September 5, 2005
Getting back in the boardroom | Industry veteran Ernie Lebel says the HR department needs to have a say in corporate strategy
By Taylor Smith
Ernie Lebel, vice president of human resource services for Portland-based consulting firm Drake Inglesi Milardo, has argued for years that the human resources industry is in a tough spot. In a 2003 presentation at the Maine Human Resources Management Summit in Portland, Lebel delivered a talk entitled, "Is human resources going out of business?" Since then, the tenor of his dire forecast hasn't changed: According to Lebel, if the human resources industry doesn't get its act together, its workers could find themselves kicked out into the cold, shooed onto the corporate doorstep with other workers whose jobs have faded into obsolescence.
But what exactly is so wrong with human resources? At companies large and small in Maine and beyond, companies for decades have relied on HR staffers to recruit employees for all rungs of the corporate ladder ˆ from basement-dwelling mailroom clerks to CEOs with corner offices. They've been there for employees stymied by difficult-to-understand benefits packages, and have been privy to strategy meetings with upper management. But these days, says Lebel, HR workers have been left out of the boardroom; instead of being intimately involved with strategic decision-making, they're increasingly filling the role of corporate social director.
Mainebiz recently spoke to Lebel about his perception of the human resource department's role in modern corporations. The following is an edited transcript of the conversation.
Mainebiz: You recently gave a presentation called "Is HR going out of business?" That's a pretty big question ˆ what did you mean by that?
Ernie Lebel: At companies, humans seem to be less of a resource and more of a commodity. Companies say people are their most important assets ˆ until the going gets tough, and then they're dispensable. The role of people in the business world has changed significantly, and so has the role of HR professionals as a result.
In the beginning, we were all involved in trying to help companies manage around the laws, the issues, the people. Lately, HR people are less concerned with that and more concerned with balancing the number of people they have in the workplace and helping the company control costs or in some cases even survive.
It seems like the days of spending 30 years with one company are over ˆ as you said, workers are less of a resource and more of a commodity. What do you think is behind that shift?
I think it's just the economy in general. There are not a lot of variable expenses in running a business ˆ taxes, the cost of power and the cost of other elements to run a business don't shift that much. The only thing you can really control is the number of people you have, the size of your payroll. Generally, people try and do more with less. And the only way to do that is to eliminate jobs and automate when possible, and put more work on the people that you do have, the people that remain. That's been a fairly common trend now for a number of years.
It seems human resources would be vitally important to companies during these kinds of transitions, where companies merge or layoffs happen. So why do you think human resources is becoming outdated?
I don't think HR participates in the strategic direction of the company as much as it should. Decisions to eliminate groups of people or decisions to reorganize the company generally don't come from the HR person. HR may execute the plan, but they're not part of the strategic planning. If companies were effective in their HR management, they would be less likely to have these massive layoffs and cuts if they were planning strategically in advance.
The cost of benefits has become a major issue in most organizations, particularly health care costs. When that happens, responsibility shifts to the finance department. They're the ones who are strategically involved and are helping to make decisions about the future, as opposed to the HR professionals. That's because in some cases the HR professionals tended to be less business oriented ˆ and I hate to say this because you are going to quote me ˆ and more socially oriented. A lot of HR people have allowed themselves to become the social directors as opposed to the hard-nosed business managers.
What do you mean by social directors?
Well, HR people want to be the go-to person for the employee, so we always try to be the representative of the employee. We plan the outings, make sure the benefits programs are designed to help employees and their families, and sometimes we have done that without strong enough regard for the cost and the long-term impact on the organization.
HR people are more interested in the functional events of the day than the strategic outlook of the organization, [the thinking of] what do I need to do today to be ready for five years from now? And ˆ this is a very general comment ˆ sometimes we have been more relegated to the social function than the business function. That is pretty broad and not true of every HR person. But whenever the economy gets tough and companies' financials get strapped, the first things that's dumped is [HR functions that include] training and development.
How has the industry changed since you first took a job in human resources?
It started out that the tough guys ˆ or the tough people, I should say ˆ who would be able to deal with union environments and be able to manage production people so that they would do the things they were supposed to do, those were the people that were attracted to the profession in the early days.
What's happened since then?
