That the HR function needs to become more strategic is a mantra I first heard over twenty years ago when I started working in HR. It’s one that people must like, because they are still repeating it. Back then I wasn’t even sure I knew what HR was let alone what strategic HRM or an HR strategy might look like. On the latter points, at least, I reckon a lot of HR professionals would not be much clearer today because truly strategic HR management and HR strategies worthy of the title are still scarce.
It is true that HR professionals tend to have more coherent plans for their own functions than they did even ten years ago. Many firms have embarked on Ulrich-inspired HR re-organisations which, if nothing else, have made them focus more clearly on what they are trying to do and made them more aware of the costs and benefits of doing it. But that is not the same as Strategic HRM or having and HR strategy. HR functions can be well-organised and have clear goals while still being almost completely transactional.
Even when HR professionals attempt to be strategic they all to often repeat that other time-worn cliché, that the HR Strategy should be aligned to the business strategy. And as soon as they say that they are sunk. These are the words of someone who has already relegated himself to the role of functionary or, at best, facilitator. Come on? When did you last hear a Finance director saying that the Finance strategy should be aligned with the business strategy? It just doesn’t happen. Finance directors assume that they will be part of the team that formulates the business strategy and act accordingly.
As the CIPD says:
In the majority of organisations people are now the biggest asset. The knowledge, skills and abilities have to be deployed and used to the maximum effect if the organisation is to create value. The intangible value of an organisation which lies in the people it employs is gaining recognition by accountants and investors, and it is generally now accepted that this has implications for long term sustained performance.
It is therefore too simplistic to say that strategic human resource management stems from the business strategy. The two must be mutually informative. The way in which people are managed, motivated and deployed, and the availability of skills and knowledge will all shape the business strategy. It is now more common to find business strategies which are inextricably linked with and incorporated into strategic HRM, defining the management of all resources within the organisation.
In other words, looking at the capabilities and knowledge among your workforce should inform your business strategy as well as being driven by it. Therefore as well as saying, “We need to expand into this market; what sort of people will we need?” you also ask, “What skills, knowledge and relationships to our people have? What markets would that enable us to exploit?” Strategic HR is about seeing your human resources as one of the factors determining your business strategy, rather than as something which will have to respond to it.
Having said that, even where these sort of discussions do take place, HR professionals are often not present. As Mike Haffenden points out:
There are very few businesses that have managed to differentiate themselves from the competition by the quality of their HR management. The best example I have seen was Hewlett Packard in its halcyon years. Yet even here, human resource management was regarded as far too important to be left to the HR managers. What really made the company stand out was the quality of the people management, not the quality of the HR management. Indeed, there is a view that HR flourishes where there are weak people managers and a strong HR function that acts in an almost executive capacity. This can’t be right!
As I have said before, there is evidence that CEOs are increasingly seeing the importance of strategic people management but that they are not necessarily looking to HR people to deliver it. Just because senior executives are starting to see the importance of managing human resources it doesn’t mean that they will give Human Resource managers a seat at the top table. It might even be that the HR function never becomes strategic at all and that HR professionals are relegated to a support role while someone else does all the interesting stuff.
Part of the reason for this might be that HR directors often implement things that they think look clever and strategic but which are actually irrelevant to the business. Here, Mike is especially scathing:
There is a further rather large category of HR Directors who are the faddists bent on chasing best practice and the latest quick fix, regardless of the needs of the business. They exist in surprising numbers, and there are far too many of them.
If in doubt, check it out: try to determine which strategic imperative is underpinned by 360-degree feedback, development centres, neuro-linguistic programming or competency frameworks. Most of these initiatives are simply fashion fodder, and if your HR Director has implemeted some of them but cannot link any to a strategic imperative, then your Director belongs in this category. Ask customers to choose between the basic product without the HR fads, and the more expensive one created by managers who’ve had 360-degree feedback. It will elicit only one response.
What? HR people followers of useless fads and fashions? Who’d have thought it, eh?
HR strategy is like many other aspects of corporate management – when all is said and done there’s a lot more said than done. HR strategy is, perhaps, not altogether a myth but there’s a lot less reality than many HR professionals would have you believe.
If you would like to join what promises to be a lively discussion on this subject, Mike Haffenden is speaking at the Novotel in Hammersmith next Wednesday evening. The event is being organised by West London CIPD and you can book your place here. It’s free to CIPD members and their guests.
I will, of course, be there but I promise not to say too much so don’t let that put you off.