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A Functional Critique
High-ranking business leaders outside the human resource function gathered recently for an exclusive roundtable discussion about the pros and cons of the HR profession, and the talent challenges ahead.
We've long wondered what other top business leaders and C-suite executives think about human resources -- whether they're getting what they need or expect from the function, and whether the function has their respect. At The Hackett Group's recent 18th Annual Best Practices Conference in Atlanta, we got a chance to find out for ourselves when a group of senior executives from finance, IT and procurement, and the CEO of a global life-sciences company, agreed to come together (at the invitation of Human Resource Executive®) to share their perceptions of HR. The wide-ranging conversation touched on a variety of topics, from today's mounting talent challenges to what they need from HR to specific ways HR executives can gain more sway in the boardroom. It also touched on some nerves, revealing a still-pressing need for true partnerships between HR and other top leaders in order to meet the talent demands in the years to come. The leaders who gathered with us that day all agree that the war for talent is one in which the entire company must come together in order to win, from the C-suite to the HR department. "I think one of the key things that we are challenged with on an ongoing basis is the attraction and retention of top talent," says Iain Mackay, senior executive vice president and chief financial officer at Mettawa, Ill.-based HSBC North America Holdings. "Attracting great talent is relatively easy," he says. "Retaining that talent, developing that talent and showing a clarity around what the career opportunities may be for them beyond the next two years -- in fact, into the next five and 10 years, and building 10-year expertise [and] global skills within a large global banking organization like ours -- that is [especially] challenging. "Retention and building the future for individuals is something that we spend a lot of time working on at the moment," Mackay says, adding that HSBC strives to make a compelling career-opportunity case over an extended period of time. Ted Zerafa, vice president of purchasing for Herndon, Va.-based construction materials producer LaFarge North America, also stresses HR's need to retain good people. He says finding good talent may not be that hard, but the real challenge lies in keeping them over the course of their career. It's important, he says, that his HR department have a good feeling for the type of work the purchasing department does in order to get better hiring results. "I still demand the A-team from the HR organization . . . [I need them to] recognize who I am and the skills, competencies and experiences it takes to be successful in my space within the organization. [I need them to] know me as a business partner just as much as [they might] spend time with operations or sales or marketing," he says. Stephen Joyce, a human resource practice leader at Hackett who participated in the discussion, sees a need for a greater focus internally. "Lots of companies think HR's primary goal is to recruit," he says. "But if they don't focus on internal talent management as well, good people are likely to leave, and all you've accomplished is to increase the churn through your organization. "World-class HR organizations make a much greater effort in the area of internal talent management. While they spend less than typical companies in HR overall, they actually spend almost 25 percent more on internal talent management." For others, such as Scott Alsup, chief information officer for Lousiville, Ky.-based Steel Technologies, striking that delicate balance between salary and life issues is a paramount challenge. "Trying to develop an overall package that balances [the two] and trying to get an environment where [employees] want to work for us" is a difficult issue, he says. "We can't get into a bidding war. We're just not in that position to compete at that level." Building a common sense of identity and community is one of the biggest issues facing Fluor, a construction and maintenance services provider, says its global IT controller, Jana Alexander. "I sit in a corporate headquarters location in Dallas, and, of course, we have offices all over, and I think it's very difficult to feel like a single company at times." She says Fluor's HR department recently launched an employee-driven focus-group effort geared toward answering the needs and the opportunities that are perceived by its workforce across the systems. "I am pretty excited that they are listening and responding and have set up some steering committees to try to address the need for engagement and that sense of belonging that I think we all have," she says.
