The very first debate I have with my students in their very Human Resource Management class is to argue that organisations do not need Human Resource Management (HRM).
That the people management functions can be handled at the line and staff levels. And the accounting function which often combines with administration can take care of Payroll and the administration of remuneration. And I often win the argument.
But HRM is said to be more than just managing people. That it is managing people at profit. It is not about recruitment but the intentional search for the right people to perform work activities that will make the organisation money.
In essence, theorists say HRM does not only provide targeted people, it seeks to develop and improve their performance hence increasing productivity and profits. HRM is intentional and that is how it becomes beneficial to an organisation.
Otherwise, an organisation does not need HRM because organisations from time immemorial have found and worked with people and paid and motivated them in someway.
In the traditional corporate structure, Human Resource Management (HRM) is considered indispensable. However, a growing number of modern organisations, particularly in the tech and startup sectors, are challenging this norm by operating without a dedicated HR function.
Companies like Valve, GitHub, and Buffer have experimented with decentralised people management, relying instead on self-managed teams, automation, and cultural alignment to fill the gap. But is this a sustainable model, or does it invite chaos?
This article explores the viability of organisations operating without HRM, weighing the benefits of autonomy against the risks of unstructured people management. Would your company thrive without HR, or is it an essential pillar of organisational success?
Human Resource Management (HRM) has evolved from an administrative function to a strategic powerhouse, shaping the success of modern organisations. How transformative is HRM really? Does it genuinely elevate businesses by enhancing human capital, or is its strategic value overstated?
Historically, HRM (or its predecessor, “personnel management”) was seen as a bureaucratic necessity, handling payroll, compliance, and hiring. However, the late 20th century marked a paradigm shift. Scholars like Dave Ulrich (1997) positioned HR as a strategic partner, arguing that people, not just products or processes, drive competitive advantage.
Today, HRM encompasses talent acquisition, leadership development, performance management, employee engagement, and organisational culture. Companies like Google, Unilever, and Microsoft invest heavily in HR innovation, using data analytics, AI-driven recruitment, and continuous learning platforms to optimise workforce potential (Pfeffer, 2018). This shift underscores HRM’s role in not just managing people but enhancing them. A core function of HRM is fostering employee growth through Learning & Development (L&D).
Progressive organisations use HRM to create up-skilling programs, mentorship initiatives, and leadership pipelines. Amazon’s Up-skilling 2025 program, which retrains employees for high-demand roles, exemplifies this (Davenport & Kirby, 2020).
Modern HRM replaces outdated annual reviews with continuous feedback systems, improving productivity and engagement (Buckingham & Goodall, 2015).
HRM helps employees envision long-term growth within an organisation, reducing turnover and increasing motivation. These practices validate the claim that HRM improves people, directly contributing to business success.
Beyond individual development, HRM influences broader business outcomes. Despite its benefits, critics argue that HRM’s strategic impact is sometimes exaggerated. Some HR departments become rule enforcers rather than enablers, stifling innovation.
And not all HR initiatives translate to measurable ROI. A Harvard Business Review study (2022) found that only 11% of employees felt HR understood their needs. With AI handling recruitment and payroll, some question whether HRM’s traditional roles remain relevant.
These critiques suggest that while HRM is powerful, its effectiveness depends on execution. The future of HRM lies in balancing human-centric development with data-driven decision-making. Companies that leverage HRM as a true strategic partner, not just a support function, will thrive.
The rise of the HR-less organisation
The concept of an organisation without HRM is not entirely new. Small businesses and startups often forgo formal HR departments due to budget constraints, opting instead for founders or managers to handle people-related tasks.
However, some larger companies have deliberately eliminated HR roles, arguing that bureaucracy stifles innovation and employee autonomy.
Valve Corporation, the gaming giant behind Steam, operates without managers or HR. Employees choose their projects and teams, with compensation determined by peer reviews (Walker, 2012).
Similarly, GitHub initially functioned without HR, relying on a flat structure where employees self-organised (Hastings & Meyer, 2020). These companies argue that removing HR reduces red tape, speeds up decision-making, and fosters a culture of trust.
