What’s in a Name?

Around 1980 people started calling the personnel function “human resources.” It wasn’t a popular decision for many within the personnel administration business. The main concern was that people aren’t resources.

The implication is that a resource is something of value that can be applied, used and consumed. The argument is that people should not be misused, consumed or otherwise done away with. No one would disagree with that position. The misuse and disposal of people was a practice of the Industrial Revolution that led to the formation of labor unions.

What seemed to be the central question was the point of financial or economic value. The dyed-in-the-wool humanists insisted that people shouldn’t be viewed from an economic perspective. Many in personnel believed that people are not economic entities, but beings who should be approached and dealt with in terms of human welfare, values and dignity.

Few would argue with that. Yet the thinking on the other side was that people were also an asset with economic value. During the next decade, the two sides never came to agreement.

By 1990, the term “human capital” began to appear in personnel and human resources literature. The force behind this was the new notion that objective measurement could be applied to personnel work. This really set off the humanists. The “capitalists” were the proponents of finding, measuring and reporting human economic and financial value.

The battle was fierce, but not too long-lived. In time, the capitalists won out. The humanists retreated, but never really subscribed to the financial value aspect of people.

Today, the term “personnel administration” is seldom used. Human resources is the common appellation for the function. Some companies have sidestepped the battle with terms like “people office,” “associates” or other euphemisms. But in the end, it no longer is so strong a debate, since the intrinsic value of people is largely accepted.

In the same vein, there are still Theory X holdouts, but their number is limited and disappearing. Some are too young to have heard the Theory X vs. Theory Y debate of the 1960s. The X’s believed that workers are lazy, motivated only by money and need to be closely supervised. Theory Y’s believed that people are naturally ambitious, self-motivated and exercise self-control.

So after four decades of argument, where does that leave us?

Does the name really make any difference? Is this a worthwhile semantic battle, or is the organizational culture and managerial behavior actually the key point? Other functions have changed their label, sometimes with internal angst — management information system to information technology, accounting to finance.

I believe the most important issue is not what we call ourselves but how our customers refer to us.
In some circles, HR or human capital are not compliments despite the effort and commitment we put into our services. There are three possible reasons for this.

The first is historic. For decades, the personnel function was a dumping ground for people with limited capability. The second is the management philosophy of the organization. When top management is unenlightened about the value of people and the leverage that HR can provide, we have an ongoing problem.

The third reason is internal to HR. Some HR departments don’t accept that they’re part of an organization whose goal is to make a profit — or, in the case of nonprofits, operate at a highly efficient level while serving their constituency.

The solution, however, lies within our reach.

If we demonstrate through word and deed that the human resources or human capital or people function is more than paper pushers or impediments and that we add financial value, we have a good chance of changing management’s perception. Many HR professionals are doing just that already. Overall, the view of HR is improving, because its value is visible.

By any measure, the game is not what you call it; a rose by any other name will smell just as sweet. It’s what we do and how we do it that changes perceptions.

Jac Fitz-enz is founder and CEO of the Human Capital Source and The Predictive Initiative. He can be reached at editor@talentmgt.com.