"Knowing the business" is not the same as understanding "the language of business," contends Meisinger in her latest column on whether the next generation of HR executives will have the skills needed to navigate tomorrow's business environment.
Every year, the National Academy of Human Resources (NAHR) holds a banquet to induct new Fellows, individuals who have been recognized by their peers for their contributions to the profession. While the black-tie affair in New York City is always memorable, the meeting of the Fellows prior to the dinner is even better. During the meeting, this group of respected, thoughtful and experienced HR executives engages in a frank and open discussion about the profession and issues that confront it.
One of the topics for discussion at the meeting in November was the next generation of HR executives -- how to find the best and the brightest students today and introduce them to a challenging, exciting and rewarding profession in human resource management. While more and more entrants into the profession have a degree or concentration in HR management, there are many more HR professionals who "end up" in HR, and as a result, lack critical knowledge of the field. Another concern frequently raised by HR executives is the challenge of up-skilling their HR staff to better enable them to operate in a global environment of rapid change and constant ambiguity.
The challenge to HR leaders isn't new -- it's just more pronounced because of the pending exit of the baby boomers and the recent economic downturn, which has forced most HR executives to assess, and reassess, their teams. Over the years there's been a great deal of research done on HR competencies at successful organizations (see, for example, the work done on HR competencies by Ulrich & Brockbank, with the University of Michigan, and work done by SHRM on HR leadership competencies). Doesn't every generation of leaders wonder if the next generation will be up to the task?
A theme that permeates any discussion of the future of the profession is the critical importance of an HR professional's ability to speak "the language of business." Yet some of the competency research results seems confusing. According to Dave Ulrich, "we have consistently found that knowing business is not as highly ranked as a predictor of HR effectiveness." Much more important in determining an HR executive's effectiveness is whether the individual is viewed as a "credible activist" -- someone who offers a point of view, takes a position, and challenges assumptions. They practice HR with an attitude, and are able to influence others.
So why do HR executives and other business executives always zero in on the importance of business expertise? Ulrich's take, with which I agree, is that knowing business (finance, marketing, operations) is the ante, or ticket, of admission. Without this knowledge, HR won't be included in key business discussions where they could provide a point of view, take a position, or challenge an assumption. And, if invited, they won't be asked to stay. Unfortunately, many in HR limit their own opportunities because their expertise is too narrow.
Today, most HR professionals will take the time to understand why or how the business manufactures a product, or the nature and quality of a service that's being provided. But understanding the language of business, to me, includes understanding the financials of an organization. It's not just understanding the impact of a business decision on the budget, but understanding the impact of the decision on the very value of the enterprise.
If business knowledge is a ticket of admission, HR executives need to ensure that their HR leaders of the future are armed and ready and, at a minimum, have some background in finance and accounting. It's not an easy challenge, since so many in the profession have totally unrelated degrees, and most HR-degree programs focus on just HR coursework. Even the PHR and SPHR certification exams, while including some knowledge requirements pertaining to business, are exams designed to measure the grasp of a body of HR knowledge.
It will require that HR executives ask for more detailed information on the knowledge and background of candidates: Did they ever have an opportunity to focus on finance and accounting in their academic or professional careers? If not, HR executives need to be willing to provide the opportunity to do so. Without it, the HR professional will never be a credible activist in their organization.
This doesn't in any way diminish the importance of the HR knowledge required to be a successful HR executive. It, too, is a ticket of admission. It highlights the breadth of knowledge required for a career in HR management. It requires both HR and business expertise.
A grasp of the HR body of knowledge provides HR professionals with a road map for the direction they may need to take in their organization. But a grasp of finance and accounting provides them with knowledge of the topography underneath the road map. This combination ensures they will pick the best path forward for their organization.
Susan R. Meisinger, former president and CEO of the Society for Human Resource Management, is an author, speaker and consultant on human resource management. She is on the board of directors of the National Academy of Human Resources.