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Why Does HR Make Business Better?

Why does HR make business better?

The easy answer is because I know it is true. But the more honest answer is because as an HR professional, I’m tired of being marginalized and side-lined as a businessperson for choosing HR as my discipline, when it seems so obvious that HR does make business better.

I've had MD's and CEO's talk condescendingly to me about the ridiculousness of HR people being promoted into operations roles. About how HR may know policies and legislation, but they don't know business. You get the drift. And to be frank, I'm peeved because after all these years working for mostly good people, the one thing I know for certain is that when you get the people matters right within your business, then your business is more successful, more profitable and everyone who works with you is more satisfied.

So why does HR have this negative reputation as a business function? It's easy to use the regular cop outs: HR is the police force of the company; HR only gets involved to do the dirty work; you can't trust an HR person, they always take the company side.

In many respects I can see where this comes from. So let me straighten out the most common misconception about what HR is and does. HR mitigates risk to the organisation. Doesn’t matter whether HR is labelled Personnel, Human Resources, People & Culture, or any other fashionable variation. What HR does – irrelevant of the label - is mitigate risk.

That's it simply stated, but ultimately complicated in its delivery. Unless you have a fully automated business with zero people except for you - the genius inventor of the single person organisation - then when you employee people, you create risks. HR mitigates the legal, organisational and operational risks of employing people to work in an organisation in whatever format your organisation takes. Who pays HR? The organisation. So therefore who does HR have an obligation and responsibility to mitigate risk for? That's right, the organisation - the "person" who pays its wages.

In most consulting businesses there are things called 'Chinese walls' which are supposed to mean that a single company can work for competing clients. And I know that at times employees feel that HR should be able to similarly have Chinese Walls when it comes to personal friendships and relationships within organisations so that when the organisation has concerns about someone HR is friends with, they can compartmentalise their friendship from the issue (and the investigation). And all my friends in HR do this. But it’s the person on the other side of the organisational issue who often can’t divorce their friend in HR from the HR professional who has a job they have to do.

If you are paid by an organisation, you have a duty and responsibility to mitigate risk to that business, within the boundaries set by the code of ethics of the HR industries professional body and legislative requirements. What that means, simplistically, is that unless you know your company is doing something illegal then you have an obligation to mitigate risk for the organisation that pays you. Is this easy for HR professionals? No, mostly not. You tend to form a hard shell that enables you to deal with the abuse from unhappy employees and the really personal issues that come across your desk and straight for you. But it's what we do, those of us who are good at our jobs anyway. We take the hard line and do what is best for the business to mitigate risk. No matter how high up that risk reaches. Risk of poor performance. Risk of hiring the wrong person. Risk to health & safety. Risk that bullying, discrimination, harassment or victimisation will not only destroy the individuals involved but cause irreparable harm to the organisation.

I think is really easy for finance and operations divisions to claim the high ground and crown themselves the masters of business and the kingpins of organisational success and profitability. But in my experience, finance and operations are only part of the equation. An equation that won't and can't add up if you fail to give full attention to the function of HR. It is a corny catch phrase these days to say 'our people are out business'. And I agree, it's trite, over used and under recognised for what is actually means. Catch phrases have that tendency, they are repeated so oftentimes their meaning is lost and devalued.

So let me, perhaps crudely, rephrase it for you. Shit people give you shit results. Great people treated poorly give you shit results. But average people treated well will give you good results. And great people treated well will do amazing things for your business, including your profit margins. So, you do the maths. Because HR will make your business better. If it doesn't, you're just not doing it right.


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