CEOs force change on HR

by 01 May 2007

AS C-level executives are forced to justify business value and deliver greater efficiencies and effectiveness, there is a trend for chief executives to oust HR directors who fail to deliver on ever-increasing business expectations and replace them with more commercially savvy COOs, according to a global human capital consultancy.

“Often HR does HR for its own sake without the deep knowledge of the business drivers and complexities,” said Justyn Sturrock, IBM human capital management practice leader in Australia & New Zealand.

“Business partnering is a loosely used term. However it can be as simple as HR developing a much greater understanding of the business they are driving – really understanding the business challenges – and then developing HR interventions that align with, and help to drive overall business strategy.”

One of the biggest HR and business issues is talent management, Sturrock said. For example, a recent IDC survey of US business and HR executives found that 90 per cent said their companies are experiencing increased competition for talent, while 80 per cent of companies consider talent management their top management problem.

IBM human capital management estimates that companies are investing between 70-80 per cent of their budget to develop talent management programs.

“Many firms are still looking to technology solutions to solve many of their human capital challenges, such as technology solutions to better manage workforce manage and rostering, developing bottom up tactics to solve complex workforce issues, and so on.”

In order to deliver results and shift current paradigms, Sturrock said a top down, integrated employee life-cycle strategy, coupled with a coordinated transformation roadmap is required.

In general, he said Australian firms are not as advanced as US or European organisations when embracing workplace transformation. However, there are now a small number of senior HR practitioners in Australia who are focusing on greater business partnering to ensure the execution of business and HR strategy, supported by a greater emphasis on developing more meaningful measurement of the HR function.

“This is a small group of practitioners either returning from ex-pat assignments or coming into HR from other business functions and disciplines,”Sturrock said.

Understanding key skills

• Only 42 per cent of companies are addressing their skills and capability needs for the next three to five years

• Less than half of companies measure their overall human capital practices on business impact and approximately 25 per cent evaluate them by return on investment

• Less than 25 per cent of companies measure their learning activities by business impact and less than 10 per cent by return on investment

• Less than 40 per cent of organisations incorporate any human capital metrics into their senior leadership’s compensation plans

Sources: Closing the Generational Gap, IBM Institute for Business Value Executive Brief; The Capability Within: IBM Global Human Capital Study 2005


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