The demotion of HR

My good friend Robin Stuart-Kotze wrote to me at the weekend from deepest rural Ireland, pointing me to this recent McKinsey article and reflecting on ‘The Demotion of HR’:

Contrary to the speeches and articles coming out of the HR community about why they should have a seat at the top table it seems that instead of progressing towards the boardroom they’re moving progressively to the back door.

The McKinsey Quarterly posted the results of a survey today that shows the steadily declining influence of the HR function. The survey asked seven questions of HR professionals and Line managers and the differences in the responses are startling. For instance,  while only 25% of HR professionals agreed that “HR lacks capabilities to develop talent strategies aligned with business objectives”, 58% of line managers thought that was the case, a gap of 33 percentage points.

In response to the statement “HR is not held accountable for success or failure of talent-management initiatives”, two-thirds of line managers agreed, while two-thirds of HR professionals remained in denial.

The problem is that HR thinks they should be the judge of how effective they are. It’s a bit like asking Gordon Brown to decide whether he is doing a great job as PM. The fact is that the only people who can judge the effectiveness of HR are its clients – line managers.

When presented with the statement, “HR doesn’t provide enough support to line managers”, 43% of the HR people agreed (that’s a step in the right direction) but 58% of line managers ticked the yes box, so there are a few more steps still to be taken by HR.

This has echoes of last year’s survey by The Economist and Deloitte which concluded that, although CEOs were starting to see people management as a strategic priority, they weren’t looking to their HR managers to help them with it.

When I commented on that survey, I asked the question, “What if HR never becomes strategic?”  If the McKinsey commentary is right, the picture could be even worse. Not only might HR not see its status increase, it could, as Robin says, find itself demoted.

This paragraph sprang out at me.

When companies do make talent a priority, they often fall into another trap: focusing narrowly on HR systems and processes, which divert attention from the place where most of the obstacles lie: people’s heads. “Habits of mind are the real barriers to talent management,” one financial-services executive confided.

Dealing with these performance blocking habits is difficult though and it usually involves having uncomfortable conversation. It’s a lot easier to focus on systems and processes because they are tangible, or at least they appear to be so. When faced with the problem of performance management it is a lot easier to redesign the appraisal system than to find out why managers are failing to manage performance effectively. A re-launched appraisal process, supported by flashy new documentation, computer tools and rah-rah training courses, gives HR a big tick in the box. Supporting, coaching and challenging managers to help them manage performance is a long hard slog that may take a while to produce results, yet it will have more impact on the way people are managed than yet another new HR process.

This McKinsey report is more evidence that HR functions are applying themselves with gusto to the wrong things.

Update: Dan McCarthy adds his two-penn’orth in a similar vein.

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8 Responses to The demotion of HR

  1. I can’t imagine an HR person in NYC actually looking for talent. My experience has been laziness and croneyism, almost unilaterally. I don’t know how many time I’ve heard, ‘oh, they ended up hiring some guy who went to school with the VP,” etc.

    I am extremely bitter and biased though:).

  2. Dan McCarthy says:

    Rick –
    Yes, yet another wake-up call for HR. Well said.

  3. Rosie says:

    Are line managers the only clients of HR?

    Thinking about it, are there not different levels? Perhaps something like:
    Top – Directors/CEOs
    Middle – Line managers
    Bottom – Employees

    Would taking a balanced perspective from top/middle/bottom HR may get a better understanding of how well they are doing. It’s almost like a 360 for the HR department(…?)

  4. Pingback: Four Groups’ Blog » Dismal, Disastrous, Ouch!

  5. Karen Lynn says:

    “…where most of the obstacles lie: people’s heads. “Habits of mind are the real barriers to talent management,” one financial-services executive confided.”, you posted as a standout thought.

    “Hum…on both sides of the talentforce discussion”, I thought to myself after reading it. The poverty of new thoughts and habits in world of work is rippling through our economy like a comet of dense slug the universe skipped across the talent pool to see if a new current could be stirred, not shaken.

    While 20th century business owners cling to old currents as if their profits depend on it, a new current is gaining momentum in the underbelly of corporate American. HR, as we’ve known it up to now, will not be demoted – it will be extinct or transformed.

    Transformation is unlikely.

  6. Rick says:

    Sorry Karen, you’ve lost me.

    I’m not sure what you mean.

  7. Karen Lynn says:

    “…although CEOs were starting to see people management as a strategic priority, they weren’t looking to their HR managers to help them with it.”


    Perhaps because HR, as a function of 20th century business, is filled with workerbees and tenured professionals instead of innovators and talentforce experts. I wondered if what you alluded to in the comment above about CEOs looking elsewhere for people management means that they will continue to see the value of outsourcing more HR business functions, leaving HR outside the building, to provide services rather than strategic expertise.

  8. Karen Lynn says:

    Oops … by ‘both sides of the talentforce discussion’ I meant that both employers and employees are experiencing the challenges of habitually stagnate thinking when it comes to talent management.

    Employees continue to depend on HR to be a functioning threshold for their business life and career. Is it?

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