Forty-four Years of Change: I started in HR before it was HR. I was in Personnel when 98 percent of Personnel Managers were men, when women were either at home taking care of the kids and home, or were working as secretaries and typists in what was then the world of work. Women hadn't done industrial work since World War II.
The tools of the trade were a typewriter (if you were lucky, an IBM Correcting Selectric), a flip chart, perhaps a slide projector, a copier, a mimeograph, and books. You may have received an education that had something to do with the psychology of work, and the legalities of Personnel, and how to deal with unions, but you didn't know anything until you actually worked for a couple of years in a Personnel job. At the same time, you couldn't get a management position without a degree. Didn't matter that the degree was in English Lit or Biology, you needed a degree. If you had one of those relatively new MBAs, so much the better, salary-wise.
You had a private office if you rose high enough, and you supervised four to six people because Graicunas had figured out that more than that could only be supervised on an assembly line. The big scare for workers in the 50s and 60s was automation. Second was the loss of a government contract if you were in aerospace. But all and all, work was stable, structure was entrenched, and you could plan your work years as well as your annual vacation, the kids' education, health insurance, and then ultimately, retirement.
"The Pill," now 50 years old, and the one thing that started the revolution which affected the entire workplace and work itself, first slowly, and then by the 1990s, visibly and for the foreseeable future.
Civil Rights as law is now 46 years old, and it became the first major impetus for change in the workplace. It was immediate (well, relatively speaking), and if that was "Point A" then Gloria Allred was "Point B." Not only were there new federal and state laws, there were regulations for almost every industry. In California and Colorado, there had always been Wage Orders regulating work in every industry, but it was as though all Baby Boomers were bred to become lawyers. The spate of race, then sex, then age, then harassment, and then whistle blower suits came forward like out-of-control sour-dough starter, with civil rights as the yeast.
I am by no means complaining. By 1977, I had learned enough, had sufficient experience thanks to two employers where I was essentially a social-psychologist helping people to survive the environment, grow, and climb the corporate ladders. I was also the one advising companies on how to write "bullet-proof" policies and procedures, often counseling presidents of companies, as well as their supervisors, on how to in essence "behave."
There was no panic, and anger was fleeting, to be replaced by resignation and compliance. We had organization structure which, even with internal politics (back-stabbing, lying, and once in a while more onerous behaviors), was fairly easy to understand. In other words, as a worker, you knew where you stood, and at least annually, you had a supervisor who would directly or with a great deal of sweat and difficulty, tell you where you stood. If you didn't like it, you could always go to another company. In fact, one of the things that I miss - and that most of you reading this never saw - was when personnel managers "traded" employees. It was like major league baseball. We had someone who had topped out of his or her range, we'd call another personnel manager in another bank (it happened more in banking which is perhaps why it was called "the banking fraternity") and find a position for someone we were about to fire.
We had regulations, and they were fairly clear. We had labor codes which were and remain obtuse. We had procedures which told supervisors what to do under different circumstances. That's why I wrote Labor Pains, and carried it out for 15 years ... and now to infinity and beyond!
As I've mentioned in numerous articles, HR used to consist of the following functions:
- Recruiting and Hiring (Staffing)
- Policies and Procedures (handbooks and dissemination)
- Benefits of two types: insurance and personal time off
- Retirement
- Compensation [often found in Accounting rather than Personnel]
- Training: management, supervisory, skills
- Compliance [in the largest companies, given over to the Legal Department]
- Safety [after OSHA was enacted on state and federal levels]
- Retention
- Termination
What Happened? The Start of Outsourcing: In the 1960s and 70s, Personnel Departments outsourced very little. The one major area was in hiring where we engaged personnel agencies to find us people with certain skills, and then we'd interview and take the pick of the litter. Our companies would pay the agency for both the search and, if we hired an individual they'd referred, for his or her fees (which now almost all applicants pay). Although we might advertise for secretarial positions in the Sunday papers, by the 80s, we were using agencies like White Collar Employment (an example I'm using because of the name of the company) to find our "Executive Secretaries," and later even our temps.
Beginning in the 1980s, various HR functions started to be outsourced. First, it was payroll which went to such companies as ADP and Paychex. Included in payroll was watching vacation accrual, then vacations, holidays, and other benefits including health insurance. These companies expanded their services within a year or two to include maintaining data for EEO reporting, thereby getting into the "legalities" aspects of HR Management.
Recruiting had always been done through outside agencies, most of which we no longer hear from in 2010. Instead of the company paying an agency, individuals looking for jobs would pay an agency to get them interviews. The world was indeed turning topsy-turvy. The HR department still did the final interviewing, but their recruiting was now being done for them. If they wanted to "recruit ," they could always advertise on the Internet. Look at an employment section of a 1991 Sunday L.A. Times, and look at one today. From 40 pages to two!
Employment agencies and employment scams sprang up on the Internet like crazy, and perhaps without knowing it, HR departments took greater chances of getting potentially poor performers as well as geniuses because the choices were narrowed by this funneling of candidates through the Internet meat grinder. The oddest action not taken by HR was background checks. When they were done, which was certainly becoming rarer, was done through Internet firms and "investigation" agencies. Smaller companies found this a valuable service, but some were stung by not-so-reputable companies which did cursory examinations of applicants' past work history. What all company HR departments could have found out was that it was just as difficult for these agencies to do background checks as to performance as it would have been for them. Recruiting and background checks were still relegated to the outsiders.
Retention? If a company survived, it was almost more important for the HR Department to find ways to terminate (i.e., "layoff") employees than to retain them. Retention was now a matter of finding the star performers - usually senior managers - and give them golden parachutes. Once in a while, the CEO of a company would come to HR to find out how to get rid of a senior manager as cheaply as possible, but for the most part, after AT&T found out it could "lay off" 60,000 employees at one crack with relative impunity, it became much easier to discriminate - so long as you did it en masse.
