1) Read the HBR article, “Why We Love to Hate HR and What HR Can Do About It”  Why We Love To Hate HR and What HR Can Do About It (3) and  write a 500-word reflective essay discussing your takeaways. Illustrating you thoughts with specific workplace observations and experience will enhance the quality of your paper.

SPOTLIGHT ARTWORK Do Ho Suh, Floor, 1997–2000, PVC figures, glass plates, phenolic sheets, polyurethane resin; modules 100 x 100 x 8 cm
Installation view at Lehmann Maupin Gallery, New York

Why We Love
to Hate HR
…and What HR
Can Do About It
by Peter Cappelli

SPOTLIGHT ON RETHINKING HUMAN RESOURCES

Peter Cappelli is a
professor of management
at the Wharton School and
the author of several books,
including Will College
Pay Off? A Guide to the
Most Important Financial
Decision You’ll Ever Make
(PublicAffairs, 2015).

HBR.ORG

July–August 2015 Harvard Business Review 55

These feelings aren’t new. They’ve erupted now
and in the past because we don’t like being told how
to behave—and no other group in organizational life,
not even finance, bosses us around as systematically
as HR does. We get defensive when we’re instructed
to change how we interact with people, especially
those who report to us, because that goes right to the
core of who we are. What’s more, HR makes us per-
form tasks we dislike, such as documenting problems
with employees. And it prevents us from doing what
we want, such as hiring someone we “just know” is
a good fit. Its directives affect every person in the
organization, right up to the top, every single day.

The complaints also have a cyclical quality—
they’re driven largely by the business context. Usu-
ally when companies are struggling with labor issues,
HR is seen as a valued leadership partner. When
things are going more smoothly all around, manag-
ers tend to think, “What’s HR doing for us, anyway?”

This doesn’t mean that HR is above reproach.
Quite the contrary: It has plenty of room to improve,
and this is a moment of enormous opportunity. Little
has been done in the past few decades to examine the
value of widely used practices that are central to how
companies operate. By separating the effective from
the worthless, HR leaders can secure huge payoffs for
their organizations. But it’s important to understand
HR’s tumultuous history with business leaders and
the economy before turning our attention to what the
function should be doing now and in the future.

The “Personnel” Pendulum
How top executives feel about HR pretty reliably re-
flects what’s going on in the U.S. economy. When the
economy is down and the labor market is slack, they
see HR as a nuisance. But sentiments change when
labor tightens up and HR practices become essential
to companies’ immediate success.

Think back to the Great Depression. People would
put up with nearly anything to stay employed. Line
managers complained that personnel departments
were getting in the way of better performance, which
they thought could be achieved with the “drive” sys-
tem: threatening workers and sometimes even hit-
ting them if they failed to measure up.

Similarly, business leaders didn’t put a lot of
stock in HR during the 2001 and 2008 recessions, be-
cause employees—keenly aware of how replaceable
they were—stayed put and more or less behaved
themselves. Because companies had a large pool
of job seekers to draw from, wages stayed flat and
productivity rose. More employees were working
harder for the sake of security. And that remains true
in our “jobless recovery” from the latest financial
crisis. Although 83% of people in a Salary.com sur-
vey said they would look for a new job in 2014, the
number who are actually quitting has not yet spiked.
So it’s still easy for leaders to push back on all those
annoying HR policies. They seem superfluous.

Consider, in contrast, times when labor wasn’t
so plentiful. In the 1920s—when the economy was
booming, and keeping workers was both hard to do
and crucial to business—personnel departments
started to make supervisors treat their employees
well. And after World War II, U.S. industry suffered
a talent shortage unlike anything since. Many of the
men (it was always men) who might have gone into
business had fought instead. It didn’t help matters
that talent development had received little or no at-
tention during the Depression. The postwar question

“What happens if the boss gets hit by a bus?” pointed
to a huge concern. About one-third of executives
died in office—many of them from heart attacks—
and no one was around to take their place. A lot of
small companies went out of business, and many big
ones had to be sold.

