Why we have the human resources department

Aug 25, 2008

Frank Beutellow was growing increasingly frustrated. It seemed to him that everyone who joined his firm, Beut Engineering, lately, was not as good as the person who left the firm before them. Morale was bad— and watch out for the stampede out the door at 5 p.m. every day. Plus, costs seemed to be getting out of control— for benefits, recruiting, salaries, and more. And, on top of it, they had two lawsuits from some awful employees that they had let go. Where was the human resources department anyway? Oh, yeah. They didn’t have one! HR was a part-time job filled by Beutellow’s controller, Gina Rutherford, who, at best, was a decent accountant, but by no means anything close to a human resources expert. Beutellow was too “thrifty” to hire a real human resources person. He didn’t want to add any overhead. His mentor, Joe Thiessen, who hired him out of engineering school at TA & Associates, taught him that all overhead was bad. So that’s the way Beutellow ran his firm from the time he started it more than 20 years ago. But now, it was apparent that something needed to get done. They needed a HR director, and a good one. Beut Engineering could not afford to make a mistake. They needed the right person. Frank Beutellow got out his paper and pen and started making a list of requirements. Here is some of what he put on it: Good understanding of the financial impacts of the job. Clear understanding of a professional service business. Approachable by other employees. Strong recruiter. Contributes to creating strategic advantages for the firm. Diverse, wide-ranging knowledge of management and HR. Because they were at best, a mid-sized company (90 employees), Beut Engineering wanted someone who was not too expensive (less than $90-$100K per year) and not too specialized in any one aspect of human resources (i.e., benefits administration, compensation, etc.). They ended up hiring a 30-year-old fellow who had an undergraduate degree in psychology with an MBA along with five years in human resources at a local regional CPA firm. He came into the company and spent about two months getting to know the people and figuring out what needed to change there. Then he presented a 20-point human resources management improvement plan to the Beut Engineering board. In the year that followed, that plan was implemented. Morale improved, turnover went down, statistics showed improvements in recruiting costs, training provided, and more— and the firm overall seemed like a better place to work. Not to mention the fact that accounting was doing better with billing and collection, in no small part because they weren’t dealing with human resources stuff. Frank Beutellow now knew that all overhead wasn’t bad— the money spent on hiring a HR director was money well-spent. Originally published 8/25/2008

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