In a previous article, I wrote about the trend towards the concept of the "employee entrepreneur".
This week we go a little deeper down the rabbit hole and look at how this transition towards a more entrepreneurial culture is affecting, and leaving behind, what has traditionally been a key business function:
Human Resources.
It seems that, while certain aspects of HR will always be needed, some entrepreneurial companies are abandoning the traditional view and use of HR, only to replace it with alternative sources of HR knowledge and service.
Want to learn more about how to create a creative, entrepreneurial workplace culture?
RELATIONSHIPS, COMPATIBILITY, & ENTREPRENEURIAL COMPANIES
After posting my previous article, I received a call from a colleague of mine who I greatly respect...both as an expert in the field of HR and as an entrepreneur.
He asked me why I thought that Cooperative Action seemed to appeal to businesses that embraced entrepreneurialism...
...Of course, knowing my colleague, he did it in his typical style of demanding my answer be 25 words or less.
This was a great question and one I had to think about to carefully to find an answer.
"Well", I finally answered, "it acknowledges that not all existing relationships are meant to be future relationships. When views are no longer compatible, it is ok to walk away."
This concept, that it is completely acceptable to exit a relationship when the other party's beliefs, perspectives, values, and practices are no longer compatible with the rapidly changing needs and culture of the business, is extremely appealing to highly entrepreneurial businesses.
It also explains why many of these businesses have abandoned the corporate HR model, preferring more flexible, low-cost, "on demand" alternatives.
We asked a few of these companies to explain in their own words why they have walked away from the traditional HR model...
SCHEDULE A FULL DAY SEMINAR FOR MANAGERS AND EMPLOYEES AND SEE IMMEDIATE RESULTS
HR IS TOO CONSERVATIVE...
"Before we started this company up I was operations manager in the hospitality industry. 60% of our employees were part-time, mainly university and college students looking to grab a few hours here and there. Turnover was always a challenge and even in that highly conventional business HR had trouble keeping up. I remember one time I was desperate because we were extremely short-staffed and mandated customer service levels weren't being kept up. I told HR to hire the first people they came across. I didn't care who it was because someone was better than no one. HR flat out refused because, in their words, the proper process had to be followed. They needed all of the t's crossed and all of the i's dotted. It took three weeks to fill the vacancies but by then it was too late, the damage has been done and we had already lost customers. Given the extremely fast-paced, ever-changing industry in which we are competing today, we have had to throw out the rule book and constantly find new ways of doing business. If we had to wait for HR to cross their t's and dot their i's we would be out of business in under a year. There is a place for that old-school HR model, it just isn't a good fit for a business where being entrepreneurial means behaving differently today than we did yesterday." - Josh K., Toronto, Ontario, Canada
THE CORPORATE HR MODEL DOESN'T "GET" US
"Originally we had people on staff from each of, what I consider to be, the key business services. So we had an accountant, a lawyer, and an HR person who, as I recall, was extremely experienced. From day one we had problems with her because despite all of her experience because she just never seem to get us, to understand who we are as a company and therefore what we needed. Part of our business model is to find and hire the best young talent we can find and the reason we have done this really well is because we can offer these people a highly flexible, unstructured, and (I would like to think) fun place to work. This has worked for us because very few of our much larger and more established competitors can't offer this. Many of them are still stuck in the dark ages where if you aren't in the office working then you aren't working. The problem was when trying to hire these amazing people who had a reputation for really creative and abstract thinking (which was what we liked about them) they weren't making it through the interview process because their atypical interview responses didn't fit within the very neat little box of what our HR person thought "professional" should be. We were losing out on a lot of really great candidates because of her so eventually we had to let her go. She wasn't a bad person, in fact I really liked her. The problem was that the experience she gained from spending years in a corporate environment got in her way and prevented her from being able to see and understand what we needed. After we parted ways we replaced her by contracting a search firm that we work very closely with to find the right candidates. Then the other two owners and I handle all of the interviewing so that we can focus on those areas that most concern us while paying little or no attention to questions and answers we care little about. While this may be intimidating to some we have actually had tremendous success." - Steve S., Waterloo, Ontario, Canada
