NilaKanthi Ford writes:

Introduction

Three clear trends are potentially reshaping the role of the HR function in organisations.  The first relates to the rapid growth of a global economy.    Recent surveys indicate that the majority of multinationals anticipate major global mobility challenges over the next two to three years with companies in all regions anticipating increased cross-border moves.

Second, the rapid growth of the knowledge economy means the workforce will be critical in developing new and innovatory products to stay ahead of the competition.

Third, administrative functions such as payroll and attendance were handled by HR Departments.  These are increasingly being reduced by software solutions or outsourced to third parties.

These combined trends help to present the HR function with a way to re-invent itself.  HR specialists will be able to place themselves as the people specialists - a central plank to any commercial organisation.

At the moment, at KFVC, we have noticed that the HR function tends to be kept uniformed about the strategic direction of the business.  HR personnel seem to have limited commercial understanding of the business as a whole.  This indicates that senior HR personnel are still in transition. 

Workforce challenges will affect the bottom line

In our travels across markets and countries, KFVC Consultants hear repeatedly that CEOs are concerned that insufficient talent across their organisations could affect the company’s bottom line.  Other concerns raised include those of a) insufficient leadership talent, b) lack of alignment between business and individual objectives c) low employee morale.

In times of boom, organisational shortcomings are often masked.  In times, like now, of economic transition, more people are being forced to juggle more activities, motivation is challenged daily.  As workforces are being reduced, the competencies of the remaining people are not being developed to match changing needs.  This widens the skill gap perceptibly in a short period.

We would strongly advocate that the HR function is actively involved in understanding the commercial and strategic aspects of their business.  Far too often, we meet HR professionals focussed on just the HR agenda.  This is far too narrow.

To be effective, everyone needs to understand the organisation’s strategy and where they fit into an organisation.

The Head of HR should be a key part of the strategic planning programme.  Leaders know they need to understand how people can help an organisation succeed.  The Head of HR can really provide that understanding.  Having top talent will differentiate any organisation from its competitors.

HR professionals need to retain a balance between the minutiae of their HR knowledge and a broader commercial approach.  They can add significant value to their company if they started to focus on achieving high performance for the HR function on strategic issues such as Succession Planning and Talent Management.  In addition, by carrying out commercial awareness programmes, the HR decision making processes can be honed in a way that drives innovation and value throughout the organisation.

The Head of HR is an effective sounding board for the Executive team

The Head of HR can also play a useful role to the Executive team in ways unrelated to corporate strategy.  The Head of HR probably gains a more accurate insight from the organisation as a whole. Providing feedback to the executive and how their leadership style is impacting the business can be a significant role.

There is also the whole external domain to consider.  The Board of Directors for an organisation will be the object of scrutiny from the media, investors and other stakeholders.  The head of HR as informal executive coach is often overlooked.

This additional role for the Head of HR will also involve ensuring that the Executive leadership team are working together effectively.  The leaders of an organisation set the tone for the whole of their business.  They need to be coached and encouraged to be the best people and the highest performing team that they possibly can be.

Conclusion

In this article, I have outlined the three drivers of change – globalisation, knowledge economy, and outsourcing – that will provide the levers for HR functions to play a significant part in delivering an organisation’s strategy.  I have also suggested a number of ways in which the HR function can add significant value to every organisation.   By understanding the wider commercial picture of their organisation and being proactive in providing effective solutions, HR heads will become an integral part of every executive committee.

Recommendations for future Heads of HR

• Exhibit an understanding of the wider business and its commercial drivers,
• Align a talent management and succession planning strategy to the business strategy
• Ensure that the CEO and the Board are an effective working team
• Become a sounding board for the CEO and Executive board
• Understand what are the key business topics
• Demonstrate proactive problem solving
• Lead commercial awareness and innovation programmes
• Take initiative