Fog Creek Software
Discussion Board

Studies I'd like to see, #42

In "Testing Software" Nigel said:
"Or the company is small enough (and fortunate enough) not to have an HR department."

Since we happen to currently have volumes of information on company formation in the IT industry, it would be interesting to do an analysis of profitability of companies vs. when they hired an HR director.

For example, in one dotcom I worked at, the HR Director was employee #10. They barely survived the dotbomb, only after effectively reinventing the company twice.

HR-targeting aside, it seems like "the order employees are hired as an indicator of company survivability" would make a decent business thesis.


Monday, February 2, 2004

I've never started a company, so I may be way off base, but...

Even accepting that the "gatekeeper" role that HR usually plays is a bad thing, I'd want an HR director for a very important reason - dealing with employment regulations.

At least in the US, dealing with employees is such a legal morass that I'd want a full-time expert on the subject just to keep from being sued.

Am I off base on this idea?

Chris Tavares
Monday, February 2, 2004

It might be an interesting study, but job titles in companies with low numbers of employees don't tend to reflect the owner's actual job duties very well.  On the other hand, if the vast majority of failed companies differed significantly from other companies in this respect, it could be an interesting result.

Monday, February 2, 2004

>> HR-targeting aside, it seems like "the order employees are hired as an indicator of company survivability" would make a decent business thesis

Yes, an HR person is important, especially in the knowledge industry that is software but... the simple reason why a lot of dotcom companies failed is that they simply had no profitable business plans (We don't need fifty online bookstores), which is something that has nothing to do with HR, and everything to do with just plain business.

Monday, February 2, 2004

We are a small company -- about a dozen.  We have one person who is dedicated to accounting/financials and the "legal/beauracratic" side of HR -- everything from tracking vacation time to IRS regulations to insurance to 401K.  He is not sitting around playing solitaire much.

There's a data point for you -- FWIW.

Should be working
Monday, February 2, 2004

Small companies often have at least a part time (shared with another company) HR person to deal with paperwork and regulations.  The other option is to outsource the HR.

Richard P
Monday, February 2, 2004

I'm not sure if its necessarily a transatlantic assumption but human resources need not be that involved in actual recruitment, apart from setting policies and making sure interviews are fair and probably taking part in those interviews.

There's nothing cast in stone about HR being gatekeepers and I'd probably not want to work anywhere where they were.  Mind, these days I'd probably not want to work anywhere very much other than in mine own little universe.

HR though is needed for rapidly expanding (or rapidly diminishing for that matter) organisations.  Its a truism that the last one out the door and to switch the lights out on a failing company is the HR director, and the last job is to fire themselves.

HR is also required to make sure the glue that secures its most valuable asset, its employees, is still up to the job, whether that's pay, conditions or whatever else.  Not to mention running interference with taxation, benefits and the rest.

HR isn't a bad thing, its necessary and when well run a very good thing.  Just as management isn't a bad thing, but necessary and when good achieves remarkable results.

So for the dot coms I'd expect HR to be quite early in the pack but largely because of the speed of growth and that speed of growth was largely demanded by the venture capital people.  That whole business model depended upon the South Sea Bubble and everyone knew it.

Traditional engineering startups, one or two engineers and someone, or one of them is willing to be sales, have an idea, sell it to a major client, they expand slowly, get lucky and grow awkwardly up until the point when they're too clumsy to communicate, at which the original owners sell out and someone managerially savvy runs it and makes it into something bigger and entirely different or it blows away like an empty husk, perhaps a product name lingering for a few years inside a much larger corporation's portfolio.

Simon Lucy
Monday, February 2, 2004

I was speaking a little tongue-in-cheek there Philo, but not too much.

In some ways I see them as a necessary evil. As people have pointed out, there are some tricky issues to be worked out with 100+ people companies (or 10+ perhaps), and HR people are trained for that.

On the other hand, I've seen too many situations where bringing an HR person in suddenly resulted in an excessive amount of baggage surrounding every staff decision. Just an incredible waste.

I personally don't know of a better way, but every story that I hear regarding HR situations makes me think there must be one.

This is why I work only with small companies ;-)

Monday, February 2, 2004

I think its great to have someone to manage the 'beauracratic/legal' side of things as the poster mentioned above.  This is a very necessary and important function in a company.  It is excessively time consuming as well.

Here is where I think HR departments fall down:
  * Setting renumeration levels or 'bands'
  * Hiring

In every medium/large comany I have worked for or consulted with, the above 2 duties are *always* relegated to the HR department.

Firstly, setting someone's renumeration based on seniority or any other criteria that fits into a nice neat box, is ridiculous.  Provided that the management team is competent (quit laughing!), they are surely more apt to be able to evaluate an employee's worth relative to the company.

On the second note, in what world is HR better at hiring talent for a given department than the department itself?  A hierarchial managerial structure, by defenition, implies that someone is competent in the given trade (quit laughing!),  in order to lead the team.  Wouldn't that particular person be knowledgable enough to hire the talent he is responsible for managing?

Its really this part I can't stand.

Monday, February 2, 2004

There are numerous "outsourcing" schemes for HR.  At
my current 9-person company, we are all "employees" of a
company that is paid by us to manage stuff like payroll, misc
bureaucracy, medical insurance, 401K's, etc for a per-head
fee.  It actually works out well - the co. has a website
for managing stuff like medical insurance selections and
tax withholding, and it is easy to hire people and get them
set up HR-wise.  Since they have several hundred little
companies like us in their pool, they can get much better
group medical insurance and such than we ever could.

Monday, February 2, 2004

I think a more interesting study would be a comparison between the level of involvement of HR department in areas such as recruitment, training, remuneration etc and the general performance of the company.

In every *Good* company I have worked, the HR just played a supporting role.

Job specs were done by line managers and sanitized by HR.
In interviews, HR sat in the background to ensure that proceedings were legal.
HR did grunt work like compute salary, tax, pension, leave, but left day to day management of staff to line managers.

This worked beautifully. The managers got the people they wanted, even if they were not able to quite put it in the fluffy words that make most HR driven job specs.

In one company I consulted for though, HR wanted to drive the show. They would fight tooth and nail with managers over what to pay whom. What qualifications (read piece of paper) a candidate should have etc.... Needless to say this place was full of deadwood.  What would happen in the end is that managers would identify the people they wanted and bring them in as consultants to avoid dealing with HR over the issue. Net result $$$ more than what employees would cost.

Wednesday, February 4, 2004

*  Recent Topics

*  Fog Creek Home