Companies Say No to Having an HR Department

Sometimes the only thing worse than having an HR department is not having one.

When LRN Corp., which helps companies develop ethics and compliance programs, restructured a few years ago, the 250-employee business abolished most job titles and department names. It also did away with its human-resources department, which had dealt with recruiting and compensation issues, among other things.

“We wanted to force the people issues into the middle of the business,” said David Greenberg, Los Angeles-based LRN’s executive vice president.

Companies seeking flat management structures and more accountability for employees are frequently taking aim at human resources. Executives say the traditional HR department—which claims dominion over everything from hiring and firing to maintaining workplace diversity—stifles innovation and bogs down businesses with inefficient policies and processes. At the same time, a booming HR software industry has made it easier than ever to automate or outsource personnel-related functions such as payroll and benefits administration.

Some workers say they feel the absence of an in-house HR staff acutely, especially when it comes to bread-and-butter HR responsibilities such as mediating employee disputes and resolving pay problems. LRN and other companies that are going it alone say they are working out the glitches as they go.

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