Getting Strategic In order for HR departments to better handle the future challenges of the business world, the leaders also say HR must become more strategic in its thinking in order to create positive business results. They agree that such a move would have a tremendous impact on business performance and that the HR focus needs to be on workforce planning, anticipating how markets are changing and how the business is changing, what new skills will be needed to get ahead and working with the business to make sure those skills are being acquired. "At the best companies," says Hackett's Joyce, "the HR organization isn't filled with people who've spent their careers in HR. A large percentage of their staff comes from other functions. This gives them the business acumen they need. They are also much more likely to have advanced degrees, which we believe also correlates to broader business skills." But Stephen DeFalco, president and CEO of Canadian healthcare technology provider MDS, says the word strategic can often be a problem. "Strategic is one of these words that's overused and difficult to define," he says. "The first thing I would ask is, 'Are your HR teams in the right meetings?' So, for me, the right meetings an HR team should be into are: a business-performance review, a discussion of R&D projects and a discussion of next year's marketing budget. If they're in those meetings, then the questions to them are, 'Do you think we have the right talent in our R&D organization? As you look at this business and what it's struggling with, what are the places where there are holes in the talent?' " DeFalco says he issued a challenge to his company's HR team by giving them a quiz on the business of the business, including such questions as, 'Can you understand our core measure of profitability and the three things that affect it most in your division?' "I said to them, 'Every person in this room should be able to answer these questions' . . . because if they can't speak that language and participate in those meetings, there's no way they can be strategic." LaFarge's Zerafa says he would also challenge his HR team to be more strategic by being more proactive with him about career management, talent management and professional development. "Ask me tough questions about the leadership of my organization," he says. "Do I have the right people in place? Do we have the right succession plan?" He says he wonders if "a person got hit by a bus, what do you do, how do you recover the next day? ... Bring those challenges to me from an HR perspective and make me work on those, because, really, the effectiveness of my organization is all about the people." Mackay, of HSBC, says it is just as important to get feedback from HR on how a leader's communication style comes across to employees. "That feedback about your personal interaction and how you're received and perceived by your team is . . . a hugely useful set of skills, whether it's [for] a functional leader or a business leader. I think it's hugely important and truly strategic." Norm Fjeldheim, senior vice president and chief information officer at San Diego-based communications provider Qualcomm, says his company's HR department helps him map a plan of growth. "We're doing a number of benchmarking studies, looking at other organizations, sized where we want to be, and then looking at my organization and [asking], 'Do I have the right levels? Am I too broad? Am I too deep? Do I have the right organization in place to support the company as it continues to grow?' " When it comes to the barriers that prevent HR from playing a bigger role in an organization, Zerafa says history is set against the function. "I think a hundred years of tradition of what the HR role has been [continues to challenge HR] as much as the traditional role that purchasing has played," he says. "We all have to break out of the traditional role. [HR practitioners have] got to see themselves more as a part of the business." Alexander adds that HR departments need help to overcome being viewed as a less-than-confident bunch. "It's the lack of self-confidence of people in HR," she says. "... We need to empower our HR partners and professionals with the sense that there's nothing mysterious about what we do and they add important value. And fundamentally, they need to understand the core business. What I see is a real lack of confidence that will allow people to be equal partners in the company." Who Owns Talent? While the gathered leaders discussed their differing levels of involvement with their respective HR departments, the conversation turned to a pointed question: Who really owns the talent in an organization, HR or the department heads? Scott Alsup, of Steel Technologies, says he thinks HR "can be a partner without a doubt, but [the line leader] still has to be the person who knows exactly what those employees are doing, where they're at," adding that if "you abdicate that to HR, now you've really kind of put those employees in limbo, and they'd be part of the corporation but they [wouldn't] feel part of the team that you're on." Qualcomm's Fjeldheim says he spends "at least a quarter of [his] time on HR issues, everything from defining jobs and roles with the new organizations, looking at titling and performance reviews [and] making sure that we're equitable across a fairly large organization." "I own the talent within my organization," he says. "I do the long-term planning. HR is certainly a partner in that . . . they provide training [and] help us set up training programs for my employees. But at the end of the day, the IT organization is my responsibility, and I've got to make sure that it's successful. I can't say, 'Well, I didn't succeed because HR didn't step up and do what was necessary.' "Ten, 12 years ago, I ran my own HR function. I did it while HR was focused on other things. Over time, they stepped up, and I got out of that business and let HR do what they do better than I could. But . . . I had to do it at times, and it's my responsibility." Alexander agrees, saying that HR is there to provide guidance, keep companies out of legal trouble and help executives understand policies as they are written. "But I would never abdicate responsibility for the people on my team," she says. "I mean, who's going to care more than we do about the success of that department?"
July 1, 2008 Copyright 2008© LRP Publications |
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