HR should not be defined by what it does but by how it delivers results that enrich the organization’s value to customers, investors, and employees. More specifically, HR can help deliver organizational excellence in the following four ways:
- First, HR should partner with senior and line managers to move strategy from the conference room to the marketplace.
- Second, HR should become an expert in work organization and execution, delivering administrative efficiency to minimize costs while maintaining quality.
- Employees should represent employees’ issues to senior management and at the same time work to increase employee contribution, i.e., employees’ commitment to the organization and their ability to deliver results.
- Finally, HR should shape processes and culture to boost an organization’s ability to change.
The primary responsibility for transforming the role of HR belongs to the CEO and to every line manager who must achieve business goals.
Why HR Matters Now More Than Ever
Industries, businesses of all sizes and locations confront the same five fundamental challenges. These issues collectively require new capabilities. Who is now in charge of developing those skills? HR can fill that need by helping organizations meet the following competitive challenges:
1. Globalization: With the rapid expansion of global markets, managers are struggling to balance the demand to think globally and act locally. That imperative requires them to move people, ideas, products, and information around the world to meet local needs. They must be more literate in the ways of international customers, commerce, and competition. Globalization requires that organizations increase their ability to learn and collaborate.
2. Profitability Through Growth: Executives will now have to pay attention to the other part of the profitability equation – revenue growth. The drive for revenue growth, needless to say, puts unique demands on an organization. Companies seeking growth through mergers, acquisitions, or joint ventures require other capabilities, such as the skills needed to integrate different organizations’ work processes and cultures. They must also become more market focused and in touch with the needs of their customers.
3. Technology: In the coming years, managers will need to figure out how to make technology a viable, productive part of the work setting. Not all technology adds value, but technology can and will affect how and where work gets done. Managers must stay ahead of the information curve and learn to leverage information for business results. Otherwise, they risk being swallowed by a tidal wave of data.
4. Intellectual Capital: Successful companies will be the ones adept at attracting, developing, and retaining individuals who can drive a global organization that is responsive to both its customers and the burgeoning opportunities of technology. The challenge for organizations is making sure they have the capability to find, assimilate, develop, compensate, and retain such talented individuals.
5. Change: Companies must be able to learn rapidly and continuously, innovate ceaselessly, and take on new strategic imperatives faster and more comfortably. They must create a healthy discomfort with the status quo, an ability to detect emerging trends quicker than the competition, and the agility to make rapid decisions. To thrive, they will need to be in a never-ending state of transformation.
HR’s New Role
In the new economy, winning will spring from organizational capabilities such as speed, responsiveness, agility, learning capacity, and employee competence. Successful organizations will be those that are able to quickly turn strategy into action and manage processes intelligently and efficiently. The need to develop those capabilities brings us back to the mandate for HR set forth at the beginning of this article.
1. Partner in Strategy Execution: Senior management should ask HR to play the role of an architect who draws up a comprehensive set of blueprints for the company. HR must be held accountable for conducting an organizational audit. Without such clarity, managers can become myopic about how the company runs. They might overlook what drives strategy implementation and what stands in its way. HR managers should be assigned to take the lead in proposing, creating, and debating best practices in appraisal and reward systems.
HR would be responsible for bringing state-of-the-art approaches for creating a team-based organizational structure to senior management’s attention. In time, the concept of HR as a strategic partner will make business sense.
2. Administrative Expert: HR professionals will need to shed their traditional image of rule-making policy police and become administrative experts. HR staff will have to improve the efficiency of both their own function and the entire organization. Within the HR function are dozens of processes that can be done better, faster, and cheaper. Finding and fixing those processes is part of the work of the new HR. Improving efficiency will build HR’s credibility, which will open the door for it to become a partner in executing strategy.
3. Becoming an Employee Champion: In their new role, HR professionals must be held accountable for ensuring that employees are engaged fully. HR must now take responsibility for orienting and training line management about the importance of high employee morale. It should be the employees’ voice in management discussions and offer opportunities for personal and professional growth. HR can play a critical role in recommending ways to ameliorate morale problems.
4. Change Agent: The new HR has as its fourth responsibility the job of building the organization’s capacity to embrace and capitalize on change. HR professionals must introduce such a model to their organizations and guide executive teams through it. As change agents, HR professionals do not execute change but make sure it is carried out. The process can be arduous, but it is one of the most valuable roles HR can play.
Four Changes for the Line
The new mandate for HR requires dramatic changes in how HR professionals think and behave. There are four ways senior operating managers can create an era in which HR is focused on outcomes instead of activities.
1. Communicate to the organization that the “soft stuff” matters: At Hewlett-Packard, managing people was one of the two hoshin (major objectives) of the CEO for 1997. At General Electric, CEO Jack Welch claims he spends 40% of his time on people issues. Southern Company’s senior managers are working to create an empowered organization. For HR to be taken seriously, senior managers must demonstrate that they believe typical HR issues —the soft stuff like culture change and intellectual capital—are critical to business success.
2. Describe clearly the deliverables from HR and make the accountable:
The new mandate for HR is like any other business initiative in this way. It is one thing to tell HR that it is responsible for employee contribution and quite another to set a specific goal. A company has a much better chance of achieving its goals if senior managers state what they expect from HR and then track, measure, and reward performance.
3. Innovative HR practices: Senior managers should always be on the lookout for new HR practices. Too often, after learning about an innovative idea, HR tries to copy it. Such efforts often fail and come at a high emotional cost. Instead, HR should focus on learning what works elsewhere and how a new practice should work in the company’s unique competitive situation.
4. Train HR professionals: Companies need people who know the business, understand the theory and practice of HR, can manage culture and make change happen, and have personal credibility. Sometimes, such individuals already exist within the HR function but need additional training. Other times, they have to be brought in from other parts of the company. In still other cases, they must be hired from outside.
Hard Work Ahead
HR professionals must become more professional and articulate their role in terms of value creation, rather than just getting the job done. They must create mechanisms so that business results quickly follow. It’s time to get beyond the stereotype of HR as incompetent, value-sapping support staff and unleash its full potential. Senior executives need to demand more of the HR function and invest in HR as if it were a business.
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