It may be important to explain to some readers that a "lay off" prior to 1989 was a term used for employees - many of them members of unions - who were to be dismissed for a relatively short period of time, say, three to six months. This could be because of economic conditions, the loss of a government contract, or just a slowdown in an industry. But someone who was laid off would almost always be recalled at some time down the road. It was required under some state laws and under union contracts, and there were an entire set of law regarding the laying off and recalling of employees and unemployment. The laws may still be on the books, but there are very few unions which still exist that strike fear into the hearts of corporate management. Now, when you hear the phrase "lay off," you can almost always assume that it's a termination and it's permanent.
Discrimination? Deregulation has weakened wage and hour laws, but laws regarding discrimination remained relatively intact. However, large companies found out that if they discriminated indiscriminately by terminating whole groups of people, they could discriminate pretty much at-will. Age discrimination was the easiest, but all forms of discrimination were made easier because companies were "laying off" people for "economic reasons," and since the companies were not going to rehire, they did not have to prove that they hired a younger employee to replace an older one or a caucasian to replace a black employee.
One of the real functions of HR from 1967 onward was to protect the company by making sure that the company was in compliance with all federal state laws regarding discrimination. This included a tremendous amount of paperwork (including the EEO-1 which still has to be completed), and that paperwork often meant that HR needed at least one more employee with one more computer to keep tabs on hires and terminations, positions filled and vacated, and the sex, race, etc. of the individuals involved. Individuals became numbers. Eventually, these numbers were sent to an outside agency and, eventually the outside agency took over the function when HR sent in monthly reports.
I well remember that one of these companies would call when a red flag came up that a client company was about to terminate a "disproportionate" number of minorities, and I also remember a couple of clients (no longer in business) who would call me and ask if it was necessary to terminate a few white employees to "get away with" firing a couple of black employees! It was a numbers and a money game. If I would tell them "NO!," they would often go to their attorney, and that attorney rarely had expertise in labor law. I had one client who worked his way down to his internal accountant until he got the answer he was looking for and, when several weeks later, he received a claim from EEO, he fired the accountant. (He also terminated his contract with me. C'est la guerre.)
Retirement: Nobody retires anymore. They either get laid off, quit, or get fired. Funny. When I started with Wells Fargo, there was one gentleman in San Francisco who was being lauded by the company for his 50 years of service. Fifty years! (And he never rose higher than a Grade 14 out of 23 grades.) When is the last time you heard of someone retiring after 50 years, or 30, or even 25? It doesn't matter now, but at one time every HR manager had to know something about ERISA. Now that has been outsourced to attorneys. Nobody understands ERISA anyway, but to delegate it to lawyers who can't communicate anything? Looks like it's come full-circle: it started with lawyers in Congress, it ends up with lawyers outside the company. ERISA was known in personnel circles as "Every Rotten Idea Since Adam" because it grew to about 11 volumes and was the most convoluted thing Congress had come up with ... until now.
Safety? Well, let's look at BP...
Policies and Procedures? Ah, well at least many companies over the years has "delegated" that to Winning Associates. The number of companies which our very small firm has written employee and administrative handbooks for is somewhere around 600.
Where Does HR Go From Here? Well, I think that the answer is obvious. For the most part, what is left in medium size companies will be outsourced to HR consulting firms. If you listen to radio, you've heard the ads for at least four of the largest outsourced HR firms. "We'll be your administrators. We'll handle all your HR needs. We'll take the worry out of having to have people." Well, the last one is paraphrased, but there is a company which implies that working with people can be hazardous to your health, and they're willing to suffer the migraines for you. It does not imply that it will solved or stave off your problems.
HR will remain in many companies, but with very limited powers. It will probably institute policies and procedures written in part by outside companies, and it may oversee both the implementation and compliance of both.
However, Human Resources as a function will have lost all of the "gains" as the department that innovated and was involved in strategic planning. If it can get smaller, in many companies, it will. And, unlike the forecast by SHRM in 1992, HR will no longer be the integral part of the company. At best it will be like the least important Cabinet post in the federal government. It will still exist in companies with unions, but remember that unions have lost most of the sway that they once held over companies and governments, accepting for the most part what is offered in "negotiations."
There will always be a need for Human Resources, in part for a smaller role in compliance, and in larger measure a return to the "clerical" aspects that it used to have. Who knows, maybe psychological testing will get another foothold in companies. Think "Miracle on 34th Street." But just as 34 states have banned DNA tests in companies, psychological testing may well be considered an invasion of privacy (again), and be banned. That's really too bad. If HR Managers could be trained to use some work-based psychological tests - something as simple as FIRO-B - there could be a great deal of value to both HR and the company. At the next SHRM meeting, somebody ought to bring up ways of making HR a viable department again, one which does not itself agree to 60 hour workweeks as the norm! (We all should have seen this coming when "60 Minutes" aired a segment about people working at home after leaving the office, and answering e-mail at 2 AM! That was about six years ago, and I'm sure it's available somewhere on the Internet.)
I don't have a solution. To some extent, HR has only itself to blame (and SHRM). But I do have a word of advice for HR managers. Over the years, HR managers in small companies were reluctant to come to a company such as Winning Associates, reluctant because, as irrational as it was, many of those managers were afraid that we would either want their jobs or become so involved with the company that HR would be seen as unnecessary. My advice is to trust the smaller HR and management consulting firms like Winning Associates which can establish or re-establish some of your importance in the company. How? Ah, give us a call and we'll explain, but it starts with thinking about us as liaisons and not invaders.
Ethan Winning