HR needs to build commercial awareness
I was interested to see recently a briefing paper from the Korn/Ferry Institute entitled What Makes an Exceptional HR Leader? Appalled to see that the authors suggest that taking a role outside of HR is no longer a prerequisite for an HR leader; that business understanding is absolutely secondary to other attributes. The paper does actually conclude by suggesting that HR professionals should pursue the broadest experience in testing roles and make career choices that broaden their understanding of business.
All too often business leaders don’t see HR as having the business awareness to be real business partners. They see HR staff as fulfilling a purely transactional role – we’re launching a new product, go and hire us the staff; we’ve completed our acquisition, now take care of the legal niceties.
The bald truth is that HR’s agenda is a small part of what preoccupies the senior leadership team. In order to be a valued partner you need to focus on what your CEO is trying to achieve as their priority. Business acumen and an ability to implement business strategy with an effective HR strategy are the skills most desired by business leaders of HR partners.
There is often a mismatch between the long term priorities of senior management and those of HR professionals even though there may be broad agreement on short term issues, according to a CIPD survey from early this year which found that nearly 1 in 5 (18%) business leaders is unaware of HR’s contribution to business strategy, while a further 18% say senior HR people have no involvement in business strategy at all. And only 21% of business leaders believe HR successfully combines commercial and HR expertise.
If you’re not after a leadership position perhaps you don’t want to ‘dilute’ your skills and track record, and think that technical depth is more valuable than functional breadth. But if you want a place at the top table, if you want to be a strategic business partner, your route to the top is blocked if you are not seen as having the requisite business awareness.
That HR leaders need to develop business acumen is something that I have been recommending for years now. In fact in I think it is essential whatever your profession, exposure to a range of business functions benefits the individual and organisation. Spending time in a business unit leadership role or taking a secondment to the finance department not only equips an HR executive for an HR leadership role but, potentially, for business leadership positions too.
So work in a line management role, go and be a client of HR. You can’t perceive the real issues unless you’re a client. Similarly, when did you last go out with one of the salesforce to meet a customer? If HR leadership has hands on exposure to P&L, financial processes, sales and marketing planning then not only do they develop their commercial skill set, but they build firsthand knowledge of the broader business agenda.
Plainly there is an opportunity for HR to develop and present the business case for creative solutions that address business priorities and to influence business decisions. The CIPD say “for HR to maximise its contribution to business performance there needs to be a stronger connection between HR leaders and business leaders in terms of what they view HR’s current and potential role to be.”
So the key is to decide what does it take to be successful an exceptional HR professional? A favourite quote from hockey player Wayne Gretzky: “A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.” Plan ahead, plan your career, and plan your moves.
HR executives have always thought that they could work across a range of industry fields, the skills are transferable, so you can move from telecoms to manufacturing to professional services with no trouble. The truth is though that doesn’t build in depth knowledge of the sector, for that you need to move out of HR, work elsewhere in the business before moving back to the HR function. Early in your career you should probably work in two or three sectors to work out what interests you but by your mid-30s, as a senior HR business partner or HR director, you should have settled on an industry sector.
Building broad business background allows you to understand problems from more than one angle. It encourages a breadth of thinking and allows you to understand how to get things done more effectively. For this reason I also heartily recommend continuing education such as an MBA course. You move out of your comfort zone, meeting a diverse range of managers from a range of sectors and cultures; you learn from watching and working with each other; you learn how colleagues from IT, finance and other functions about how they operate and think about and deal with business problems.
The Corporate Research Forum states in its report Developing a Strategic HR Approach that HR needs to ensure there is a clear line of sight between business strategy and HR actions. HR must interact with the business to understand and make an input to corporate strategy, and deliver it. This report gets to the heart of why I encourage you to develop and build commercial awareness – “ultimately businesses exist to make money, and HR should play a significant role in this. HR’s strategic approach needs to reflect the unique features of the company and industry in which it operates, and be linked to how the business makes money”.
If you want to be an HR leader you need to think holistically about the business and talk the language of business based on real analysis and sharp end expertise. Sorry Korn Ferry on this one you are way off the mark!
Developing a Strategic HR Approach published by The Corporate Research Forum, July 2013
HR Outlook: A variety of leader perspectives, published by Chartered Institute of Personnel and Development (CIPD), London, January 2013
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Michael is Chief Executive of 10Eighty. 10Eighty is a career and talent management consultancy that helps organizations maximize the contribution of their employees by ensuring satisfying jobs and careers for their employees.Michael is a Human Resources professional, having worked in the National Health Service, Insurance, Commodities and...