How often have you heard business leaders wishing that their Human Resources team was more strategic? I have heard that several times and felt that on a number of occassions through unsaid words. Leaders wish that HR departments are more strategic in their focus, rather than being overly pre-occupied by administrative and transactional tasks. Leaders, today, want their HR team to create business value, instead of having ‘compliance’, ‘adherence’ and ‘tasks’ as their top KPIs or KRAs.
But, when it comes to core functions like Finance or Marketing or Sales, leaders do not have the same disillusion. Though leaders are always pushing these teams to deliver more and more, they are not so hopeless about them in most cases. Why? To my mind, there are two key things which undermine the HR departments’ ability to create business value.
- Diffused Focus: Frankly, most HR teams suffer from a diluted focus. The lack of separation of “administrative” tasks and “strategic” human capital management ensures that HR hours are mostly spent on transactional activities, rather than creating & executing transformational plans. This is even more prevalent in traditional businesses. For HR to act as a business partner, it has to be close to the business and focus on the bigger issues. The admin function should be a separate group, which is aligned to the HR needs of the organization.
- Lack of incentives: This is a strange observation that many of us may have made. In several good business schools, I have seen that the cream of the class always opts for careers in Finance or Sales / Marketing. HR is usually taken up by people in the 1st and 2nd quartiles of the class. Why? (Note: I am not trying to undermine anyone’s abilities or pedigree here) My hypothesis is that HR careers are less rewarding than a career in the core business functions, thus incentivizing the best people to choose careers in areas other than HR. Companies could look at this situation more strategically and with a long-term view. Leaders do recognize the role of people in the success of their businesses. If companies could make HR careers as rewarding as others, the best minds would be keen to work in the field, since the opportunity costs would be low.
Again, these are hypotheses and may or may not be apply to all cases.
What do you think needs to be done in order to ensure that HR departments can add real business value?