Oct 17

HR Organization for Production

The only time I remember receiving the transcript for a term of courses when I was in college was after acing an industrial engineering course called “Organization for Production.” It was memorable not because I did well… and frankly I remember nothing of that course today… it was the abbreviation used on the grade slip: Organ for Prod. The visually active part of my brain immediately went into the gutter and I bragged for weeks about getting an A in Organ for Prod. I was too naïve to see that it might have value as a bar-pick-up line and it is probably a good thing that I chose to rise above it all and take the high road. After all, if nothing else I told myself that I did have standards. Mom and Dad would have been proud!

When looking at companies and their hierarchy it becomes apparent that there is a sliding standard regarding the value of Human Resources. This is obvious when considering where HR sits on the various org charts. At the academic level it would seem that there could be a standard organization that would produce the most effective results. Discounting what I know today, if my IE course had tasked me to look at this aspect of a company and determine the best organization for productivity I would have first looked at the standards set for HR relative to the company mission. Who sets those standards? It is certainly not HR. It is the CEO/Board/Owner/Big Boss/Top Dog and their perspectives that determine where the HR functions should be.

  1. Perspective: HR is an administrative arm of the company to handle the paperwork that management does not want to do. Possibly oblivious to the fact that the employee workforce is a “resource” to be managed, this narrow viewpoint is problematic in that it perpetuates the “us” vs. “them” mentality and can contribute to labor problems. Lumping this activity into an overall Office Management or Administrative arm of the company may sound prehistoric to HR professionals today, but small entrepreneurial companies still operate this way. Few come into existence with the HR function as a partner.
  2. Perspective: HR is overhead. Since it is not a profit center it has to be managed as an expense to be regulated. This approach does not ignore the fact that people are a difficult asset to manage, but the cost of doing this is considered to be less significant than other aspects of the business. An “employee first” mission statement is really only lip service when a “profits first” reality is the key. Can the HR function report to the CFO? Of course it can, but safeguards against valuing individual performance based on the company bottom line are sketchy at best. Management by executive whim is not a recognized tool for effective organizational change.
  3. Perspective: HR has an important voice in business direction. The development of an organizational culture that encourages employee excellence would seem to be necessary for success. If the measure of success is collaboration, innovation, teamwork and cooperation that leads to increased profitability, this approach would seem to be optimal. Having said that, the cost of performing these activities must be consistent with the goals and objectives set by the person occupying the top box on the chart.

These three grossly oversimplified perspectives make a great undergraduate analysis of the ability of an organization to operate productively. The reality is that any of them can (and do) work. Maturity of the organization and its leadership determines the start point and evolution takes over to create a vigilant and constant reassessment of the status quo. While HR does not make the decision as to how the organization is organized there are various influences that may be used to take the company to the next level and beyond.

  1. Influence: Never accept the current situation to be perpetually correct. The buck may stop at the top box, but the perspective there is limited to personal experience without the input from those in functional boxes below. The lines of communication need to be open both ways to understand how the situation may be improved.
  2. Influence: Never assume that the cost of HR operations is insignificant. Often survival of the enterprise may rest with leaders who understand how the business operates. HR professionals do not need to be expert in the company’s products or technology, but it they cannot read a financial statement they will be ineffective as a catalyst for change.
  3. Influence: Never underestimate the value of accurate data from meaningful metrics to guide the decision making process. HR professionals must not only be experts in compilation and analysis of such data, they must also be experts at presenting the data to management and add value to the setting of corporate goals.

The downside of a failure to exercise the influence necessary to correct the course of events is to give in to the stereotypes. Accepting the roles of administrator or overhead without adding value is to endorse the preconceived notions that HR doesn’t matter. It sometimes takes courage and self sacrifice to make that happen. One of my heroes in the HR world is a former colleague who was VP of Human Resources in a technology company where the Big Boss didn’t fully respect HR as a useful entity. When called in to be told that he was being reassigned to report to the CFO instead of the CEO he resigned on the spot and left the building immediately… and never looked back. It was a matter of principle rather than ego. To him, losing that “seat at the table” was being relegated to a minor support role that was taking the company in the wrong direction.


Image Credit: Org Chart w/Magnifier steph79 / 123RF Stock Photo