Why Taking a Stab at HR is a Bad Idea

One thing that never ceases to surprise me is the way in which many business owners attempt to tackle complex HR issues with little or no knowledge. If one were to form a comparison with finance -or most other professions for that matter- most leaders would understand the limits of their knowledge and ability and proceed accordingly. 

Where finance is concerned some business leaders might for example keep bookkeeping and VAT returns in-house. But most would generally outsource (or employ a specialist) to complete more complicated work such as corporation tax and annual accounts filing. It would not only be much quicker, but the chances are that the specialist will get it right first time. 

This being the case I find myself wondering why so many business owners feel that they are suitably equipped to deal with issues like performance management, restructuring, TUPE and complex employee relations problems with little or no training or experience. Clearly cost is a factor. But many who adopt this generally reckless approach often find that when issues get out of control it is far more stressful and costly to resolve problems later than it would have been to get an expert involved from the outset.

In the UK our establised business practices have always lent themselves to short-termism and opportunistic management methodologies. Some would argue that this is a good model that delivers results. While there may be some truth to this, a question that nonetheless presents itself is at what cost should results be achieved?

If one looks at the financial services sector by way of an example it is easy to identify numerous examples of opportunistic business practices that have ultimately come full circle with significant negative outcomes -both financial and reputational- for a whole range of organisations. PPI, sub-prime lending and LIBOR rigging were all arguably inevitable outcomes that flowed from management cultures where personal self-interest and short-termism were -and perhaps still are- the guiding principles.

For many organisations the idea of having “HR best practice” and appropriate expertise in place is not something that enters in to the thinking of most business leaders. The first encounter with HR that many such leaders often have is at the point when things have gone wrong resulting in a distress purchase to tackle an issue retrospectively. It is also at this point that business leaders often begin to realise that there is major value to be had from the management science of Human Resource Management (HRM).

Some leaders even have the humility to acknowledge that skills required for good HRM go beyond his or her understanding and/or level of ability. Many don’t of course. When I speak to business leaders outside of the corporate world (where the value and need for HR is sometimes better understood) it is generally clear that many business leaders do not even understand what HR is. It is logical, therefore, that they cannot properly understand the benefits it delivers. For example I recently spoke to a business owner who wanted to become an ‘employer of choice’ but the limit of the individual’s understanding of this was that they basically wanted to spend less on recruitment. This isn’t entirely wrong of course but it is a very superficial understanding of how effective HR practices can improve productivity and profitability through improved levels of employee engagement.

In some organisations business leaders deliberately or inadvertently remove HR from the equation altogether and instead align themselves to legal professionals. By doing so leaders effectively adopt an ultra compliance-led management strategy. This approach carries significant potential risks that rarely go unnoticed by staff. This risk can even be viewed by employees as being akin to polarising employer and employer- even though the destinies of both are intertwined.

In some organisations a major lack of HR practices can easily lead to a culture emerging where the employer appears to be protecting itself from its own employees. In my experience these kinds of scenarios are some of the most significant contributory factors in creating the woefully low productivity experienced by the UK economy. A problem that is not improving irrespective of what the prevailing political rhetoric may claim.

Furthermore, many organisations enter in to employment relationships without even the most rudimentary of HR/employment law knowledge. Many such organisations stumble forward without the basics such as policies or terms and conditions in place. Many employers cannot even do the basics thing like work out holiday entitlement. It is a very precarious way indeed to run a business. An overarching problem for many business leaders is that -irrespective of initial intentions- they often find themselves commoditising employees and ultimately even treating them as a drain on resources. Few start out with this mind-set but it can easily take hold. Employees quickly pick up on this and over time adversarial employment relationships can emerge. Productivity suffers, stress levels rise and employee relations suffer.

The sooner an organisation invests in appropriate HR expertise, the better it will be for a business and the business leaders involved with it. I use the word investment because this is exactly what it is. Developing a business based on good HR management practices may seem like a luxury to some. But not doing this is a bit like buying a new car without having learned to drive. Some business leaders have to accept that while they may be good at their own specialism they may not be good HR managers or leaders of people. We all have to acknowledge our limitations and play to our strengths.

Muddling along with little or no knowledge is a highly risky strategy as much of our current workload bears witness. Shutting the door after the horse has bolted is time-consuming, costly and even fatal for some businesses. Don’t leave it to chance. Reach higher with Reach Higher Human Resources™.

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