At Xenium, it’s our job to stay on top of the various workplace and HR trends that come our way. And in this podcast, we’ll talk about the belief that HR should be replaced or absorbed into other business departments. Is it a good idea? Listen in to find out. We’ll be discussing the viability of this approach, the role of HR and the real duties of the department. Whether it skews administrative or strategic, we’ll be talking through the ways your HR department can be refocused to do more for your organization.
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Brandon: Welcome to the HR for Small Business Podcast, this is your host Brandon Laws. Today I’m with Angela Perkins. She’s technically a first time guest on the podcast, though we did a short little segment on peer groups not too long ago. It’s good to have you, Angela!
Angela: I’m happy to be here!
Brandon: So we’re talking about refocusing your HR department. I ran across a Forbes article that talked all about this, and this is our world, o I thought who better than our Vice President of Sales & Marketing to come on the podcast and talk about it. You’re talking with employers all the time. So you hear the pain points, how they’re doing HR, you hear all the stories.
Brandon: So you have good context for this. Let me kind of set the stage. Personally, I feel like employers are in three different buckets as to how they treat HR. Some of them don’t value it and they just see it as something that they could get away with not doing forever. And so as the employer grows, they get to 50, 60 employees without HR and then they start feeling pain after that point.
When they do have HR, some of them feel like it’s an administrative function. They truly treat it as such.
And the others, they view it as a partnership between HR. It’s a strategic function in the organization. Those are the buckets from my perspective. But I think there’s some truth in each, it’s a combination of all those things.
Brandon: Some people – and this is where the Forbes article comes into play – some people believe that HR should be replaced or absorbed by other business functions. But from your perspective, why is this not a good idea?
Angela: Well, I have a hard time overall with carte blanche anything, all or nothing. So when reading the article, it was interesting because I can side with him in many cases to say it needs to be absorbed, but that doesn’t mean replaced. It means adopted by the managers and supervisors that are supporting that company, in my opinion. So really the concept is HR is not a siloed function inside any business or shouldn’t be because it spreads across every performer, every talent inside that organization.
If it’s a siloed department and HR is over there and they’re responsible for these 17 things and it doesn’t affect the rest of the organization, I don’t think that it’s performing as well as it could. And instead if it’s taking a look at the horizontal effect of HR across a company, then there is some absorption of responsibility inside different departments.
I don’t know if that’s really what the intent of the article was, that’s just my spin on it. I think really the intent of the article was does it or does it not have to be its own thing, does the HR department have to exist as it sits today in many organizations? I think it’s not a fair answer to say yes or no.
Brandon: One of the points I brought up earlier was that there are some companies that just don’t value HR and it’s probably more of they don’t know what they don’t know. A lot of times as a small company, you grow without HR and the duties are, to your point, spread amongst the other functions of the organization. The managers have to do certain things.
I always feel like the HR department is a hub to develop all these processes and it could be strategic but it can be administrative as well. Where do you see most employers kind of landing with HR nowadays?
Angela: You know, I love this job because of this – I see and hear all kinds of different things. I will pull a thread on something you said which is some employers don’t value HR. I would almost rephrase it to say they don’t know what HR is really capable of doing for their business. When employers say, Ah, we don’t need dedicated HR resources, they haven’t been able to experience what the strategic work that can be done out of an HR department can actually provide in terms of results. It doesn’t have to be all compliance. It’s not about posters on the wall, it’s about what’s the result coming out of some of the work that comes through in HR department.
So circling back to your question, what do I see? I see everything. I see employers that say, I have 11 employees and I want a fulltime HR presence because I know how important our culture is and I know what that means to retention and attraction of new talent.
I see 150-person companies saying We don’t want dedicated resources and we want a call-as-we-need kind of HR team. Honestly, in those scenarios, generally speaking those companies are more developed on their manager and supervisory teams than some of the other companies that do have in-house dedicated HR. Because what they’ve done is distributed the work to the managers to say you are responsible for our culture. You are responsible for the process. You are responsible for the new hire’s experience at onboarding. So it works.
I think, honestly, in all cases, I’ve seen it work with no dedicated resources, I’ve seen it work with slim pickings in terms of the HR team or staff onsite. I’ve seen what you might consider overstaffed in HR work brilliantly for a company. I think it is all dependent on the culture and what results that company is looking for from their people because that’s ultimately what HR is responsible for: attracting, retaining and developing talent.
