A column in which HRO Today’s grumpy-yet-optimistic publisher takes one more swipe at the HR profession and the difference between its ambition and its reality. Because this is the era of extreme accountability, HR better get on the CRO bandwagon.
After writing about and managing companies in HR and HRO for nearly 12 years, I have noticed one resounding theme. HR always aspires to be something that it rarely, if ever, has actually achieved.
This column is about another HR aspiration. Whether or not your HR organization will ever reach the heights I describe here is up to you. Suffice it to say, you have a hill to climb.
The hill is what many analysts call the CRO, or Corporate Responsibility Officer. This is not a new role; just a new acronym. The CRO is the person or persons within corporations responsible for a basket of accountabilities to a company’s four major stakeholders: employees, customers, creditors, and shareholders; and two other major behavior influencers: government and the media. The accountabilities I’m talking about range from Sarbanes-Oxley (SOX) compliance to EEOC to business ethics to financial transparency to customer and shareholder rights.
I know what you’re thinking: “Here Jay goes again on one of his nasty rants about the shortcomings of HR.” But you know that I am right about this. HR needs to play in the CRO game, or HR will stop being as relevant as it is to today’s corporations.
If you doubt that this CRO thing is real, just take a look around. SOX compliance cost American companies an extra $6 billion in 2005. In 2006 the bill may be nearly double that. Here is why. To date, the Fortune 1000 were the only ones complying with SOX. Mid-market firms are doing it because everyone now knows that financial transparency is good for business.
Today, at least 480 of the Fortune 500 now have senior officers whose job functions are that of a CRO. Even before the convictions at Enron, Tyco, and WorldCom hit the front pages, corporate leaders, investors, and customers have known the value of a CRO. So they have put their money where their mouth is and seriously invested in compliance and responsibility initiatives.
As happened in the early days of the HRO boom, America’s biggest companies are leading the way in CRO. Our biggest employer, Wal-Mart, continues to grow by spending heavily on employee diversity and making everything transparent to investors, suppliers, and customers. General Electric’s big growth initiative is “ecomagination,” measuring the value of its businesses by accountability to the environment. Starbucks is providing transparency up its coffee supply chain, so customers know that its supplies are coming from fairly paid sources. Diamond merchant DeBeers and jeweler Tiffany & Co. have joined with others to show customers that their gems come from suppliers that have responsible workforce practices and have avoided dealings with corrupt governments. These are just a few examples of the large companies who are polishing their brands with a new tool: hyper-accountability to stakeholders.
Here is the great irony. One of a CRO’s biggest tools is HRO-type services. The reason is simple: HRO is a CRO enabler. Strong outsourcing partners for HR functions have given thousands of corporate clients greater compliance and transparency than was ever possible from an in-house department, regardless of the HR function. One of the reasons for this is that HRO providers measure everything, and these HRO metrics are measures of accountability. Accurate measures such as time-to-fill, cost-per-hire and employee-productivity indices were rarely available prior to the HR outsourcing revolution. Now they are commonplace. These measures keep HR accountable to the organization and the organization accountable to its stakeholders.
Enabled by strong HRO tools, HR leaders can be their companies’ CRO. These days, CFOs are often being tapped for the CRO role, but why not HR? HRO’s ability to empower HR leaders with hard data puts them in a very strong position. In earlier days, I have said that HRO is the key to HR relevance. Relevance comes from continuously demonstrating accountabilities to stakeholders. That is what the corporate responsibility officer role is all about. Hopefully, HR leaders will see this as their natural next step. If not, one thing is certain: CFOs, treasurers, and general counsels will gladly fill the spot and leave HR in the dust.