While
people issues might be a perceived preoccupation for business
leaders of late, for this to be reflected at boardroom level
personnel professionals need to play their part. Â More than just being seen at the top table, HR
needs to be heard. By Nic Paton
A
couple of years ago a US polling organisation, Ketchum Research, carried out a
survey looking at what kept chief executives awake at night. Unsurprisingly,
perhaps, increased competition came top, at 16.7 per cent. But in joint second
place, at 15.6 per cent, beside the demands of the fluctuating world economy,
came human resources.
The
fact that more CEOs spent the wee hours worrying about HR than staying
competitive (13.5 per cent) or customer satisfaction (9.4 per cent) speaks
volumes about the importance today’s chief executives attach to human resources
and people management.
Yet
it is estimated just 5 per cent of FTSE100 or 250 firms have an HR director on
the board. So, how much of this perceived new focus on HR survives beyond the
closed doors of the boardroom? Are CEOs simply paying lip service to HR and
people management in public, while happily sidelining people issues when it
comes to the crunch around that large, imposing table?
Every
company is different in its attitudes to people management, of course, because
it has different needs and tensions, argues Debbie Meech, director of talent at
Internet service provider Freeserve. In her sector the war for talent is a real
one and so discussions about people management are constant and conducted at a
high level. "It is in every topic that comes up. I would say people issues
are involved in the discussions about 70 per cent of the time," she says.
Within
this, HR has a key contribution to make, driving and guiding discussion and
acting in a supporting, advisory and consulting role. "HR people need to
be very commercial, so their input is not just about people topics, but how a
project needs resourcing or is affected by people – the skills set that should
be available," she explains.
The
first time Clive Newton, global head of people and knowledge at the consultancy
practice of PricewaterhouseCoopers, sat down at the boardroom table he admits
he felt completely out of his depth. "I did not feel I understood the
business issues once they started talking about the financials or the
marketing. Luckily I have got lots of friends who helped," he says.
Newton
has been on the board for a year and feels the learning curve to get there –
coming up through the business in both the US and Europe – was about right.
"I would say it took me a couple of years to feel I understood the real
business stuff. After two years I felt I was ready."
Of
how discussion is split on the board, he says, "My experience is that
about a third of the time it is people-related. Then it is about a third of the
time on clients and a third on financial issues. But if it’s a manufacturing
business where the biggest assets are physical, then the time allocation may be
different."
In
Newton’s, as in many sectors, vying for skills in the past two years has had "a
huge impact" on boardroom thinking because, for the first time, top people
who were well looked after and well rewarded suddenly became mobile.
"If
you get things wrong you have lost them," Newton says. "You have got
people who are constantly being approached by headhunters – that really
concentrates the mind."
But
getting credibility and influence will not happen overnight. Normally, it takes
a good six months to a year before an HR director can feel fully comfortable
around the boardroom table, he estimates.
Being
on the board, with all its issues of collective responsibility and strategic
focus, is very different from simply leading a function, argues Liam Donnelly,
HR director of HMV Europe since January. "The sharing of information is a
critical aspect of any board meeting. It is about looking at issues and how you
take the business forward. You have to think outside the box and address
different issues," he says.
Increasingly
CEOs see HR as a function they can use, or at least ignore at their peril. This
means HR professionals need to grasp the opportunity with both hands. "If
you are not seen to add significant value then there is the question, ‘what are
you doing?’," he says.
What
CEOs want at board level, is what might be called "HR with attitude",
says Lynda Gratton, professor of organisational behaviour at London Business
School and director of the school’s Strategic HR Management in Transforming
Organisations course. "They are getting the normal pay and benefits stuff.
What they want is the added value, pushing ideas on to the senior team, how to
increase the performance of the organisation."
But
contributing effectively to the board meeting is just the tip of the iceberg.
Just as important – and sometimes even more so – are the frequent informal
meetings that go on between board meetings. It is during these that action
plans often get mapped out, against which the HR director may later be gauged.
Gratton
is an academic adviser to Royal Dutch Shell and has seen how HR director John
Hofmeister works. Periodically, the company gathers together a circle of about
50 of its senior people to talk about what is needed in terms of HR for the
business. While there are one or two short presentations, the majority of the
time is devoted to wide-ranging debate and conversation. "They have a very
open and frank conversation," she says.
With
120 senior HR people passing through her UK course last year, Gratton picks up
a lot of anecdotal evidence about how HR is perceived at the highest level and
what tensions there are out there.
"There
is a huge frustration on the part of the HR professional on the impact they
have on the main board. Many feel their voice is not heard. But if your voice
is strong enough you will be," she says.
A
sense of becoming bogged down in the day-to-day operational minutiae is a
common complaint. "They feel they spend too much time on transactional
work. That’s why many have outsourced it. And they find it hard to get access
for the sort of conversations they feel they need."
Even
when the board is prepared to listen, many top-level HR people worry – more
often privately – that they do not have enough of the answers, that they have a
knowledge gap that needs to be plugged, she adds.
