More Companies Doing Away with HR Departments: Why It’s a Bad Idea

This year, more companies are opting out of their human resources departments, instead choosing to spread the HR duties across other departments. It’s understandable on one level why some management teams would be tempted to take this approach, but it’s even more obvious why it’s a poor choice for most companies. Companies cut their departments because it seems cost-effective to do so in the short term. However, in the long term, companies suffer when other departments are forced to perform the same duties at a substandard level.

Why Companies Are Cutting HR

Much of the time, HR departments don’t get credit from the rest of the company for their contributions. Maintaining an entire department for human resources is costly, and it’s often less expensive to allow general management to take on some of the same duties, such as hiring. However, most management that lacks HR training struggles with hiring practices and is generally less effective at the same tasks. It makes sense that assigning specific tasks to employees outside of that area of expertise will be less effective than retaining the right personnel.

Why Your Company Needs Its HR Department

Of course it costs money to run your HR department—every department has overhead costs, and there are no exceptions. What you really need to consider is whether the overhead costs are worth the return. When it comes to HR, the answer is yes—the cost is worthwhile and the returns are significant. In addition to handling hiring issues with ease, HR managers handle interdepartmental conflict, independent contractors, recruitment and turnover, and much, much more because they have the education and training on these matters. It isn’t fair to the rest of your company to unload human resources matters onto general managers, and the tasks won’t get done with the same quality.

Dealing with HR Problems, and Why They’re Not Exclusive to HR

Another common problem that leads to cutting human resources personnel is the idea that HR departments somehow contribute less than other departments do. In some cases, results-oriented companies see fewer tangible results from this department than from others, or results that take longer to reach their potential. In reality, this is a problem that can affect any department, because benefits that are important to companies don’t always take a concrete, tangible form. Indeed, HR departments add value to companies by providing expertise on employment laws and handling personnel matters more efficiently than general managers without this level of training and experience. Eliminating human resources starts a slippery slope that can lead to elimination of other valuable departments, ultimately hurting the company much more than management initially realizes.


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