Recent complaints about the HR function have
touched a nerve in a large, sympathetic audience,
particularly in the United States. The most vocal
critics say that HR managers focus too much on

“administrivia” and lack vision and strategic insight.

©
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SPOTLIGHT ON RETHINKING HUMAN RESOURCES

56  Harvard Business Review July–August 2015

In that leadership void, modern HR was born,
ushering in practices such as coaching, developmen-
tal assignments, job rotation, 360-degree feedback,
assessment centers, high-potential tracks, and suc-
cession plans. They sound routine now, but they
were revolutionary then. And they arose from an
urgent need to develop and retain talent in the 1950s.

In that “gray flannel suit” era, 90% of positions
(and virtually all those in the top ranks) were filled
from within—and 96% of large companies dedi-
cated an entire department to planning for work-
force needs. Those numbers reflect an intense
commitment to development, which paid large divi-
dends. HR was a powerful function, voted the most
glamorous area in business by executives.

Things have changed quite a bit. Only a third or
so of today’s hires are internal. Companies engage
executive search firms to fill most senior-level vacan-
cies. One in four CEOs comes from the outside. And
companies spend less time and effort than they used
to mapping out the talent they’ll need in the years to
come: By the mid-2000s only a third were doing any
planning in this area.

What happened? The economic slowdown of the
1970s practically eliminated labor shortages, and
business leaders began dismantling those postwar
programs designed to identify and develop good
managers and workers. Corporations that held
on to them, such as GE, were the exception. New
companies, particularly in tech, could hire all the
executives they needed when—thanks to layoffs
and stalled advancement—people left the great or-
ganizations. Microsoft became the largest company
in the world in terms of market capitalization, with
virtually no investment in developing management
skills. Others followed its example. As one CEO said
to me at the time, “Why should I train people when
my competitors are willing to do it for me?”

Meanwhile, supervisors spent less and less time
on their direct reports. They had too many people
under them to manage everyone carefully, and
other tasks were given higher priority. In his book
The Leadership Factor, the Harvard Business School
professor John Kotter reported on this phenom-
enon at a leading New York bank in the early 1980s.
Junior managers complained that their people-
management tasks were distracting them from their
more important roles as individual contributors, so
the bank’s leaders allowed them to devote less en-
ergy to evaluation and coaching.

Thus employees weren’t getting the investment
and attention they needed to grow. Even HR’s brief
resurgence during the dot-com boom—corporate re-
cruiters, rather than IT workers, had the hottest job
in the United States then, according to the Bureau of
Labor Statistics—was limited to hiring and retention.

At the same time, more and more tasks that had
traditionally been performed by HR (from hiring
to development to compensation decisions) were
pushed onto line managers, on top of their other
work. And that’s been the case ever since. HR is now
in the position of trying to get those beleaguered
managers to follow procedures and practices with-
out having any direct power over them. This is
euphemistically called “managing with ambiguous
authority,” but to those on the receiving end, it feels
like nagging and meddling.

I recently participated in a debate of HR leaders
staged by Will Peachey, the head of HR transforma-
tion for Capgemini. He kicked it off with a provoca-
tive question: Is HR as a function doing more harm
than good by prompting line managers to take their
responsibilities as supervisors more seriously? The
position that carried the day was that things would
be much worse for employees without HR’s involve-
ment. But there was also a palpable sense that in

Idea in Brief
THE PROBLEM
When talent is in short supply,
business leaders see HR as a
valuable strategic partner. But
when the labor market loosens
up, HR suddenly seems like a
nuisance, because we don’t
like being told how to behave—
and we see no immediate
benefit to complying.

THE OPPORTUNITY
Instead of sitting tight until
the next market shift changes
leaders’ perception, HR
managers should set the
talent agenda now. They have
the required perspective and
expertise.

