According to a recent IBM and Oracle-sponsored study conducted by the Economist Intelligence Unit (EIU), just 38 percent of CEOs regard human resources leaders as key players in strategic planning. However, while many of them may fall short in terms of strategy, this doesn’t mean HR professionals don’t still have significant contributions to make, particularly when it comes to workforce management and liaising with the executive team.
“CEOs are considerably more likely to think their relationship with their head of HR is close and trustful – and value that relationship highly – than they are to believe the head of HR is playing a key role in strategy,” the EIU’s report stated. Indeed, among CEOs of surveyed companies with more than 5,000 employees, three-quarters of respondents described their relationships with HR leaders as close and trustful, while just over half (53 percent) characterized their heads of HR as important components in strategic planning.
What can HR leaders offer from an executive perspective?
So, if HR leaders aren’t often seen as valuable from a strategic perspective, what do they have to offer? Paul Sparrow, Director of the Centre for Performance-Led HR at Lancaster University in the United Kingdom, outlined some of the reasons these professionals are helpful to CEOs, such as:
- their high emotional intelligence and good communication skills
- their ability to act as what Sparrow described as “an informal sounding board, offering practical feedback on the CEO’s thoughts”
- their role as provider of constructive criticism, particularly in regard to the CEO’s leadership style and its effect on the executive board
- their position as “informal executive coach,” which allows the CEO to “honestly talk through issues he needs to overcome in his own mind in order to do his job better,” Sparrow explained
The HR leader has a lot to bring to the table in terms of executive team management as well, including:
- establishing and maintaining synergy and collaboration between senior leadership
- executive recruiting in order to ensure that the team is, as Iron Ore of Canada CEO Zoe Yujnovich put it, “periodically refreshed with new blood”
- clarifying the CEO’s vision to members of the team who would benefit from being given further explanation
- keeping an eye on the team to identify members going through personal issues, as well as underperformers and those who aren’t fitting in with the rest of the group
Bringing analytics to HR
That said, there’s no reason HR professionals can’t make strategic contributions too, but in terms of data analysis, many are being held back by a lack of knowledge. Indeed, in a blog for Bersin by Deloitte, corporate HR expert Josh Bersin revealed that research has shown just 6 percent of HR departments consider their analytics skills to be “excellent,” while more than 60 percent believe they are behind the curve in this area.
“Truly having a voice and influence in conversations where the future of the business gets determined … will require HR to better understand and speak the language of the businesses they operate in,” wrote David Bernstein, Vice President of Big Data for HR at eQuest, in a recent piece for Big Data Republic. “This is predicated utilization and understanding data and analytics.”
That isn’t to say the amount of time firms dedicate to HR reporting and metrics hasn’t increased over the past five years. In fact, according to a SuccessFactors-commissioned study of 1,300 finance, HR and IT managers carried out by international research firm Vanson Bourne, the opposite is true. However, much of the effort put into HR reporting may not actually be helpful, as a fair amount of the data currently being captured quickly grows stale, meaning its usefulness is compromised by the time it’s put into a reportable, viable format.
“Organizations need HR to focus less on reports that give only a view of past performance and more on what’s needed for success tomorrow,” wrote Shawn Price for SAP Community Network’s SAP Business Trends. In order for this to become reality, firms must align their HR systems with other organizational reports, from inventory predictions to financial data.
“The advent of big data now holds the promise of making HR one of the most strategic functions in any organization,” noted Bernstein. “Strategy requires purposeful design, and that requires data. HR has it in spades: hiring metrics, performance reviews, employee surveys, compensation and benefits data and on and on – not to mention numerous and varied external data sources.”
Ultimately, although HR professionals haven’t historically been viewed as having much to contribute from a strategic perspective, their roles are changing, and executives would do well to move with the times.
About Caldwell Partners
Caldwell Partners is a leading international provider of executive search and has been for more than 40 years. As one of the world’s most trusted advisors in executive search, the firm has a sterling reputation built on successful searches for boards, chief and senior executives, and selected functional experts. With offices and partners across North America and in London, the firm takes pride in delivering an unmatched level of service and expertise to its clients.