Transform HR the US way

Do these expert quotes sound familiar? “You know you have arrived as an HR director when your chief executive routinely takes you along to see City analysts. But few HR directors are up to this task.”

“HR departments must learn to say ‘yes’ if they want to engage in the business.”

Anyone who has been to an HR conference in the past two or three years will recognise the themes raised, but these sound bites – swapping “HR” for “IT” – are actually from the IT Directors’ Forum, held on the cruise ship Aurora earlier this month.

The lack of strategic influence has been an ever-present worry for many function specialists in recent years, but the constant stream of advice from ‘gurus’ on the conference circuit appears to be having little impact.

Indeed, some in the HR profession have gone as far as to say that the current generation of business gurus are doing nothing to further the cause of the function in UK organisations.

Graham White, head of HR at Surrey County Council, said: “Simply following the latest trend or inspired speech guarantees nothing more than wealth for the author, disruption for our organisations and further undermining of HR as a strategic contributor.”

But HR professionals may find it more constructive to learn lessons from US companies, which are thought to be at least two to three years ahead of European organisations on HR strategy.

At a recent roundtable discussion in the US, organised by the Center for Digital Strategies at the Tuck School of Business, executives from multinationals, including IT and communications giants IBM and Cisco Systems and toymaker Hasbro (which makes the toy versions of the cult Transformers cartoon), discussed how HR management was contributing to competitive advantage.

Hollie Castro, vice-president of HR at Cisco, sees HR’s role as a catalyst to “create a sustainable supply of price/earnings enhancing talent”, and to support “future growth in markets that we want to be in that we’re not in today”.

Castro revealed that she had recently analysed profit models and their implications for HR with Cisco executives. “That’s a very different conversation for HR than most people were used to,” she said.

Maryam Alavi, from Emory University, said HR needed to focus on creating a work environment that promotes continuous learning. “That’s completely different from the traditional HR task and mission,” she said.

Robert Carniaux, senior vice-president of HR at Hasbro, said HR should not be afraid to be frank when talking to senior colleagues. “I think the biggest turning point for us was building up credibility in our management ranks,” he said. “Some of the most important conversations we need to have are when we go into the chief executive’s office, or the head of a business unit, and we’ve got to tell the emperor he has no clothes on.”

Financial outcomes

Echoing much of the current debate in the UK on human capital management, Susan Billiot, assistant vice-president of HR at logistics firm Sysco, suggested that the answer was to get the business to clearly understand the tie-in between HR initiatives and financial outcomes.

She said her HR team worked with Sysco’s marketing department to do simultaneous surveys of the company’s employees and customers, which revealed a clear link between employee and customer satisfaction at Sysco’s various divisions.

“When the chairman of the company stands up and starts talking about this, [HR staff] look around and say, ‘so, it’s not just that I need to be nice to people, but Bob is making more money than me’,” she said. “It’s not HR for HR’s sake, but it really does drive and support their business objectives.”

But Carniaux warned that financial metrics were not the be all and end all.

“I get kind of concerned when we try to get everything down to dollars and cents,” he said.

He suggested looking at multiple hard and soft metrics, including how many good people are getting recruited away from the company.

“As the head of HR, one of the worst things you can have is no headhunters calling your organisation for your people,” he said.

Richard Stanger, vice-president of HR solutions for IBM in the Americas, suggested putting a cost case together for each strategic HR initiative, and trying to factor in measurements which can be used to create accountability over time.

“I should track what people’s performance ratings are, what their promotions are, and whether they’re part of successful teams – and be able to prove that I added real business value,” he said. “You can come up with a lot of examples where you’re demonstrating that you’re being successful. That, to me, is how you measure the strategic value of HR.”

Outsourcing option

One obvious way of becoming more strategic is by outsourcing time-consuming administrative functions, a list which is constantly lengthening, according to Edna Kinner, director of talent management at Eastman Chemical.

“We’ve tried to either e-enable or outsource administrative roles,” she said. “We made a decision two years ago that doing retirement counselling, for example, was not core. We’re on a journey – what was core three years ago we may not consider core any more. Our benefits department has gone from 25 to 13 people in the past three years.”

Susan Cook, vice-president of HR at industrial manufacturer Eaton, said that outsourcing had enabled the organisation’s HR team to better enforce consistency and compliance across traditionally decentralised locations.

“We had to have a way to protect the company on some of these key processes,” she said. “With 120 locations, you can’t keep their knowledge base up with what they need to know to run things well, for example, on employment, affirmative action planning, relocation, and ex-pat administration.”

But Cook agreed with the consensus view that HR functions which could provide some core business or strategic advantage shouldn’t be outsourced.

“I don’t ever want an Eaton manager to call a third party to get advice on firing somebody,” she said. “It’s a decision you get to as a result of your values. It’s what creates your culture. Every time you have one of those discussions with a manager they learn something. How do you give that to somebody outside the company?”

Returning to the question of influence, Rita Heise, chief information officer at industrial manufacturer Cargill, said that both HR and IT professionals should not spend too much time worrying whether they have a ‘seat at the table’. “We have to think of ourselves as ‘executive leaders’ rather than as ‘enabling functions’,” she said.

And Kinner said HR should stop worrying about whether it is perceived as strategic and actually get on with the job. “If we don’t start now will we ever get there?” she asked. “The world is changing on us so quickly.”

Click here for more on HR strategy in our feature Winning Ways

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