4 mins, 6 secs read time
There’s a shift happening. Human Resources is reinventing itself. The most progressive companies have replaced HR with new People Teams.
As the VP of People at a company that builds tools to optimize People practices, you can pretty much say that I think about the concept of People all day long. And I am fortunate to be surrounded by other forward-thinking People-People who are passionate about this changing industry, too. From discussions with my co-workers at Greenhouse and with People leaders across the industry, I’ve gained a unique vantage point into the changes that are happening to traditional HR departments.
What I’ve learned is that traditional HR departments, which have been around for 40 years, have long been focused on ensuring compliance and decreasing liability for the organization. On the other hand, the main objective of People Teams is to maximize the value of employees and drive business results. Clearly, there’s a difference here—a difference that is just beginning to emerge and will be the defining chasm between good and great companies.
On that note, let’s get a better understanding of which modern trends are driving this shift from HR to People:
1. The digital revolution has elevated the value of people to an organization.
We’re well into the digital revolution and technology companies have emerged as the fastest growing and most successful companies. According to Yahoo! Finance, ten years ago, the top 10 largest companies (by market capitalization) included just one technology company. Today, five out of the top 10 are technology companies, and three of them have been around for less than 20 years!
Technology companies, at their core, are intellectual enterprises, whose greatest assets are their people. Unlike the companies of the industrial revolution, whose success depended on efficient factories, the value of a technology company comes from People functions: design, engineering, sales, marketing, management, etc. This doesn’t apply only to tech companies, though. Any company whose differentiating assets are the quality of its people and its intellectual property needs a new People Team to thrive.
2. The power has shifted from companies to people.
People today have more power over their careers than ever before. The days of an employee staying at one company for 40 years and collecting a pension at retirement are over. The average employee today will switch jobs every 4.4 years, and this frequency is rapidly increasing with the rise of millennials in the workplace.
The transparency and accessibility of new job opportunities exemplified by sites like LinkedIn and Glassdoor have given people newfound mobility and pushed organizations to focus on retention and employer branding in order to compete for and retain top talent.
3. Strong employee engagement and company culture have become a competitive advantage.
Gallup research overwhelmingly shows that companies with high employee engagement and strong company culture outperform their peers across all business metrics: profitability, productivity, customer satisfaction, employee turnover, etc. In order to excel in employee engagement, organizations must be deliberate in prioritizing work culture and strong management.
The New People Team
As previously mentioned, progressive companies have responded to these trends by moving away from HR departments and instead, fostering the new People Teams. From then to now, it’s clear the main objective has shifted:
- Traditional HR: Ensuring compliance and decreasing liability issues
- People Teams: Maximizing employee value through talent acquisition, employee onboarding, talent management, total rewards, employee experience and culture, and internal communications
So what does this look like in practice? In speaking with numerous People leaders, I’ve found a few major differences that separate the traditional HR Teams from the new People Teams of today and tomorrow:
Now, more than in any other period in human history, people and their level of engagement in their work are the key drivers of an organization's success. So, tomorrow's winning companies will be the ones that are reinventing their HR Teams to become more deliberate, strategic, and holistic new People Teams.
It’s an exciting time to be in this space. I’m seeing major innovations every month and I’m inspired by how different companies are approaching this change. Over the next few months, our People team will be writing more blog posts about how we structured our team internally and also how we’re approaching our programs and initiatives.
The New People Teams will also be a major theme of the 2016 Greenhouse Open, our annual conference & networking event taking place next month in San Francisco. Several New People Teams leaders like Neil Frye, Global Head of Operations & Technology (People) at Dropbox, and Joris Luijke, VP of People at Grovo, will be speaking about how they have developed their dynamic People Teams.
Want to join the conversation? See all of our upcoming webinars and virtual events to stay current on the most relevant topics in hiring.