Friday, June 23, 2017

No Company Should Have a Human Resources Department

It is a linguistic irony of the modern corporation that those most desolate of resourcefulness and human rapport occupy its Human Resources department.

Consistent with its culture of perverting language and policing words, “Human Resources” is one of those contemporary terms of which the intended and practical meanings are exact opposites.

If you work for an organization large and unfortunate enough to have a dedicated “HR” division – and even, perhaps, if you have been a member of that mirthless, officious cohort – you know of what I write.

Moreover, though your conditioned response is to consider HR a necessary evil – after all, someone needs to hire, fire, and ensure the company avoids legal disputes arising from personnel issues – you sense, on some level, that life would be better if the entire bureau simply did not exist.

Developed in the 1980s to protect corporations from the sudden ubiquity of “sexual harassment” cases, Human Resources departments have persisted and metastasized such that the current generation of workers cannot imagine a world without them.

But, like so many cost-driving, self-perpetuating, control-seeking entities one finds in both the public and private sectors, scrutiny yields that not only are they not good at what they do, what they do is not good.

As stated, the essential functions of HR consist of hiring new people, terminating those no longer required, and monitoring employee conduct between those two junctures (advocates of HR may insist there’s far more to it than that, but this has been the plaint of every irritating profession from politicians to mimes; to wit, what they do is much too complicated for the rest of us to comprehend).

In the first instance, it is not uncommon for HR personnel to have no training or experience as to the revenue-driving aspects of the organizations for which they work.

This is to be expected since HR is, as noted, a cost-driving enterprise, the make-work nature of which provides, at best, a thin prophylactic against legal trouble.

But consider the bounded rationality of an HR person working for, say, a software or engineering company, tasked with laying out the qualifications and sifting through the resumes of applicants, while lacking expertise in that field. Certainly, she will receive guidance from the department head seeking a new employee, but the deficit of knowledge regarding the actual job dictates that the HR person does not know what to look for.

This is how you get nonsense prerequisites for posted positions such as, “minimum 5 years’ experience” or “English or Journalism degree required.”

As to the former, perhaps one applicant served 5 years in a cubicle, accomplishing nothing of consequence for a competitor, while another evinced prodigy-like skills in a shorter period of time and wishes to bring them to bear for you. Thanks to a reasonable-sounding yet arbitrary number devised by HR, the company will most likely hire the lummox and let the superstar slip away.

Pertinent to the latter (and I admit I benefited from this in my early career), jobs that involve writing or media are often gate-kept by requirements of degrees in English or Journalism. Once again, this evinces a misunderstanding by HR personnel as to how things work.

One’s capacity for writing financial or news copy, for example, is not aided in the slightest by an English degree’s obligations to read Moby Dick or The Faerie Queene. And as for a degree in Journalism, suffice it to say sheepskin of this sort makes four years of Gender Studies look like time well spent.

But again, to an HR person who has no idea what her company does or how it makes money, this sort of thing seems perfectly sensible.

To whatever extent Human Resources bring imagination to bear, they discover uncharted ways to infuriate and enervate. No better object lesson exists than the HR-developed online application process.

Profiles must be created – complete with unnecessarily complicated passwords that incorporate upper and lower case letters, at least one number, special characters, and an emoji of a smiley whale – before carefully crafted resumes are deconstructed and supposedly “populated” into HR’s preferred form.

Invariably, such programs make a dog’s breakfast of the applicant’s curriculum vitae, such that even the most suitable candidates become frustrated at having to correct and readjust every field; indeed, the more extensive their experience, the more irritating and time-consuming is this process.

Moreover, the applicant is robbed of the opportunity to present himself as he would like, since HR has prioritized their own convenience by making the process uniform. At what point does a qualified candidate with other options begin to make assumptions about the organization and question his desire to be part of it?

Likewise, Human Resources’ involvement in the termination of employment, whether the person is leaving of their own volition or not, brings out the automaton-voiced worst of HR people.

The “exit interview” of a voluntarily departing employee – supposedly undertaken to find areas for improvement within the organization but more properly understood as scanning for potential legal liability – is a nonsense conversation between a person who is dishonest about its purpose and one who no longer cares.

Conversely, the unnecessarily obnoxious, key-card-snatching, security perp-walking type of employee termination, designed by Human Resources and punctuated by one of their number uttering passive-aggressive, lawyer-approved disclaimers, is a rare moment in which the minatory nature of HR is laid bare.

Notwithstanding their ineptitude and menace evident at the commencement and conclusion of employment, the greatest organizational damage done by Human Resources occurs during the time in between.

It is unhealthy, on a day-to-day basis, for a coterie that is uninvolved and disinterested in the actual business of an organization to monitor and police those who are working to make it a success.

Again, HR types might insist there is a constellation of other, wonderful things included in their work but, make no mistake, their primary purpose is to keep an eye on you. This is undertaken with scrupulous adherence to the shifting mores of political correctness.

This is how you get “mandatory diversity training” and, true to HR’s roots, zero-tolerance policies and terminations for behavior fitting the eternally elastic definition of “harassment.”

Glomming on to an organization’s hull, Human Resources exerts a kind of parasitic authority, since it is neither assigned (inasmuch as HR exists outside the traditional chain of command) nor emergent (no one looks to HR for guidance simply because they respect them so doggone much).

Consequently, as outsiders with opaque power and picayune priorities, HR personnel are often oddly behaved (admittedly, there may be a chicken and egg scenario at work here). Again, supervision by peculiar people who do not understand or care if you are good at your job is not conducive to esprit de corps.

