"There has to be some important problem in the CEO’s bailiwick and the function has to be able to address it. Finance became important because investors became important and the CFOs became important because they had the tools and answers to the questions.” That’s Wharton professor Peter Cappelli’s view on what it takes for a function to rise to prominence.
After all, if a function is not delivering something critical why would it be there in the first place? Which is why the debate around whether the HR function is needed is so mystifying, and so tiring.
So here, once and for all, our experts spell out just some of those many vital value-adds that HR delivers – those areas in today’s operating conditions, that organisations would be lost without.
1. Management
“There is no other function right now that has any claim to management – how do we manage the organisation, how do we manage change, how do we manage people? It’s there for the taking if HR could grab it. Someone else might grab it. The most likely character is the CIO, who isn’t prepared to do any of it but is happy to launch into it. HR must step up.”
Peter Cappelli, professor of management, The Wharton School
Killer stat: Poor quality people management costs employers £84 billion a year
2. Engagement
“The fundamental value that great people leaders and strategies deliver for the business is an engaged workforce. If you create this then you have happy, productive, motivated people who are delivering every day for your customers. That generates more customer satisfaction, more purchases and more profit. From this the business can grow.
Engagement is the root of all the other strategic imperatives – from recruitment and retention to talent and customer service. An engaged, motivated, values-driven workforce can be unstoppable and its potential is limitless.”
Eugenio Pirri, VP of people and organisational development, Dorchester Collection
“You have to earn commitment and engagement. You don’t do it just by running a survey; surveys are a useful diagnostic tool but need to lead to action in how staff are managed day-to-day.”
Wendy Hirsh, principal associate, Institute for Employment Studies
Killer stat: Firms with a high engagement score have revenue levels 4.5 times higher on average than those with the lowest
3. Executive team coaching
“The role of coach is crucial. A CHRO needs to be confident and really brave – to provide one-to-one feedback to the executive team, to coach leaders through people challenges and general business challenges, to listen, to support. It’s lonely at the top, after all.”
Julia Ingall, group HR and talent director (UK & EMEA), Ogilvy & Mather Group
“A key role as part of the ‘triumvirate’ [the CEO, CFO and CHRO] is networking and alignment of colleagues, a role that is most readily carried out by the CHRO. They can become the glue that holds all of the executive team together and aligned through sound objective advice and counselling.”
Helen Pitcher, chairman of Advanced Boardroom Excellence
Killer stat: Bad leadership costs UK businesses £39 billion a year
4. Recruitment
“In a world with so much change, companies need injections of external expertise and talent, and must fish in different pools for scarce skills. This applies as equally to a new CFO hire as to frontline workers. The pipeline brings fresh perspectives to the business, which can help to ensure it stays dynamic. It is important not to replicate the present but look to skills required for the future. This balancing of organisational capabilities through recruitment enables innovation and prediction of future customer demands, which will drive success.”
Julie Welch, HR director, Wincanton
Killer stat: 71% of CEOs actively search for talent in different geographies, industries or demographic segments
5. Talent management
“It’s about knowing how business needs are changing and assisting line managers to develop people for the future, not just the present. HR should be helping individuals consider their careers and prepare for significant changes. Relying only on an internal job market does not address changing skill needs or create an environment in which employees can access the developmental experiences they need to be credible candidates for broader or different jobs. HR can play a role with line managers and individuals in brokering experiential development and finding imaginative ways of deploying skills.”
Wendy Hirsh
Killer stat: 73% of CEOs rank skills shortages as the biggest threat to their company
6. Reward and remuneration
“Talented staff who are delivering results deserve recognition. Staffing costs represent 50% of our expenditure so it is critical that top table discussions include how we measure, recognise and improve our pay and reward strategies, which impacts on our bottom line.”
Sue Shutter, pro vice chancellor and director of human resources, Regent’s University London
“This area has gone from being a typical administration function to taking centre stage, more so after the credit crunch. A proper philosophy provides balance. It’s important to build the right techniques and methods to balance costs with the need to attract staff. Businesses should have a function dedicated to that. CEOs [used to] focus on the impact on the bottom line, but now they’re looking for compensation and benefits to be strategically aligned with what they’re trying to achieve. They are wanting to apply more science to it.”
Richard Bolger, group HRD, FNZ
Killer stat: 52% of Institute of Directors members identify ‘anger over senior levels of executive pay’ as a threat
7. Legal expertise
“We have phenomenal skills in HR. People can sort out legal issues such as tribunals, redundancies and casework at the click of a finger, which I really admire. I worry about people coming in who just want to be a business partner. If everything’s outsourced then how are [HRBPs] going to know how to do a redundancy?”
Melanie Steel, ex-HR director, group corporate centre at RSA
Killer stat: The average tribunal case costs a business £8,500 to defend
8. Crisis management
“Conflict management is critical and valuable. Lots of managers and staff get very tied up in their work lives and home lives, so conflict is inevitable. Managing conflict is something HR can do because it requires that slightly removed, trusted, experienced, safe pair of hands to add the value. That saves the company lots of money.”
Barry Hoffman, group HR director, Computacenter
“HR people are excellent in a crisis. They’re the first to get called in during a reputational situation, for example. Whatever it is, the strongest person in the room is always HR when something’s gone wrong. The business leaders are usually flapping and HR stays calm. It offers a great source of support.”
Melanie Steel
Killer stat: Managers spend on average 18% of their time resolving conflict in the workplace
9. Cost saving
“HR has saved our business a lot of money through our flexible working policy. With the business expanding we ran out of space. We could either spend on space or go for a flexible working policy. We’re going to be saving half a million a year in office costs. It’s huge.”
Emma Blaney, HR director, business intelligence at Informa
Killer stat: Organisations with optimised workforce management spend 33% less on unplanned overtime
10. Getting the basics right
“HR must get the basics right: the administration of employment, contracts, payroll, quick and efficient recruitment. HR has foolishly called this transactional, which makes it sound less important. If someone can’t get the basics right why would you trust them to do anything more? Although HR may be doing that stuff better now you only have to make one mistake and you’ve blown your credibility.”
Wendy Hirsh
“Our function has to cover a wide range of areas and not all of them are exciting, but there’s a bread and butter piece that needs to happen. If you don’t get that right you will never have the respect of your business to do the strategic things.”
Emma Blaney
Killer stat: Dissatisfaction with HR processes, policies and functions was “a major driver” for those two out of five employees considering leaving
