usually has no talent management, career development or training strategy. People go on courses that do not match either personal or company needs and all the key people are left to be poached on the open market. What makes things worse is a chaotic remuneration system. This is usually based on short-term market imbalances meaning those recruited six months ago are being paid far less than new recruits. Cronyism also rules the waves with little regard for merit, fairness or consistency.
Back in my heady company turnaround days HR was the last function to be axed if I had my way. If it all went wrong of course they would be the ones left to dismiss themselves. Curiously too it was not line managers who could generally see where things had gone wrong. HR people knew only too well, but their voices were muted by overconfident marketing and sales managers, made worse if the CEO also came up through the sales function.