THE SOLUTION
HR managers can score big
wins for their companies by
rethinking programs that have
been around since the 1950s,
making a business case for
the initiatives that matter, and
cutting loose pet programs
that lack impact.

In the “gray
flannel suit”
era, 90% of
positions were
filled from
within—and
96% of large
companies
had an entire
department to
do workforce
planning.

WHY WE LOVE TO HATE HR… HBR.ORG

July–August 2015 Harvard Business Review 57

relevant experience, now that fewer of them are
coming up through training programs and rotational
assignments in which they could have learned effec-
tive people-management practices from knowledge-
able peers. So the HR team can show these executives
what they should care about and why. That means
articulating a point of view on every people-related
topic relevant to the business. For instance:

• Layoffs. According to a report published near the
beginning of the 2008 recession, only about a third
of HR departments said they were consulted on
company decisions about which people to let go.
That’s a stunning lack of influence in an area where
HR has the most expertise of any function.

• Recruiting. HR understands that structured inter-
views help identify the best candidates. Yet many
organizations allow managers with no training in
interviewing to go with their gut in asking ques-
tions and deciding whom to hire—which increases
the risk of litigation as well as the cost of poor hires.

• Flexible work arrangements. Line managers who
want to retain control often resist flextime and
working from home. But HR leaders know that
these arrangements can be highly effective.

• Performance management. Forced ranking—
imposed by top executives who thought supervi-
sors weren’t tough enough in their evaluations—was
the rage about a decade ago. Now most companies

many organizations HR is simply slapping bandages
on problems that will persist until top executives
make talent issues a clear priority for managers.

What HR Should Be Doing Now
As the economy continues to recover, businesses may
very well wait for labor to become scarce again before
looking to HR for meaningful support. But HR can
speed things up by assuming the reins now. It has the
expertise to help companies get ahead of the market
shift that we should all see coming. Here are the basic
but powerful steps HR leaders can take:

Set the agenda. Like any other function, HR
must show why the issues it addresses matter to the
business and that it has sensible ways to manage
them. A few years ago the head of HR at a leading
corporation—someone who had survived lots of re-
structurings—was asked about the key to his success.
He said, “I do whatever the CEO wants.” Though do-
ing things the boss doesn’t want is certainly a career-
limiting strategy, too many HR managers wait to
be told which issues to tackle. If a company starts
a wellness program after the chief executive has a
heart attack, or launches a women’s initiative after
his daughter takes a job in the business, you can be
sure that the HR team is not leading the charge.

CEOs and other operating executives are rarely
experts on workplace issues. They often have no

HR’s Activities Closely Track the Labor Market

1920s
In a thriving economy,

good workers were
hard to come by and
even harder to keep.

HR induced supervisors
to treat people well.

1950s
After World War II, one

third of executives
died in office with no
one to replace them.

To fill that void,
HR created a host of
revolutionary hiring
and development

programs.

1930s
During the Great

Depression, supervisors
favored the “drive”

system of management
(threatening and

sometimes hitting) and
saw HR as a hindrance.

Workers put up with
almost anything to

stay employed. Talent
development was

practically nonexistent.

SOURCE BUREAU OF LABOR STATISTICS

EARLY 1900s
The HR function (known
as “industrial and labor

relations”) was born.
After steel and oil had

transformed U.S. business
in the 19th century, it

became clear that
workforce management

needed its own discipline.

U.S. UNEMPLOYMENT

SPOTLIGHT ON RETHINKING HUMAN RESOURCES

58  Harvard Business Review July–August 2015

one ought to understand its pluses and minuses in
various circumstances. Such plans add volatility to
compensation that can be difficult for the business
to control, so they may not be the top choice in an
economy that’s already unstable or even one that’s
in recovery but subject to unpredictable swings.
And they are effective only when employees feel
that they have sufficient autonomy and authority to
influence stock performance.

