Message to HR: Be leaders, don’t be a support function

At present, we have 71 trillion dollar economy globally, which is going to be 100 trillion soon. Three kinds of companies are basically driving this economy:

• Startups

• Born Digital (Amazon, Facebook, Google)

• Large physical companies going digital 

What is common amongst them is that they all need the talent to thrive upon. It is talent that creates value, not money. Rather, it is talent that finds money and allocates it. Talent further creates talent and it is not the strategy that competes but it is talent that competes. Therefore, HR is the trustee of that talent. 

Across the world, the HR function does not come in the top quarter in these companies. It is seen in the bottom quarter.  There are leading CHROs globally, who are seen as value creators in the industry. Some of them are CEOs and some of them are board members. In India, few exemplary would be Aadesh Goyal of Tata Communications, Dr. Mishra of Aditya Birla Group. What is that they do? What tool do they use?

Tools used by CHROs 

CHRO Judgment:  CEOs want CHROs to have the expertise in judging people. To do so, they may use all the tools and facts. But, in the end, what is their calibration of the people and talent is all that counts and this needs practice. CHROs should have the courage to debate with their partners and CEOs of the company, along with their functional heads. They should be able to check biases about the people as well.

Joint Business Diagnosis: CHROs should be able to do good business diagnosis along with CFOs and CEOs of a company. Today, a new trend has begun in businesses, where a company’s CFO gets input and CHRO also obtain inputs and then CEO evaluates them both. After analyzing them carefully, CEO plans and reallocates talent and money. In this process, CFO learns about the people side and CHRO gains knowledge about business and finance.   

For CHROs the call is - don’t be afraid of numbers and ask relevant questions to succeed in the business. In order to do good business diagnosis, one should be able to analyze the causes and the responses and should seek answers for the  questions like – What has caused the decline. What are the external causes? They should be able to deliberate on issues such as interest rates, pricing decisions, collaboration, product launches, wrong incentives etc. So, joint insights and learning from each other is the new norm.    

Connecting numbers and people: CHROs and HR should connect business to people and vice-versa. They need to ask questions about the growth of the company and ask how it can be delivered. They need to evaluate right talent for right jobs and also ponder upon, do they have right collaboration? So, the key is to keep it simple and practice it. 

Mastering externals: CHROs also need to master externals along with CEOs, colleagues, and peers. They need to be aware of major changes happening around the world. The Big changes that happened recently – Donald Trump election in the US, Brexit in the UK – all these are big changes. HR needs to be informed about them and if not then they need to ask questions about it. As the saying goes, curiosity is the mother of developing your capability. HRs need to do develop that capability and lead. 

Link with CEO goals, priorities, and concerns:  CHROs of all companies need to link with their CEOs goals, priorities, and concerns and further lead in bringing transformation. They don’t just need to remain a support function; rather they should lead from the front. They should be a part of the vision and mission. 

Build new HR talent pipeline:  Today, all leading CHROs have had experience other than in HR. CEOs are asking CHROs to gain experience beyond HR as well. Be it in – sales, product development, finance or any other portfolio. Organizations need to provide cross –department training to HR. It will further help in building strong HR talent pipeline. This trend is gaining ground in India. Companies like such as McGraw-Hill is practicing it. CEO of BMW, General Motors, and Unilever came from HR and are leading CEOs today. Hence, wide experience makes you more business oriented. 

Split HR into L&D and transactions: For HR to be successful, it is required to be split into two parts- first, learning and development domain and the second is transactions.  A leading example would be of Johnson & Johnson, whose 65% of HR is into transactions and that will be automated soon. Another example is of GE, where employees are learning coding. Therefore, employees need to learn new skills in order to adjust to the changing environment, as innovation is changing rapidly. 

In addition, getting HRIS systems and performance system is crucial to be able to compete in the disrupting environment. It all sums up to that entrepreneurship is the value creator and HR is the trustee of the talent. So, there is a huge opportunity and it is truly the time for HR. 

(This story has been built from the session delivered by Prof. Ram Charan, Author, Coach and Strategy Guru at 20th NHRD Annual Conference, Bengaluru on 8th Dec 2016)