My experiences of working with CEOs and business leaders, as well as running
a large professional services firm, have convinced me of the need for HR to be
a significant part of a company’s strategic agenda.
We have made considerable progress at Deloitte & Touche, but there is
still room for improvement in many companies. If the top management team is to
fully appreciate the value of intellectual capital, the profile of HR – as an
important commercial function within the business – must grow.
Our recent global survey shows that 75 per cent of senior executives rank
human performance as a source of competitive strength, ahead of productivity
and technology. And, 80 per cent believe the ability to attract and retain the
best people will be the primary focus for influencing business strategy by 2005.
But HR still has some way to go before it is fully recognised as a
‘value-adder’ by the rest of the business. An indicator of just how far is that
less than one in five of the FTSE 100 have their HR director on the board.
While board presence is not essential for the HR director, a strong
relationship with the top team is.
Direct access to the decision-makers and the opportunity to influence
commercial decisions is vital. Many companies are correctly claiming ‘people
are their greatest assets’, but HR professionals don’t always seize the
opportunities to strengthen these relationships.
To address this, HR directors should be seeking to raise awareness of the
people-related impact of business decisions – the input of HR can make a
significant difference to the success or failure of that decision. A good
relationship between the HR director and CEO gives HR access to the top team
and the chance to get involved in key business decisions. Clearly, HR must be
involved in all areas of the business to be truly effective and relevant and if
a CEO sees HR as a priority, the rest of the business is likely to follow.
HR is often accused of lacking business direction. A strategic HR function
concentrates on practicalities and demands, and if successful, it creates an
organisation that allows people to fulfil the business’ needs.
HR directors also need to be business managers. As well as being commercial
and pragmatic, they need to have the ability to draw people strategies from the
business objectives. Those with experience outside HR are increasingly in
demand because they benefit from wider leadership skills and enhanced business
knowledge.
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Finally, for HR to be seen as an integral part of the strategic debate, its
leaders need to quantify and communicate the contribution they make. It means
HR directors have to become part of the top team and share responsibility for
organisational performance.
By John Connolly, Chief executive and senior partner, Deloitte &
Touche
