HR will never be able to contribute as it should to the success of an organisation unless HR professionals have broader business experience, writes David Creelman
A CEO who wants more strategic HR capability needs to change the career path of HR professionals. Until they do, managers are not going to consult HR for human capital advice and we will continue to hear comments like this: “In the work I do, I would expect to come across HR departments much more often than actually happens,” says author and UK-based HR consultant Elizabeth Lank.
The work Elizabeth Lank does is on collaboration between organisations. To me, that’s an HR topic. If two companies were planning an alliance I’d expect HR to be right in the middle advising on job design, conflict resolution and team building. But as Lank laments, it’s not often that HR is part of these projects.
Why business leaders don’t ask for help
I don’t think that business leaders are overconfident about their ability to handle the difficult organisational and people issues of something like a cross-company alliance. It’s just that they don’t feel HR understands, in a deep way, what the challenges are. Yes, their HR person has insights on teambuilding and job design in general, but not on the specific business problems at hand.
This lack of business understanding isn’t because the people in HR are not smart; it’s just that most HR professionals have spent the bulk of their careers safely within the HR department. We’ve all watched lots of movies, but we won’t have a deep feel for the challenges of movie making unless we’ve actually been involved in a production.
HR professionals suffer from a similar lack of experience in other areas of the business. An HR person will know a great deal about the internal processes, but not a lot about the customers, even less about the competitors, and maybe not much about products and services. Most HR people have never managed a “P&L”(a unit judged by profit or loss), so they don’t have a gut feel for what needs to be done.
One can imagine a business unit leader saying: “When I’m looking for someone to help me work through these difficult challenges I don’t just want someone who is well-educated, I want someone who has experienced the same kinds of pressures I’m struggling with.”
How HR can learn the business
One can encourage HR people to spend more time learning about the business, but I don’t think that’s the real answer. The real answer is to structure HR careers so people spend more time outside HR.
The main way to do this is to rotate people in and out of HR. It doesn’t need to be a highly formal program. There should just be an attempt to hire people with non-HR experience into HR roles and find roles outside of HR for HR professionals. It would be useful to keep some basic metrics, such as what percentage of the HR department has spent at least a quarter of their professional career in some field other than HR, or simply, of all the years of professional experience in this department, what per cent is from outside of HR?
Young HR professionals should be encouraged to get some experience outside of HR, even if it is just for a couple of years, and even if it not a job they want to do in the long run. There is no reason why a compensation analyst could not become a marketing analyst or an OD professional a sales rep.
Similarly, professionals from other disciplines can become successful in HR. At Nissan in Tokyo, one of the specialists on their award wining diversity team was formerly one of the engineers working on the luxury Infiniti. Why would Nissan ‘sacrifice’ a smart engineer to HR? It’s because they don’t see it as a sacrifice; they see HR as a critical function. They want HR to know the business and the business leaders to know HR.
Switching jobs only happens every few years, but there are some things HR professionals can do right now. When I worked for an oil company in MalaysiaI spend a couple of days riding around with sales reps and a few days at a service station pumping gas. This was far more useful for me than going to an HR conference or attending training on performance management. After that experience I had a feel for the business I never would have got if I had stayed at my desk. CEOs should ensure their HR people have many of these sorts of opportunities.
An issue for the CEO
Expertise in managing human capital is an important competitive lever. Your operations people are experts in operations, your sales people are expert in sales – but they are not experts on human capital management. The only place you have deep expertise on human capital management is in HR. However, that expertise is not as valuable as it should be unless HR people have hands-on experience with customers, products and operations. A company that invests in job rotation for HR professionals will see a leap in their capability to strategically manage human capital.
There is a balance to be had here. You don’t want a compensation department staffed entirely by people with little experience in compensation. It’s a matter of looking at the competencies and experiences of the HR team as a whole. In the mix you want to have a good number of years of non-HR experience; but enough years dedicated to HR that you have some real expertise. We can argue just where that perfect balance is, but the fact is that right now most HR departments have far too many HR experts and few people with hands-on business experience.
We need to make this change in career paths, or HR will never be able to contribute as it should to the success of the organisation.
By David Creelman, CEO of Creelman Research. Email: firstname.lastname@example.org