To appreciate the importance of context, con-
sider what’s happening in consulting and tech firms,
where developing skills and human capital is crucial
to success. PwC and Juniper Networks have already
abandoned traditional performance appraisals—per-
haps the most reviled standard practice in all of man-
agement—and moved toward a model of ongoing
conversation designed to improve skills and results.
(See “Bright, Shiny Objects and the Future of HR,”
on page 72.) Microsoft and Deloitte are moving in a
similar direction. Concerned about retaining key tal-
ent, Deloitte broke up the traditional promotion lad-
der, providing a more open and flexible framework
for career advancement that accommodates both
employee interests and changing business demands.
(See “Reinventing Performance Management,” HBR,
April 2015.) And Infosys, in India, has figured out how
to use the classroom to deliver the kind of contextual
knowledge people previously assumed had to be

(including GE, where the practice became famous)
are stepping away from it as they realize what HR has
long known: Supervisors need the training, the time,
and the incentives to have serious conversations
with subordinates about performance and growth.

HR should be in front of every one of these issues,
saying, “Here’s how we should be managing this task,
and here’s the evidence behind that view.”

Focus on issues that matter in the here and
now. Many U.S. businesses still follow the talent-
management playbook written in the 1950s. For ex-
ample, even though elaborate succession plans are
rarely used, companies keep creating them. Instead
of copying what large corporations did decades ago,
HR should craft company-specific (and industry-
specific) policies that respond to today’s challenges.

If you’re wondering why that’s not obvious, think
of the simmering debate within HR about whether
it should be a profession like accounting, with uni-
versal practices. This view has been championed by
the Society for Human Resource Management and
driven by its very successful certification programs,
which teach and then document knowledge in de-
signing compensation systems and other specialties.

Detailed knowledge of practices is essential, but
it’s more important to understand what works when
and where. For example, rather than just knowing
how to put a broad-based stock option plan in place,

1970s
As the economy

slowed, labor was
once again plentiful.

Business leaders
started undoing

all those postwar
programs designed

to attract and
develop talent.

EARLY 1980s
The U.S. went into a deep

recession, and workers
clung to their jobs.

Rather than invest in HR,
companies pushed hiring
and development tasks

onto line managers,
who had neither the time

nor the training to
do them properly.

LATE 1990s
During the dot-com boom,

companies competed
fiercely for “employer of
choice” status to meet

their soaring talent needs.
So HR enjoyed a brief

heyday, focusing primarily
on hiring and retention.

2001
When the dot-com
bubble burst and

the economy tanked,
business leaders felt

little urgency to attract
talent. Productivity rose,
wages stayed flat, and
HR lost the influence
it had enjoyed during

the boom.

2015
With the effects of

the Great Recession
of 2008 still lingering,
most people with jobs

aren’t jumping ship
yet, so executives feel
no urgent need for HR

programs. HR must
make a case for them.

WHY WE LOVE TO HATE HR… HBR.ORG

July–August 2015 Harvard Business Review 59

acquired on the job. The company teaches manag-
ers how to do business in other cultures and in par-
ticular industries—for instance, how to tailor their
IT services to chemical companies in Germany.

All this is a matter of looking more closely at the
environment in which the organization operates. It’s
about continually identifying new challenges and
designing tools to meet them.

Acquire business knowledge. HR has (and
should have) deep knowledge about workplace is-
sues. But it should also bring first-rate analytic minds
into the function to help companies make sense of
all their employee data and get the most from their
human capital.

In a recent survey by Deloitte, HR leaders said
they felt least prepared in the area of analytics—but
some are doing exciting work on that front. Not sur-
prisingly, Microsoft and Google mine their own data
to predict good hires, and IBM uses its enormous em-
ployee database to create project teams more effec-
tively. But companies outside the tech sector, too, are
bringing analytics into HR. Cigna uses sophisticated
data to minimize its own health care costs and iden-
tify its best performers. Managers of Cornerstone
OnDemand (formerly Evolv) and other providers of
call center software are parsing simple jobs in a hun-
dred ways to predict and then improve performance.

