An increasingly common theme in Human Resource (HR) literature in the 1990's concerns how the HR Department can make a greater contribution to the success of the business it serves. To do so, we must first change our view of the Human Resource role as being only executable within a traditional "Department." We must view HR more as a "function," or "a set of activities," than as a department. While HR services may not be delivered in the future via what we know as a Department, they must be delivered in some way. This article is about the realm of possibilities.

The HR Function Today

Today the HR Department is in a transitional phase. Some organizations have long ago realized that the HR Department can make a greater difference. Others need convincing. A positive trend seems to be developing, as evidenced in publications of the Human Resource professional's accrediting organization, the Society for Human Resource Management, (e.g. see HR Magazine, 11/98). Chief Executive Officers are increasingly viewing the HR function as an actual or potential "strategic business partner." This is encouraging, for as recently as the early 1990's the notion of the HR function as a strategic partner would have been quite novel.

To understand where the HR function is going, it is helpful to briefly review its past.

WHERE HR CAME FROM

In the first half of the 20th century, the Human Resource function grew out of the Payroll function. The remnants of this can be seen in companies that retain the responsibility for payroll processing within the HR Department. Today, the payroll function can often be found in the Controller's functional area.

This new entity then became known as the "Personnel Department." It was responsible for those duties that, quite frankly, didn't seem to fit anywhere else, such as overseeing the employment process. Unlike later iterations, the Personnel Department was not concerned with strategic recruiting and selection. Its goal was simply to hire people to fill "jobs," a 20th century creation. This emphasis explains how, even today, many people think of the Personnel Department as simply "the Department that hires people." So engrained is this idea that, even in surveys of HR practitioners that we conduct today, many of them still define the main purpose of the HR Department as being "the employment of people." Of course, it is true that in many of their companies, hiring people still is their main focus and purpose.

Since its inception, the HR Department has gone through a number of transformations, as depicted in Figure 1. During the 1970's and 1980's as it sought a new identity. These changes attempted to reposition the function as the guardian of employee relations and a provider of services.

The Evolution of the Human Resource Department:

- Payroll
- Payroll/Personnel Department
- Personnel Department
- Employee Services Department
- Human Relations Department
- Employee and/or Labor Relations Department
- Personnel Relations Department
- Human Resource Department
- Human Assets Department
- Human Capital Department
- Human Systems Department

In terms of the evolution of Management, this change had its origins in the "Human Relations" and "Human Resource" Movements of prior decades. The core notion of these movements was that organizations should proactively establish closer links with its employees to create the perception of, if not an actual concern for, employees, because of the employees' potential to disrupt organizations when "relations" became unstable.

This era was also the beginning of the "employee involvement" movement and strategy. Employees became more increasingly engaged in decisionmaking that affected them. Progressive companies increasingly realized that employees who did the work, knew the work best. To gain greater acceptance of change, it was best to involve employees whose lives would be affected by the change. Human Resource professionals became "Employee Relations Counselors" and had the responsibility of bridging, establishing and maintaining a stable relationship between the employer and its employees.

Eventually, the notions of the HR function as the Personnel Department and the Employee Relations Department gave way to a new notion: the idea of employees as organizational "resources" to be valued. Thus was born the "Human Resource Department."

Structurally, the Department did not change very much. The various sub-functions of Employment, Compensation, Training, and others remained. But the connotation of employees as "resources" permitted the HR Department to be viewed as something more than just a hiring function or as a mere provider of counseling and other services to employees. It suggested that the HR function recognized that humans as resources could be valued, served, recognized and "invested in," in ways which could increase their value to the company.

It was the start of what would later emerge as "Human Capital" theory. This theory holds that, through training and education, an investment in people will provide a "return" to the company in the form of greater innovation and/or productivity. We see this final transition represented in Figure 1 by several newly conceptualized titles, including "Human Systems" and "Human Assets" Departments. Human Systems, for example, refers to the potential involvement of the HR practitioner in any human system within the company, be it a pay system, a sociotechnical system, a team-based systems or others requiring the internal consultation of the HR professional. Their contribution is tied more closely to the strategic nature of the business and the impact can therefore be even greater than that which was possible within the traditional HR Department.