HR really has two functions: one is administrative, and the other, strategic. Most companies, despite the title they may give to their head of HR, have only an administrative HR function.
This may not sound like much, but the impact on an organization is significant. To see the impact, consider an analogy using Finance: by way of background, finance also has both administrative and strategic functions. The controller generally acts as the administrator, managing the nuts and bolts of money flowing in and out of the organization, while the CFO is more strategic, using a financial perspective to make decisions that shape long-term corporate plans. Now imagine what would happen if the CFO were removed, and the controller were left as the senior-most financial position in the company. How would strategy be impacted? In all likelihood, the advice coming out of finance would start feeling more cautious, more tactical, and generally narrower in scope. Emphasis would be placed on processes and controls rather than outcomes. Now what if the title given to this person was “CFO,” and the advice was called “strategic,” even though it wasn’t? Things would get pretty frustrating pretty quickly.
While many organizations understand finance well enough to know when they have “outgrown” a controller and require a CFO, many of these same organizations may miss the analogous decision in HR. They’ve heard the lingo (“HCM,” “learning organization,” “executive coaching”) and seen the impact of human capital with their own eyes, but when it comes time to implement, they fall short. HR is cautious, tactical, and reasonably narrow in scope. It demonstrates a process focus. (I tend to think that measuring “satisfaction” of development programs is like measuring adolescents’ satisfaction with puberty. Growth is tough and not always enjoyable, but you can’t get to maturity without it, so measuring the process is pretty much meaningless; it’s the outcome that matters.)
So while all the right words get used, linkages fail to emerge across compensation structures, training and development, organizational structure, recruiting, performance reviews, promotion, culture, communications, informal practices, tone and frequency of executive communications, office layout, etc. Systems may get purchased that support such linkages, but buying the software doesn’t exactly get you home. I recently came across an article about “strategic” HR, and how one company was touting itself as on the cutting edge because the EVP of HR was asked to write a paragraph for the annual report. My response: sorry, not good enough. That kind of involvement is called “pandering to the markets.” If HR is truly strategic, then the head of HR’s fingerprints should be all over the annual report. S/He should be editing, not authoring, and Hr’s involvement would go well beyond a paragraph.
In finance, a series of statements is used to connect things like cash flows, debt levels, ownership interests, assets, liabilities, revenues, expenses, and capital expenditures. In HR, no consistent methodology yet exists for connecting the above issues as concretely as is done in finance. This may make it more difficult to conceptualize the need for a “CFO” counterpart in HR, but it does not make the position any less important. We don’t say, “Because off-balance-sheet deals aren’t counted on our balance sheet, we don’t need to watch them.” Our inability to concretely define some aspects of the human element does not mean that we should ignore what we do know. And what we know is this: no resource shortage can long stymie a sharp, hungry team. No amount of financial or market strength protect a toxic, political, ego-driven team from itself. Human nature is a constant, and it is as predictable as gravity.
It’s time to get people into place who not only have a feel for these rules, but who are trained in them and who can articulate them, too. It’s time for organizations to develop a truly strategic human capital function.
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I'm Jason. I make people shine. My mission is to help 1 million people tell their stories better. 