What CEOs Want from HR and what HR Needs from their CEOs
By Dr. Kwame R. Charles
Director, Quality Consultants Limited.
I recently had the honour of moderating a forum hosted by the Human Resource Management Association of Trinidad & Tobago (HRMATT) at the Arthur Lok jack Graduate School of Business. The title of the forum was “What do leaders want from HR?”
The forum was very well resourced by four competent Chief Executives: Ian Chinapoo, the recently appointed Executive Director of the Trinidad & Tobago Unit Trust Corporation (UTC); Anna Henderson, CEO of Pereira & Company Limited, a member of the Neal and Massy Group of Companies; Russell George, General Manger of the Hyatt Regency; and Fitzroy Harewood, GM of PowerGen.
Four main themes ran through all four CEOs’ presentations: they were for the Human Resource function (HR) to:
- Know the business of the organization,
- Align HR to the strategy of the organization,
- Add value to the organization and
- Engage employees.
Let’s exploreeach of these points.
Michelle M. Smith, in her HR blog of May 2013, entitled “Here’s what CEOs really want to get out of their HR leaders,” opens with the statement: “Your CEO doesn’t want you to be a human resource leader – they want you to be a business leader with human resource expertise.” Others have put it more simply: “the business of HR is business.”For the HR “purists” among us, these are strong statements about what CEOs are expecting from HR, and they may even be considered controversial by those HR practitioners who see their “business” as, first and foremost, human resource management. But, as Fitzroy Harewood said, the HR professional must be able to talk about the business in a sensible way. He or she needs to learn the business in order to be able to add value to itthrough the management of its human resources.
HR guru, Dave Ulrich, who was the keynote speaker at HRMATT’s conference in May, holds a similar view with his concept of “HR from the outside-in.” Ulrich suggests that HR professionals should spend time meeting with their organization’s external customers and clients, out in the field, finding out what they want from the organization. This would give the HR professionals a better idea of the kinds of employees that should be recruited, the kind of training they should get, how their performance should be assessed and how they should be compensated, among other things.
Knowing and understanding the business you are in is key to managing the people in the business, whether the business is in the public, private or non-profit sector.
Once you know and understand the business of the organization, the next role of the HR function is to align HR to its strategy. According to Anna Henderson, CEO of Pereira & Company, HR is integral to an organization’s strategy. For the past two decades at least, there has been a debate about HR being “at the table,” in the boardroom playing a critical role in strategyformulation. It is only when HR is involved as an equal partner in an organization’s strategy discussions that it can be said to be truly strategic. A good gauge of how strategic HR is seen in an organization is its reporting responsibility. To be truly strategic, HR needs to report to the Chief Executive. The further down the hierarchy HR is, the less strategic, the less powerful and the less respected it is.
Of course, HR has to “earn its place” at the table by demonstrating in-depth knowledge and understanding of the business, its operations, its markets, its competitors and its competitive strategy.
Another role of HR is to add value to the organization. Ian Chinapoo, UTC’s new CEO, is very clear about what he wants his HR function to do: he wants to get “value for money” from his HR people. Chinapoo made the point that CEOs like numbers, and HR has a lot of numbers that it can use to demonstrate its value. The rapidly expanding area of analytics is one place where HR can show that it’s adding value. It is said that we’re in the era of “big data.” HR has to learn to harness some of its “big data” to demonstrate its value to the organization. What is absenteeism costing the organization? What best practices exist to counter absenteeism? How can we reduce the human and organizational cost of lost-time injuries? What incentives and reward programmes can we put in placeto increase productivity? What do we need to do to retain our top talent?
All of these questions can be answered by reference to human resource and other organizational data that already exist in the organization or that can be collected. HR needs to step up and demonstrate its bottom-line impact. As Russell George, GM of Hyatt, said, “Innovation must be part of what HR does.”
Finally, HR must ensure that employees are fully engaged. More and more research is making the link between employee engagement and organizational outcomes such as increased efficiency, improved product quality and customer service, greater market share, profitability and shareholder value. HR needs to help create an engagement culture in the organization and link engagement levels to outcomes. It is not HR’s role to engage employees. That’s the role of the line manager. However, HR has to train, develop, coach and counsel line management to create the environment for employees to be engaged. Therefore, although employee engagement is ultimately a line responsibility, HR, together with the CEO, should be the torch-bearers for engagement.
But the relationship between the CEO and HR should not be one-way. It’s not only what CEOs want from HR. It is also what HR needs from their CEO. HR needs the CEO’s full support and confidence for the advice and decisions that HR makes. CEOs need to trust HR to give them sound people advice, in the same way that they trust the CFO to give sound financial advice.
Just as CEOs wants HR to know and understand the business, HR needs their CEO to have a full understanding and appreciation of the role and function of the HR department. The CEO is ultimately the Chief HR Officer, as well as the Chief Financial Officer, the Chief Operations Office, etc. HR needs the CEO in their corner.
Finally, HR needs the CEO to appreciate and acknowledge that HR is first and foremost a line function and that they need to hold their line managers accountable for their HR responsibilities, in the same way that they hold them accountable for their production, operations and financial responsibilities. As Ian Chinapoo said, “HR doesn’t happen in HR. It happens on the line.”
I think Fitzroy Harewood summed up what HR needs from CEOs most appropriately when he said at the forum: “We must be leaders worthy of HR.”
With due respect to the other management functions, all of which are important, the function that deals with the people in an organization is the most important function, because it is people who create value for an organization. It is people who produce or don’t produce, give excellent or poor customer service, make wise or unwise financial decisions, provide good or bad market advice. The CEO and HR, along with the other management functions, need to work as a team for the success of the business, whatever that business may be. The CEO needs HR and HR needs the CEO.