Wednesday, July 3, 2013

We’re Spending Too Much on HR

The CEO just stopped by your office and said all the company’s resources next year are going into a major growth initiative and we need to cut cost in all non-essential functions. He wants 10% reduced from the HR Budget.

I was listening to the radio the other morning and there was a story about the wildfires in the west. The interview was with the government manager in charge of forest fire management. He made the following statement:

“We spent so much money last year on putting out fires there was no money left for fire prevention”

I am not making this up.

I am not making up the HR budget story either.

I was with a company a few years back that was hell-bent on growth: Acquisitions, expanded sales, development of overseas markets, new products; anywhere we could grow we pursued. It was expensive and money had to come from departments that weren't directly contributing to this big push. That (it was assumed) included HR.

Do you wonder about cause and effect when you see that two years later the growth is behind schedule, employee turnover is up, morale is down, service quality is down and reputation in the industry suffers?

There wasn't enough money for fire prevention.

Are we spending too much on HR? After a decade of squeezing more and more out of our HR budgets, has this helped make companies better?

Did you see this headline the other day? Americans Hate Their Jobs, Even With Perks.  Here’s a quote from the article:

“Just 30% of employees are engaged and inspired at work, according to Gallup's 2013 State of the American Workplace Report, which surveyed more than 150,000 full- and part-time workers during 2012. ….. A little more than half of workers (52%) have a perpetual case of the Mondays — they're present, but not particularly excited about their job.

We are spending so much money on putting out fires, there’s not enough money for fire prevention.