HR is still struggling to gain recognition from executives at the top of organisations, according to a survey by consultancy Deloitte.
After collating the views of senior business executives and HR practitioners in more than 500 companies, the Aligned at the Top report found that despite 85% of senior executives identifying people as vital to business performance, more than half failed to have HR sitting on the board. Furthermore, almost two-thirds admitted they never consulted HR on mergers and acquisitions.
Separate research, from the Economic and Social Research Council, showed that annual reports are not taking into account human capital. The analysis of the 2003 annual reports from 150 listed companies revealed that just 14% of the coverage of ‘intangible’ factors related to human capital.
At first glance, it would seem both these studies suggest that HR is still being undervalued and not seen as effective by business leaders.
However, Alan Warner, director of people and property at Hertfordshire County Council, said although the reports make for disappointing reading, HR cannot afford to feel sorry for itself.
“There must not be a ‘woe is me’ response – the profession can only look to itself. It has to find better ways of demonstrating added value to organisations. If HR seems occupied with processes and procedures, that is how it will be viewed,” he said.
So is HR still failing to ‘get strategic’? It seems so just one-quarter of HR leaders surveyed by Deloitte said they contributed to conversations about business strategy.
“HR should be setting itself up as a thought leader with ideas on how the business might make more money either in terms of profit or, in the public sector, reducing costs. Everything we do should be in tune with what the organisation is trying to achieve,” said Warner.
“It’s HR’s job to support line managers, but because it’s line managers that are seen to be the ‘doers’ and HR is working behind the scenes, it can be difficult getting recognition from chief executives,” he said.
According to Tyson, this means HR professionals should add marketing to their skills base. “You need employees to buy into the new pension you’ve introduced, or the development scheme you’ve created. HR provides a whole range of services and advice, and these should be marketed like any other products if you want the business to know about them,” he said.
Angela Baron, organisation and resourcing adviser at the Chartered Institute of Personnel and Development, said to really get noticed, HR needed to be proactive in demonstrating the direct impact of the function on business outcomes – and this meant coming up with some hard data. “Not only will this raise the profile of HR, but it will also ensure managers and investors have access to relevant information to make the best decisions,” she said.
But do HR professionals have the skills to collate this information? Baron believes so.
“It’s often argued that HR lacks the number-crunching skills needed to feed data back into the business. But you don’t need to be a trained statistician – you can always buy in skills to collate the data,” she said.
“What HR needs to do is to tell people what the data means. This is about developing business skills to communicate messages, not number crunching.”
Improving communication could also mean ditching the HR jargon.
Gary Miles, principal consultant for HR strategy at management school Roffey Park, said HR professionals don’t always talk the business language people want to hear. “They can talk in jargon. They need to talk in the same language as the rest of the business so they can clearly link their actions to business objectives,” he said.
This is a problem Angela O’Connor, chief people officer at the National Policing Improvement Agency, has experienced. “I’ve worked in organisations where you needed a translator to understand what HR was talking about,” she said.
“Maybe it is HR’s insecurities that make the function hide behind complex language and come across as more ‘anoraky’ than it needs to. But chief executives have no interest in what HR is saying unless it is able to speak in business terms they can understand.”
According to Miles, one way to break down these language barriers would be for HR to work in different parts of the organisation to gain general experience. “It’s vital to get a different perspective. If HR got this business experience, it would really build its credibility,” he said.
As for earning a place on the board, O’Connor believes that those who are worthy will be at the top table. “No-one is owed a place. If HR is contributing to the business, it will be there,” she said.
Tyson said it was debatable whether there was a need for HR to sit on the board at all.
“There are other ways to make an impact. Boards like making decisions, but not doing the research,” he said. “If HR provides meaningful information to back decisions, then executives will see its value.”
Snap shot results
Of senior business executives surveyed:
- 63% never consulted HR leaders on mergers and acquisitions
- 5% described the HR function as ‘highly effective’ in addressing business needs
- 19% saw people management as valuable to the ambitions of the business
- 24% claimed senior HR does not contribute to company culture
Of senior HR leaders surveyed:
- 50% felt their firm considered people matters to be very significant
- 25% claimed that HR contributes to conversations about strategy
- 52% believed they helped shape the organisation’s culture
- 29% outsourced transactional services to focus on strategic HR
Source: Deloitte Aligned at the Top report