The people that were attracted to or put into HR positions were generally people who had some interest in, or were good at, managing under difficult situations. Over the years, [HR] became less managerial and more administrative. The people that were called to that profession were good at processing, making sure all the right forms were made out and that sort of thing.
People started being promoted into human resources positions because that was the only place where they could be promoted to, where they didn't [need] special training or a special background. So I think that began to soften the role of human resources and the loss of credibility comes along with that.
What kind of effect will this shift have on the human resources industry?
HR people ˆ and I hear it all the time ˆ have figured out that they need to become more strategically involved in the running of the business, and the senior management in companies want them to do that. People who make that transition from an administrative functional role to a strategic business management role will survive and become more and more important. And that, whether we like it or not, is the future of human resources: How can we strategically position the people side of an organization for the success of the business overall?
So if senior management understands the importance of this transition, why has HR been shut out of companies' strategic planning?
Well, I think it's because [HR employees] haven't asked for it. Or they haven't put themselves into the position where they have the confidence of the organization that they'll do what is most important for the future of the company. I think if they start doing that ˆ if they start functioning in a more strategic role and helping the company position themselves for the future ˆ they'll be allowed in and welcomed in most organizations. If they sit back, wait and make sure that the functional things are done and not pay attention to helping the company strategically, they're going to be left at the station as the train pulls out.
From an organizational standpoint, why should the human resources department be in on strategic planning?
The only thing that differentiates companies today is people. If you're not doing the people side effectively, you're not going to be in a competitive position. You can tell the difference in organizations that do it right, and [you can tell] those companies who don't pay attention to it ˆ it's the turnover.
There's no loyalty to companies anymore. And why should there be? Companies aren't loyal to their people, so people leave. If you're going to attract and retain talent, you have to do it better than other people. You've got to treat people better, you've got to have what people want in the workplace, which is entirely different than what it used to be. What people want now is flexibility, some balance in life, competitive earnings with good benefits. Good, strategic HR people will find the talent and then will make sure the companies take care of that talent.
If HR can get more involved in the strategic planning, do you think there can be a renaissance?
No, I don't. I just don't see the level of interest in HR people to shift from doing what they're doing now to what the company needs them to do. That's the difference: You really need to be prepared to provide what the organizations need. I don't see that happening in a lot of places. I do see it happening in some places: L.L. Bean is like the world's greatest employer. Their HR department, which is significant, plays a major role in that strategic organization. I'm sure there are others that function at that level. In smaller organizations and different cultures, I don't see it. I don't see anything happening that is going to change it.
But what exactly is so wrong with human resources? At companies large and small in Maine and beyond, companies for decades have relied on HR staffers to recruit employees for all rungs of the corporate ladder ˆ from basement-dwelling mailroom clerks to CEOs with corner offices. They've been there for employees stymied by difficult-to-understand benefits packages, and have been privy to strategy meetings with upper management. But these days, says Lebel, HR workers have been left out of the boardroom; instead of being intimately involved with strategic decision-making, they're increasingly filling the role of corporate social director.
Mainebiz recently spoke to Lebel about his perception of the human resource department's role in modern corporations. The following is an edited transcript of the conversation.
Mainebiz: You recently gave a presentation called "Is HR going out of business?" That's a pretty big question ˆ what did you mean by that?
Ernie Lebel: At companies, humans seem to be less of a resource and more of a commodity. Companies say people are their most important assets ˆ until the going gets tough, and then they're dispensable. The role of people in the business world has changed significantly, and so has the role of HR professionals as a result.
In the beginning, we were all involved in trying to help companies manage around the laws, the issues, the people. Lately, HR people are less concerned with that and more concerned with balancing the number of people they have in the workplace and helping the company control costs or in some cases even survive.
It seems like the days of spending 30 years with one company are over ˆ as you said, workers are less of a resource and more of a commodity. What do you think is behind that shift?
I think it's just the economy in general. There are not a lot of variable expenses in running a business ˆ taxes, the cost of power and the cost of other elements to run a business don't shift that much. The only thing you can really control is the number of people you have, the size of your payroll. Generally, people try and do more with less. And the only way to do that is to eliminate jobs and automate when possible, and put more work on the people that you do have, the people that remain. That's been a fairly common trend now for a number of years.
