To effectively take that much coveted seat at the top table, HR must follow the example of other functions and separate out strategic activities from transaction-based, operational tasks.
But while departments such as IT, marketing and finance have already made the move, it is politically still not considered the right thing to say in the world of HR, said Ed Lawler, distinguished professor of business at the Marshall School of Business at the University of Southern California, during his keynote speech at the HR Directors’ Summit in Birmingham today.
A key problem in obtaining the recognition and status that many HR professionals craved, however, was that they often had “no experience of strategy”.
“There’s often relatively little time to do strategy or analytics and so if you don’t break some piece of HR off to do more strategic things, they will always be pushed out by ‘demand’ stuff. So you risk always being trapped in operational decisions,” Lawler said.
But if a new function, which looked after ‘organisational effectiveness’, was hived off from the rest of the administratively-focused HR department, it would be in a much better position to dedicate its time to strategic considerations. The head of this unit would ideally report to the chief executive, while the head of the operational HR function would be accountable to the chief operating officer, Lawler believes.
As to the key strategic focuses of the new department, these would include managing and developing talent in an integrated fashion as well as building up the employer brand and aligning it with the organisation’s business strategy.
Wannabe or will be?
Other core activities would comprise devising sustainable effectiveness programmes, especially around performance management, and using analytics tools “to come to the table with hard data such as ‘we need this kind of talent and why and this is how much it will cost’”, said Lawler.
In his view, “predictive analytics is the hottest area in HR” at the moment because the technology is crucial not only for HR to prove its value, but also to obtain project funding from the finance director and demonstrate a return on investment. According to the Business School’s survey data, as many as two out of five HR directors currently do not know what the ROI on any given initiative is.
But the secret behind HR getting it right in today’s “era of human capital”, Lawler believes, is to “effectively connect human capital practice to organisational performance and make decisions and recommendations that reflect organisational priorities”.
At the moment, HR has the unfortunate tendency to be seen as a ‘BP’ or ‘business prevention’ organisation that is resistant to change and is keen to maintain the status quo. But in today’s world of continual, rather than even episodic, change, such an approach will no longer work and will ultimately lead to the company’s demise.
HR’s role, as a result, is to build change into the DNA of the organisation, for example, by introducing strategies to deal with talent mobility and rewards as well as devising leadership models that can be shared throughout the business.
“HR is not a strategic contributor in most organisations, but it would like to be. It comes across as a wannabe, but the question is, will it be?” Lawler concluded.
