The HR function must raise its game

“…surveys show that business leaders around the world are deeply concerned about the intensifying competition for talent, (yet) few companies make it an integral part of a long-term business strategy, and many even try to raise their short-term earnings by cutting talent-development expenditures. Other factors compound the difficulties of recruiting enough appropriate talent: minimal collaboration and talent sharing among business units, ineffective line management, and confusion about the role of HR…
…another problem: the declining influence of the human-resources function. Yet only HR can translate a company’s business strategy into a detailed talent strategy. HR professionals should assert their influence and provide credible and proactive business counsel and support for individual business units.”

The McKinsey Quarterly (August 2008)

McKinsey’s recent survey revealed something interesting: yet again, we don’t seem to know what the human-resources department is there to do.

We’ve been here before: before ‘HR’, we had ‘Personnel’. That was the department that managed your payroll and counted your holidays, and gave you the little slip when your services were terminated. We then began thinking a little more strategically about the people in the organisation and started paying lip service to the “people are our greatest asset” mantra. Employees were now referred to as a “resource” (akin to money and machinery), and the HR department began seeing itself as a resource manager: looking at motivation as well as productivity, and getting involved in training and performance appraisal.

Next came the ‘human capital’ wave, when people managers began respraying themselves as builders of capital. The term “resource” became a no-no for a while, as it was deemed to imply exploitation rather than uplift, and suggested that shareholders were still controlling staff like they did IT systems and vehicle fleets.

Amidst all the reinvention and rebranding, one thing is getting lost: what exactly IS the function of the HR function in today’s rapid-moving business world? McKinsey suggests that all the mundane stuff should be relegated to being managed by efficient systems. The HR manager as ‘talent officer’ is what is needed: a strategic role that involves pro-active coaching and counselling. This involves looking at the talent needs of the organisation in coming years; ensures that the best talent walks in through the door; and delivers a stand-out employee experience that keeps people inspired and motivated.

In this regard, McKinsey found that we have some way to go. The survey showed that HR professionals think they do far more of the ‘talent’ thing than line managers give them credit for. For example, just 25 per cent of HR people felt that they lacked the capacity to play a talent management role, whereas 58 per cent of line managers felt the lack. 60 per cent of line managers felt that HR was playing a merely administrative role, not acting as a ‘strategic business partner’.

I led a strategy programme for a wide range of senior Kenyan executives last week, where we concluded that whether a company fails miserably or succeeds wildly is usually explained in one sentence: “It’s the people, stupid!” It’s time to understand who’s really being stupid about talent in organisations.

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