HR: After Amazon

Feature Article | March 13, 2013 by Heather McIlvaine

scholz

Professor Christian Scholz (Photo: private)

Interview with Christian Scholz, professor of Organizational Behavior, Human Resource Management, and Information Management at Universität des Saarlandes.

SAP.info: What are the biggest concerns that the HR industry is facing today?

Christian Scholz: Today, we’re seeing a discussion, and it’s only getting more intense, about who has the power to make human resources decisions. We’re dealing with what I call a “gutted HR department,” in which there are fewer employees and fewer really talented HR employees on the payroll. A lot of the jobs are being outsourced. This is happening in communications departments too, but not as heavily as in HR. And to make it worse, the people who are left in this “gutted HR department” don’t have as much say. The real power is moving to the managers in the lines of business. They make the decisions and HR carries them out. In the past 10 years, this sector has moved backwards. HR isn’t allowed to do as much, and really, it can’t do as much because the well-trained professional people were all let go.

What is lost when HR is gutted like this?

Above all, we’ve lost the professionalism of the HR department. And this at a time when employee structures are rapidly changing, the workforce is becoming ever more international, and compensation schemes are growing more complex. The average line-of-business manager doesn’t have the training or experience to do the work of HR, much less on top of their other duties. On the other hand, many of the jobs previously carried out by HR have been outsourced to external service providers. I have nothing against external service providers. But when one company is doing the hiring, a call-center is handling support, another company is doing personnel development, and another is dismissing employees, it becomes very difficult because there’s no quality control of all these crucial processes.

Are companies feeling the consequences?

Yes, of course. There’s a big discussion happening around subcontract workers, service contracts, the external workforce, and so on. Amazon for one has certainly demonstrated the pitfalls of gutting the HR department. And then many companies are experiencing problems with management development, employee commitment, and employee retention. That’s why a number of businesses are already thinking about the role of HR in their organization, and what it should be in the future.

Next page: The future of HR

How do you see the future of HR?

I think there are two possible paths to take. The first path involves a real empowerment of the HR department and a concerted effort to professionalize HR employees through training programs. Companies that choose this path most likely feel that their employees are central to their success. Management and personnel development, employee commitment, performance-based salaries: Companies that differentiate themselves in these areas will gain a competitive advantage. These activities cannot be outsourced. Processing payroll – that’s trivial. It doesn’t matter who does it.

Now, there are some companies – and maybe Amazon is one them – who think their employees are central to their success in a few areas, but in most areas, it doesn’t matter who completes a task, as long as it gets done. For these companies, there’s the second path. This involves outsourcing as many HR duties as possible, as cheaply as possible.

I don’t think one option is better or worse than the other. In some situations, it just makes sense to hire subcontract workers, and to outsource the hiring duties to an external service provider. The most important thing for companies today is to choose one path or the other. Getting caught between the two is where the danger lies.

How do you see the role of IT in the future of HR?

I don’t think we’ll be seeing a quantum leap in the area of human resources software in the near future. Of course, there will always be new technology and tools, but first we need the kind of professional, well-trained HR workers who understand what the current software is capable of.

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