In their July/Aug issue, Harvard Business Review gives the floor to Ram Charan to have a go at all HR leaders. That was an excellent idea from HBR; Ram is the perfect coach to stimulate ‘rethinking’. A few years ago, I had to honour to work with Ram on a development faculty. It was clear from the onset that he wanted the audience to challenge the status-quo.
Ram Charan -bestselling author, leadership guru and advisor to Chief Executives-, has been many years the trusted coach to Jack Welsh (General Electric); the respected –but oh so figures hungry- Chairman and CEO. You will also recall that it was at GE where the rule ‘to get rid of the bottom 10%’ was introduced; to boost general performance figures. Figures –so not people- driven leadership and HR.
So no surprise that in the latest HBR issue, Ram Charan is suggesting to
- get rid of HR Directors / Chief Human Resources Officers (CHRO),
- put the HR admin and Comp&Ben under the Finance structure,
- create a role for Leadership & Organization to focus on the people’s capabilities, and
- for this role to be taken by line-managers (i.e. nor HR generalists) .
In his mind this would be the most practical solution to solve the disappointment many CEOs seem to have on their CHRO. “They would like to be able to use their chief human resource officers (CHROs) the way they use their CFOs—as sounding boards and trusted partners—and rely on their skills in linking people and numbers to diagnose weaknesses and strengths in the organization, find the right fit between employees and jobs, and advise on the talent implications of the company’s strategy. But it’s a rare CHRO who can serve in such an active role. Most of them are process-oriented generalists who have expertise in personnel benefits, compensation, and labor relations. They are focused on internal matters such as engagement, empowerment, and managing cultural issues. What they can’t do very well is relate HR to real-world business needs.” (HBR, July/August 2014)
Personally I am not so convinced that moving part of the HR role to the CFO is such an innovative thought. That’s just back to more than 30 years ago where ‘Personnel Management’ was part of a Finance structure. It was then recognised by business leaders that ‘our most important asset’ needed dedicated and specialised leadership.
By the way, that CEOs love their CFOs is also not such a surprise. A recent study from Executive Grapevine says that “There are too many CEOs with finance background …and they are there to deliver short term margin improvement very quickly”. And that’s exactly the point; HR frequently adds value through longer term impact – but sustainable.
But Ram’s prime intention has been achieved; in full. The article created a massive debate in the HR community whereby most HR people are going into self-defence mode.
One of the comments I like –and support- comes from Eugene Chang (HayGroup Singapore): “Leaders today heading any key function from Finance (CFO) to IT (CIO) to Operations (COO) to HR (CHRO) all need to be able to orientate themselves to look beyond their function to add value to the executive team.”
Indeed, Ram could have written just the same story about executives in Marketing, Finance, Operations, etc. It’s so basic; it’s the capability to look beyond your function, to have that broader view and understanding of the total business picture. Only then you can be that ‘trusted partner’ in the C-suite. And yes, some HR Directors are lacking that capability. As others do.