It may not feel like it now, but let me assure you: it’s an unprecedented time to be working in HR at the moment. I spoke about “exciting times” in another blog. Like many other lines of business, most of the redundant, manual tasks are now automated; various new technologies are delivering key insights into your workforce and HR is sitting at the cross roads of getting a seat at the board room table. HR as a profession is about to grow up. It’s on the cusp of moving from tactical to strategic, from afterthought to forethought.
Except for one problem – not enough HR Directors and Chief HR Officers are actually stepping up.
The problems start at the top – or more accurately, with lack of access to the top. The truth is that HR has a messaging problem. The inability to translate the value of workforce excellence and performance into the language of growth and profitability is a big road block for HR, not to mention the wider organisations they represent.
It’s not that HR doesn´t know what the huge challenges are that lie ahead – globalisation of labour supply, the looming talent crisis, skills gaps and their associated recruitment challenges, an elastic workforce of contractual, intermittent employment, Millennials entering the workforce, employee engagement issues, low level employee longevity and loyalty, not to mention quite a sharp leadership cliff. Why then is HR struggling to communicate strategically and effectively with the board?
For starters, most HR Directors and Chief HR Officers are not speaking the language of the C-Suite – that means quantifying and spelling out the impact on bottom line revenue and growth with hard numbers. The former CHRO of a large telecommunication company was famous for asking his direct reports to attach numbers to their business cases, in other words what is the return if I give you budget for this HR practice?
Second, HR isn’t speaking this C-Suite language because it’s not equipped to do so, and lacks the metrics and tools to effectively communicate in evidence-based, numerical terms. Third, most executives assume HR is making its own headway in the information economy and the same rate or at least a similar speed as other areas of the business. (It isn’t).
Recent worldwide research by Oxford Economics, sponsored by SAP, reveals that only 42 per cent of companies surveyed say they know how to extract meaningful insight from the data presented to them. While HR frequently works with C-Suite executives, barely half of executive respondents say it drives strategy at board level, and nearly a quarter say that workforce issues are an afterthought in business planning.
The bitter irony is that organisations with better bottom-line results are more likely to report workforce issues driving strategy at the board level. I am seeing two major trends on the market: 1) companies who really want to get better insights into their workforce are turning their systems of records into systems of engagement to “check the pulse” of the organisation and turn those insights into points of action on the HR agenda 2) Some of the more forward thinking companies are already moving analytics out of HR and into dedicated team. As I mentioned in another blog, I think moving forward we will see a leaner version of the HR department, focusing on strategic thinking (using workforce planning and analytics) and business partnering.
But the reality for many companies today is that HR is still playing catch up by comparison to other lines of business in the information economy. Given the massive challenges that lay ahead, this needs to happen sooner rather than later. Either HR management takes the reins to build an enterprise-wide vision for the workforce their company needs, and articulates that vision in the language of the board, or it risks remaining a business planning afterthought.
To read the Oxford Economics research take a look here.
Eric Brunelle, Head of the Executive Value Network for HR, Thought Leader and SAP Social Ambassador for HR