AS BOTH THE INDUSTRY and builders have grown, companies have been forced to make major structural changes to the way they organized their businesses. From finance to purchasing, all systems have been adjusted to handle the increased volume—except one. Builders' human resources departments traditionally have been—and many still are—underdeveloped and undervalued, considering the size of builder operations.

During the past few years, builders consistently have said they attribute their success to the quality of the people they employ. However, with feeble human resources departments often the norm, how much is actually in place to develop employees' careers and morale is questionable. Martin Freedland, president of Atlanta-based management consultant Organizational Development Associates, says, “Most builders say people are their biggest asset. But I don't believe that they believe it. It's good conversation, but most people don't walk the walk.”

All that may be about to change.

NEW NEEDS Calling the human resources department “the most underutilized area in home building,” Crystal Miller, search consultant for residential construction at Plano, Texas-based Kaye/Bassman International, says a well-developed department is becoming a must as society becomes more litigious.

“There are so many laws governing how we employ people that it's not fair to expect managers to be up on all those laws and do their jobs,” Miller says.

She adds that as builders have moved from a good-old-boy system to an equal-opportunity operation, there is a heightened need for formal programs to address companywide issues such as diversity and harassment.

Couple that changing workplace dynamic with an industry turnover rate of roughly one in four, and Miller sees an obvious need for more investment in the department.

Freedland agrees, pointing out that some builders—Beazer, Lennar, Pulte, Centex, and John Laing, to name a few—have caught on. Some plan to expand at the divisional level, while others look to create a national position to report to the top brass. Freedland notes that “There's a recognition in the last few years that this is a much bigger deal than what we're paying [in terms of] benefits, and insurance.”

Miller says she sees these examples as just the beginning. She expects that in the next two to three years, a number of builders will create a more standardized structure for the human resources department, complete with a recruiter, human resources manager, and human resources director. The restructuring will probably up the number of human resources employees in a division from one to two to anywhere from three to 10, depending on the size of the builder, she says.

PUBLIC NECESSITY Many of the large, publicly held home builders have seen their ranks swell during the past few years. The growth has made many of them realize that it makes good business sense to invest more in human resources operations. After all, similar-sized companies in other industries have much more sophisticated departments.