In many businesses, CIOs and their teams are
the ones wrestling with big data to solve classic HR
problems, such as how to find the best candidates
and which practices increase productivity. If HR is
to set the agenda on people management, it must
either staff up to handle those analyses itself or part-
ner with people in the company who can do the work.
Otherwise, the answers to fundamental HR ques-
tions will come from elsewhere in the business, and
HR might as well pack it in.

Highlight financial benefits. During the tight
labor market of the late 1990s, an HBR article de-
scribed how the HR team at Sears, Roebuck had dem-
onstrated that improved employee attitudes led to a
better customer experience and, in turn, to higher
store profits. (See “Employee-Customer-Profit Chain
at Sears,” January–February 1998.) Few HR depart-
ments since have felt compelled to make the case
that any of their practices could drive profits. Many
don’t calculate ROI, even though other functions
have been expected to do so for at least a generation.
That just feeds into business leaders’ view of HR as a
cost center where the goal is always to cut, cut, cut.

Back in the 1950s, HR controlled the promotions and career
of every manager at every level. For precisely that reason,
William H. Whyte wrote in The Organization Man, it was the
most glamorous job in business. The only other time that
was true in the United States was in the late 1990s, when
the labor market tightened up again and companies vied to
become the “employer of choice.”

Why HR Is Still Hot Everywhere but in the U.S.

HR hasn’t fallen out of favor in
other countries, however. In Japan
it is still the preferred track to the
C-suite. And in India, my studies
with colleagues suggest, it’s
arguably the most powerful of all the
functions. Indeed, across Southeast
Asia, top executives are investing
in the training and development of
employees and more-sophisticated
systems, especially for hiring. Even in
Europe, which has a talent glut, HR
appears to be growing in influence as
companies recognize the importance
of organizational culture, knowledge
management, and so forth. The U.S.
is the outlier.

The main reason HR is more vital
elsewhere is that organizational
power goes to the group that deals
with the biggest problems—an
idea dating back at least to the
great economist Alfred Marshall.
Businesses in the rest of the world

have to deal with aggressive
government regulation of the
workplace, strong unions, political
support for workers’ interests, and
often a real shortage of people who
can even be trained for key jobs.
Among developed countries the U.S.
has the most favorable environment
for employers—and the least
incentive to make changes.

Ideology plays a role as well,
though. The leaders who ran U.S.
corporations after World War II had
broad training in and appreciation for
management and used a governance
model based on balancing the
interests of stakeholders, who
included employees. Those leaders
have been replaced by people
disproportionately from financial
backgrounds, whose model of
governance—maximizing shareholder
value—awards no special role to the
interests of employees.

No doubt most HR departments were initially
caught off guard by questions about whether prac-
tices such as expat and rotational assignments actu-
ally pay off. The information they gathered tended
to focus on individual outcomes, such as job satis-
faction; they didn’t feel equipped to estimate finan-
cial returns. But that excuse no longer holds. The
enterprise resource planning systems of most orga-
nizations contain copious data on turnover, produc-
tivity, and other factors that suggest which talent
development programs merit investment.

Take IBM’s recent decision to retrain IT consul-
tants whose skills were obsolete. The company said it
would provide on-site training during working hours
one day a week for anyone who wanted to participate,
but employees would share the costs by forgoing pay
for the days they participated. With that requirement
baked in, it was relatively easy to make a financial
case for offering the program: The savings in hiring
would be more than twice the costs of the training.

SPOTLIGHT ON RETHINKING HUMAN RESOURCES

60  Harvard Business Review July–August 2015

company leaders say, “We will do this without our
own employees, by outsourcing or engaging contrac-
tors,” HR folks should be involved, because they’re
best able to assess whether those engagements will
succeed. (After all, outsourcing is just paying to use
another company’s human capital and becoming
reliant on it.) But meanwhile, HR should also keep
stepping back to study those initiatives in the aggre-
gate: What emerging needs do they point to? How do
those needs map to the organization’s talent pipeline
and practices? Which capabilities need shoring up?
How are things likely to change in the marketplace,
and what will be needed then? Why don’t we have
the ability to handle those tasks internally? That’s
the kind of analytic counsel the “new HR” should
provide. Then its job is to help organizations act on
the insights.