Brandon: We have this onsite model where it makes things a little bit more complicated, it’s more of an outsourced HR function. But a lot of these bigger companies need an onsite presence, they need somebody there day-to-day. What I’ve seen you do is you’ve developed this matrix of clear responsibilities at the client level. So if they have an HR person, what are they responsible for? What are we, Xenium, responsible for as a strategic HR partner? What is the onsite HR person responsible for?
So there’s a clear division of duties by function whether it’s culture, whether it’s recruiting, whatever it may be. Do you think employers who maybe have a little bit of HR, outsource function aside, in-house HR or no HR, do they have clear picture of what the duties of HR are? I know that’s a big question, but do you feel like they have a clear understanding of what those duties are?
Angela: Probably not. Those companies that I visit with tend to – particularly at the C-level chairs – they’re not really sure what’s happening. They just know it’s working, right? Or it’s not, and that’s why they’ve called us in.
Generally speaking, there is usually some assumption that certain things are handled by certain people. We actually have a project that we conduct for a company that’s an HR structure assessment. So it literally gets into the HR department functionality. There are lots of redundancies at times found when you really dive in and say who’s responsible for what. It’s funny because what I said earlier is it really needs to flow across the organization, but this whole concept of having clear definition of who is responsible for what is a foundation for everyone to understand what’s their accountability.
As a manager here at Xenium, I know my accountability is separate from our internal HR team. We have a big internal HR team because we’re an HR company, so we have a lot of people with a lot of ideas. But I know my responsibility to my team. If the HR function is fuzzy and no one knows really who’s responsible for what, it’s the employees that pay for that as well as the outcome, right?
Brandon: I asked you that question because I don’t know about you, but oftentimes when you try to explain what HR is to a friend or a family member and it’s not their world, you try to sort of dumb it down for them and I always explain that there are really two sides to HR. There’s this admin side—compliance, tracking, payroll, benefits, all that stuff. Then there’s the strategy side of it—culture, people, recruiting, all those things. How do you think most employers treat HR?
Angela: In the small business space, I would say definitely on the HR admin side. It’s tactical, it has to get done. It has horrible nicknames.
Brandon: Like the Department of “No.”
Angela: It’s the Police. Administration becomes the necessary evil, right? That is horrible! We don’t want to think of HR in that way. There are some fundamental administrative tasks that have to happen. You have to pay your people, payroll has to occur, and that isn’t generally speaking an HR function. More and more companies are leaning toward putting that into the accounting department and that actually was referenced in that Forbes article that we read. It seems to work well when that does occur. The challenge is it’s, again, not all or nothing. There is so much dependency on HR and payroll to work together to have that administrative function go well.
So even if you say, oh, we’re going to slide payroll over into accounting, you’re not getting rid of it as the HR leader. There is so much dependency on your two roles within the company that you’re always going to have a hand in it. But the smaller the company, the more painful that administration is and so therefore HR becomes it.
Brandon: It’s a drain on resources a lot of times. You and I joke about this all the time. Like, oh, it would be great if we could just spend all our time doing strategy. But the reality is admin is going to touch us no matter what and I think with the small companies, it’s tougher because those admin things have to be done, the compliance, the tracking, etc.
Angela: And there are usually not enough resources to even get that done at peaks and valleys, right? Say you onboard 10 employees. Then all of a sudden you’re drowning in new hire paperwork and employee setup and benefits meetings and all of those things that go along with it. It doesn’t leave a lot of time for the strategy, that’s for sure.
Brandon: Let’s talk about the drain the admin has on the strategy side. Let’s say we’re a small company, we’ve got one HR person and they’re basically splitting their time probably not evenly between admin and strategy. How frustrated can the HR person get when they’re sitting there doing admin all day?
Angela: Oh, very much so. You talk about and you hear about people wanting a seat at the table, right? So, internal HR wants a seat at the table. But when 75% of their job is administrative, it’s really hard to earn themselves a seat at the table because they are spent in behind the scenes work that really doesn’t get a lot of credit. Everyone just assumes that those things are going to get done and it takes a lot of time to get some of that completed.
