Personnel’s bid for business power is faltering. Until the profession addresses skills shortages among its membership, it will have no claim to seats on the board. Helen Rowe reports
People policies might – in theory – be seen as crucial to commercial success. But 50 per cent of HR directors still have to achieve board level representation.
Worse, the customary alibi that “a place on the board does not matter as long as we demonstrate value” has also taken a knock. The Cranfield Cranet Survey, from which the finding emerged, also showed that 50 per cent of HR directors are not even consulted about strategy.
The state of the profession’s influence looks positively anaemic, especially given the ground it could reasonably have hoped to gain in recent years.
So what can be done? The message from HR professionals who have made it to the top is clear: learn the business.
Privately, some leading HR directors who have found their way to the directors’ board are scathing about the calibre of personnel professionals whose knowledge of marketing, finance and new technology is limited.
For without some expertise in these areas, how can the modern HR manager begin to equip businesses with teams that give competitive edge? And in the public sector, how is it possible to retain and motivate key staff?
There is no doubt that in this age of fluid employment patterns, recruitment and retention rely on a close understanding of business structures and job content.
Lynda Gratton of the London Business School argues that HR professionals need to improve their skills. The failure to do so, she has claimed, is leaving HR staff having to implement policy devised elsewhere.
Some companies may be putting their people policies at the heart of their strategy, but they are enlisting consultancies like McKinsey as project partners and leaving the HR department out in the cold, said Gratton.
A growth in the use of interim managers for fixed periods, either specialising in or including HR, also suggests that the personnel department is increasingly being sidelined.
The IPD is more upbeat, however, pointing to the Government’s Workplace Employment Relations Survey last year, which gave a more encouraging picture (see box). The institute is engaged in research which assistant director general Ward Griffiths said will show that more HR professionals are involved as business partners in organisations and are engaged in broad, strategic activities, not just as technical specialists.
And many professionals are shaping up. The cause of learning the business is close to the heart of Jane Stables, personnel director of United News and Media. The key to recognition within organisations is the ability to present a good business case, she believes. No longer is it good enough to present people policies as welfare issues. A direct link with increased productivity must be made.
To do this, she said, HR professionals must have a good grasp of their organisation’s business needs.
“Not enough people in HR understand business as a whole. It is about making connections and understanding other colleagues’ ambitions in what they are trying to achieve and trying to help them in that.”
It is also vital to demonstrate that wider range of skills, Stables added.
“Traditionally HR people were a certain type – good at dealing with people in terms of communication but not necessarily good at business. That has changed.”
Now it must be demonstrated that concrete commercial benefits will flow from practices. A benefit to staff welfare on its own is not enough.
Family-friendly policies are one means by which Stables has attracted scarce talent at a moderate salary.
“One example was a lawyer we headhunted from a big City law firm. Clearly she would not make the money with us that she would in private practice but she said the flexible working tipped the balance in favour of us.
“We have two or three others who are excellent at their job. Having them work this way is not a disadvantage to the organisation and yet having them work for us has meant demonstrable benefits for us.”
Making a business case has enabled the HR department to introduce a comprehensive approach to flexible working in all its forms – from job shares to flexible hours and homeworking, where it is possible.
The need for personnel professionals to develop a strong voice is paramount. And they must set the agenda by spelling out the link between people policies and commercial advantage. If they do not, the rise of interim managers and consultancies make it inevitable that someone else will.
As Cranfield’s senior research fellow Christine Communal commented, “One cannot imagine a company saying ‘sound financial management is our most important objective’, while at the same time having no director of finance on the board.”