HR
has long suffered from problems in selling the value of its services to the
board. But the time has come for senior members to press its case for taking a
leading role in company strategy. Nic Paton reports
The
Holy Grail of HR has long been how to translate business priorities into
effective people management strategies. Yet, for many HR professionals, the
reality is often sadly different from the aspiration. Too often managers will
dismiss HR as a personnel function that simply hires and fires and makes the
pay cheques arrive on time, but is not to be trusted with the really big
strategic stuff.
A
survey last year by management consultants PricewaterhouseCoopers found senior
HR professionals in fewer than one in five companies were satisfied with the
impact they were having on their business. And only 32 per cent had secured a
seat on the main board. But slowly, as businesses realise their people are
often the final competitive advantage they have, the notion that senior HR
professionals can work with businesses and actually become valuable board-level
partners is starting to catch on.
Paul
Turner, general manager of West Bromwich Building Society’s people development
division, is one such partner. A finalist in last year’s Personnel Today
Awards, Turner has worked in partnership with chief executive Andrew Messenger
to ensure a seamless flow of HR policy from board to department level. This has
included putting a targeted selection process in place, benchmarking results
against the rest of the industry and carrying out substantial internal changes.
"In
the past, HR has been at the back end, thought of after the business plan has
been developed. But it is critical today that the HR function aspect is
considered right at the beginning," he says.
Turner
asserts that if HR professionals want to get involved in strategic and business
planning, they need to have credibility. And to have that, they need to be able
to speak the language of business. "If you’re talking about absenteeism
going down by 25 per cent, tell them you have saved 800 man days this year, or
more than £100,000, or whatever it is," he says. "If you are looking
at good people practices, you need to say how managers are achieving in terms of
sales and productivity."
When
the HR director becomes a partner, the respective roles of line and HR in
managing and developing people should, ideally, be seamless, adds Martin
Burridge, senior lecturer in international business at Henley Management
College. "There are some companies that do not need an HR department, all
they need is an HR director, somebody who has a real stake in the
business," he says. "HR needs to be in every department. It is the
role of the manager to manage resources. If a manager is not managing their
most important asset, what are they doing?"
But,
again, the reality is often sadly different, says Linda Holbeche, director of
research at Roffey Park Management Institute. "What tends to happen is the
business strategy is set by the business partners and HR is very much a support
function set short-term targets, usually recruitment, to service those business
roles. The board may have HR in such a box that it never manages to break
out," she says.
Translating
business priorities into effective people management strategies requires
"HR with attitude", she suggests. First of all, "don’t cock
up"Â This may seem obvious but, if
HR has always been seen as a purely administrative function in an organisation
and yet the HR director can’t even get that right, there is really no hope of
progressing further.
Once
the core function is running smoothly, HR professionals should be looking at
how they can help their organisation secure competitive advantage. "HR is
not just about disappearing into the night to the ivory tower. It is about
delivering specific needs, challenging, cajoling and having a framework.
Short-term initiatives build up to give a bigger picture. It is about
understanding the nature of the work and the nature of the people," she
says.
For
instance, say an organisation wants to go for growth over the next three years,
she argues. For the HR director it is not just about ensuring, in the short
term, that the company has the right level of staffing to achieve this, but
interpreting what the business strategy is about and how the tools that HR has
can help. This might mean asking what type of business the organisation is
becoming and what sort of people or processes it is likely to need in two or
three years. Is it, for instance, becoming a global player, and, if so, what
sort of mindset is it looking to develop?
Yet,
however talented an HR director is, if the board does not want to listen, it
won’t. And, if line managers below do not buy into an HR strategy, getting
anything done may prove well nigh impossible. Advocacy, then, is a key element
in developing as a business partner, argues Holbeche. "You have got to
have line managers champion it."
