Businesses in America are becoming increasingly aware that combining the latest in technology with in-house human resources staff is the key to maintaining all-round success.

Some companies have chosen to get rid of their human resources departments but experts say that this is a mistake that could have serious implications for the future of these businesses.

Why is it happening?

As managers see more highly effective, easy to use human resources software coming on to the market, some are taking the opinion that it is now more cost-effective and productive to outsource or automate personnel-related tasks, such as the administration of payroll.

Others believe that human resources should not be confined to one department but should be incorporated into the whole of the business. During a restructuring of the compliance and ethics program company, LRN Corporation, the management decided to abolish most department names and job titles, including its human resources department. The firm’s executive vice president David Greenberg said that this aimed to bring a people-focus into the very centre of the business.

Many managers now believe that this sort of structure achieves more staff accountability and prevents businesses from being stifled by inefficient and unnecessary human resources processes and policies. Craig Ruppert, the CEO of Ruppert Landscape Incorporated, which has a 900-strong staff and is based in Maryland, is an advocate of the decentralized structure. He claims that it promotes accountability and autonomy amongst his own senior managers, who spend around five per cent of their time dealing with human resources issues.

The downside of axing departments

Many employees in America, however, have reported acutely missing their own HR staff, which had provided a vital port-of-call and mediation for those dealing with pay problems or employee disputes. Senior staff members have also expressed concern about dealing with difficult issues, such as staff disciplinary matters, without the human resources advice and coaching they had benefitted from previously.

Managing director Steve Miranda, of the Centre for Advanced Human Resource Studies, at Cornell University, says that getting rid of some sections of HR can create strategic and financial risks for businesses. The Society for Human Resource Management also advises that companies with more than 15 staff require the skills of HR staff.

Mr Miranda says that managers completing HR tasks may not have enough specialized knowledge to maintain a business’ competitive edge and to ensure that it only engages in lawful practices, such as adhering to employment regulations. Blooming’ Brands’ Outback Steakhouse restaurant chain, for example, did not have a human resources department but created one shortly after it was sued for sexual discrimination by the Equal Employment Opportunity Commission. The chain eventually paid $19 million in settlement of the case and agreed that an executive-level human resources position was required.

That is not to say that businesses are not wise to invest in human resources computer software, which can offer levels of functionality, flexibility and ease that have never been seen before, making it easier for any staff member to carry out HR tasks. Technology and personnel can co-exist, and many experts believe that this is the best way to ensure success and prevent problems in the future.

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