Issue link: http://www.e-digitaleditions.com/i/94708
Captains of Industry human capital to drive its objectives. The consumers of HR are anyone using the organisation's HR services, such as job candidates, employees, line managers, recruitment agencies, contingent workers, senior executives, suppliers, and so on. The role of HR is split between serving these two constituencies. Assisting the superior performance of each duty is HRO, yet even the most robust outsourcing services will not maximise talent assets without HR itself enjoying a more strategic purpose. "I see companies talking the language of HR being a strategic partner, but not walking the walk," says Janssen. "Many HR directors are not achieving what their organisations are promising." Obviously, having the right employees putting their shoulders to the right tasks is vital to winning in the marketplace. And the way towards achieving this balance is to charge line management with this responsibility, aided and abetted by HR and the technological tools at its disposal. As Spink sees it, "HR provides the information, processes and policies to enable line management to do what the business needs to do. And to have this, it requires a senior enough HR person to jointly share this responsibility with managers." The other experts agreed that line management has the ultimate responsibility for human capital asset management. But, since managers also are tasked with growing the business and managing operations, they must rely on specialists to advise them. Among these specialists, says Goldstein, is HR, "their business partner on human capital asset management, counseling them and influencing their thinking." "HR is the hub for creating a framework for the rest of the business in understanding and defining the key metrics governing talent objectives," says Foster. "In the absence of that, line management will just do what they do–merely manage people." Janssen concurs: "HR must facilitate standardisation across the company through the use of HR technology. Line management owns the results, but HR needs to facilitate it." Taking a Seat Impeding the ability for HR to make good on this service to and relationship with line management, or at least to achieve some sort of shared approach to human capital maximisation, requires a faster evolution in the role of HR within the organisation. "The HR sector has emerged from a personnel function, whose focus has historically been administrative. Asserting responsibility and swimming upstream continues as the natural progression of HR, but one met with ongoing resistance by the business," Goldstein explains. She adds that the natural progression of HR continues to be met with ongoing resistance by the business. Another complication is that HR has responsibility for delivering outcomes that are accomplished outside the scope of its influence. "Improvements in workforce performance and productivity are realised and measured outside of HR," says Goldstein, pointing to the payroll expense line of the business operations as an example. Would elevating the director of HR to C-level status and a board director position change the status quo? "It's a raging debate that continues—whether or not HR deserves a seat on the board or at the strategy table, in a sense a right to be in the inner sanctum," Foster comments. "My best answer is, `It depends.' As long as human capital has a voice in one way or another, whether through HR or some other channel, to me that is more important than the medium." Janssen doesn't couch his response to the question. "The head of HR should sit on the board—yes," he says. "Most companies spend roughly half their expenses on labor, depending on the industry, with some more and some less. Obviously, human capital is such an important component of the P&L [profit and loss] that someone on the board must own it. I've seen the CEO, the COO, and the CFO have pieces of this ownership, but no one with sole responsibility." He finds this shared responsibility to be wanting. "I've always felt it is strange that here we have one of the biggest components of the P&L, and no one in the organisation is solely on the hook for it," says Jannsen. "I can't get my head around why companies feel it is not necessary to have someone lead, manage, and maximise their people assets. Someone on the board should be in charge, and that someone should be [the head of] HR." Spink unequivocally agrees. "The HR director absolutely should be a board director," she says. "They need to have equal weight and to be seen as a strategic partner. They're not just an administrator sitting on the other side of the fence, they're enablers of strategy. How can you influence strategy if you're out of the room?" She maintains that the HR director at Xchanging has this strategic purpose and role. "She comes to the board meetings, which are all about strategy and what we're trying to achieve as a business, and how she can help this," Spink says. "Can we enable it with a series of people activities? Are there cost-reduction elements to the strategy, such as achieving lower headcount numbers while maintaining the quality of service? Or what are the human capital aspects of [12] HRO TODAY GLOBAL | FALL 2012