Critics of traditional HRM argue that the department often becomes a bottleneck rather than a facilitator. HR policies can be rigid, favouring compliance over flexibility. In some cases, HR is seen as an enforcer of corporate rules rather than a champion of employee well-being.
Reed Hastings, CEO of Netflix, famously stated, “HR policies are like recipes—great for beginners, but a constraint for experts” (Hastings & Meyer, 2020). Netflix minimises HR intervention by hiring “fully formed adults” and expecting employees to self-manage. This approach assumes that high-performance cultures do not need policing but thrive on autonomy and accountability.
Moreover, HR departments can sometimes create adversarial relationships between employees and management.
Performance reviews, disciplinary actions, and rigid hierarchies may breed resentment rather than engagement. By removing HR, some companies aim to dismantle these power dynamics, fostering a more collaborative environment.
One reason companies can operate without HR is the rise of HR technology (HR Tech). Platforms like BambooHR, Gusto, and Workday automate payroll, benefits administration, and compliance, reducing the need for HR personnel.
AI-driven tools can screen resumes, conduct initial interviews, and even predict employee turnover (Davenport et al., 2020).
Chatbots handle routine employee queries about leave policies or benefits, while performance management software enables continuous feedback without HR mediation. In such environments, managers and employees take on HR responsibilities, supported by digital tools.
However, technology alone cannot replace the human element of HR. Conflict resolution, cultural alignment, and leadership development still require interpersonal skills, areas where AI falls short.
The risks of going HR-Free
Despite its appeal, the no-HRM model carries significant risks. Without a dedicated HR function, companies may struggle with legal compliance, workplace conflicts, and inconsistent hiring practices. Employment laws are complex, and missteps can lead to costly lawsuits.
Employee relations can also suffer. HR traditionally mediates disputes, ensures fair treatment, and advocates for diversity and inclusion. In their absence, biases may go unchecked, and grievances may escalate. A study by the CIPD (2021) found that organisations without structured HR support reported higher turnover rates and lower employee satisfaction.
Additionally, not all employees thrive in self-managed environments. Some need guidance, mentorship, and structured career paths, elements HR typically provides. Without these, disengagement and attrition can rise.
Proponents of HR-less organisations argue that a strong company culture can compensate for the lack of formal HR. That if values like transparency, accountability, and trust are deeply embedded, employees may self-regulate effectively.
Zappos, under Tony Hsieh, famously adopted a holacracy model, eliminating traditional managers and HR roles in favour of self-organised teams (Robertson, 2015).
However, the experiment faced challenges, with many employees leaving due to the lack of structure. This suggests that while culture is powerful, it may not fully replace HR’s role in conflict resolution and policy enforcement.
The idea of an organisation without HRM is provocative, appealing to those who value agility and employee autonomy. For small, high-trust environments with strong cultures, it can work, especially when supported by technology.
However, as companies scale, the risks of legal non-compliance, inconsistent people management, and employee dissatisfaction grow.
The future may lie in a hybrid approach – minimising bureaucratic HR while retaining essential people functions. Some companies are adopting “People Operations” models, where HR is less about control and more about enabling employees (Bock, 2015).
Whether the complete elimination of HR is viable long-term remains debatable, but the trend certainly forces a re-evaluation of traditional HRM’s role in modern business. The debate continues.
For More Reading:
- Bock, L. (2015). Work Rules!: Insights from Inside Google That Will Transform How You Live and Lead. Hachette UK.
- (2021). People Profession 2021: International Survey Report. Chartered Institute of Personnel and Development.
- Davenport, T. H., et al. (2020). Artificial Intelligence for HR: Use AI to Support and Develop a Successful Workforce. Kogan Page.
- Hastings, R., & Meyer, E. (2020). No Rules Rules: Netflix and the Culture of Reinvention.
- Robertson, B. J. (2015). Holacracy: The New Management System for a Rapidly Changing World. Henry Holt and Company.
