HR stands at a crossroads in the minds of business leaders. Whether we would like to acknowledge or not, there is a disconnect between what the HR leaders and Business Leaders think on what HR as a function delivers. CEOs worldwide think human capital is a top challenge, and yet they rank the HR function on the eight or ninth position in the list of important functions.1 Has the HR failed to keep pace with changing business priorities? Let’s look at a few assumptions business leaders hold regarding HR:
- HR approach has been mostly reactive rather than proactive: Business leaders feel that HR often comes into action when the impact of a situation is already felt. HR is often seen trying to solve a problem or completing tasks rather proactively mitigating risks.
- HR has failed to build a strong support ecosystem: Business leaders often see the HR agenda as independent of the Business Agenda and often fails to understand the driving factors behind HR priorities. The perception that the HR leaders lack business understanding or commercial acumen acts a big barrier in building credibility and buy-in for the HR agenda.
- HR is seen as a cost and not an investment: Most of the times any spend in the domain of HR is viewed as a cost and not an investment with a pay-back period. Business leaders often argue that HR spends are shown more as ‘feel good factor’.
So what should the HR be doing differently? One can reasonably say that insight from the past should be a good starting point for HR leaders to know what needs to be done differently.
- Be aware of the global business environment: The external environment plays far more critical role in defining the business outcomes for organizations. HR leaders need to understand people implications of changes in external environment and engage with business leaders proactively to mitigate the impact of external changes on business.
- Understand the Business: Most of the Business leaders complain HR people do not understand the business and hence are ignorant if the on-ground challenges. A grip on the ground realities can help HR have a meaningful engagement with business.
- HR is Business: HR is no longer a support function but an integral part of business influencing business outcomes. It is high time HR leaders start talking about HR outcomes in form of business deliverables and impact.
Potential Game Changers for HR
- Performance Management System: How performance is managed and rewarded is a key concern across organizations. The current performance management systems have failed to keep pace and are ineffective given the pace at which things are changing. We have had some success in form of continuous feedback, doing away with forced ranking but nothing concrete enough to do away with the current approach to performance management and linking employee rewards.
- Embracing Technology: Artificial Intelligence: HR alone is not impacted by the continuous advancement in technology and HR leaders should embrace this tech disruption to redefine its role. HR needs to leverage technology for its benefit and as value presevator or value creator. HR needs to be able to migrate repetitive and transactional activities seamlessly without taking away the human touch.
- Corporate Governance: The growing need of transparency and accountability required by law and investors is making governance critical for many business decisions. HR can play a pivotal role in ensuring relevant information and data is available with the business for informed decision-making.
- Game of Differentiation: HR needs to come out of the vicious circle of benchmarking as it leads to mediocrity. A ‘one-size approach’ to HR policies and practices is no longer relevant in a world where success is dependent on how differentiated offerings are provided the consumer, which is the employee in HR’s case.