Most people who read my Insights have a tangential relationship with human resources. Those of us in the trenches in organizations are seeing a huge debate going on about the future of Human Resources. There are some people who think the function is broken beyond repair and should be blown up and started anew. There is a second group who says the function should be split in two, with one part handling administrative tasks and the second part focusing on strategic, business-related issues. There is now a third group that says HR has made huge strides and its role needs to be elevated in the corporation. An article in the July/August issue of the Harvard Business Review entitled, “People Before Strategy: A New Role for the CHRO,” says that the heads of finance and Human Resources should be part of a triumvirate with the CEO, as CCFO and CHRO to decide the financial and people issues for the corporation.
What is going on to create this turmoil and vast divergence of opinions?
First, there are companies that range in size from a few employees to hundreds of thousands. These different-sized companies have varying degrees of sophistication in all their services and systems. At a small company, you could aspire to have a strategic HR person but can't afford one. Your small organization needs to pay people and handle benefits claims, so you hire someone to do that instead.
On the other hand, you may be an experienced operations person who came up through the ranks when HR was called Personnel and are now running a company. People who did Personnel work were not expected to be strategic. Your frame of reference may not have changed in 20 years.
During my time in HR, which has been since the 1980s, there have been two groups of people in HR: Specialists and Generalists. The Generalists were people without a lot of formal HR training, many of whom learned “HR” on the job. Many of the positions were more administrative and tactical. The Specialists were in areas like organization development, selection, leadership development and compensation. A lot of these people had graduate degrees in these areas. Over time, this has evolved into what is now called talent management.
Many companies tried to cross-train their Specialists and Generalists in an attempt to be egalitarian. Quite frankly it didn’t work. The Specialists could successfully be Generalists, but not the other way around. Ram Charan, one of the authors of the article I mentioned earlier, also wrote an article in last year’s Harvard Business Review that advocated for dividing these two groups into different components and having them report through different chains of command. For many midsized or more mature organizations, this may be the path of least resistance. These organizations need both tactical administrative support, unless they can outsource it, and a strong talent management function. This is not working under one roof known as HR. The users of these services can separate the two functions, and the whole area is viewed based on the lowest common denominator, administration/tactical.
The most recent twist as outlined in the “People Before Strategy” article does have interesting possibilities, but in many organizations it will not succeed. Why? You can find excellent strategic talent management people to do the CHRO role. The challenge is going to be to find a CCFO and CEO with a high enough Human Resource Intelligence Quotient (HRIQ) to be able to partner and utilize the CHRO’s capabilities to manage the business. It will work at General Electric, BlackRock, Tata Communications and Marsh because they have been operating this way for years. This concept holds promise at places like Google, Microsoft and Apple because they have a strong need for specialized talent. They know they are competing for the same people, and they have to do this people thing better than their competitors to win and keep their human capital.
So is the answer HR Lite, Talent Management 2.0 or the new CHRO in the executive suite adjoining the CEO? Organizations are always going to have administrative needs. They will continue to outsource everything possible. Organizations will have varying levels of talent management functions. The organizations with higher HRIQs will invest more and get a greater return on human investment (ROHI). The very best organizations will fully integrate finance and people at the top of the organization.
EASI•Consult® works with Fortune 500 companies, government agencies, and mid-sized corporations to provide customized Talent Management solutions. EASI Consult’s specialties include individual assessment, online employment testing, survey research, competency modeling, leadership development, executive coaching, 360-degree feedback, online structured interviews, and EEO hiring compliance. The company is a leader in the field of providing accurate information about people through professional assessment. To learn more about EASI Consult, visit www.easiconsult.com, email [email protected] or call 800.922.EASI.
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