Human Resources is a distinct and specialized skillset, often overlooked or perceived to be something anyone can do. This stems from a lack of understanding of the nature of human resource work, the complexity involved and a belief that human resources is solely another administrative function. Organizational leaders often underestimate the deep amount of knowledge, skills and ability that is required of a human resource professional and department.
This lack of understanding often leads organizations to prioritize other positions/departments who they feel can integrate human resources into their daily work. This approach always fails, it fails miserably because human resources is critical to mitigating organizational risk and is a strategic catalyst to supporting organizational success.
What is at Stake for the Organization and Employees
Organizations without a highly functioning human resources department will experience increased organizational risk including increased legal issues, employee problems, compliance problems, reduced employee morale, reduced productivity, workplace culture issues, burnout and damage to employee well-being.
Human resources is vital to positive outcomes. The lack of a skilled human resource function means employees do not receive the best support on workplace complaints about bullying, toxic work environments and harassment. Managers do not receive critical advice on the best path forward when faced with personnel issues. The workplace culture fails to align with the organization’s mission and employees become disengaged, resulting in a loss of productivity. Ultimately, organizational leaders and employees feel unsupported in the workplace.
What is the Financial Impact
Organizations without human resources can face significant financial costs through penalties and lawsuits during a time when they must be fiscally mindful and responsible. Human resources is responsible for staying abreast of employment laws and changes, compliance with Title VII, FLSA, and ADA.
Did you know that employers of all sizes are facing more lawsuits and allegations of labor law violations? Class action lawsuits have been steadily increasing, EEOC lawsuits have been steadily increasing, and the top-class action lawsuits are related to FLSA violations. According to an article on the SHRM website, the US Department of Labor recovered $212.3 million in back wages and there was a 10 year high of $25.8 million in violations for labor laws in 2023.
The amount of EEOC monetary damages for discrimination lawsuits is increasing. In 2022 the EEOC recovered $513.7 million dollars in monetary damages, according to SHRM. The same year there were 23 systemic discrimination lawsuits, that alleged there were patterns of discrimination or discriminatory practices, which doubled from the prior year as reported by Duane Morris on SHRM.
What Options Do Organizations Have
Today, organizations have options when meeting critical human resource needs while balancing organizational resources. Organizations have the option of building out a human resources department, outsourcing their HR function completely or utilizing a combination of both. The best approach to fulfilling this critical need is completely based on the organization’s size, budget and human resource needs.
More and more organizations are completing the transactional work of human resources through onsite or remote human resources support and accessing high level fractional Chief Human Resources Officers to provide strategy, answer questions and provide advice on critical human resources functions. Regardless of the path chosen, it is critical for organizational risk mitigation and overall success to have skilled human resources professionals working in the human resource function.
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