HR - a seat on the board

HR - A SEAT ON THE BOARD

VALUE-ABLE HR - THE KEY TO A SEAT ON THE BOARD HR IS THE AWKWARD CHILD IN MANY ORGANISATIONS. ITS RELATIONSHIP WITH ‘THE BUSINESS’ IS CHALLENGING, CHANGEABLE AND NOT UNIVERSALLY WELL-UNDERSTOOD. KEEN TO MAKE AN IMPRESSION, CHASING THE DREAM OF A ‘SEAT ON THE BOARD’ LIKE A DOG CHASES A BALL, AND MISUNDERSTOOD BY MANY; ITS ADOLESCENT YEARS HAVE BEEN CHALLENGING ONES. STRUCTURAL MODELS AND NAMING EXPERIMENTS HAVE DONE LITTLE TO IMPROVE ITS REPUTATION; IT IS STILL RELATIVELY RARE TO FIND AN HR DIRECTOR ON THE BOARD, AND IT IS ALMOST UNHEARD OF FOR AN HR DIRECTOR TO NAVIGATE THEIR WAY INTO A CEO POSITION. A GROWING SENSE OF FRUSTRATION REMAINS, BOTH FROM BUSINESS LEADERS AND HR LEADERS. Gallus recently conducted research to identify and define the factors that are evident where HR is considered to be a credible and respected contributor to the organisation and exerts significant influence. Data was gathered from conversations with Board level business leaders and experienced HR Directors and specialists, working across the world in a range of sectors. Some of the organisations have ambitious growth plans whilst others seek efficiencies, however ‘change’ is common to all.

A high level of agreement exists around the most pressing issues for organisations over the coming three years. FISCAL POLICY and CHANGING POLITICAL AND REGULATORY LANDSCAPES are perceived to be important to most, and there is general agreement that an ability to understand these areas and to recognise changes and trends that may impact the organisation well in advance is a critical capability.

Global expansion and the attraction of suitably capable talent is also a concern to most, however GAINING ALIGNMENT was cited, almost without exception, as the most critical focus, particularly when navigating complex change. For business leaders DRIVING REVENUE GROWTH, and the exploration and development of JOINT VENTURES AND ACQUISITIONS feature heavily, whilst HR leaders show a greater focus on OPERATING COST MANAGEMENT, TALENT DEVELOPMENT, TALENT RETENTION and the creation of STRUCTURE, both in terms of “structured thinking and planning” and “creating structure in terms of roles.” The subtle difference in emphasis is interesting, and may point to one of the underlying problems in the relationship. There is no doubt that many organisations, even those with a growth agenda, need to focus upon the management of operational costs; however business leaders consistently neglected to mention this when asked about their priorities, focusing instead on revenue creation and driving growth.

Business leaders feel that critical areas of focus for HR are the creation of STRUCTURE in terms of mapping out the future organisation and achieving a better demarcation of roles; enhancing PERFORMANCE MANAGEMENT to better identify over and underperformance and to drive the critical cascade of objectives across the organisation; being strategic in WORKFORCE PLANNING, identifying capability and capacity gaps early and embarking on the right attraction strategies; TALENT DEVELOPMENT AND RETENTION aligned to the future organisation; and managing and maintaining CULTURE as the organisation grows and/or changes.

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GALLUS CONSULTING Business leaders want HR to consciously CHALLENGE them in their thinking. The perception is that HR focus on challenging around processes and procedure rather than in terms of the impact of actions and decisions on the value chain and the ability to do business in the future.

In addition, they want HR to operate as part of the business rather than from an ivory tower (this view is as prevalent in organisations where HR is structured around the Ulrich ‘business partnering’ model as in those where it is not) and feel that if HR could “be part of the business – part of the process – not separate,” it would enable the function to “ascertain and deliver what the business needs,” as a “commercial function – to grow the bottom line and not just add cost.”