So to earn yourself a seat at the table, you need to be providing value and demonstrating results that are beyond hey, I happened to get payroll processed again today or look how many new hires I added or even to the degree of recruiting and look how many folks I screened. All of those things are so critical for a business to run, but some of them are undervalued.
How do we get HR at the table? It’s by illustrating results from the people and that’s all strategy stuff. You have to get the baseline of administration managed and give yourself enough time to spend on the strategy or hire to it or augment it, but there has to be space in order to get some of that done.
Brandon: We’ve talked in the past about how sometimes it really matters who HR is reporting to, whether it’s a President, CEO, VP of People, however big the company is probably makes a difference. But then in other cases they’re reporting to a financial professional where, I’m overgeneralizing, but where most of them are treated as a transactional, administrative function. Do you feel like it matters who HR is reporting to?
Angela: I do. If any of my favorite CFOs out there are listening, this doesn’t pertain to you! But in general, if HR is reporting to the CFO, it’s a statement for the company. The accounting and finance division of any company is responsible for expenses and strategy around profitability and all of those things. If you slide HR underneath that, it makes it a cost center and generally speaking, you’ve heard HR called overhead. So if there’s a report to that’s going directly to the leader of the company, there’s an illustration to the wider company that says HR is as important and put on the same playing field as all of those other division leaders. VP of Sales, CFO, COO, and Director of HR. If they’re all on the same playing field, the beautiful thing that that communicates to the organization is that we value people. We value HR.
Can in work in other structures? Absolutely. We’ve seen it work well. We have lots and lots of folks that we work with on a C-level controller position, CFO position, that HR reports into and because of the flavor and the culture of that company, there is more freedom to have that HR strategy at play even though it’s coming in underneath the financial division of the company.
Brandon: Do you feel like the trend is that HR is getting the seat at the table and they’re getting recognized as a strategic function that can actually grow the organization?
Angela: I would say so. Just in my tenure here, I’ve seen a lot more HR people reporting to the owner or president and they’re often peeling it out from underneath that financial position. I think it’s because the leader of the company is the talking head, if you will. So they’re the one that should be guiding and driving the culture from a speaker perspective at least so that employees can see the vision of the company through the CEO.
If HR is right there, then there’s connection and there’s alignment of what different kinds of processes and procedures are going to roll through HR. They’re going to only do supporting of that culture statement that that CEO is living up to.
Brandon: So let’s expand on that a bit. In the Forbes article we’re referring to, they talked about things that could be offloaded from HR and they talked about stripping admin duties such as payroll, benefits administration, record keeping, getting rid of those sorts of things so that way HR can focus on strategy. Do you buy that?
Angela: You know, I do. Kind of like what I said earlier, it’s an all or nothing attitude. I struggle a little bit with let’s just kind of kick it over. In a perfect world, could you literally push that over? Think about outsourcing, so to speak, the communication of everything that would normally go underneath HR to marketing. There’s still going to be such a partnership between those two departments that you’re never going to truly rid yourself of that responsibility because it’s so interconnected. We already talked about that same story with payroll and HR. Those two functions are so dependent upon one another.
Brandon: I agree.
Angela: So what I would spend more time doing if I were the owner of a company and I was asking, How do I set up my HR infrastructure? It’s getting the right work on the right desk. So focusing on how can we get the right functions on the right desk within the staff and talent that we have.
Is it appropriate? Is my accounting department capable of managing payroll and benefits administration? Is that the better place to put that work load? In that case, there’s obviously going to be that connection to HR because it’s feeding the hires and the terms and all of that dovetails into a process. But if that’s not the case and you don’t have bandwidth there, then is the HR person or team that you have, are they properly skilled? Are we having a lot of payroll issues? Is there not buy-in? Have they been hired for a different job and now they’ve been tossed payroll? All those things affect performance and when performance is affected, at the HR level, then again, you have a trickle-down effect across the whole organization.
To answer your question pointedly, I certainly don’t recommend to any HR professional to walk into your CEO’s office tomorrow and say, Hey, by the way, I’m done doing payroll. I think it’s a strategic conversation to say what’s the overall structure of who’s doing what work and do we have the right talent doing the right functions because payroll is not going to go away. Benefits admin is not going to go away. Filing is not going to go away. Who’s doing that work? And just structure the conversation that way.
