In India, when the HR function responds to the challenge from the CEO or the CFO, he does not know the cost of doing business
HR will become completely disruptive in four years. Indian CHROs will soon face a whole lot of different questions than what they are hearing today
There is a question over the capability of HR. While HR builds capability for the rest of the company, how does HR build its own capability?
Anthony: It’s the doctor who doesn’t take his own medicine. HR, as a function, is a relatively new concept that came out in the 90s. If you think about the evolution, we are in our own change process right now moving from payroll to personnel to having a seat at the table and driving the business. I think we spent so much time building the muscle that we have failed using it on ourselves. Our clients are increasingly investing more on HR capabilities and talent. We have migrated to newer models and these models have supported us to support the business. That has allowed us to focus on the business, but not really on ourselves. There is a lot of talent out there that may be playing a field/business partner role but is not suited for it. The next phase is thinking about the skills, competencies and behaviors needed for the different futures of HR. The clients who are seeing a strategic impact in HR are the ones that are making significant investment in HR talent. In India too, I see it as an issue. In India, I think the issue is more about not having HR talent available in the marketplace and having to build it and hence the investment in HR becomes so much more important.
Jayesh: I would go one step further. In India, there would be a requirement for business to collaborate with MBA institutions – most of the feeder function that has happened in HR has happened from a few institutes. One would really like to see an investment there. Five to six years ago, Accenture was growing rapidly and we needed HR talent. So, we partnered with an institute and shaped the educational agenda by influencing part of the curriculum so that we would get ready talent. In India, we need to start looking from there and then look at building capabilities for HR. We need to start much earlier and there are multiple things we need to do; be it technical or functional skills of HR processes as they vary across the various industries. We need to significantly differentiate in the formative stage.
It is very critical to get line managers to spend some time in HR so that they become the best sponsors you can go to for implementing HR processes. It should also work the other way around as well. We need core HR professionals to go out and run four-five businesses and be successful in it. In India, it is possible that two companies on the same street have different approaches: One has a very rudimentary approach while the other’s HR practices could be benchmarked against the best of the world. The dichotomy in India is significantly higher than other countries.
Do you think that is because there is an impression among MBA students that those who go into HR are there because they can’t get into the other functions like finance, operations etc? Also, why does HR have a hard time getting funding for its initiatives?
Anthony: On a global perspective, I think more people want careers in HR now than in the past. Human Resources is one of the most sought after jobs for different motivations such as capability, global reach and compensation. I can validate your statement that HR is not investing enough time in building its capability and not recognizing the value of HR and what they do. To come to the second part of the question, I think any corporate function has the challenge of funding these days if it is not directly related to top line growth. Globally, the issue has always been HR having to understand the RoI. HR has to be better at being ahead of understanding the business and its drivers. Jayesh has a good point when he says HR helps your business understand what it takes to run your business. A client of ours spent $35 million a year globally on HR technology and it’s a big investment. If you understand what it means for your business, then the question of whether it is a discretionary spend does not arise.
Jayesh: In India, the HR function, when responding to the challenge from the CEO or the CFO, does not know what is the cost of doing business. I feel that the HR function underestimates the rationale to prove to the business that the HR initiative is essential. The CFO asks the same question to all other functions as well and not just HR. HR has to capture data and measure it so that it can provide the rationale to the business. The dialogue between the CEO and HR Head is more about how can I improve the RoI rather than where is the RoI and I think that is healthy. HR Heads find it unfair when questions are being raised about new initiatives that have never been done in the past. We must segregate what is required for business delivery versus discretionary investment.
How disruptive will HR be in say another three years?
Anthony: HR will be disruptive as long as they are not afraid of themselves. I think analytics is extremely disruptive. Part of the reason why companies have not had the level of predictive analytics is fear of the unknown and how much information am I going to put in the hands of my business to understand what I’m doing and how I’m doing it. But if we are effective in our job, it will let us move up and above the value chain of what we can provide for business and I think what will come out of is real pockets of meaningful investment.
Jayesh: In India, HR will become completely disruptive in four years. A whole host of companies are going to Cloud and are implementing very well featured Human Capital Solutions now. A lot of basic HR services like leave, travel etc will soon get wiped out. Two-three years down the line, Indian CHROs will face very different questions than what they are hearing today: The CEO will ask are you building the best custom talent management solutions for me? The talent will ask do you have the best proposition for investing my time in your company and not the other way around. Today, we talk about employee satisfaction. At that point in time, the employee will become a stakeholder.
Do you think HR is afraid of such a change because intangible parameters like engagement and retention become quantifiable?
Anthony: I think that is a great point. The ones that rise to the top will not be afraid. I think there is an inherent fear within many organizations. If you haven’t come to the realization that the partnership with the business and CEO is not there, then the HR function and the organization will fail. It may be in the DNA of some HR leaders, but this is an opportunity to understand and build the shared understanding of the value HR can bring to the business.
Jayesh: I agree with Anthony. Let me illustrate with an example. Coaching has been recognized as a leadership skill over the past three years – it unleashes potential and allows the employee to perform better and also build the leadership pipeline for the future. Most HR Heads have transitioned from being a coach to being a boss and also a coach.
Do you think HR has a future? If companies have the HR technology to do it, then do they need the people to do it?
Anthony: Yes, of course (laughs). The real question is what will HR look like in the future and how it will change in the future. I think we are in a very exciting place right now. We are just beyond transformation and the next phase of HR is this continued evolution. Earlier, we invested in Business Partners, CoE model, the shared services. Now we are investing in greater digital channels. We are seeing a greater level of customization and evolution of that model company-wise and industry-wise. Learning organizations are investing heavily in the business partner function and look at a greater cadre of talent in HR experts who are in the business that can facilitate a lot of programs or initiatives for the organization. You will see other organizations that are going to develop R&D or invest heavily in the CoEPs to drive insights, innovation or new development from the external markets into the business. Shared services become an important factor in the optimization of the function. In summary, you are going to see different evolutions of this model and each organization is going to be tweaking that.
Jayesh: I would bet on the science-driven HR in India. The role of HR is going to be significantly better informed with data, analytics and therefore more challenging but with a lot more opportunities and value creation. The future of HR is brighter and is far more challenging than it is today.
The first part of the interview series was published in June 2014 issue of People Matters.
Anthony Abbatiello is a Managing Director and the Global HR Consulting lead within Accenture’s Management Consulting practice, based out of the New York office. Anthony has spent his career advising leading firms on building high performance businesses that drive optimization and growth through Human Resources and Talent Management.
Jayesh Pandey leads the Talent and Organization Practice in India. He has over 18 years of work experience. He works with the CHRO’s and CLO’s to build processes, organization and metrics to make functional and technical learning more effective and efficient. Jayesh is also the sponsor and faculty for the Leadership Development Program in for the Consulting Workforce in Accenture India