Human Resources Department Shrinks as Outsourcing Rises
I love to mentor people. In fact, I have taken to mentoring people who are moving into HR careers, as I feel like I have a lot to offer in this area. However, I am beginning to find a common theme with universities graduating HR folks into a workforce that has left their dreams behind. The human resources department is vanishing in the organization structures of today. However, the universities are still preparing HR grads only for that segment of the market for HR jobs. Also, as you can see in the charts below, the starting salaries don’t differ much between education levels either (except for Juris Doctor).
Education levels for fresh HR generalists entering the job market
The story plays out like this: you are studying with a major in HR as a bachelor’s degree. If you are studying for a Master’s in HR, your Bachelor’s degree major was not a technical major with which you could easily attain employment. The cold job market was why you stayed in college without hitting the workforce to get experience before taking on a Master’s degree. Now, ready to graduate, you are panicking. You are quickly finding out that your plans for joining an HR team as a junior member, moving through the ranks and gaining experience, isn’t happening. It is a fantasy that has already fallen victim to the changing economic landscape.
The economy of contractors is an increasing segment of society that, through choice or necessity, has rendered the human resources department as a thing of the past for all but the largest companies, institutions, and multinational organizations. Small and medium-sized businesses and not-for-profits would rather save on costs by outsourcing redundant HR tasks such as payroll and compliance, and getting access to PEOs or HR business partners. Furthermore, some cannot afford a full-staff human resources department. Others do not see the value in adding headcount that has not proven to generate more revenue for them.
Options for setting yourself apart in the new era
What does the gig economy mean for a new entrant to the marketplace for HR jobs? Here are some options:
- Seek out quality internships.
- Become cross-functional.
- Develop a demanded specialization to future-proof your career.
- Rebrand yourself.
Seek out quality internships.
The unfortunate thing about the many new HR professionals I encounter is that many have years of formal education under their belts, but are lacking in experience. For many of the companies they apply
to, that lack of experience instantly disqualifies them, as managers want someone who can hit the ground running with relevant experience without heavy investment in training to cut the time to productivity. How can they possibly hope to have a career if they don’t have an inroad to large firms that would invest in young talent?
This is where quality internships are important. I spent my time in college creating opportunities for experience and working multiple internships. That allowed me to scam an ivy league education out of a great state university. A quality internship offers:
- SWAG! They’re proud of their program and like giving free gear.
- The chance to try a job to see if you will enjoy it.
- Access to training materials that are generally paid.
- Opportunities to build relationships with a cohort of peers.
- Opportunities to network with leaders of the company.
- An alumni status that comes with its own benefits.
- Meaningful mentorship that magnifies strengths and improves on weak spots.
- Chance to apply the craft to see what works, and where is the school material is outdated.
- First right of interview for full-time jobs, and sometimes even assign you an internal recruiter.
A quick note on how to find quality internships
You must do your research on locating these internships. Go down the list of S & P 500 or Fortune 500 companies and scan for the ones with internships, like the 100 Best Companies to Work for list. These companies generally do have a full human resources department, even if spread across the world, and are big proponents of employee development and intra-preneurship. Interested in startups? Try looking through AngelList to find top fast-growing companies that are not yet publicly traded. However, most of the best internships are only offered during certain seasons (mainly summer) and must be applied for in the prior season. Don’t put your eggs all in one basket; apply to as many as you can with the time you have.
According to a Harvard Business Review article by Ram Charan, CHROs (Chief Human Resource Officers) that perform the best and are most trusted by CEOs, do not come from HR. Instead, they “have worked in line operations—such as sales, services, or manufacturing—or in finance.” The idea is that people who identify themselves as HR professionals can find it difficult to relate HR to real-world business needs, and struggle in “linking people and numbers to diagnose weaknesses and strengths in the [firm], find the right fit between employees and jobs, and advise on the talent implications of the company’s strategy.” These abilities are touched on in a Human Resources degree course of study, but are not generally developed enough to be useful to executives. With direct experience in another area of business, this experience is fast-tracked into your marketable skill set.
Becoming more cross-functional will give you more mental models from which to solve problems. I repeat this point constantly and across my posts because it is that important!
Develop a demanded specialization to future-proof your career.
While it seems like it’s contrary to the previous option of being cross-functional, it’s a good idea to zoom in on a specific skill that takes time to learn and become an expert in, and make it your own. Find a way to work this into tasks you do regularly. For example, in the era of analytics and data-infused business decision-making, an HR specialist can first learn statistics, then learn programming in R or Python to create actionable metrics and visualizations that people actually care about. Once you have the skill, it becomes a valuable part of your repertoire and part of your brand, informed by your other career experience.
Rebrand and reinvent yourself to stay current and stay relevant, moving toward your intended path. Even if it zigzags or goes off track, you’re building your brand on a story of progression. Here is my example:
15 years ago I was a marine and technician in training.
12 years ago I was a technician and a supervisor.
10 years ago I was an honor student and amateur statistician.
8 years ago I was a student leader and a “googler”.
7 years ago I was a “banker” and investor.
5 years ago I was a consultant.
Today, I am a CEO with a family of three. I focus on building communities through the businesses that support them.
When you take active steps to communicate your personal value proposition, you are putting forth your personal brand. The continuous rebranding is woven into your story, which adds context to who you are and what you bring to the table. Every hand you shake from that point forward comes with an understanding of what you can offer to people and how you relate, communicated in a few sentences.
When you are able to clearly communicate who you are professionally, beyond your job title, you inherently open yourself up to opportunities that did not exist had you not rebranded yourself.
My final thoughts
This options I just presented are also a list of steps to prep you for your career in HR. If you take the typical safe route and become a textbook college-educated HR specialist, you won’t have a job. Rather, you won’t have a good job. Your career will be akin to a steamboat in the middle of the ocean – being tossed about by the currents. You’d be ill-prepared for the very predictable but dangerous winds of change on the horizon.
What is my top recommendation for people looking to get into HR? Study something else as a primary career (finance, for example), and wiggle your way into HR later. If it’s too late for that, minor or double-major in a non-HR area. Or if you can, get an internship or college job outside of HR, like in Sales or Marketing.
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