A report from Henley Business School looks at the factors behind successful HR departments and asks how others could do better.
The HR function could improve its capability by paying more attention to getting the basics right and better managing its own talent, according to a newly released report by the Centre for HR Excellence at Henley Business School.
Function faces challenges
The report found that the function faces a number of challenges, including how much it can afford to invest in its own development, and what career paths and opportunities it makes available to individual staff. HR managers will also struggle to find the time and investment to develop staff in the long term, particularly given the outside pressures placed on them as organisations deal with market forces.
Experts from the centre interviewed 173 HR directors and senior professionals from employers including household names such as British Airways, Diageo and Marks & Spencer. "The critical success factor that differentiates the successful HR functions, in terms of developing their capability and individual career offer, is their long-term ethos and focus on sustaining their investment until it really bears fruit," the report concludes.
However, securing investment and confidence in HR in many organisations hinges on the CEO's view of HR. "If he or she believes in the critical importance of HR as an organisational enabler and strategic partner, as opposed to being an administrative overhead, then there is more likely to be a sustained investment in the time and resources required," it adds.
Nick Holley, one of the report's authors, believes that board-level HR professionals must ensure that their department is getting the basics right before they can play a real role in moving company strategy forward. "You don't just go in talking about strategy, because there will always be operational issues. It's a bit cheeky if you haven't got the basics right. You have to earn your credibility to take part in strategic discussions," says Holley.
Operational side of HR
Henley's report found that the majority of non-HR professionals believed that getting the operational side of HR right was more important than the function understanding business strategy; and while chief executives and board-level colleagues valued strategic skills more than operational, this was never as much as HR did. It also suggested that: "Some functions operate in victim mode, which isn't conducive to securing investment or confidence in the function."
But Isabella Brusati, a change management consultant, argues that it is impossible to do the job properly as an HR professional if you do not know which direction your employer is heading. "If you don't know what the company strategy is and what the vision is you are not in a position to implement it at operational level," she says. "In my opinion, the real problem with HR is that it is far too administrative and process based."
Adjust HR metrics
Peter Lieskovsky, HR director at technology company Oracle, claims that HR needs to adjust its metrics to reflect more accurately where the organisation is heading: "HR is the only function in the corporate world fighting to justify its own importance," he says. "HR must talk business, do business and take responsibility for business results as an integral part of the organisation. Ninety per cent of HR key performance indicators are not related to business results of companies."
Another issue impeding HR's performance as a function, according to the report, is that the move towards Ulrich's business partner model has led to so-called "stovepipe careers", where HR business partners lack depth because they're only dealing with one part of the business and specialist HR professionals lack breadth because they tend to deal with one issue across the business. Generalists, it argues, know more about how the business works because they have to.
Recruiting and developing talent
To overcome this, HR needs to become better at recruiting and developing its own talent, rather than focusing solely on the needs of the rest of the organisation, the report concludes. Only around 60% of those questioned in the private sector had a formal talent management process for HR, while the proportion was much lower in public-sector and charity employers. In terms of training, meanwhile, many organisations simply left it up to individual HR staff to plot their own development path. As one respondent put it: "We're like a hairdresser with a rubbish haircut. We spend 12 hours a day making sure everyone else has a good barnet."
But Rachel Fawcett, chief HR officer at Skipton Building Society, argued that Henley's report simply "repeated myths which are based on a minority rather than an updated reality". "Most of the HR people I work with are numerate, literate, intelligent people who know exactly how to add value," she says. One thing is certain, the debate around HR's contribution to the business will never abate.