Frontline Intelligence: HR on the brink of transformation

by Human Capital05 Jul 2012

Human Capital Management stands at a crossroads. After emerging from the older, less impactful field of personnel management and growing up quickly, our profession has to decide what it wants to be. We have walked, sometimes hesitantly, but always positively, towards the boardroom, knowing that if only we could marshal our ideas, we have something powerful and important to say and do.

So, having got into the room and around the table, what are we going to do next? In our last column, we discussed the absolute importance that is now attached to ‘people strategy’. Either because it drives growth in the good times, or because it allows us to make better use of scarce resources when things are tough, our work is central to business performance. Now that the importance of our work is plain for all to see, we will either keep transforming, or we will be swept aside. For many of us, it is time to make sure that we are up to the challenge. People strategies can no longer merely support or help to deliver independently created business strategies– they have to be the business strategy. And we must always demonstrate a clear ROI for all that we do – not just in general terms but in terms of the organisation’s specific goals.

 As we discussed last month, the challenge is to establish clear people solutions that are fully part of the business goals, to prove how our work will deliver them, and to be sure what the value chain is – to show and create the causal links. Until we can show, for example, how talent development or an enhanced culture or improved talent sourcing actually delivers increased sales or better margins or higher customer satisfaction, our work will always be underestimated. It sounds tough, but we simply have to rise to this challenge.

The fact is we need to hold ourselves to account – not just because the CEO will; all too often, they shy away from doing so, because the perception still is that our work can’t be fully measured or valued that way – but because if we don’t do so ourselves, our efforts will continue to be at the margins.

The answer is not merely to reorganise or refocus HR from within – the needs of the whole organisation need to be our starting point. We need to stop merely supporting (or even ‘partnering’) the business, or thinking about how to transform ourselves, but start creating people strategies that directly drive our organisations’ ability to perform.

Some of our field’s habitual ways of thinking and operating certainly risk limiting our potential. Our starting point is often that we are a service or a function. We think about ‘best practice’ and compliance.

Important though those things are (and I would never wish to devalue the importance of our professional excellence and passionately-held values), we need to start with a full view of the business and how people can deliver its needs.

We bring unique skills, opportunities and approaches that are critical to business performance, and can certainly deploy these much more powerfully when operating as true business leaders. HR people need to have the potential to understand how people deliver business performance.

All too often, we create a structural model around HR business partnering, and somehow expect that this will lead to true partnership. The fact is, true business partnership does not happen because we create a structure, but instead requires us to challenge others, to bring our unique talents to meet business needs, to demonstrate clarity of thinking about the link between people and the business’s goals – in short, to be business leaders ourselves, not merely part of a partnering structure.

The structure of the HR model is not the point. The key thing is to be close to the business, to be trusted leaders and central to creating the overall strategy, not a separate people strategy, HR service or a supportive ‘function’.

Another key idea is freeing HRDs up from operational concerns; they should be able, as other leaders do, to create teams of people delivering specialised activities so that theycan focus on the bigger picture. Indeed, key functions hitherto central to HR increasingly reside in other parts of the structure (either within business units or in a centralised ‘corporate functions’ unit). Does this free up and empower HR to be strategic, or endanger our survival as a profession? Will you even have an HRD in a decade’s time?

Perhaps once again this is not so much a structural question as one about expertise and influence. The key thing is not whether there is an HR function, but whether there will be people professionals and leaders who can drive business performance. That is the true challenge for us all.


About the author

Ed Hurst is the managing director at Kenexa Australia. For further information phone (03) 9602 3899 or email