In the September 24, 2019 Ask The Headhunter Newsletter an entrepreneur wonders if HR is necessary at all.
Question
I am starting a company. I have an absolute disdain for HR as a general rule and wanted to get your thoughts on a company running without an HR department. I feel like HR has hoodwinked so many executives into thinking they’re a necessity for any business, but there’s only a subset of things they do that are actually required. For example, making sure you’re not in violation of labor laws.
Which would you recommend: to have no HR department, or to severely limit HR to only those responsibilities that actually help the company (and hence reduce its size considerably)? One thing is sure: HR should never be involved in hiring decisions. I’ve never seen them help there.
Nick’s Reply
Good luck with your start-up. I’m sure HR folks will have something to say about this.
HR options
I think I would try a hybrid of no HR and limited HR. You can cover the compliance bases by contracting with a good HR consultant and by defining exactly what you want them to cover. But be careful – there are a lot of HR hacks out there. The good ones, however, will cost you and are worth what you’ll spend because they’ll advise you as well as do the work.
I understand why you’re so down on HR — you feel it’s not very helpful. You’re not alone — see FastCompany’s excellent Why We Hate HR. Make sure your HR consultant understands that they will have no decision-making authority, that they report to you, and that their scope of work is narrowly defined. Use them as you need them, just as you’d use any good consultant.
Limiting HR
If you find an HR consultant that’s actually good at recruiting, interviewing and managing the hiring process, you’ll be really lucky. There are some very good HR folks out there who work closely with managers to get jobs filled. They will embed themselves in a manager’s operation to learn how it works and what makes the manager tick. A good HR person will help the manager recruit and hire — but will not do the recruiting or hiring. They will process documentation and ensure the process is compliant with the law.
I think you can take care of important HR functions with just a good consultant for quite a while before you need to worry about hiring a full-time HR person.
HR & Legal
Keep in mind that many HR responsibilities are legal in nature, including compliance. If you hire lawyers to advise you, make sure they have labor and employment expertise so they can backstop your HR consultant when necessary. Just be careful not to let the lawyers and HR gang up on you and rack up huge bills — or hobble your ability to run your business!
There’s a good, simple rule for managing HR, lawyers and other experts. Explain to them what your objective is; that is, what you want to do. They will often respond with myriad reasons why you mustn’t do it, or why it’s illegal, or why it won’t work. Thank them for their advice and cautions. Then instruct them to find a way to do what you want without violating the law, because that’s their job. If they push back, tell them to also provide you with a risk analysis, because that’s their job, too. Your job, as the principal of the company, is to decide how much risk you want to take — legal or otherwise. Never let a consultant make your decisions for you.
Do it yourself
I agree that HR should not control recruiting and hiring. (See Why HR should get out of the hiring business.)
I think the most important reason to limit any HR function is that being directly involved will force you to understand, grasp and grapple with the challenges of having others working for you. I’ve seen many companies fail because management left that to “experts.” So don’t “let HR do it.” Your people — your workers — are everything. They are your responsibility. The idea that someone else will manage your new company’s “human resources” is akin to suggesting that someone else is going to run your business. Perhaps that’s your goal ultimately, but until you learn the ins and outs of finding, hiring and managing people, you won’t have a business. (See Hiring Manager: HR is the problem, you are the solution.)
An HR function can be helpful if you, as head of the company, manage it like companies used to manage HR — actively. The trouble today is that HR is often left to its own devices because the C-suite sees HR functions as “icky but necessary, so let HR do it…”
Big mistake.
I wish you the best with your new business.
Can a new business operate without an HR department? If you could build an HR department from the ground up, what tasks would you have it handle — and which tasks would you never let it control?
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