By Katie O’Brien and Donna Burnett-Vachon
Moving from talk to action
Given the dynamic nature of today’s national and global economies and the importance of organizational agility to drive competitive performance, the HR function must be business-oriented and led by CHROs who understand this strategic context and champion related value-add. In this regard, it is interesting to note that at progressively managed Canadian organizations, CHROs are indeed executing business-oriented HR strategies and practical front-line value.
This progressive approach is being driven by a number of factors. First of all, boards of directors and CEOs recognize that human capital is a key enabler of organizational success and performance, and therefore HR must be a top strategic priority. In a recent Conference Board of Canada global survey of CEOs, human capital was identified as the number-one challenge facing organizations. Issues such as succession planning, workforce productivity, employee development and engagement are top of mind to executives as well as HR.
Given the demographic profiles of western countries, tight labour markets for knowledge-intensive and skilled workers and recognition that workforce productivity is a true strategic differentiator, we are truly entering the emerging talent decade. As this decade progresses, the HR agenda and functions are being recognized for their strategic importance.
Arguably, the 1990s were the “Dot-Com/Technology Decade,” culminating in Y2K. The 2000s were the “Finance Decade,” coming to an end in the fall of 2008 with the global financial services meltdown. The current decade is the emerging Talent Decade, and business and HR leadership can control how it evolves.
A convergence of key strategic factors is driving the talent decade.
Demographics – Impending retirements and younger generations entering the workforce are leading to a shift in workforce demographics and related career and workplace expectations.
Labour markets – Beyond 2015, retirements accelerate while the number of new employees joining the workforce declines. Additionally, a shortage of critical skills in some sectors and changing regulations for foreign workers are having a significant impact on labour markets, according to research.
Leadership preferences – CEOs have a stronger focus on people, engagement and culture.
Workforce productivity – Increasingly, businesses are focusing on optimizing the performance of all employees and ensuring greater alignment to business strategy and accountability for organizational performance.
Overall economy – A volatile global economy is leading to increased pressure to create nimble and agile organizations.
HR governance – There is currently a stronger emphasis on HR and compensation at the board level – both reporting and oversight. In a recent Conference Board study of board practices, many publicly traded companies now have either an HR or Compensation Committee on their boards of directors.
HR strategy sophistication – Workforce segmentation and variability of needs are influencing more strategic choices about where to focus HR strategies and resources.
Characteristics of an HR business partner strategy
It is against this background that CHRO leadership and a true HR business approach is one that is moving beyond debate and pushing forward to execution.
- The CHRO is an active participant on the executive team, and a core part of strategic conversations.
Key strategic HR priorities (productivity, wellness, diversity, etc.) are an active part of the conversation at the executive table. - HR leaders are business leaders, with a proven mix of both HR and operational competence, and they are able to translate business issues into practical HR functional solutions.
- The organization truly understands and executes a portfolio-based HR strategy. When it comes to HR strategy, one size no longer fits all.
- HR measurement and analytics are now recognized as core business practices and a priority value for the HR function.
- The HR service delivery model has become more specialized and flexible. HR advisors are allocated to specific business unit clients, supported by centralized shared services such as call centres for high volume service delivery support, and centres of specialized expertise and advice.
- HR strategy is understood and applied at all levels of the organization from the executive level down to front-line managers and employees. Further, all stakeholders have clearly defined responsibilities and accountabilities for HR strategy and performance success. Organizations that embrace all of the above have a dedicated HR team that provides oversight and inspiration to the human capital agenda.
Conclusion
Do we talk about the finance function needing to be a strategic business partner? Generally not.
It is time for HR to stop talking about being a strategic business partner and simply go and do it. In this day and age, anything less will not be value-added, let alone accepted by executives, line managers and employees. In the emerging talent decade, HR needs to act as a true business partner with HR programs, policies and systems that are aligned and integrated with the business.
Katie O’Brien is manager, Leadership and Human Resources Research at The Conference Board of Canada. Donna Burnett-Vachon is associate director, Leadership and Human Resources Research at The Conference Board of Canada.