Stepping up to the mark

How does an HR professional make their mark on the  board or have their opinion taken seriously? HR practice expert
Marc Hommel lets HR in on the secret of what makes a good power player in the
boardroom

HR professionals lack commercial acumen. This was the response from almost
half the finance directors who participated in the PricewaterhouseCoopers
November 2002 survey of major UK companies that had recently gone through a
major acquisition or merger. With refreshing honesty, an even greater
proportion of their HR directors agreed they were short of commercial know-how.

Yet some HR professionals bemoan the fact that they are often involved too
late in major organisational decisions, that HR doesn’t have a seat at the top
table and leaders don’t value their work.

Cause and effect

HR directors need to step up their game if they are to win recognition in
the boardroom and make a positive impact on business performance. They must demonstrate
a wider understanding of what makes the business tick. Only then will they gain
the recognition they desire.

To be on a board of a major plc, a director is expected to have a general
level of business understanding and commercial acumen to contribute effectively
to wide-ranging decision-making, in addition to any particular specialist
expertise. They do not just have to be financially savvy, but should be able to
dip in and out of different areas of the business.

A successful business track record is often a pre-requisite. Many will have
completed a stint on the shopfloor. This is rarely the case in HR – yet the HR
director must gain the same level of credibility as that expected of a fellow
director.

Interaction with customers

Enlightened HR leaders recognise that they and their team should work on
that business knowledge first of all. A growing number attend business schools.
Some recruit people from a general business background. Others are learning
firsthand about how the business works by spending time with employees as they
interact with customers – on the factory floor, in call centres, at retail
outlets, in the delivery van or in client meetings.

So how would you change your behaviour as an HR professional and focus if
your personal remuneration was dependent on key business performance criteria?
These could include an ‘increase in market share from x per cent to y per cent’
or ‘customer satisfaction improved from A to B’. Your focus might shift
somewhat.

It is a given fact that HR must first and foremost deliver the basic HR
services cost-effectively. Yet how can you really empower yourself and the HR
function to do more and to really have a positive business impact? There are
three criteria for success:

– Acquire and demonstrate solid understanding of the business, what and who
makes the money, what creates and destroys value (See box on opposite page)

– Communicate in a way that is understandable, relevant and addresses the
‘so what?’ question

– Report regularly and clearly on the contribution HR is making, in a way
that is understandable, relevant and demonstrates how HR impacts upon the
broader business performance.

It seems many HR professionals are recognising they need to step up to the
mark as businesses become ever more demanding. For some, the challenges are
daunting and many see them as a threat. But you should be excited by the
opportunity to develop wider business skills and open up whole new career
opportunities.

The choice is yours.

Marc Hommel is a partner in the Human Resource Services practice of
PricewaterhouseCoopers marc.hommel@uk.pwc.com

Common feedback on HR professionals from CEOs and FDs

Common complaint
They don’t understand us and our business priorities     

What they want
An HR function that understands our business and addresses what is important
for business success. (see About Your Business opposite)

Common complaint
We often don’t understand them and what they’re talking about 

What they want
Ditch the jargon. (Don’t use words/expressions shown in Jargon Challenge
opposite)    

Common complaint
They can’t even get the basics right       

What they want          
Efficient delivery of basic HR services (eg: payroll, recruitment,
disciplinary) before expecting to be trusted with strategic decision-making

Jargon challenge

Test these words out on your non-HR
colleagues, friends and family before you risk using them in the boardroom.         

– Balanced scorecard
– Broadbanding
– Cafeteria benefits
– Competency framework
– Diagnostic
– HR intervention
– Job cluster
– Job evaluation
– Organisation design
– Organisation development
– Performance management
– Reward
– Reward strategy
– Skills transfer
– Talent management
– Total reward
– Upskilling

About your business

Assume this is a ‘for-profit’
organisation

How confident are you that you can answer these questions about
your own business?  If you have the
confidence to answer these questions, you to be more impactful in helping your
business perform better

  What does your business
do, why and for whom?

  How does your
business make its money?

  Who are the existing
and target customers and what do they want and need?

  In addition to
profitability, what are the key (financial and other) measures against which
the business is being measured?

  Who are your major
competitors?

  In what areas (and
how) does your business need to do better than your competitors to be
successful?

  What are the priority
challenges for your business. How are these being tackled?

  What people and
processes are critical?

If a quoted company:

  What impacts most on
share price and how can management influence this?

  What expectations for
revenue growth, cost containment, etc are built into the share price?

  How does reality differ
from the expectations? What is the potential impact of this?

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