Helen Pitcher: Is it time to blow up HR and build something new?

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Helen, thoughtful as ever. I was trying to decide whether to scream 'not another article on the relevance of HR' or not. I held my nerve. Firstly, be wary of comparing HR in the US with the UK, ...


Read More Tony Williams
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The Harvard Business Review (HBR) articles raise some good analysis of HR – even if collected under an incendiary title

The first article recognises that the Europe/UK context is different to the US and is undergoing a ‘paradigm shift’ at board level, with the board taking greater governance responsibility for key areas of the HR agenda that goes beyond the usual “people are our most important asset” statement.

As the HBR articles suggest, recognising the fundamental business context of companies is important and provides the backdrop for analysing the potential role HR can play in an organisation at any point in time.

Europe and the UK are experiencing a quicker and more focused engagement with a broader range of stakeholders, beyond a financial interest viewpoint, into longer-term sustainability as part of the governance debate:

  • Companies are driving customer stakeholder engagement at the board level for both business (the impact of social media) and governance (regulatory) reasons
  • Big sustainability and diversity issues around the long-term leadership of companies are emerging
  • Reputational risks are engaging boards, often driven by the prevailing culture and values of the organisation
  • Remuneration and reward continues as a big focus for boards

Clearly, these are all strongly linked to the HR agenda.

The series of HBR articles give insights into what may be missing in the current approach to HR at the highest levels, focusing attention on providing a more strategic engagement beyond the transactional view of HR. The articles also reinforce our current perceptions that HR needs to significantly enhance its financial viewpoint beyond management accounts and budgeting into an overall business, strategic financial investment focus.

The articles focus us on the triumvirate at the apex of organisations (the CEO/CFO/CHRO) as shapers of the strategic business plan. It is, however, rare that CHRO's achieve this position and they are often relegated to a lesser role.

CFOs typically have a balanced relationship with the board. They have a significant advantage of a position that creates a natural visibility. However, the board will often be looking for the CFO to be their own person and a good commercial partner to the CEO, not in their pocket.

The CHRO needs to target this same mentality. As a potential member of the triumvirate the CHRO should seek to drive the HR agenda through business strategy and financial analysis, not a fashionable initiative. And while the CEO and CFO are also susceptible to fads, the CHRO needs to understand their motivation for engaging with these ideas, and have the analytical power to match their understanding of the bottom line outcomes desired.

The HR profession needs to look at its ability to run efficient, effective and economic core HR services as qualifying criteria to join the ‘Board Game’. It must look at:

  • Compensation and reward
  • Talent development
  • Employee relations (legal)
  • Change management
  • Efficient and effective work systems
  • Efficient and effective HR administration

What makes a difference is the ability to engage beyond these areas with the fundamental leverage points of the business strategy. This includes relating all of the above to the CEO’s and board’s strategy in an integrated way.

Of particular importance is understanding the organisation’s strengths and weaknesses and how these impact on the bottom line, with the ability to call out the financial implications of strategic options on the HR environment – within the context of creating a sustainable competitive advantage.

So if the efficient running of the qualifying criteria gets you in the game, what makes a difference at the strategic level? I would say:

  • Understanding the fundamental commerciality of a company and the financial engineering this entails
  • Being confident in modelling financial outcomes and the impact of initiatives, policies and decisions
  • Being able to position yourself as the expert on the areas discussed above at a strategic level
  • Getting data analytics under your belt
  • Financial leadership of people – usually the most expensive asset of the business and the most potentially impactful on growth and profits
  • Finally, networking, influencing and alliance-building with colleagues to achieve business outcomes

Helen Pitcher is chair of Advanced Boardroom Excellence, a consultancy that focuses on individual and collective director effectiveness

Comments

Helen, thoughtful as ever. I was trying to decide whether to scream 'not another article on the relevance of HR' or not. I held my nerve. Firstly, be wary of comparing HR in the US with the UK, Europe, Asia and so on. Having sat above global teams, the truth is HR can be very different across locations, sectors, where the centre of gravity is and so on. A sweeping generalisation i know but the US in my experience tends to focus a lot of time on benefit provision and compensation generally. It maybe my skewed FSS lens but strategic HR meant something quite different there. Similarly generalistic but my teams in Asia tended to be much more operational, service driven and happy being so. And importantly expected to be so by the business leaders. Much of Europe has a strong employee relations angle dominating the HR agenda, again perhaps triggered by my own business context of acquisition and business change across our European footprint. And the UK, maybe because that was HQ for me, it did feel more balanced between the underpinning disciplines of HR. MY key point here is that sector, organisation context, location and quality of business leadership will strongly determine the context on which HR can be seen to add value in the 'day job'. I couldn't agree more though with the key point of your article which i took as all of the above is fine BUT, to be a proper grown up CHRO, you need to be much more business savvy. Again in my experience i found a lovely CHRO shaped hole in many of the discussions i used to have with my CEO. Exactly for having the perspectives you raise BUT also i found quite often my time horizon was longer than the others round the senior table. Certainly the CFO and even the CEO bogged down with todays agenda. We rarely challenge the CFO for only having this years budget (plan) and next years forecast and we forget that much of what a CFO does is tell you what already happened, or will happen from actions already taken. A good CHRO with excellent commercial and analytical capability doesn't need to fight for time or space on the agenda and can be credible by understanding the issues of today but also challenging on the implications for tomorrow. In short, they (we) earn it. One final request, can we ban any further debate on whether HR deserves a seat at whatever mystical table HR folks keep talking about wanting to have? Some of those tables can be quite daunting! We have the seat, lets spend more time on using it.


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