I had a bit of a humorous moment as I was reading this article from Mercer.com. While besides the point of this post, the Mercer page starts out saying:
The survey reveals that despite some progress, nearly 60% of finance executives still view HR as a cost rather than a strategic partner; and 80% of HR leaders believe the function is not credited with delivering any value to organisational performance. ((Theaker, Mike and Vernon, Philip. July 31, 2006/ “Removing the Barriers to Success in HR Transformation.” Retrieved from www.mercer.com on December 21, 2006.))
It’s entirely possible that only I found this humorous, but I thought to myself that if 60% of fiancé executives erroneously view HR as a cost, 80% of HR executives also erroneously view finance as a cost. The truth of the matter is that neither of us really know what the other does which has led to all sorts of battles over the years between not only finance and HR, but payroll and HR as well.
OK. So on with the point.
Theaker and Vernon go on to highlight three skills needed for success in HR transformation. These are:
- The skills of the function. While HR has strong traditional administrative skills, it needs additional expertise to broaden its contribution across the business.
- The use and integration of technology. HR has invested significantly in IT but has yet to demonstrate a real return on investment or quality improvement.
- The role and engagement of leadership. Many business leaders underestimate HR’s potential to contribute to business performance, which is exacerbated by HR managers failing to drive and sell the changes. ((Ibid))
The skills of the function. I’ve been arguing on this site for 2 years now that HR needs to be able to speak the language of finance, operations, sales, and anyone else that has strategic influence over the business. We still see ourselves as HR people, and even though we think we’re getting more strategic, we’ve only been getting more strategic as it concerns ourselves and the workforce. The sooner we start to see the correlations between our workforce management strategies and start integrating our plans with the rest of the business, the better off we’ll be and the better off the entire business will be.
The use and integration of technology. HR has not yet shown an HRI or quality improvement? Oh I beg to differ. Perhaps this is best left to my very ROI/TCO able contributor Donald Glade, or perhaps even one of the hundreds of HR technology vendors can help me out here. But HR technologies such as web self service, workflow and other types of process management, and even the core customer service technologies buried in call centers such as IVR’s have had huge dollar impacts to our businesses. Mercer should know this and I assume should have studies saying this as well as anyone out there.
The role and engagement of leadership. I’m not sure where to go with this one as Theaker and Vernon go on later in the paper to talk about leadership and governance rather than engaging senior executives to the HR cause. My point however, is that they were at the very least headed in the right direction. No HR strategy will find success without the clear and unwavering support of senior executives to both support and publicize the efforts.
4 responses to “Required Skills for HR Transformation”
> The use and integration of technology. HR has invested
> significantly in IT but has yet to demonstrate a real return on
> investment or quality improvement.
You are correct to point out that this is not accurate. There are amazing process improvements from technology investments. Looking back over the last decade you can certainly find processes that have been completely transformed. That said, the bar is very high — when technology works – we soon take it for granted. Also it is often easier to show HR efficency improvements than business impact.
Regarding skills needed for HR transformation — a bit more internet-technology and application literacy among HR decision makers is needed. I can recall several conferences over the past couple years where I was in sessions in which HRIT people were discussing new technology and trends. The lack of vision and understanding around technology sometimes is astonishing — what I remember from these sessions are items such as the need to recognize younger workers’ preferences for IM over email… Not exactly strategic or visionary stuff…
The innovation, new models, and new technology transforming HR services delivery are coming from outside the enterprise. This is to be expected under any circumstances. However, HR decision makers are not nearly as technology savvy as they should be. Many buy HR solutions like they were still shrink-wrapped software. There should be more HR decision makers with enough vision and understanding about technology so they not only can evaluate alternative delivery models and vendors, but be able to join in the discussions that will influence industry and vendor directions. I’m not saying those people don’t exist — but they are a rare breed.
While ROI in HR and Finance are very real in terms of discrete initiatives, the bottom line is HR and Finance are both, by default, cost centers – period, end of story. For any of those that disagree with me, here’s the bottom line.
When you look at any revenue generating business (remember, HR and Finance are cost centers designed to support those revenue generating businesses), the businesses are rewarded based upon revenue and profitability. Businesses that lose money get treated poorly by the investment community and share holders. When businesses lose money repeatedly, they are simply shut down. Get it?
And, when HR and Finance do come up with “brilliant” ideas to make money, they seldom have the expertise to build the business case and get the support to move forward. Moreover, there are few consulting firms that have the respect of the C-suite, such as McKinsey, that have the credibility to help make the case. Note – there’s a good reason why the McKinsey’s of the world do so little consulting in the HR community.
So, the whole HR cost center debate will continue. Rare is the HR organization that can not only create the vision to act as a truly value-added partner, even rarer is the organization that can get management’s attention to make it happen in spite of the business case.
Allow me to illustrate with an Employee Benefits example. Everyone knows that healthcare costs are insane. Even Michael Porter in his book Redefining Healthcare cites employee benefit managers as a major root cause of our crisis. Why? Because HR has no accountability for healthcare costs or to that end, monetizing mistakes and controlling trend (healthcare inflation). Very few, if any, HR/Benefits professionals have any skin in the game – they don’t get bonuses, they don’t get promoted, they don’t get bigger raises, they don’t get more staff, etc. for demonstrating their ability to manage healthcare costs. What they do get is costly consultants, such as Mercer, that don’t talk in ROI terms, but cost terms. So, it becomes a self-fulfilling prophecy. I rest my case.
[…] Systematic HR: Required Skills for HR Transformation “The skills of the function. I’ve been arguing on this site for 2 years now that HR needs to be able to speak the language of finance, operations, sales, and anyone else that has strategic influence over the business. We still see ourselves as HR people, and even though we think we’re getting more strategic, we’ve only been getting more strategic as it concerns ourselves and the workforce. The sooner we start to see the correlations between our workforce management strategies and start integrating our plans with the rest of the business, the better off we’ll be and the better off the entire business will be.” […]
I read an interesting statistic on HR.com a few days ago: 60% of HR professionals are cinvinced HR really makes a difference. Only 20% of the line managers think HR makes a difference.
I am in HR for over 20 years and I hear the same stories and complaints about HR, as descrinbed in your reactions,all the time. Companies have the HR depaftment which they deserve/ want. And HR doesn’t have to courage to radically re-invent itself. Is the org. of the future one without an HR department ? Like banks without customer desks ? Will recruitmenst be done entirely by line management supported by systems hundreds of times more powerfull than Taleo and Co… ? Will development beentirely owned by employees themselves, no line management intervention? Should we not start radically reinventing HR in stead of fine-tuning it… The latter we have tried for over 30 years now and see where it brought us… 20%….