HR directors have a unique position in the boardroom as the only members of the senior team who need to think and act like a chief executive or chairman. HR alone needs that broad understanding of issues that cross departmental boundaries, believes Andrew Kakabadse, Professor of international management development at Cranfield University’s School of Management. Trouble is, Kakabadse sees little evidence of this actually happening in today’s boardrooms.
“HR is absolutely a vital component and should be there partnering the top team and board, but the problem is it is not there,” suggests Kakabadse.
And when HR input is there, it is often not regarded as up to the job. “I’m not finding that many HR directors that do well with talking the language of strategy and policy. But there’s no doubt about the need,” he says. “When I talk to CEOs and chairmen they do not think that HR delivers the strategic insights that are essential to governance of organisations.”
Kakabadse has built a solid reputation as an influential thinker on HR issues, leadership, executive performance, international relations and many other workplace-related issues. He is a visiting professor at many universities and institutions, a consultant, lecturer, author and journal editor. Currently, he is focused on a major £2m global study on boardroom effectiveness and governance.
“From the point of view of talent retention and change, HR is and should be the partner for the CEO and the chairman,” points out Kakabadse. “The reality is, it’s not and it’s other functions that are doing that. Other functions or inputs take over that HR contribution, such as external consultants or even finance. There are quite a few finance directors that have an HR management role as well.
Too HR?
One of the problems, according to Kakabadse, is that HR directors are seen as ‘too HR’ and divorced from strategy. Rightly or wrongly, HR is also perceived as focused on the transactional. Instead, what’s needed is for HR to take a broader, strategic viewpoint. “I’ve seen cases where engineers or finance do a better job than HR people, because they can bring that wider experience and make a valuable contribution,” he says.
But, more than any discipline, it’s vital for HR to be able to align its thinking with the CEO because it is a cross-functional discipline. “HR needs to think like HR needs to think like CEO or chairman in way other functions do not. Finance is there to drive costs and value for money, but does not need to think like a CEO. Marketing needs to think about the position of the brand, but does not need to think like a CEO. Sales does not have to think like a CEO, but how to deliver sales. But HR does need that broad overview,” explains Kakabadse.
“Most companies are complex and have confusing strategies that need HR – there are tensions, for example, between driving costs down and creating quality service and investing in talent.”
To gain that broad scope, HR needs more general business experience. Secondment to other departments can help, but the usual few months or two-year stint is not enough to create the depth of understanding into other disciplines. “You need five years to truly understand marketing or awareness. You need time to create awareness,” contends Kakabadse.
Thinking like a CEO or chairman requires HR to take a look at the whole business, and that requires being fluent not only in business language but also in the the language of finance, which is where many HR departments fall short. Talking about competencies is not enough; there needs to be real strategic input.
This mismatch between between requirements and delivery has created a polarised situation. On the one hand, Kakabadse highlights surveys that have found that the number one function identified as critical to the development of the organisation is HR, at the same time revealing that the number one function to be outsourced is HR.
The first step towards changing this situation is first to acknowledge that there is a problem. Kakabadse suggests the need for an HR leadership forum, where these issues can be laid out and HR professionals can discuss how they can become more strategic and walk and talk like chief executives.
One Response
Kakabadse interview
Professor Kakabadse offers some very important insights into challenges for HR inside many organisations. He is definitely right about senior HR people getting wider business/organisation experience. One area that should not be overlooked is the contribution of coaching to strengthening skills in strategy and policy. As HR professionals, we need to think in a broader about coaching contributing to greater strategic competence.