Human resources occupies a unique role in any company. Unlike other functions, HR has a connection to every department and goes beyond the administrative call of duty, embracing a relationship with each person in an organisation. It is that very connection and understanding that affords HR professionals the ability to become more engaged with the business.
When I speak to CEOs, they acknowledge a reliance on HR and express confidence in the way HR connects with employees. However, many are dissatisfied with how the HR function connects to the business. The majority of CEOs do not see their HR leaders as having a comprehensive understanding of, or connection to, the business, operations, income streams and other elements of strategy.
According to the Global Leadership Forecast we at EY conducted with DDI and The Conference Board, HR professionals see themselves as strategic partners, while leadership regards HR as more reactive than strategic. If CHROs don’t have the leadership perspective to contribute on the executive team, they are limited in their ability to help take their company to the next level.
To provide strategic value, HR leaders need to fully comprehend the company’s business plan, its potential talent needs and its implications for the current workforce and structure. They should view the business through a CEO lens and design a workforce to support the company’s future.
Can you articulate the company’s vision for the future? Are you assessing the needs of tomorrow, such as new customers, products and operating models that will transform the workforce? Answering these questions allows you to hire the right employees while building programs and processes to improve their performance.
CEOs are focused on redefining their products and services. This includes enhancing customer experience, growing their market for profit and transforming operational functions (supply chain, quality, efficiency and cost optimisation). A strategic CHRO can foresee whether the business will face circumstances that impact the workforce or workplace, and then consider external or internal options. HR will know the skills needed for specific jobs today and going forward if it proactively engages in leadership meetings.
HR’s value spans the organisation, working alongside leaders and affecting the performance of all departments and functions. The structure of the workforce, including skills, capabilities, mindset and sense of purpose, essential to success, must also be balanced by the skills, capabilities and mindset of company leaders to deliver the organisation’s stratagem.
When HR’s approach is aligned with the business strategy, the organisation improves its ability to achieve both mission and goals. When CHROs consider innovative and disruptive forces of the business model, such as new technology, acquisitions, products and markets, they can then evaluate the changing dynamics and develop a program to ensure an effective workforce and workplace.
What will require employee adaptation and engagement, skills development or changes to work habits and environments? Are new employees with new skills needed, or is there a less expensive, more efficient means to access the needed talent? Overall, the challenge is to find the right talent, provide the right environment for that talent and support ways to reskill or upskill the current workforce and enhance employee engagement.
External forces also drive significant change to the organisation and people strategy. The Global Leadership Forecast discovered the biggest challenges business leaders face is in the company’s effectiveness to operate in a digital environment and use analytics, with just 37% reporting they felt they had a digitally prepared workforce.
Meanwhile, only 16% of HR leaders concurred. In addition to managing the internal forces of business change, highly effective CHROs will make sure business leaders are prepared for external forces of people change, such as:
• An aging workforce of baby boomers that continues to retire, leaving a talent gap that adds urgency to attract and train younger workers.
• Younger employees who prioritise quality of life (stress reduction, work-life integration, citizenship, flexible schedules, benefits and health care) over salary.
• An expanded work pool beyond full-time, in-office employees who might optimise workforce costs, but also demand changes to measurement, management and teaming. This new group of workers includes contingent, remote, part-time or full-time employees who may utilise robots as teammates.
• A changing social dynamic that demands a workplace culture of equality and respect at all levels of the organisation
These are common HR challenges that many executives can overcome using innovative psychology and data analytics, but prodigious HR is not an exercise in a void. The most effective CHROs will engage a strong business case to show CEOs and the rest of the C-suite how people strategy drives value to the organisation and enhances the probability of meeting business goals.
Only when you understand future business models and investments can you answer: What people do we require? Where are they best utilised? What skills are necessary? With whom should they team? How will we compensate them, and what is the reward system? How much is the total investment in people needed to succeed?
Those HR professionals who master new skills and technology to carry out the administrative and process-related tasks will also acquire unique business insights. They will speak the language of the business (financial impact and return on investment) and manage a consumer workforce by protecting the organisation’s brand. These business-focused, digital HR professionals will possess the skills to anticipate changes that will impact the workforce and lead the business through disruption.
Author: George Brooks