Consider the recent decision at Comcast to bring
world-class IT capabilities in-house, which will allow
the company to develop its own software for man-
aging and delivering online entertainment. The HR
challenge there is clear: attracting and retaining the
best talent in Philadelphia, which is not known as
an IT center. But with HR’s guidance, the company
is addressing that in creative ways, such as build-
ing and supporting an IT start-up community and
targeting IT students and recent graduates raised in
Philadelphia for internships and jobs. This big bet on
the future rests on HR’s ability to pull all that off.

Tech companies such as Google, Microsoft, and
Apple are now on the front lines of HR innovation,
largely because they have an acute need for special-
ized talent. Human capital is practically their only
major asset; talent is in short supply; and competi-
tors are eager to lure employees away. There’s been
some creative HR thinking in financial services as
well, to predict and ward off unethical behavior.
JPMorgan, for instance, is using an algorithm to
identify employees who are likely to break the rules.

No crisis or scandal is necessary for HR to trans-
form its practices, though. Nor should the function
focus solely on innovations in hiring. Discretionary
effort—by employees who are engaged and willing to
give their best—is at the heart of organizational suc-
cess, and managing and developing people is the way
to drive and sustain that effort. So the time is ripe
for reimagining human capital much more broadly.
Business leaders will see that—if HR makes a com-
pelling, evidence-based case for what matters, and
jettisons what doesn’t. HBR Reprint R1507C

Quantifying costs and benefits in this way turns
talent decisions into business decisions.

Walk away from the time wasters. HR invests
heavily in many programs that lack impact. Consider
the current preoccupation with generational differ-
ences. There’s little compelling evidence that they
even exist: Young employees today appear to be
remarkably like young employees decades ago, and
they’ve always been a challenge to older managers.
Their supervisors aren’t having any unusual prob-
lems with them now. Nevertheless, many HR de-
partments spend a lot of energy worrying about how
Millennials want to work. Given all the other things
to worry about, it shouldn’t be a priority to learn how
to manage one subset of subordinates differently.
Everyone wrestles with engagement and satisfac-
tion; Millennials aren’t alone in that. But even if they
were unique in their preferences, HR couldn’t make
managers tailor the supervision of them—it doesn’t
have the authority.

The same is true for diversity programs. Em ploy-
ment law prohibits diversity mandates in hiring and
promotion practices, so companies try to change line
managers’ attitudes and priorities instead. But such
efforts are effective only if top executives lead them,
transforming the culture. Otherwise HR is just a
cheerleader for an initiative it can neither enforce nor
measure; its leaders will end up pleading with line
managers to take on yet another set of tasks, burning
up more social capital in the process.

The Way Forward
One of traditional HR’s biggest difficulties has been
supporting business strategy, because it’s such a
moving target these days. Companies seldom have
long-term plans with straightforward talent require-
ments. Instead they generate streams of projects and
initiatives to address successive needs.

But HR is by nature a long-term play. Developing
talent, heading off problems with regulations and
turnover, building corporate culture, and address-
ing morale problems all take time. Often, leadership
teams and priorities change before such initiatives
have paid off. And when companies don’t meet their
performance goals for the quarter, those programs
are among the first to go.

How can HR bring the long view back into or-
ganizations? By reconciling it with the immediate
pressures that businesses face, which those one-at-
a-time projects are designed to address. Even when

Companies
seldom have
long-term
plans with
straightforward
talent
requirements.
Instead they
generate
projects and
initiatives
to address
successive
needs.

WHY WE LOVE TO HATE HR… HBR.ORG

July–August 2015 Harvard Business Review 61

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