Based on the Mettle Executive Session “Is HR Heading for Extinction?” 2008
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What does the term Human Resources mean to you?
One of the significant outcomes of the Mettle Executive sessions is an understanding that the market value to book value ratio of companies will continue to widen exponentially as more and more value is recognised in the intangible assets which cannot be easily priced at an auction. What does this mean for the human resource director?
Their department can no longer exist as simply a transactional back-office overhead providing payroll, OH&S compliance and exit interviews.
It also means HR directors have more work to do. HR directors must become an essential source of strategic guidance positioned firmly to the chief executive’s right. Representing a base of broad, dependable wisdom, they should come to embody a balance of intellect, emotional intelligence and intuition. And they must be responsive to a world that no longer makes sense or tolerates solely analytical minds.
Measures in total compensation, total turnover, cost per hire, percentage of employees undergoing performance appraisals and job satisfaction ratings are necessary, but are far from sufficient. They will need to be able to measure the non-financial statistics that financial analysts have long used to determine the best investments:
- Execution of corporate strategy
- Management credibility
- Quality of corporate strategy
- Innovation
- Ability to attract and retain talented people
- Market share
- Management expertise
- Alignment of compensation with shareholders’ interests
- Research leadership
- Quality of major business processes
Dave Ulrich, long known as the HR director’s champion, has written extensively on the competencies that are now required by human resource specialists, which far surpass traditional technical capabilities in recruiting, compensation and benefits. He speaks of various critical steps in any people director’s work as:
- Being part of the critical team that will define the firm’s strategy alongside the marketing director, the innovation director, the CFO, the CIO and the CEO.
- Using this strategy as a way to determine the business case that HR will need to populate the firm with the best talent to execute it.
- Creating a ‘strategy map’ with the C-level team that will translate the strategy into the skills and behaviours required of employees at every level in the organisation.
- Aligning the HR architecture to its deliverables: how will HR position itself in the business as strategic partners, relationship managers, nononsense advisors, and solution deliverers?
The competencies of the people directors of today will reflect their strategic background and knowledge of business, its financials and its technologies.
They will be across the organisation’s capabilities, understanding customers and competitors and measuring business results, with the ability to manage change.