The BBC is often so highly regarded and sometimes maligned for the extent to which it drives organisation diversity, that it seemed likely to be the place to look when seeking a definition of what contemporary HR should look like. However, their guide to the role and importance of Human Resources describes the remit as being Recruitment, Training, Employee Relations, Safety and Raising awareness of current workplace legislation. These are critical tasks but they are operational and seem to imply that HR is only tactical. The London School of Economics in describing the purpose of its own HR function talks about developing excellence in management and leadership, linking people issues to organisational planning, developing the school as a high performing organisation, delivering professional HR services to the school and promoting equality, diversity, well-being and engagement of staff. This seems to indicate that while the operational delivery is important, the influence of HR in strategy development and alignment with organisation strategy implementation is key. If you are reading this and are a HR professional I wonder which of these perspectives on HR best reflects your own organisation?
In a McKinsey Quarterly article early this year, a former McKinsey consultant who has gone on to be an in house manager in several multinationals suggests an additional area of confusion. Peter Allen explains that executives often see their purpose as being the delivery of financial results rather than to manage people. He points out that when executives neglect people management, HR worries about the lapses and generally leans in to right side. While this approach solves short term organisation needs, it allows managers to move away from areas it views as time consuming and unrewarding and allows HR take on the responsibility, solve the problem and frankly gain some glory. A conflict of longer term interest.
In our experience dealing with organisations of all sizes and nationalities we can say with some certainty, that the role of HR is determined by the perception in which senior leadership hold the function. The board and senior management determine that HR is simply an operational problem solver by not having HR sit at the table or that it is of immense strategic importance by engaging HR from the outset in strategy formulation. Author Ram Charan writing in HBR proposes that there are in fact two HR’s and your organisation has either one or both of these different functions. The first he calls HR-A, a function which reports to the CFO and looks after administrative HR tasks such as compensation, policy implementation and other “administrative” level tasks. The second he describes as HR-LO, with LO standing for Leadership and Organisation. This function he suggests, focuses on improving the people capabilities of the business and would report to the CEO. Cham proposes this function would be staffed by high potentials from operations and finance who, in addition to bringing commercial strategy into the function, would learn about assessing and developing people, the company’s inner workings and linking culture to financial performance. It is certainly not a complete theory but it suggests an understanding of the need for HR leaders to be well rounded business executives and not process driven generalists as can sometimes be the case.
The question of where HR sits and how it adds value has been around for many years. Many line managers are ambivalent to the function, only engaging when they have a problem or when they don’t wish to deal with an issue personally. With the consistent question about it’s position and lack of real engagement from it’s customer, it is no real wonder that HR is such an insecure function. But HR practitioners often feed into that by not working to fully understand their organisations operation, goals and pressures. They become too generalist or narrow specialists and miss out on the basics of the business. Consequently, they find it difficult to wear their customers shoes when trying to contextualise HR processes for managers or to fully convince of the value of outcomes. Recruitment using external partners is a good micro example of this. Often a person from HR without any real understanding of the nuances of a role or in some cases a practical understanding of the technical aspects will be asked to brief the partner. In seeking to drill down on the detail, either incorrect information will be given or access to the hiring Line Manager will be denied. This poor judgement is borne from either the insecurity of the HR contact or the lack of co-operation of the Line Manager in bringing the best talent to his or her organisation. Whichever is worse, the consequence is always poor accuracy, wasted leadership time and lower quality talent choices for the organisation. We don’t talk about strategic finance or strategic marketing or strategic supply chain, we work out what the organisation needs and engage the leaders in each of these areas to develop a responding strategy. So why do we talk about Strategic HR?