Stop Passing the Buck!

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.

 

As president of Birchtree-HR, LLC, Janet Walsh is best known for her contributions in the field of global HR strategy specifically to increase the financial performance of organizations. Her unique perspective comes from 25 years as a senior HR executive in Fortune 200 companies, author, educator, and consultant working in more than 60 countries.

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3 Comments on “Stop Passing the Buck!

  1. Right on!

    In most companies, large gaps still exist between HR contributions and the talent management demands of the various strategic missions designed to systematically build enterprise health and value.

    The C-suite, which too often does not include HR executive representation, deserves a sizable share of the responsibility for this prevailing condition, especially if the CEO, CFO, COO, CIO, etc. have failed to take the lead in helping to make HR more strategic.

    Few C-suite executives would disagree with the assertion that to manage, we must measure. Well, why not lead by helping to define a set of metrics and measurement methods that better align HR initiatives and outcomes with the enterprise’s strategic objectives?

    We can measure to avoid hiring mistakes. We can measure to predict job performance. We can measure employee engagement (and it does matter). We can measure team strengths (weaknesses), balance and leadership needs. We can measure to determine learning and development opportunities. We can reliably, validly, compliantly and profitably measure these things and much, much more. We have all the necessary tools at our disposal, 24/7/365.

    But most C-suites still indulge employee selection processes that start with resume screens and conclude with unstructured interviews. Most companies do not have up-to-date job analyses that properly document what it takes to perform in each position. How can those companies expect to identify talent that “has what it takes”? Such poor practices degrade the quality of hiring and promotion decisions and create compliance exposures.

    When it comes to making HR more strategic, CEOs should lead, set priorities and enable. CFOs should leverage their facility with metrics. COOs should identify mission-critical positions and, with the help of their CIOs, start building a complete and current library of job analyses. Perhaps, the newly appointed Chief Talent Officer should steward the entire process.

    As a former international industrial CEO, I say: “better to address the problem than to play the blame game”. If the C-suite truly leads, and really means it (i.e. no more “People are our greatest asset” lip service), significant change for the better will happen quickly.

    When invited to the table, HR can inform the C-suite about the Uniform Guidelines on Employee Selection Procedures, how compliance and selection best practices align and how to use the latest online assessment, survey and simulation solutions to manage better by measuring better.

    One more thing, HR must show the C-suite that the three and four-digit ROIs routinely delivered by best-in-class online assessment solutions compare very favorably to any alternative investments.

    It’s time for the C-suite to take the lead and for the whole organization to participate in change for the better.

  2. Adding to that I believe that HR professional can restructure the Human Resource of an organization to actually help grow in recession times even. what would be your opinion on this.

  3. HR executives have a great opportunity to move quickly into the forefront of business strategy by closely linking HR activities to financial performance. The closer the links between strategy and HR activities the greater the financial return to the bottom line. Watson Wyatt has done some excellent research in this area and it is readily available on line.

    The barriers to bottom line improvement have always been HR’s difficulty with the financial side of business, understanding and applying metric measures, costing programs, engaging and empowering managers with the tools and services they need to do their jobs. Senior HR leaders generally “get” this message but Director, Managerial and Functional HR professionals much less so.

    Separating the tactical/compliance aspects of HR from the strategic would be the first approach. Creating an HR strategic plan based on the corporate strategic plan would be part of a good beginning. Adding a dashboard or scorecard measure shared with other executives would be another great start.

    If you need more ideas we have some free resources on our website, birchtreehr.com, that may be of interest.

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