HR WAS ANYTHING BUT A "BUSINESS PARTNER"
"I want to start off by saying that I'm extremely happy with our current HR service provider. That being said, we went through five different HR managers over the period of four years and had to look beyond the traditional approach to HR to get where we are today. I also acknowledge that part of the problem likely lay in my expectations for the person occupying the HR role. My background is technology, not people. So what I needed when I started this company was someone who could take on the leadership of the people side of the business. I was looking for someone who was, based on knowledge and experience that I didn't have, willing and able to make important decisions regarding our employees. I know that a lot of HR people call themselves "business partners". Well, what I was looking for was a true business partner. What I repeatedly got, however, always seems to disappoint me. They all behaved the same way. They would present me with information (usually far too much of it), and then expect me to make the decision. I was, in fact, doing exactly what I had hired them to do. It was frustrating because all I wanted them to do was to make a damn decision. I needed them to be a leader within my company. Eventually I just got so frustrated that I decided to outsource HR to 3 different contractors to handle the basics. I still don't feel I know enough about human resources to make all of the employee decisions that I make but at least decisions are being made. I doubt I will ever go back to having an HR person on staff again since there are so many amazing contractors out there who, if they failed to meet my expectations, I can easily sever our relationship with." - Anna T., Vaughn, Ontario, Canada
WHY PAY FOR WHAT WE DON'T NEED
"We've never had an HR person on staff. I really don't see the benefit of it. If you have someone on staff, they are there and you're paying them regardless of what they're doing. The nature of our business requires us to be incredibly agile in how we operate. This means we have to do everything we can to minimize our overhead so that we can continue to fund our product research. By relying on a team of external HR providers we effectively convert a component of overhead into it on demand service. Doing this allows us to apply the same entrepreneurial principles to the process of determining what service providers we use that we do to the rest of our business. We define our needs, figure out how best to satisfy those needs, and if it doesn't work out we try someone else. It really is an exercise in trial and error but if we employed a full-time HR person we would kind of be stuck with them and what they can do. Personally, knowing that we are able to use the best third-party providers we can find, whether we use 2 or 10 of them, means it's one less thing that I need to worry about. I probably sleep a little better at night because of it." - Angad P., Toronto, Ontario, Canada
STEP 5: BEST PRACTICES ISN'T CUTTING EDGE
"We've outsourced HR to a couple of key partners and it wasn't easy to find them. I'll admit that my experience with HR has led me to understand that HR really stands for human resistance. They constantly resist new ways of doing things that haven't been proven effective over and over again. Their idea of the new goes back to what they call "best practices". Every HR person I've ever spoken with loves talking about these best practices. However, what makes them best practices is that they have been used over and over again because they seem to be a little bit better than the previous "best practices". Here's the problem. At the very core of our culture is innovation. If we aren't cutting edge we will die. This requires us to constantly question what has already been done and push forward beyond the accepted standard. So this idea of doing what everyone else is doing runs completely contrary to who we are as a company. By their very nature, "best practices" can have no place in any business where innovation plays a central role in the company's external and internal branding. I'll admit, however, I would love to see someone in HR who was truly innovative and entrepreneurial. I would for sure consider doing business with them." - Marco D., Calgary, Alberta, Canada
THE LESSON OF THE DAY...
So, what does all of this mean?
It demonstrates how smaller, fast moving entrepreneurial businesses have chosen to address the service gap between organizational needs and the services provided by conventional HR professionals.
It is a choice that will impact the very nature of HR for years to come.
While there will likely always be a demand for HR professionals, the services provided by these professionals, and what these services consist of, must evolve past the conventional corporate model taught to HR students.
Tomorrow's HR professionals must readily embrace the highly variable, unconventional, and unconstrained cultures that define entrepreneurial companies.
Next week I will look a few things that HR professionals can do to remain relevant, valuable members of an entrepreneurial team...