It has been like shooting fish in a barrel. The HR profession has been under fire from all quarters lately for not being “strategic” or a “helpful partner” to organizations. Many comments have been made in the ERE forum that make this point. In response, I have to say, I think you’re passing the buck.
The person who unequivocally directs the strategic operations of a firm is the CEO or President. Strategic leadership in business means adding value for the shareholders by increasing revenue, reducing costs, and improving operating efficiency. What responsible and accountable executive would routinely overlook the strategic and tactical importance of human capital assets whose associated cost equates to more than 70% of the corporate balance sheet? What logical and professional executive would marginalize the contributions to bottom-line performance by their human capital? Why would a CEO isolate their fiduciary responsibility to the organization by saying in effect, poor performance by HR “isn’t my fault!”?
There are only two possible responses. They either don’t know or don’t care.
Research from any number of organizations and researchers from Watson Wyatt, SHRM, Mercer, David Maister, and David Ulrich, among many, conclusively and persuasively show organizations that link their business strategy with their HR activities increase their financial performance between 6 to 38% over organizations that do not. If you don’t believe these statistics, do the research and see for yourself or post a comment and I’ll post a response.
Leadership means setting a course of action and managing the organizational components to withstand challenges and grow. If the HR leader or department is not performing to full capability, is it not the responsibility of the CEO to step in and make changes? If 70% of a company’s balance sheet was badly led and ill-performing would that not be cause for widespread concern and action? Of course it would.
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But, most CEOs and presidents don’t separate the strategic from the transactional when it comes to HR performance. Particularly in medium or small firms, they have trouble linking competitive advantage to people programs. They routinely say, “People are our greatest asset” but have difficulty articulating a clear line of sight between the company’s strategic plan, HR programs, and customer satisfaction. But, isn’t this their job to at least understand the general components of human capital management?
I’m not suggesting HR professionals should have a free pass. However, any inadequacies or underperformance in this part of the business is directly related to the CEO’s leadership. The buck stops there and it’s time to stop passing it.