Survival focus puts strategic ambitions on back burner for HR

The big drive to make HR departments more strategic and influential to the business is over, according to Chris Welford, director of commercial operations at HR consultancy Penna.

“For the foreseeable future, HR is about helping your organisation survive,” he said. “For many people, it’s not going to be as interesting or as fulfilling as it once was, but they’re going to have to stick it out and focus on being a safe pair of hands.”

One of the first signs of this shift has been the increasing involvement of external executives in HR decisions.

“Some HR directors are being bypassed on issues of compensation and bonuses, and probably because their board isn’t convinced the HR director has the skills or aptitude to make the right decisions quickly enough,” said Welford.

“We’re probably seeing even more involvement in areas like training, recruitment and redundancies.”

Penna has worked on two major restructuring programmes in recent months. In the first case, the project was led by a former chief executive in the second, a specialist HR professional with experience of restructuring was brought in.

Out in the cold

“Almost universally, the existing HR director is not the one in charge of those programmes,” Welford said.

“If you can’t talk about business risk, investment opportunities, profit and loss then the business won’t trust you to make difficult decisions quickly.”

Dean Hunter, HR director at maintenance provider Production Services Network, said board members were becoming increasingly interested in HR spending.

“I find I’m asked far more questions about what we do, and the value that programmes deliver,” he said.

Hunter believes he is in a strong position to defend his territory because he has a seat on the board and works closely with other directors.

He added: “I advise the board on people issues, but we share a strategy and we all drive the agenda. I think that’s critical to maintaining your influence.”

Strike a balance

Duncan Reid, head of people at financial technology provider Trayport, said HR directors had to focus on presenting their case in a language the business could understand.

“The reality is that HR is a difficult area to justify, it’s not easy to show a financial return on every project. But if you don’t want every project to be shelved, you need to do a better job of selling HR internally.”

HR professionals will need to strike a difficult balance in the coming years, said Welford. On the one hand they will have to accept their role doing what the business needs, but on the other hand, they will have a duty to ensure legal compliance and a certain level of quality.

“Yes, support the business, but don’t sit back and collude with business in poor practice,” he said.

Know your place

For some HR directors, the job will inevitably become less interesting, said Clive Wright, a principal at HR consultancy Mercer.

“You can get bogged down in the details of finances, and keeping things ticking over such as holidays, payroll and administration,” he said. “The smart HR professionals are those who use this as an opportunity to become more involved with strategy, not less.”

Wright advised HR professionals to take a proactive approach to the economic crisis by ensuring they were the ones approaching the board rather than the other way around. He suggested approaching the board with potential cost-cutting measures.

“In doing that, you’re showing that you’re aware of the challenges that you’re not just a cost centre,” he said.

Ultimately, HR professionals should remember that their role is to support the business and provide insight, said Wright.

“If the business wants to cut a programme, HR’s job isn’t necessarily to stop them,” said Wright. “It might actually be to show them the consequences of that action, the potential risks involved, and alternatives they might consider.”

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