Building the high-flex, high-value HR team
In many companies, the human resources function is considered necessary, but minimally important. Douglas Ready strongly disagrees and argues that a shoddy HR function will keep the rest of the company from high achievement. It’s time to develop the people who are in charge of developing everyone else.
The answer to the question of who will lead a turnaround successfully in today's troubled time is simple: it will be the leaders of those companies that are able to re-purpose their organisations, strengthen mission-critical capabilities and bring their people together in a powerful and unified way toward building a compelling future enterprise. These challenges, however, have more to do with an organisation's capacity to mobilise its people than its capacity to make brilliant strategic decisions.
In fact, these troubled times present a tremendous opportunity for human resource managers not just to support others, not just to aspire to be respected business partners, but to lead - to help run the companies they are part of. The question I, and so many others, face is how to help the HR community around the world to become better equipped to deliver high value to their companies under continuously changing conditions. Yet, the challenges behind this question became all too clear as we studied the results of our survey of those in the HR community:
- More than seven of ten HR professionals indicated that they were concerned that the significant progress made in leadership development and talent management in their companies over the past decade might be wiped out as a result of excessive short-term thinking and non-strategic cost cutting.
- Some 60 per cent have reduced training and development budgets.
- More than one in five indicated that they would be "out of the loop" while their companies were engaged in enterprise-wide transformation efforts.
- Only 26 per cent felt they were equipped to help lead change or meet their senior leaders' demands during this level of turbulence.
The reason the HR results are of concern is simple: what kind of significant progress can be said to have been made in talent management and leadership development if HR leaders are now feeling that all their past efforts will be wiped out by tough economic times? Regrettably, this indicates one of two things: either many senior executives still regard talent management and leadership development as activities relegated to good times only, or many in HR have yet to make a convincing business case for the continuous investment of time, energy and resources of the part of the top executive team focused specifically on people.
High-Flex/High -Value HR
Seeing opportunity and knowing how to take advantage of it are two different things. In terms of assessing their own professional competence, some of the areas of concern expressed by the HR professionals we interviewed included:
- a lack of business acumen
- insufficient depth of consultancy and coaching skills, given this degree of change
- the lack of agility and speed to move quickly
- the inability to adjust to changing business environments.
No one disputed that HR needs to deliver functional excellence and needs to do it in a way that helps line managers and senior functional counterparts to run their business units more effectively. And no one argued against the proposition that HR needs to learn how to help run, grow and change the enterprise as the occasion arises. Which leads to a logical conclusion, one that HR professionals and executives can readily stack hands on: to deliver this value to their organisations, HR needs to have deep expertise, strong business acumen and the perspective, timing and gravitas that is fully commensurate with the organization's enterprise leadership team. A world-class HR function needs to have a team of professionals who can deliver excellence in each of three stages tied to operating a profitable business.
Three ways to add value
Stage 1 contributions are those that focus on the flawless delivery of transactional services. These are actions that HR can and should be taking right now to boost organisational efficiency and operational effectiveness. These contributions may be considered tactical, those that have primarily a short-term impact, although the cumulative impact of delivering Stage 1 contributions successfully can result in significant competitive advantage due to cost advantages and productivity improvements. Such contributions might take the form of both compensation- and non-compensation-related cost efficiencies such as headcount reductions, paring travel budgets, non-core training expenditures, merging or standardising of HR processes, closing or merging of production facilities and reduction of consulting arrangements (among other measures).
Stage 2 contributions are those that build or strengthen organisational capabilities and bring about alignment of systems, people and processes that more directly support the implementation of a business unit's or group's strategy. Stage 2 contributions might include cultivating talent pools that are focused specifically on the company's "growth engines", launching action learning initiatives that support an important strategic priority or initiating a communications campaign that reinforces important messages about the company's strategy or core values. If the company is retracting rather than growing, Stage 2 contributions might be directed toward executing downsizing measures that protect key talent pools or broaden management spans of authority so as to provide stretch, even under a constraining environment.
Stage 3 contributions are transformative, game-changing interventions that catalyse breakthrough innovation, value creation and step-change competitive advantage. Stage 3 contributions might include HR being actively engaged in major acquisition decisions from start to finish, positioning the ways in which talent and human capital considerations will play an enormous role in deciding whether to move forward, leading an enterprise-wide change initiative (in partnership with the CEO and the top team) that focuses on growth in key emerging markets, or leading an enterprise-wide productivity improvement process to pave the way for a game-changing acquisition.
Building Stage 3 HR excellence
After much thought on both the need for, and shortage of, Stage 3 HR managers, here are the seven steps I recommend to HR chiefs who want to become a Stage 3 HR leader.
1. Ironically, the most important step is to avoid fast-forwarding past good execution in stages 1 and 2. Make sure you have a HR team that delivers transactions flawlessly and helps build organisational capability through effective business partnering.
2. Understand the key differentiators of success for your company and find ways to contribute unique value in these areas.
3. Take risks and act with courage; remember the saying: "Go out on the limb - that's where all the fruit is."
4. Get yourself assigned to projects that are tasked with changing your company's business model.
5. If at all possible, take a line rotational assignment or a line assignment out of your home country.
6. Get to know your company's key customers and visit with them periodically.
7. Be a forceful and articulate communicator of HR's contributions to your company's future.
Uncertainty is uncomfortable. Yet, uncertainty almost always paves the way that creates opportunity for those willing to take the risks associated with navigating through unchartered waters. We find ourselves in perilous seas today, and there is little question that it is mettle-testing time for us all. As such, it is time to stand tall, shoulders square to the wind, ready to meet today's challenges with enthusiasm, not dread. By building high-flex, high-value HR leaders and teams, companies will, at last, see the potential that has too long lay dormant. HR executives, take advantage of your moment to lead. CEOs, help them.
Doug Ready (dready@icedr.org) is Visiting Professor of Organisational Behaviour at London Business School and Founder and President of ICEDR, The International Consortium for Executive Development Research, a global talent management network based in Lexington, Massachusetts.