In
his book The Bottom Line HR Function, published last autumn, Paul Kearns, a
senior partner at HR management consultancy Personnel Works, suggests the HR
function can be divided into a scale of effectiveness. This rises from welfare
and personnel administration at the bottom to internal consultant, business
partner and organisation designer at the top.
The
HR role is primarily stuck at the lower end of the scale, he argues, hampered
not only by managers’ failure to understand what HR can offer, but also by HR
professionals not being assertive enough and not having enough authority. Even
if management started to accept HR directors as partners, too few HR
professionals would have the necessary business qualifications to get there, he
says.
"There
is a serious shortage of people in the HR world, at the moment, with the
necessary skills to fulfil this role. This will seriously hamper the HRM
profession’s attempts to operate at a truly strategic level," he says.
With
companies becoming more international in outlook and the pace of mergers and
acquisitions ever increasing, cutting it at board level means not just having
excellent HR skills but acquiring business, financial and marketing acumen,
argues Francis Wilson, international manager at the CIPD.
A
study last year by KPMG showed that while 80 per cent of senior executives
thought a merger or acquisition had provided shareholder value, in fact in 83
per cent of cases it had failed to yield any benefit at all, largely because
"the people factor" had been ignored.
"A
lot of the pointers can come from HR. It can offer cohesion and provide the
corporate glue. Being a business partner is about putting the business first,
but with people at the centre," says Wilson.
Many
HR professionals, even now, are locked into a jargon-riddled
"HR-alone" mentality that makes chief executives reluctant to let
them loose higher in their organisations, argues John Nicholson, chairman of
business psychology consultancy Nicholson McBride.
"In
some respects, HR people are their own worst enemies. Thirty years ago you did
not even have finance directors on the main board, they were just bean
counters. HR people have to convince themselves first," he says.
But
that’s not to say it can’t happen. HR directors can become valuable partners –
if they can back their words with clear, tangible results, insists West
Bromwich’s Turner. "Managers have a fear that HR will interfere and will
stop them doing things," he says. "Once they understand that HR will
make their life a lot easier and help them get to the place they want to get to
quicker, well, you only have to prove it once. After that they will come to
you."
Seat
on the board led to better staff retention
When
Dr Barry Winter was appointed as board-level director of personnel and
development at public relations firm Countrywide Porter Novelli six years ago,
it was a groundbreaking move.
"I
believe it was the first board-level HR appointment in an industry that has
quite a revolving door mentality," he says.
Dr
Winter, who trained as an occupational psychologist before becoming a PR
consultant and has an MBA, immediately set about reshaping Countrywide’s HR
function, which had previously been very much one of administration and
maintenance.
He
overhauled selection processes, bringing in, among other things, psychometric
testing, to improve short-term retention. "Our retention rate is now 20
percentage points above that of the industry average," he says. He also
implemented a policy of coaching, feedback and management training for all
account managers, while exit interviews were made a standard procedure.
The
key to adding value and expanding your influence, he argues, lies in building
up credibility and in having a cogent grasp of where the business is going.
When it came to credibility, he ensured – in an industry where awards are
considered important – that Countrywide won a number of prestigious gongs,
including the Public Relations Consultants Association’s training and
development award twice in the past three years.
Dr
Winter and other key team members also handle fee work with clients, so they
are not seen as just sitting in an "HR ivory tower". The team itself
also deliberately includes people from a client-handling background to give as
broad an outlook as possible.
The
MBA helped Dr Winter to attune to business priorities, but his key belief is
that strategy should mean implementation. "You need to get some form of
business experience behind you. It is no good if you get to the top and you are
sitting there talking about the latest fad or fashion when you need to be
focused on the business. You need to find out what is really important to the
industry," he says.
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Even
when management is behind you, becoming a valued business partner does not
happen overnight, he warns. "The first two years are difficult. You are
not going to walk in there and immediately have credibility. You have to earn
respect.
"I
had two or three key members of the board who believed in it and stuck with it.
You need to have someone who will champion your role."
