Monday, 29 September 2008

HR's not an end to itself (but human capital is)


   McKinsey recommend that HR respond to its declining influence by asserting its influence and providing credible and proactive business counsel and support for individual business units.

But they also warn that HR leaders should be careful not to neglect the front line:

“HR serves only the top layers,” observed one global HR director interviewed in our survey. “My head of HR in North America only works with the chief executive – nobody knows her and she doesn’t know where the talent lies in the business.”


This is also a point highlighted by the Institute for Employment Studies in a recent report (which also found that one-third of managers felt HR has got worse over the last couple of years).

Alongside 'bogged-down", administratively focused HR, they identify another dead end that organisations may end up in as they work towards "proactive HR": this is "remote HR" which uses policy and technology to keep customers away, becomes out of touch with employees and because of this is seen as irrelevant by managers.

"Managers want an HR function with its finger on the pulse of what employees are feeling and how well they are working. Senior managers particularly look to the HR function to have an independent, and challenging, view of how to balance the interests of employees with the needs of the business. They recognise in themselves the temptation to put short-term management priorities ahead of sustaining positive relationships with the workforce. They need HR to help them strike the right balance. So an HR function that is seen as remote from the workforce loses much of its unique value to business leaders."


And the IES also develop this point in the CIPD report, 'The Changing HR Function':

"HR is the function that should know about employees - why they come to work, why they stay, what motivates them.  How does it develop this intelligence if it does not come into contact with staff, but rather is reliant on whether managers articulate employee needs (potentially less than objective) or on the results of attitude surveys (which can be a rather blunt instrument)?"


The problem as I see it  is that HR is often uncomfortable with its employee champion / advocate role, and I think these three reports show how important this is (and for HR to perform it).

HR needs to be close to the business, but, as IES note, it also "needs to be more ambitious for the business and offer a vision of how the business could be".  OK, "HR is not an end to itself" , but human capital is, or can be.

HR needs to use its knowledge of, and relationships with managers and employees to think about what type of human capital: capability, engagement, diversity, quality of leadership etc, can be created that will help sustain and transform the business.

To me, this is how HR will be able to increase its influence again.


Also see these blogs' posts on:

McKinsey Quarterly Chart Focus:


IES report 'What customers want from HR':