It seems human resources would be vitally important to companies during these kinds of transitions, where companies merge or layoffs happen. So why do you think human resources is becoming outdated?
I don't think HR participates in the strategic direction of the company as much as it should. Decisions to eliminate groups of people or decisions to reorganize the company generally don't come from the HR person. HR may execute the plan, but they're not part of the strategic planning. If companies were effective in their HR management, they would be less likely to have these massive layoffs and cuts if they were planning strategically in advance.
The cost of benefits has become a major issue in most organizations, particularly health care costs. When that happens, responsibility shifts to the finance department. They're the ones who are strategically involved and are helping to make decisions about the future, as opposed to the HR professionals. That's because in some cases the HR professionals tended to be less business oriented ˆ and I hate to say this because you are going to quote me ˆ and more socially oriented. A lot of HR people have allowed themselves to become the social directors as opposed to the hard-nosed business managers.
What do you mean by social directors?
Well, HR people want to be the go-to person for the employee, so we always try to be the representative of the employee. We plan the outings, make sure the benefits programs are designed to help employees and their families, and sometimes we have done that without strong enough regard for the cost and the long-term impact on the organization.
HR people are more interested in the functional events of the day than the strategic outlook of the organization, [the thinking of] what do I need to do today to be ready for five years from now? And ˆ this is a very general comment ˆ sometimes we have been more relegated to the social function than the business function. That is pretty broad and not true of every HR person. But whenever the economy gets tough and companies' financials get strapped, the first things that's dumped is [HR functions that include] training and development.
How has the industry changed since you first took a job in human resources?
It started out that the tough guys ˆ or the tough people, I should say ˆ who would be able to deal with union environments and be able to manage production people so that they would do the things they were supposed to do, those were the people that were attracted to the profession in the early days.
What's happened since then?
The people that were attracted to or put into HR positions were generally people who had some interest in, or were good at, managing under difficult situations. Over the years, [HR] became less managerial and more administrative. The people that were called to that profession were good at processing, making sure all the right forms were made out and that sort of thing.
People started being promoted into human resources positions because that was the only place where they could be promoted to, where they didn't [need] special training or a special background. So I think that began to soften the role of human resources and the loss of credibility comes along with that.
What kind of effect will this shift have on the human resources industry?
HR people ˆ and I hear it all the time ˆ have figured out that they need to become more strategically involved in the running of the business, and the senior management in companies want them to do that. People who make that transition from an administrative functional role to a strategic business management role will survive and become more and more important. And that, whether we like it or not, is the future of human resources: How can we strategically position the people side of an organization for the success of the business overall?
So if senior management understands the importance of this transition, why has HR been shut out of companies' strategic planning?
Well, I think it's because [HR employees] haven't asked for it. Or they haven't put themselves into the position where they have the confidence of the organization that they'll do what is most important for the future of the company. I think if they start doing that ˆ if they start functioning in a more strategic role and helping the company position themselves for the future ˆ they'll be allowed in and welcomed in most organizations. If they sit back, wait and make sure that the functional things are done and not pay attention to helping the company strategically, they're going to be left at the station as the train pulls out.
From an organizational standpoint, why should the human resources department be in on strategic planning?
The only thing that differentiates companies today is people. If you're not doing the people side effectively, you're not going to be in a competitive position. You can tell the difference in organizations that do it right, and [you can tell] those companies who don't pay attention to it ˆ it's the turnover.
There's no loyalty to companies anymore. And why should there be? Companies aren't loyal to their people, so people leave. If you're going to attract and retain talent, you have to do it better than other people. You've got to treat people better, you've got to have what people want in the workplace, which is entirely different than what it used to be. What people want now is flexibility, some balance in life, competitive earnings with good benefits. Good, strategic HR people will find the talent and then will make sure the companies take care of that talent.
If HR can get more involved in the strategic planning, do you think there can be a renaissance?
No, I don't. I just don't see the level of interest in HR people to shift from doing what they're doing now to what the company needs them to do. That's the difference: You really need to be prepared to provide what the organizations need. I don't see that happening in a lot of places. I do see it happening in some places: L.L. Bean is like the world's greatest employer. Their HR department, which is significant, plays a major role in that strategic organization. I'm sure there are others that function at that level. In smaller organizations and different cultures, I don't see it. I don't see anything happening that is going to change it.
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