Elsewhere, a question was posed about the future of “Human Resources”. It reflected the debates that seem to unfold whenever three of more HR professionals gather together in one room. It went something like this…
Q: Everyone seems to agree that HR needs to change. We need to apply ‘strategic value’ to business. Yet, we spend too much time on transactional HR (administration and processing). What could we change, automate, improve or get rid of in order to spend more time adding real value to our businesses?
I posted my response there, but thought I’d share it with others here too.
It’s extraordinary that this topic has been going the rounds for, at least, twenty years and yet (with reason) it keeps returning like a boomerang!
To me it seems blindingly obvious, and yet…. To add value, HR needs to do things that increase the bottom line by reducing costs, increasing turnover, and improving productivity. They need to do things that do NOT reasonably fall under other executive’s areas of responsibility (such as operations, finance, and procurement). They need to do things that reflect their area of specialism – otherwise know as “Human Resources”. These things need to be done in the same direction as the company is headed strategically – not down some back alley.
I think 80% of HRDs know this perfectly well. What they struggle with, though, is the last bit. Some even struggle to describe the corporate strategy in human terms – full stop. Those that do, often seem to err on the negative, and ultimately limited, side of cost reduction rather than embracing the positive growth side of the equation.
To give a simple example… in the feeding frenzy of the 80s that was ‘outsourcing’, companies were desperately trying to offload their personnel processing to ‘specialist’ providers. The argument being that this was really data processing and not human resources work. Few HRDs asked how much experience these ‘providers’ actually had of doing this work – they assumed that because they were tendering they had a track record!
The Chief Executive of one haulage firm in Hampshire was being bombarded by sales calls from a number of these ‘providers’. He asked his HRM what he should do about them. Their response was to propose that [‘safe’ route approaching] they should look at doing the same. The CEO was not so convinced. He called in a handful of these firms and let them do their sales pitch. He followed up on a couple, doing what we later called “due diligence”, confirming his hunch that they had only started trading very recently and were in a rapid growth stage in their businesses. He realised that operationally they were only going to be as good as their customer service front end and their IT back office. He was a strategic businessman and could see that they needed capital to be able to deliver the kind of stability of service that their contracts would require. So, he acquired TWO – one that had clearly got a good front end, and one that had got wizards in the back office. He set them up as one consolidated business as a trading arm of his own haulage firm, investing his capital in them and contracting them to handle his own processing and targeting other haulage and logistics firms. The HRM continued to perform a fairly basic, day-to-day role, and never did understand why they weren’t involved fully in the CEOs plans at that time or later.
To me, it is this kind of strategic thinking that HR professionals need to cultivate. In parallel, they need to build a personal resilience and the quality of relationships with their peers, so that when they propose ideas (properly planned and pre-sold) they get a fair hearing BUT, if the management team don’t support them, they can gracefully put them on the back burner and get on with other plans.
I don’t think HR needs “to change, automate, improve or get rid of” anything. They need to see that the appproach they adopt needs to be strategic, that their business plans need to be rigorously developed and tested, and that their relationships internally need to be rock-solid.
Senior Executives don’t get there alone. They need a handful of confidants – people whose agendas they can trust – and who are usually removed from the business itself – who they can bounce such strategic ideas off. People who will help them develop the thinking and plan the sell-in of it to their peers.
Gosh! I think a button got pushed…