The DNA of HR
Why is it that top flight college grads typically don’t choose Human Resources as their desired target profession? Cynthia Nelson, President of Plan B Executive Search, posed this question while I was contemplating writing this article. Since I have the pen, so to speak, let me answer the question: HR hasn’t evolved to a unilaterally recognized profession, one that would command such expertise. It really depends on the company, the leadership and the environment as to the importance placed on the HR function (its leader) and whether an investment of this nature is justified. I don’t think this comment is restricted to a specific industry or geography. I think it depends on whether the CEO and his or her top team believe that a high-performing HR function adds leverage to the business. If this isn’t the prevalent belief then what you find is a personnel director or HR manager that reports to the CFO. The HR team is mainly focused on efficient administration.
Do companies even need an HR function? Some companies go without and appear successful. I recently learned of a manufacturing company where the past CEO "didn’t believe in the value of an HR function"—that it simply duplicated what he already paid managers to do: Hire and manage the human resource. The company was successful growing from start-up to mid-size. It wasn’t the number one player though—number three. Two years after the founding CEO retired his second in command, who assumed the CEO role, made a radical, strategic decision: Hire a VP of HR sitting at the "C" table to help revitalize the business and evolve company culture. The root motivation seemed to be difficulty attracting and retaining key talent and lack of espirit de corp across the company. It just wasn’t a compelling or interesting place to be. Voluntary turnover was 15 percent.
The 2009 Great Places to Work Institute, Inc. data shows that in Manufacturing & Production, industry average is 17.5 percent; companies on the 100 Best Places to work list in this same space average 9.52 percent. Hmmm. Maybe a talented HR group pushing on Employer of Choice type activities can make a difference.
What is the role most asked for by top management but HR is the least skilled at doing? Not operating partner. Not excellence in HR best practices. Not management of e-HR. Not cost-effectiveness of HR programming and practices. Strategic partner is top on the list.1 This is old news. And, what’s really sad here is that HR often gets a "seat at the table" but blows the moment of truth over and over by not contributing at a level that meets client expectations and adds to the business value proposition in a meaningful and measurable way.
My hypothesis is simple: The HR profession hasn’t fully evolved. It lacks definition and the full depth and breadth of skills needed to fully define it as a stand-alone business function—including the supporting metrics to validate contribution. Yes, progressive class act HR shops exist in a number of companies across a broad range of industries. But these are hit or miss. The standard for the HR function remains administratively focused, servant of the people, compassion for the weak and defenseless. This is all lumped together into "soft skills" and low value-add for the company. We know this not to be true but let’s save that discussion for a later time.
All of the HR transformation swirl over the last 15 years or so has been more like rearranging the deck chairs on the Titanic. We have achieved some economies of scale with the new, progressive HR model: Centers of Expertise, HR Business Partners deployed to key clients as a single point of contact for global/matrixed organizations and Shared Services to achieve economies on administrative and other tasks conducive to centralization (in-source, co-source or out-source). But some aspects of this have been a bit of a lost leader because the fundamental issues as to why the HR function is broken in the first place aren’t addressed. And, while explicit cost savings are clearly achieved in the new model work force productivity losses that can dwarf HR cost savings are not adequately tracked. In some cases administrative activities are shifted back on to the employee base which competes with their respective primary work focus. I don’t believe this to be an isolated event. The HR dilemma remains: Key missing skills are solid business and operating fundamentals. With this basis, combined with a full array of HR competencies (with special emphasis on strategy, organization design and work force planning), an incredibly powerful HR function can evolve with significant impact on the Human Capital Management agenda.
It’s time for HR with an attitude. It's time to do a reset on the HR profession. Let’s learn from our past but define a strategy going forward that will course correct an otherwise derailed business support function.
My limited research on this topic brings me to the conclusion that our entry points into the profession, such as, compensation or people development or recruiting or HR Business Partner, become the lens with which the HR function is managed. As Maslow said, "When all you have is a hammer everything looks like a nail." So while we are busy being very competent in our specialization which became the ticket to the top HR job and a seat at the table our myopic skill-set is also our disability. Our business context is too limited to provide the functional leverage needed when we are in fact at the table. I guess for the foreseeable future, someone needs to handle the deck chairs. But any HR professional should be losing sleep if caught in this conundrum. As a community, we should be able to help those trapped in these less progressive environments too.
Possible next steps could be: 1) Use this article as a primer. Maybe I’m off track but let’s debate it and clearly define the problem. 2) Convene a special summit meeting with global HR principals to help shape a "go-forward" plan, i.e., Create a strategic plan for an HR revolution, 3) Refine this long-term plan while securing endorsements and involvement from appropriate stakeholders (educational institutions, thought leaders, key executives from established professional HR entities, practitioners, consultants, etc…), 4) Ensure that one outcome is a universal definition of the HR function, business value, and required skills and competencies, 5) Identify a common set of metrics that explicitly connects HR activity to ROI, 6) Agree on criteria that constitutes appropriate HR credentials and 7) Create and implement a communications/branding plan that targets business leaders, the current HR community and upcoming HR professionals. This is easier to fix than the U.S. health care system. We just need the interest and forum to do so.
After a hospital board meeting, a cardiologist once said to me, "I’m glad all I have to fix are hearts. These are a lot simpler to fix than organizations." He wasn’t kidding. He was daunted by the variables that I was dealing with in trying to resolve a hospital merger. It included Board conflict, radical restructuring, cost cutting requirements and labor unions galore. I don’t dispute the skill, knowledge and overall intelligence required by a medical professional. What I do dispute is that the HR profession has fully evolved. There are missing links in HR’s DNA. As such, the evolution ceased about two decades ago. When the evolution is complete one acid test of that evolution and the viability of the function will be: "Do name school graduates select HR as the profession of choice?" It’s a tough hill to climb – but isn’t it about time?
1. 100 Things You Need to Know: Best People Practices for Managers & HR, Eichinger, Lombardo & Ulrich ©2006, Lominger Limited, Inc.