For
Freeserve’s Meech, one of her frustrations is executives believing the right
people can simply be plucked off the street. For instance, a CEO might suddenly
decide he wants to snap up a raft of bright young things to help develop his
broadband capability at exactly the same time as every one of his competitors.
"The assumption is that HR can deal with it. It links back to the
strategy, where are we going to, and what is our mission? Have we got the
resources in place early enough? People often tend to be too close to the
event. You do not want to recruit them too soon, but you need to define where
you are so you can get them," she says.
And
for PwC’s Newton, the main frustration is still a sense of inability to get
things done, either because money is being allocated elsewhere or because of
feeling unable to influence decision-making outside his area. "It is the
difference between being a line manager and being in support. A great deal of what
you do is more by influence as opposed to instruction. A lot of people find
that very difficult and uncomfortable to deal with," he says.
Sometimes
the finer detail of HR work can act as a comfort zone. The fear of stepping
outside the safe confines of the function simply exacerbates the perception of
HR as non-core, contends Paul Kearns, senior partner of Personnel Works.
And
the reason why few senior HR people publicly gripe about their contribution to
the business at board level is simply because they overvalue the contribution
they feel they make, he argues, somewhat controversially. "Good strategies
are high-risk strategies and HR is known for its risk aversion. They have come
through the ranks, kept their noses clean and do not want to upset people.
"Just
because you are sitting on the board does not mean you are influencing
strategy. But if you are not on the board it says you are not senior enough and
do not have things to bring to the party."
Most
boards tend to be "pretty depressing" places, agrees Linda Holbeche,
director of research at Roffey Park Institute. "They are beset with
politics and operational issues. How to get and keep the best talent for the
business always seems to be squeezed off the agenda," she says.
In
such an environment, sadly, HR professionals can be their own worst enemy.
"There is a sense that once you have made it to HR director that you are
ever so glad to have got where you have got to and it has been a long and hard
journey. Now it’s time to fit in and not rock the boat and not look to upset
the political dynamic," she says. "A more strategic HR approach
involves dealing with many issues that may not come on stream for two to three
years."
Yet,
according to PwC’s Newton, many HR professionals who make it to such heights
often feel they have to compensate for the lingering perception that HR is a
bit "weak" by being even smarter and more conservative than their
colleagues.
Board-level
HR directors tend to make a point of being shorter, crisper and sharper in
their presentations than their colleagues, simply so they do not get tarred
with the HR stereotypes, he suggests. "The problem is that what most
non-HR people see about HR is that it is all flaky, unclear and soft. So it is
about talking in business terms, talking in their language," he says.
"You
need to look at the implications for the business as a whole. This is what this
is going to cost you, and the cost of not doing this is going to kill you
financially."
The
test of whether the CEOs’ new-found enthusiasm for HR is simply a fair weather
relationship or one for real will be made only too clear during the coming
economic slowdown, contends Holbeche.
Somewhat
depressingly for the HR professional, she believes that having had a good run,
times are getting harder and boards will be more likely to revert to
stereotype.
"If
the primary focus is economic survival the last thing that is getting
considered is what are going to be our long-term growth plans. It is batten
down the hatches time."
If
Holbeche is right, over the coming months HR professionals – whether at
boardroom level or not – may find the war for talent becoming increasingly
replaced by the war to be listened to.
Anatomy
of a board meeting
Attendees
Regular
executive board meetings will normally consist of the leaders of the key
functions, such as chief executive, finance director, operations officer, human
resources, marketing and sales directors. Full board meetings, normally
involving the chairman and non-executive directors, will generally be held less
frequently, but still on a regular basis.
Frequency
The
frequency of board meetings will again vary, depending on the needs of the
business, with some once a week, some monthly and others less frequent. At
PricewaterhouseCoopers, for instance, because executives are spread over 57
countries, two-day meetings are held every eight weeks complemented by two-hour
conference calls every fortnight.
At
HMV Europe, a formal board meeting is held every month and executives meet
informally every Monday to assess how the business has been performing over the
previous week, says Liam Donnelly, human resources director.
On
most Mondays one of the executive managers will be asked to come in and give a
presentation on key issues and emerging trends. The Monday meetings tend to
last for half a day, with board meeting generally going on for the whole day,
he adds.
Structure
Sign up to our weekly round-up of HR news and guidance
Receive the Personnel Today Direct e-newsletter every Wednesday
Clive
Newton, global head of people and knowledge at the company, says while meetings
will normally be quite closely structured, with issues such as finance and
staff turnover often high on the agenda, there will always be quite a few
non-specific items.
The
traditional idea of the CEO moving around the table getting an update from each
board member on his function has also long gone, he adds. "Nowadays that
sort of progress report can be done much quicker by writing or e-mail. As we
are spread out over a lot of different continents there is not much sense in
getting together for less than two days. If the business was where everyone was
in the same building we would probably have them once a week," he says.
