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Sleeping With the Enemy: Why HR Must Co-opt CEOs

Friday, October 2, 2015
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Most CEOs see HR as a problem, and most HR managers are aware of this. The reason? To CEOs, HR is little more than a regulatory function of the organization, an entity that constrains and limits the CEO's ambitions, mostly by taking sides with the employees and defending their rights.

In fact, to most CEOs, HR departments would rather defend the rights of potential employees -- those merely considered for a job -- than contribute to the growth of the organization. This, they would argue, is evident during the talent-acquisition process, when HR managers worry more about the applicant experience of fairness than actually hiring the best person for the job (the person wanted by the CEO). Or, they would say it's obvious when HR stops CEOs from promoting, demoting or firing certain employees.

Thus, to the average CEO, HR is indistinguishable from a health-and-safety officer or a union representative, except it has somehow managed to gain as much credibility as accounting, IT or the legal team. Yet it is clear to him or her that, without HR, the organization would unleash its true potential. The best HR departments in the world must be the weakest, because they don't interfere with the CEOs agenda.

This view is, of course, very different from reality. Judged from the perspective of human resources, HR is trying to help the organization achieve all the things good CEOs should want the organization to achieve: a better, more engaged, more loyal workforce; a great culture; a company that people feel proud to work for. HR knows this because, after many decades of research in industrial-organizational psychology and HR management, there is conclusive evidence that what is good for most employees is also good for organizations; and what is good for organizations is good for the CEO. So much so, that if CEOs can improve the employee experience, they will also improve productivity and, in turn, profitability and shareholder value.

The common feeling in HR is that it is disappointing that CEOs don't appreciate this; and few HR managers feel they have the ability to persuade CEOs to consider this reality. Instead, they allow CEOs to co-opt them, so they turn into yes men and women, and work for the CEO instead of the organization.

Yet, since leadership should be a resource for the group, HR departments must serve the organization. They should improve CEOs' performance so that the organization benefits and they should translate the CEO's agenda into effective leadership, much like the best executive coaches do.

This analogy with coaching is rather appropriate because there are also many coaches, including sought-after ones, who position the CEO, rather than the organization, as their client. Thus, they merely help CEOs stay out of trouble or increase their rewards, regardless of whether that helps the organization. In turn, CEOs decide to keep their coaches on the payroll when they see a clear personal benefit for themselves.

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What HR should and could be is rather different. Indeed, in the age of human capital, HR must be the central engine of organizational effectiveness; a critical resource for CEOs and any senior leader, not least because of its ability to understand and influence human performance. In a logical world, CEOs would appoint competent HR managers, give them resources and power, and leave them alone; first, because their performance can easily be evaluated. Have they upgraded the quality of the workforce? Is this company a better place to work now? Are people more engaged? Has turnover been reduced? Second, because no other function in the organization is either willing or able to accomplish these critical goals.

Luckily, HR's main problem is an image problem. That is, in people's minds -- and that includes CEOs -- it is still associated with boring and bureaucratic processes that could be easily outsourced or automatized.

However, thanks to the recent repositioning of HR as a talent-management or people-analytics department, many HR practitioners are feeling less embarrassed about their jobs now. Although -- in some cases -- this is simply a rebranding exercise, it does highlight the growing prestige of critical HR functions, as well as the demand for solutions to some of the most important problems CEOs will always face.

In order to be a true partner, HR must be trusted, and CEOs must first acknowledge their own limitations vis-à-vis key human capital matters. As for HR, it must find clear ways to quantify its contribution to the organization. Effective talent initiatives have a return on investment, and that is perhaps the only thing CEOs want to see. In the age of big data and talent analytics, this should be easy.

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