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Feb 18, 2014

Testing your faith in human resources

Can unique leaders get by without dedicated HR?

By Dave Crisp

Once in a while a book comes along that requires you to examine your mental models long after you've put it down.

This latest is Joy Inc., How We Built a Workplace People Love by Richard Sheridan, who holds up his company, Menlo Innovations, as a model he believes ought to be copied everywhere.

A quick orientation to the book and author comes via this short video, but the surprise it creates masks some deep thinking about organization values and practices as well as the need (or more specifically, the lack of it) for HR.

This startling story falls somewhere between the extremes of Ricardo Semler’s Maverick, which still puzzles people and elicits a lot of "that would never work here" and the easily read Fish!: A Remarkable Way to Boost Morale and Improve Results, which has both strong supporters and vitriolic detractors.

Sheridan is clearly not just a businessman, but rather a missionary for his discovery of a way of working that engages, involves and calls forth hard work but also offers staff input and a sense of accomplishment. He is quite explicit in his view that some form of this ought to be implemented in every workplace... and he may well be close to right. The book does its level best to push back at the inevitable skeptical and "won’t work in my environment" reactions most readers will almost certainly tend to feel.

Most notable for the HR profession, this is an organization that works and works very well, that is visited by many other organizations anxious to learn the secrets of its success, including its ability to attract hundreds of hard-to-source tech specialists in an increasingly difficult recruiting environment and hang onto them — all without the benefit of a single HR person despite having 350 employees.

This isn’t the typical no-HR company that really has human resources by another name. Dillards department store chain was the retail example when I was vice-president in that industry. On closer examination, despite the official ban on HR from its founder, managers at every level squirreled away a person here and there, usually named "training manager," who actually carried out HR duties as any of us would recognize them. The ban, as in most such cases, was really on calling it HR and its services were pretty much decentralized and somewhat handicapped.

Although it’s obvious there must be at least some clerical HR at Menlo — people getting paid, someone working through time sheets and so on, it’s easy to imagine not much else. It’s clear it follows some basics — such as not hiring illegals and not asking inappropriate hiring questions. Those are things that experience elsewhere would have taught the founders and things any reasonable employment lawyer and entrepreneur guide would counsel. One can certainly picture a company getting set up to function as it does with an external HR consultant providing a few basic guidelines via a review of its intended practices, after which no HR could theoretically work as a principle.

What makes no-HR workable of course is the skill of the managers themselves in instituting and maintaining people-positive practices. In HR we constantly say our role is to do ourselves out of a job by training and coaching all managers to be their own HR department, and this seems to be a practical possibility in the set up Sheridan outlines. This is perhaps the most important lesson of the book — what highly effective leaders would follow as management practice, just how effective that can make them and how little help they need if they behave well.

If nothing else, this is a book that should be read by all managers with a view to learning how to keep staff highly engaged, keep problems from developing and keep lawyers, unions and HR from “meddling” in day to day operations.

Nothing necessarily precludes a company run solely by good managers with leadership properly distributed among all levels of staff from running into one-off problems — health and safety, union issues when you fire a person who doesn’t fit or like the environment, but claims to have been trying to start a union or similar possible challenges. In fact it’s refreshing Sheridan lists some of the issues Menlo haven’t fully worked through. That shows the company is on its toes with respect to such matters. Whether HR is needed to resolve these or buffer these — or if there are even solutions at all — are other questions.

Other key questions include whether this style of operation can scale up further. If so, how big an organization could it fit? And whether, at some size, HR becomes an absolute requirement no matter what style is applied? Chances are anything much larger would have to be set up in sections probably not much bigger than Menlo is now.

Would there then be issues of equity between locations and a need for HR — or something like it — to iron those out? Would the units best be linked via broader, cross-unit succession planning? Sheridan alludes to how this organization style might be retrofit over existing styles unit by unit, but most likely then there would need to be overall co-ordination, training and teams that assisted migration of the style to other units... all of which suggest something like HR operations in play.

Above all the overriding question would be where to source leaders who would willingly implement this style and who would be able to bring or develop the skills to do it? That is perhaps the most challenging barrier of all to broader application. Sheridan is very specific about his rules that make this work, but one has to imagine there could be variations that would still retain many benefits.

Whatever the answers, it looks like this produces some very useful examples that will generate more questions for quite some time to come — until more organizations try these ideas and we start to see where the limits lie. What seems important to note at first glance, however, is that the ultimate key function of HR may well be to develop the leaders and leadership environment that produces the energy and results this book suggests are available.

But will we be able to sell it to senior managers... or even staff? And whatever the answer to this, it most certainly indicates that traditional organization structure, including HR, will be around for a very long time to come and that hybrids that include some of these ideas along with robust HR operations will continue even beyond that. So we can put aside any fear of being out of jobs and concentrate, as usual, on what we can leverage here to improve our own organizations.

Dave Crisp is a Toronto-based writer and thought leader for Strategic Capability Network with a wealth of experience, including 14 years leading HR at Hudson Bay Co. where he took the 70,000-employee retailer to “best company to work for” status. For more information, visit
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