The idea of having a corporate function focused on managing labor resources is one that has been around for more than two centuries (corporate functions emerged following the advent of labor unions in the late 1700s). Since then the function has gone by several names, the most commonly applied being “human resources.” Unfortunately the name “human resources” has gotten in the way of what the function was created to accomplish (bringing labor and management together in a manner that benefits both).
In the vast majority of organizations, be they large or small, when labor solutions need to be developed, the solutions provided by the human resource function are always “people solutions” (i.e. hiring, developing, rewarding, performance management, etc.) That narrow scope was fine when 95% of the work to be done in an organization was accomplished by an employee, but that simply isn’t the case anymore. Today organizations leverage a vast array of labor types including automation, outsourced service providers, and contingent workers to get things done. Some studies now indicate that in larger organizations when outsourcing and contingent spend is added together, it exceeds what is spent on wages and benefits for regular employees.
If the HR function and those that lead it are to be truly strategic, they must acknowledge that today managers deal with a complex array of labor solutions and that maintaining a narrow scope of employee only solutions not only limits the applicability of the function, but also harms the business by fragmenting “labor procurement/management.” A truly strategic HR function would follow the lead of marketing, supply chain, and manufacturing by offering “integrated solutions” that pair the best labor resource engaged in the optimal manner for the work that needs to get done at any point in time.
Call Centers: An Ideal Example of Labor Type Choice
As little as 15 years ago, if a manager needed to operationalize a customer call center, there was really only one choice. They would work with real estate and facilities to allocate physical space, IT to install telecommunications equipment, and HR to hire, train and manage the necessary number of permanent employees to operate the center.
Today that same manager could:
- Staff the center solely with contingent workers (as JetBlue has done)
- Outsource the call center entirely to a service provider (domestic or offshore)
- Implement and interactive voice recognition (IVR) solution
In a chaotic business environment, all three of these options (none of which rely on HR) would provide more flexibility and agility then using difficult to release permanent employees.
All Business Problems Have a Labor Component
If you analyze most of the business problems facing managers in this highly competitive global environment, you will find that very few of them can be classified as simple problems easily addressed by one corporate function. Instead, most are extremely complex problems that require a big picture perspective and solution options that coordinate change across multiple functions. In nearly every case, part, if not most, of the change required impacts how the organization uses labor.
Addressing business problems from a holistic perspective ensures that advances made by one function are not mitigated or rendered void by the action or inaction of another. Solutions emerging from a holistic vantage point are commonly referred to as “integrated solutions,” and nearly everyone has come to expect them. In the corporate world a product manager may turn to a marketing leader for an integrated solution to help establish awareness of a new product category. The solution could include the use of numerous disparate advertising channels (i.e. TV, radio, Internet, print, and direct mail), as well as PR and services purchased from external vendors.
The modern-day upscale supermarket is an excellent illustration of how business leaders have learned to provide integrated solutions. Years ago a consumer seeking a Thanksgiving turkey would have reached out to his/her local butcher. We all know that the turkey, while a large part of the Thanksgiving meal, is still just a part. The modern-day upscale butcher offers an integrated solution by being able to answer basic questions about bird storage and preparation, as well as about pairing the bird with wine, stuffing options, and other sides — the ingredients for which are all available under one roof. It’s also possible that while there your car could be getting washed, filled with gas, you could do your banking with the in-store bank branch and drop off your dry cleaning.
HR Is Not Exempt
HR has a long history of putting people first. In many cases, it has acted more like a jobs defender rather than a neutral party recommending the best labor solution for a particular situation. If that is to change, HR must broaden its scope and become the go to leader for pairing labor options with necessary work, providing solutions that govern:
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- Regular employees
- Contingent workers (part-time, seasonal, contractors, or consultants)
- Outsourced service providers (task, process, or function)
- Strategic partner labor (work shifted to a partner organization)
- Challenge/contest (work is executed by customer or contest participants as the subject of the challenge/contest)
- Automation (software/hardware)
As stated earlier, in some organizations less than 35% of the spend for labor is going to employees, with 65% going to the other five options.
Technology Has Come a Long Way
Machines have been replacing human labor for nearly a century but only recently have solutions become so accurate and reliable that they could automate a great deal of business decision-making and analysis. Google or Bing for example are at least a thousand times more effective than a traditional reference librarian in finding a quote or a fact. And, just in case you have not kept up on your reading of “Robot Daily,” you should know that there are now 8.6 million robots in use around the world with application in military, police, aerospace, and medicine.
…robots will take over approximately 50% of the jobs in the U.S. economy over the course of just a decade or two —Marshall Brain
Technology has many advantages over people, including the ability to work 24/7, no demand for overtime pay, predictable maintenance (healthcare) cost, and no threat of unionization.
Action Steps for HR
Before the HR function can expand its scope to include “integrated labor solutions,” it must get past the word human in its title. Redefine the function as a productivity consulting center and focus on recommending the best labor solution for the business be it technology, outsourced service provider, contingent or other. Once HR accepts the productivity role, it must then develop a process for identifying all of the possible labor options and the advantages and disadvantages of each. It must also develop processes and approaches for improving collaboration and communication between the different functions that are involved in any integrated solution.
Anyone who fully understands sales or customer service knows that both users and customers have come to expect integrated solutions. Managers want to be able to go to a single place and get all the answers and the solutions for labor to accomplish the work they need to get done. They want to avoid bouncing between functions to acquire resources and the HR function is the logical place to go. It has been clear for a long time that having the most employees doesn’t ensure success; instead, it is the organization with the most innovation, productivity, and speed that wins. HR needs to step up, abandon the compliance hat, and start wearing the solutions hat. If the business needed another person telling them “no, you can’t do that,” they’d hire a regulator!
This subject needs more attention and debate; luckily ere.net provides a place for it. Share your thoughts and best practices about HR can “step up” and provide more inclusive solutions.