Brandon: To put a bow on what you just said, I feel like it’s more about like who’s owning this function, but we know that there’s still an interdependency between other functions in the organization. You talked about the marketing piece and internal communication.
Here’s an example. The other day, our recruiter Kathleen said, Hey, I need to develop this benefits piece where we can highlight in the recruiting process what are Xenium’s benefits to employees. So she and I worked together to develop something that was candidate-facing, that highlighted in a cool, clever way what our benefits are and kind of highlighted a culture as a result. I couldn’t see marketing just owning that, and I couldn’t see HR necessarily just owning that either. I feel like somebody does need to lead it, but also work with the appropriate department to get those things done.
Angela: Absolutely. Leveraging resources. So think about it, it’s what we do across the organization no matter what. In my role, I’m not going to create my own financials. I lean on our financial services team for that, I leverage my resources. But the buck stops here on some of the data that comes out of that.
HR is responsible for attracting talent – same thing. They’re not a writer. They’re not necessarily creative either. Maybe, maybe they are, but maybe they’re not. If you have a department that has those skills, why are you not seeking them out for some subject matter expertise? It happens every day and I think maybe it’s that we’ve tried to silo HR so far over. That’s the HR department’s job. We haven’t lent them the resources that we give to the other pieces of our organization, because why can’t they pull on marketing for those kinds of things? It makes sense. Why wouldn’t they resource their accounting team if they’re having a hard time balancing out a garnishment or something? So even if they’re not handing it off, it’s really leaning on that subject matter expertise.
Brandon: When we talk about how HR should be more strategic and focused on the people processes, you’ve got a pulse on a lot of clients across different industries and different sizes. So you know exactly what employers are wanting. In your mind, what should HR be focusing on?
Angela: Results. At the end of the day, every business owner wants results. They don’t want to hear about compliance scares or things that are maybe going to happen or what we should be doing because there was a bully. Maybe there was a Bureau of Labor and Industries training and somebody went to it and now they’re scared.
It’s all about results. Do we want to improve certain metrics that we have across the organization? What’s our retention rate of our employees? How are we focusing on our strategic staffing plan for our growth? Do we have some of those things baked? Those are the kinds of things that the owners of the businesses that we work with want to talk about. They want to know that the baseline work is being managed, the day to day is taken care of, and we want to talk about the future forward and what are the things that the HR department and HR team can do for me so that I’m better prepared for growth, for what’s around the corner, for what I don’t know, all those kinds of things.
Brandon: If we’re talking about refocusing the HR department, who’s involved in that process?
Angela: That’s hard because I don’t believe that a refocus of the HR department is possible if you don’t have buy-in from the top level. It really starts there and you can build a case and you can give your advice and your guidance. But at the end of the day if there’s not alignment at the top, you’re going to have a hard time realigning duties because it’s going to affect more than just your own department. So I would say the idea is going to come from the in-house HR teams or who’s responsible for the HR functions. But then it really is a collaboration with the management teams.
Brandon: That’s good stuff, Angela. I want to give you the last word, anything you want people who are listening to know about the subject, about what you know, about what you’ve heard, any parting wisdom?
Angela: Oh gosh. We have about an hour left, right?
Brandon: Yeah, right! [Laughing]
Angela: I would just leave with this. HR is changing because it’s all about people, and people change. There’s nothing dynamically staying the same. If folks are listening and thinking, Oh, HR is fine in my organization, I would say poke that a little bit and try to see if there are more results you could drive out of your HR function because there is so much to be had there and so many great results to experience through people. We need to keep morphing with what’s changing and there’s a lot of focus on millennials in the work place and what are those folks contributing to the work place. And it is changing. What we need to focus on is different and always being prepared to have your mind changed, I think, is an important thing just in the world of HR today.
Brandon: Well said. And I’ll tell listeners, she knows what she’s talking about. You’ve been here, what, 18 years?
Angela: It will be 18 years. I started when I was 12, I just want to clarify! [Laughing]
Brandon: So you’ve been talking about business owners and presidents and C-level people and HR people forever and you really do have a pulse on most of the small and medium-sized businesses and I think you know what you’re talking about. I’m glad and thankful that you’re on the podcast today to talk about this.
Angela: Thanks for having me. It was fun.