Yes, I agree, the title is a tad over-the-top.

You could suggest that I am Astroturfing here, and being a bit melodramatic. But I hold to this title, and the challenges it implies are not going away soon.

I am referring of course to the collapse of in-house HR and recruitment teams in China, where I currently reside, but what I see is that the challenges are similar in other countries all across the globe.

This continual collapse is gradually making outsourcing the number one, and only choice, for many companies. For outsourcing companies this is welcome news but for in-house HR people, and external third parties suppliers that operate in the old fashioned way, it is bad news all round. Their actual survival is at stake.

Think of these issues from the point of view of the company management team. For the past few years the various other parts of business have been adopting lean everything. They have taken on board change management and ISO9000. They have adopted online technologies such as ERP and CRMs. They have improved productivity with Six Sigma, Kanban and the Toyota Production System (TPS). They have made everything measurable and adopted metrics for all the Key Indicators for their function within the business. For them it’s not just about surviving, it’s about thriving.

HR just hasn’t, didn’t, and won’t.


Talking Not Walking

By and large, HR has failed to adopt a more strategic approach to the achievement of its objectives. The perception is that HR people are more comfortable with administrivia and therefore can be seen as administators (or it is administriviators?). This is a support function and support people don’t get to make decisions. Period. They are kept in the back office, well away from the potential for harm.

HR people say that they are moving towards ‘aligning their department with company goals’ but what management sees is the failure to hire sufficient new staff and retain/motivate the current ones. Average retention rates of 18 months in China has not just resulted in a failure to develop new business but has led to the complete failure to develop any corporate culture. The very people charged with developing that culture, HR staff, are constantly resigning themselves. The people they need to rely on for support, the old hands, just don’t exist because they were never hired in the first place.

In this scenario HR can’t win. If HR is saying that is it 'strategic' then it must take the rap for the failure. If it is not strategic then it stays in the back rooms. Right now it appears that HR prefers to hide in the background, but I could be wrong. Not everyone fits a stereotype.

Finally, the other buzzword that we all hear from HR is the issue of them having a seat in the boardroom. In my book, and every senior manager’s book, this has to be earned. It’s not a given. First you have to show that you deserve it; that you talk ‘board’. Then you get the seat, and you keep it by proving yourself.


The End Game

The obvious and easy solution to this is just to outsource HR and hiring. The immediate impact of this is that the high staff turnover in China is someone else’s problem. The relationship is company to company, and the outsourcing provider has committed to providing sufficient staff to cover the issues they have contracted to handle.

The outsourcing company gets paid for achieving the goals set in their Service Level Agreement (SLA). So they are more than motivated to achieve.

The news is not all bad. A recent Veritude Report shows the way out of this mess for HR and the optimist in me suddenly sees a way out. They suggest that management’s perception of HR skills and abilities must improve, but this implies a job of work for HR. And it cannot be just about perceptions. Actions are an absolute necessity.

The recommendations are that HR should take the lead driving human capital management strategy. They should insert themselves in the strategic planning process. It’s not actually mentioned in the report but I would assume this means adding value to the strategic planning process, not just inserting themselves by turning up at meetings.

In return, business leaders need to recognize the importance of HR strategy in achieving business results while working to develop a deeper understanding, acknowledgment, and respect for the function. This is a major challenge because it requires HR people to change the pre-conceived notions of other professionals. These notions have held constant for decades. They can only be changed slowly, and with high levels of effort.

The key element, according to Veritude, is the working relationship between management and HR. The responsibility for this relationship must be assumed by HR and they must cultivate and nurture it.

So HR still has to earn that seat in the boardroom.