Does HR exist only to keep organisations out of court?

If you read the professional press, you would be forgiven for thinking the life of an HR professional is that of a proactive strategic thinker, dazzling the business with stunning recruitment techniques and unfeasibly complicated, clever-looking sets of metrics.

But hang on a moment, what is that noise? Is it the sound of thousands of happy feet skipping to work, where they will help the people attached to them to perform a well-rehearsed work-life balancing act? Is it hell. It’s the march of a well-drilled battalion of staff off to assert their employment rights. And there is only one thing standing in their way – the personnel department.

This is the reality of HR in the new millennium. It is a department sinking under ever-increasing amounts of employment legislation and corporate regulation.

Mountain of law

It’s all very well trying to sort out your performance management metrics, but this only comes after – if at all – you manage to get your head around the mountain of law.

The statistics tell the real story, and in 2005-06, UK employment tribunals accepted 115,039 cases. This was up from 86,181 the year before, and will only get worse as more and more employment rights kick in.

We are living in an ever-more litigious culture. But are more HR people being taken on to deal with this growing concern? Of course not – surveys consistently show HR is considered a ‘back-office function’ that is high on the list of cuts, or at least outsourcing. At the end of last year, HR consulting firm Hewitt Associates reported that nine out of 10 US firms may outsource HR after standardising and improving their departments.

This all seems to point to one thing: HR exists simply to keep an organisation out of court. And if anyone has a good overview of – and vested interest in – HR’s legal woes, it is the lawyers.

Sue Ashtiany, employment partner at law firm Nabarro Nathanson, agrees that HR’s primary purpose is trying to run a system that keeps [its employer] right away from compliance issues.

“We do have a more litigious culture – people are more aware of their rights and are less fazed when faced with managers, HR or tribunals,” she says.

That said, Ashtiany concedes that HR can be more than a legal firefighter.

“People are trying to go above and beyond to benefit the business, not just keep companies out of court,” she adds.

“Modern HR is about strategy drivers – legal requirements are only a part of that and my strong sense is that is what [HR professionals] are focusing on.”

At PIFC Consulting, around 90-95% of its business is advising HR on legal concerns, according to Steve Gilbert, head of HR consulting. “In the press you read a lot about smarter working practices, but the companies that are focusing on this tend to be a handful of multinationals that are only 5% [of businesses],” he explains. “In the real world of the other 95%, legal compliance is the business-critical part of HR.”

Red tape

Penny de Valk, strategic director of Ceridian HR consultancy, disagrees.

“Compliance is no longer the main thing,” she argues. “People are the biggest and most expensive asset a company has, which means HR has to be more than a get-out-of-jail card. Human capital is now the key asset that drives competitive advantage, and that cannot be replicated overnight.”

But how can HR drive competitive advantage from behind all that red tape?

“HR has the tools and metrics, but it is often bogged down in a mire of compliance,” admits De Valk. “A lot of [HR departments] are beleaguered and it’s driving HR down to the lowest common denominator.”

Chris Thomas, people and customers director at healthcare company First Assist, says it is becoming more difficult to get your “head above the parapet” and become a business partner while the laws keep raining down.

“If I were to do an honest critique of what HR departments were doing, then that is it,” he says, referring to suggestions that HR only exists to keep companies out of court.

Downward pressure on costs, not to mention well-meaning but inadequate attempts to create a core of strategic HR staff, will just exacerbate the problem, he adds.

“Companies are reducing [the numbers of HR staff] and creating business partner models, but this can just mean you have fewer staff mandated to do one thing who are being bogged down in this instead,” he says.

Beyond basics

However, De Valk points out that HR practitioners are not alone in their struggle to get beyond what should be the basics of their calling. Finance professionals, for example, have to deal with a raft of compliance issues, such as the US Sarbanes-Oxley Act – brought in to ensure firms provide accurate and transparent financial information in the wake of the Enron and WorldCom scandals – as well as facing stricter controls on corporate reporting.

“These pressures are no different to those faced by any other business function,” argues De Valk. “Everyone is trying to get their focus away from the day-to-day stuff and add value. Globalisation makes things happen much faster, product lifecycles are much shorter – everyone has to work out how to be smarter, faster and better.”

This is where the argument for an increase in HR specialists, rather than generalists, comes into its own. Having more specialists would allow HR and the idea of human capital management – a science much more in its infancy than other business disciplines – to grow at a faster rate.

However, until this happens, it seems the best strategic intentions are being suffocated by well-meaning legislation that is managing to stifle rather than promote creative employment policies.

In the real world of HR, there are just not enough hours in the day to get all these good intentions off the ground. This leads to the inevitable conclusion that HR does indeed exist – at least primarily, if not only – to keep employers out of court.

Compensation culture: the potential cost of discrimination

  Unfair dismissal   Race discrimination  Sex discrimination Disability discrimination  
 Maximum award    £477,603   £984,465   £217,961   £138,650
 Median award  £4,228    £6,640   £5,546   £9,021
Average award  £8,679   £30,361   £10,807  £19,360

Source: Employment Tribunals Service, annual report 2005-06

Where are the legal challenges coming from?

  2003-04   2004-05  2005-06
 Total claims accepted  115,042  86,181  115,039

Where is discrimination legislation hitting the hardest?

  2003-04   2004-05  2005-06
 Unfair dismissal   46,370   39,727   41,832
 Sex discrimination   17,722  11,726  14,250
 Disability discrimination  5,655  4,942   4,585
 Equal pay   4,412  8,229  17,268
 Race discrimination  3,492  3,317   4,103
 Suffered a detriment /unfair dismissal – pregnancy   1,170  1,345  1,504
 Discrimination on grounds of religion or belief  70 307 486
 Discrimination on grounds of sexual orientation  61 349 395

Source: Employment Tribunals Service, annual report 2005-06

Comments are closed.