Perhaps most chilling are those moments when HR attempts to show their “fun” side. If you wonder what the Human Resources folks do when they are not alienating applicants, calling security, or sending stern memos about wearing open toed shoes or labeling your lunch – this is it.

That cartoon alligator holding a badminton racquet on the flier announcing the first-come, first-serve giant hoagie party in the break room at lunch – that was your HR associate’s morning.

Relatedly, if you are employed someplace where company time and resources are consumed to make a zany video about the people who work there, you need to find another job at once. In seriousness, you must commence sending out resumes the moment you are finished reading this essay.

The healthy growth of an organization is measured, in part, by its ability to decentralize. Human Resources is antipathetic to that. Even a large corporation consists of smaller, interdependent entities, the managers of which, with developed skills pertinent to their field, know what they need.

As the employment market shifts, with job changes and contract work becoming more common, one hopes Human Resources, that malignant misnomer of the modern corporation, returns to the abyss from whence it came.

Theo Caldwell is a dual American-Canadian citizen living in Toronto. He has been a member of the New York Stock Exchange, the Chicago Board Options Exchange, the American Stock Exchange and the Kansas City Board of Trade. Contact him at

Thursday, May 18, 2017

The Tax Reform No One Talks About

“A territorial tax system – what IS that?”

So inquired a White House reporter of Treasury Secretary Steve Mnuchin as he outlined President Trump’s tax reform proposal.

The question itself, and the baffled tone in which it was delivered, reveals much about why Americans who rely on news media for analysis of economic matters, and tax policy in particular, remain so benighted.

In particular, American citizens, their families, business associates, and various other “US persons” seem blithely unaware of the power claimed over them by the Internal Revenue Service.

To wit, if you are an American, or married to one, or in certain sorts of business with one, the IRS demands that you file and pay taxes to them every year, even if you have never set foot in the United States.

This is almost never discussed in the mainstream media, presumably because politicians, journalists, and various financial talking heads simply do not understand the issue. In a country where a majority of citizens do not hold passports, perhaps this it to be expected.

But the fact remains that Americans who move abroad, whether they are leaving in a huff because their preferred candidate lost an election or simply emigrating for work or family, must still file and pay US income taxes as though they had never left.

Specifically, the IRS requires a complete US federal tax filing, along with a copy of the tax return filed in the country of residence, so the two can be compared. If it is found that the filer would have paid more in tax under the American system, the taxpayer is expected to send the difference to the US Treasury – again, even if that person has never been to the United States.

Beyond the self-evident taxation without representation inherent to such a regime, the crushing complexity of the US tax code makes compliance difficult and expensive.

It is not uncommon for Americans abroad to send a few pages and a cheque to the tax authority of the country in which they reside, but then have to spend thousands of dollars to process and send a 50-page return back to the United States, even if they owe nothing further.

This is applicable to more than 7 million Americans who live in other countries, along with their spouses and various other associates and relations. These people are acutely aware of the injustice and inconvenience of this system.

And yet, you can read financial newspapers and watch business programs until your eyes fall out and hear nary a word about it.

The flummoxed query posed to Mnuchin pertained to Trump’s plan to reform the corporate tax system, such that American companies doing business abroad will be taxed only on their US operations. This would be a worthwhile change and, pace the intrepid reporter who seemed buffaloed by the concept, would bring the United States in line with almost every other nation in the world.

But, as usual, there has been no discussion of whether the individual American abroad will be liberated from the worldwide clutches of the IRS. It is all well and good to offer relief to corporations – indeed, for at least the past three presidential cycles, Republican candidates have phonetically repeated that $1 trillion will be “repatriated” by such a reform – but what about an employee of one of those companies stationed overseas? Or, for that matter, what about someone who has nothing to do with America or its corporations, with the exception of having been born there, or having a spouse or parent who was?

Currently, the only escape for Americans living abroad is to renounce their citizenship, and even that requires hefty fees and payment of an “exit tax” – essentially a capital gains tax on all assets above a certain threshold. Moreover, the IRS reserves the right to scrutinize former citizens’ taxes for years to come, and those deemed to have renounced for tax reasons are technically prohibited from entering the United States.

A few years ago, the US Treasury Department began publishing quarterly lists of Americans who renounced their citizenship (and every three months brings a new record high number of renunciations), presumably to shame those people.

Rather, the shame is on a government that treats it citizens as property, demanding money from livelihoods and toil that take place in other nations.

No other country in the world subjects its citizens to this sort of worldwide taxation, with the exception of Eritrea. But the United States actually gets away with it.

Combined with other excesses such as FBAR and FATCA – whereby Americans living abroad must annually report the numbers and holdings of all their financial accounts to the IRS – the current regime is indefensible.

At the moment, ex-patriots of Russia, North Korea, and the People’s Republic of China enjoy greater economic freedom than Americans living abroad. This is one of those appalling, counterintuitive facts that, upon hearing, one squints and rationalizes and inwardly insists must not be true. And yet, it is.

As the adage goes, Americans once rioted because the British put a tax on their breakfast drink – and it wasn’t even coffee.

A tax reform worthy of America’s legacy of freedom will liberate its citizens all over the world.

Theo Caldwell is a dual American-Canadian citizen living in Toronto. He has been a member of the New York Stock Exchange, the Chicago Board Options Exchange, the American Stock Exchange and the Kansas City Board of Trade. Contact him at