Only if you are ready to answer the strategic questions.
By Zena Brand
Does the following sound at all familiar: “We need and deserve a seat at the strategy table.”
It’s become a constant refrain in recent years—HR leaders’ wanting the C-level status of a real business partner. Few CEOs would disagree that HR deserves it, given the vital role that human capital plays in generating profitable business growth. But one does not get offered this coveted seat merely by cutting administrative costs or getting the payroll out in time.
HR should be commended for the ways in which the role has transformed over the past decade—spearheading and implementing innovative expense efficiency projects and various technology solutions. But these are strategic ventures with a lower case “s.” To sit at the “big kid” table requires doing things that really deliver value, such as:
- identifying the rock stars the organization needs to fuel growth;
- finding the right mix of permanent full-time employees and contingent labor that balances internal knowledge with cost management; and
- ensuring that everyone in the organization understands the mission and values that drive success.
Now that’s strategic, with a capital S, and it has nothing to do with cutting costs or automating more processes—or even developing an integrated database—activities that appear to be consuming much of HR’s time and effort of late. It has to do with identifying, assessing, quantifying, and managing human capital, while addressing and mitigating the risks that inhibit strategic goal attainment. Being strategic has to do with communicating a bold vision and growth objectives, and even having a hand in the navigation of the strategic course of the organization.
In a nutshell, HR will earn its place at the table when it can accurately assure the CEO and other business leaders that the human resources team understands the business, has an accurate grasp of its skill sets and voids, and can empower the organization to achieve its strategic imperatives.
HR as a Talent Agent
It is news to no one that there is a war for talent raging at the moment. Those enterprises that best battle for people with these increasingly hard-to-find skills sets should be in a better competitive position. And this battle is intensifying, according to the annual resourcing report by the Chartered Institute of Personnel and Development. The 2013 CIPD/Hays Resourcing and Talent Planning Survey indicates that the proportion of employers reporting a war for talent has increased sharply to 62 percent in 2013, from 20 percent in 2009. Six in 10 organizations report difficulties filling vacancies in the past year.
The war for talent is not confined to recruitment alone. HR can add real strategic value by becoming an internal “talent agent” to discern available skill sets and where there are needs. It must also be empowered to strategically manage enterprise talent.
What does this require? HR needs to have a greater role in temporary and contract labor management, shifting responsibility from procurement. It demands that the CFO surrender (or at least share) the management of human capital risks, so no organization confronts the dire prospect of learning that key roles are filled by its contingent workforce. HR also should have business unit leaders report when certain proficiencies in their domains are needed or recently lost.
Contingent Is Not Conditional
The contingent workforce, which includes statement-of- work projects, independent contractors, consultants, and other services, is increasingly making up today’s workforce. According to a major survey of more than 200 large companies by Aberdeen Group, contingent labor currently makes up nearly a quarter (22 percent) of the average organization’s total workforce. The study also notes that the top pressure faced
by companies in regard to their contingent workforce is the organizational need to manage all facets of contingent labor (cited by 44 percent of respondents).
Other pressures include the need to manage the risks associated with contingent workers (cited by 41 percent of respondents), low visibility into the contingent workforce (34 percent), and the need to enhance project and services spending controls (33 percent) involving contingent workers. Overall, 59 percent of respondents stated their key priority was to create more visibility in the entire talent pool.
Whose job is it to provide this visibility? It would seem that the task best fits the head of HR. At least on paper, HR is charged with talent optimization. Yet many HR leaders would be hard pressed to respond to simple CEO questions such as:
- What is the size of the total workforce?
- What percentage of our workforce is contingent labor and how has this changed in the past year?
- From a security and risk management standpoint, what are the protocols we have in place for non-employees?
One cannot blame contingent workers for operating behind the firewalls—they want HR to pay attention to their work scope definitions, service level agreements, and especially payment on timely terms. They have no trouble signing non-disclosure agreements, if only someone would ask. They’re eager to understand the corporate culture, if HR took the time to introduce it. They want to collaborate fully with the permanent workforce, as long as somebody explains these processes and the technology tools assisting it.
What needs to happen? For one thing, the technology that HR uses needs to change. A so-called integrated database that has five separate parts connected by some sort of plumbing is not a “single” database, as anyone who has tried to run real analytics on talent or employee benefits can attest. Disjointed data fails to become information for business intelligence and corporate performance purposes. The total workforce fails to become greater than the sum of its parts.
It is surprising that HR has continued to find itself struggling to meet the administrative requirements of the role and not insisting on having the capabilities to develop analytics, metrics, and KPIs for the organization. HR needs to be able to ensure that it can reach all its workforce—full-time and contingent staff included—with the latest executive briefings and messages. Having the necessary tools is a prerequisite to being able to analyze the business and establish the credibility to influence business outcomes. An HR department that lacks confidence in its information, ability to answer tough people management questions, or formulate HR programs with a supporting business case can’t be strategic.
What needs to happen first—to sit fairly and squarely in that seat—is for HR to be a true strategic business player. Until HR commits to being strategic, HR directors may get to sit in the room, but they will simply be asked administrative questions. Answer the question, “Do we have the people skills here to undertake this important new project, and how do we plan to manage them, inspire collaboration, and manage the risks they create?” and the CEO will know there’s a real business partner in the room.
Zena Brand is principal of Brand Associates LLC, a consultancy founded in 2009 which works with industry-changing companies to increase market understanding, develop strategic plans, and nurture strong partnerships.