HR: A Critical Consideration
Some HR leaders will surely be frustrated to hear about another report that takes aim at the progress being made within the function, but that criticism also contains some keys to success.
Recently, during a session of the University of Michigan's Advanced Human Resource Executive Education program where I teach, there was a great discussion about how the human resource/human capital function is perceived by CEOs. The group was quite diverse, with attendees from around the world operating at the senior level of mostly large organizations. Their diversity was also reflected in the views they expressed about how their CEO perceived them.
The starting point for the conversation was my statement that HR executives should be mindful that many CEOs don't understand what the HR executive does on a daily basis. Since it's still statistically rare for the head of HR to become CEO, most CEOs don't gain an understanding of HR by doing HR, but by being a consumer of the function's services -- and their opinions may have largely been informed by the type of HR function they grew up with.
I believe it's critical for HR executives to understand this because it means the function has a higher hurdle to overcome in demonstrating its business acumen to the CEO. Maybe it isn't fair or shouldn't be necessary. But it's true. Those who know and understand the business as well as every other member of the executive team -- and are demonstrating it -- will thrive. Those who don't, won't.
Some of the class felt that their CEO has a deep understanding and appreciation of the function and its contribution. They didn't see a higher hurdle because they were already true partners in running the business. They felt it was time for the profession to stop wringing its hands and worrying about how it's perceived, and get on with the business of adding value to organizations.
Others had a different experience. They had worked within organizations where HR was not able to add value because it was unable to overcome the way in which the function was perceived. The CEO and/or top executives only had experience with a transactional HR function; the executives not only didn't expect, but resisted efforts from HR to add value in other ways.
My purpose in sharing this story is to highlight the fact that the human resource (or human capital -- your choice) function has made great progress in many organization, but still has far to go in others.
And while I am sick and tired of HR professionals wringing their hands and worrying about how to "get a seat at the table" -- please, please, stop asking this question! -- I think it's important to examine the state of the function and search for ways to improve it. While sometimes it's painful, any function -- not just HR -- should continually assess and reassess its performance and identify opportunities for improvement.
So I welcomed the recently released report from The Conference Board and McKinsey & Co. titled The State of Human Capital 2012: False Summit: Why the Human Capital Function Still Has Far To Go.
The title really says it all.
Based on the results of a survey and focus groups made up of HR executives, the report paints a picture of a function facing many challenges, but with many opportunities.
Focus groups identified three major challenges that they believed have impaired the function's ability to make greater contributions.
First, they cited a lack of capability; HR professionals aren't able "to confidently and assertively solve business issues with line leaders and define the subsequent HC implications."
Second, focus-group participants reported that HR professionals continue to have a "support function mind-set, a low tolerance for risk, and a limited sense of strategic authorship."
The third challenge identified is the "inability to relate the ROI or business impact of their function." This difficulty in speaking the language of business -- being able to articulate HR's ROI -- keeps the function from getting buy-in for its initiatives and innovation.
The report highlights that, as with most challenges, opportunities are created, and these are examined in the report in detail. They include anticipating the workplace of the future, securing the pipeline of skilled workers, capitalizing on employee engagement, and ensuring an agile workforce.
But I think one paragraph best sums the overarching challenge for the profession:
"The HC function needs many things, but most of all, it needs daring and a willingness to expand its reach; take the opportunities offered by changing employee attitudes, improved technology, and 'big data'; and create real and lasting change in how top talent is recruited, engaged and retained worldwide."
I know some will be frustrated to hear about yet one more report that's critical of HR's progress. And, indeed, I know there are many organizations where HR is having a huge impact.
But I also know that every profession, including HR, should continually examine its challenges and opportunities in its search for continuous improvement. I, for one, am confident the profession is up to the challenge; we just need the courage and confidence to embrace it.
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.