Ten critical enablers for a value-able HR function emerge (the things that really make the difference to credibility and contribution and may potentially have a significant impact on HR’s pursuit of that shiny Board position): BE COMMERCIAL: Use HR as the framework to structure thinking but ultimately question the impact and consequences upon the bottom line and the value chain.

UNDERSTAND THE BUSINESS: Know the business model and value chain inside and out to be able to identify levers to leverage and positively impact results.

UNDERSTAND THE MARKET: Acutely understand market trends and keep ahead of developments with potential relevance to the business. Have a standing within the industry sector and make it your business to know what’s going on beyond HR. KNOW YOUR STUFF: Fully understand the employment regulatory framework for all territories within which the organisation operates and be able to support the organisation in strategic acquisitions, joint ventures and divestitures.

THINK BROAD AND THINK FORWARD: Become well connected, align with the organisation’s strategy, and voice ideas and challenge assumptions beyond HR for positive commercial impact. Demonstrate curiosity, understanding and contribution more broadly across the organisation.

BE JOINED UP: Make sure that HR, as a function, is aligned and that everyone within the team are curious and collaborative. Regularly spend time with front line employees, clients and investors.

BE EVIDENCE BASED: Identify the metrics that matter and be objective and structured in your thinking. Metrics that matter are vital in two respects; identifying where to intervene in a complex system and measuring the tangible results of such interventions.

MAKE A DIFFERENCE: Give practical advice, deliver basic services, do things that make a positive difference to the organisation, and demonstrate a consistently strong track record.

SPEAK THE LANGUAGE: Know and use the commercial terms of the organisation and don’t be tempted to rely on a purely ‘HR’ dialect. Maintain an understanding of growth, revenue generation and operating cost objectives and anchor HR activities to them.

GET THE BASICS RIGHT: Business leaders are only interested in listening to strategic advice from HR when foundation processes, procedures and systems are working as they should.

Conversely HR must work hard to avoid some major de-railers; demonstrating a lack of commercial awareness; being seen to be out of touch with the reality of a situation; adopting a remote, unapproachable and at times territorial approach; being inflexible and lacking pragmatism; demonstrating a lack of capability; indulging in inappropriate behaviour or being indiscrete with information; lacking cultural understanding and losing the thread of the organisational story and the people who can make it a successful one; creating excessive bureaucracy and process; having a lack of data and an inability to draw insightful trends from high volumes of complex data; and perhaps most importantly, getting the basics wrong and focusing on the wrong things before the basics foundations are optimised and consistently performing.

HR was not found to be ‘on the Board’ in organisations where the critical enablers were not demonstrated and the major derailers were evident…

Has HR developed an unhealthy pre-occupation around securing a role ‘on the Board’ and, as a result, neglected to tend to the very programmes of work, actions, decisions, behaviours, capabilities and relationships that would amplify its contribution and promote its cause?

And, what of any personal ambitions to become CEO? Well there’s no doubt that, although a career in HR will develop some useful capabilities; typically it will not, on its own, be enough to enable elevation to the top job.

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HR - A SEAT ON THE BOARD So what; now what?

Win the right to influence.

Ask critical questions and challenge assumptions.

Deliver interventions to make it easier to do business and achieve results.

Win the credibility to influence.

Targeted interventions to: Increase present performance.

Build an organisation fit for the future.

Protect the organisation, its people and its assets.

Create the evidence to influence more broadly

Influencer

Drop vanity projects, any obsession with 'being at the top table', glory hunting and all such behaviours.

Know the value chain.

Trusted Advisor

Service

Get the basics right.

Value Creator

Gaining credibility and influence across the organisation at every level should form a critical element of HR’s strategy. Carefully and honestly considering what the organisation requires and desires from the function, protecting the organisation and its people through appropriate challenge, and remaining visible and connected at every level, enables HR to deliver significant, sustainable value and ascend from SERVICE PROVIDER, to TRUSTED ADVISOR, to VALUE CREATOR and ultimately to INFLUENCER at the most senior levels.

Contribute on a broader scale.

Collaborate and facilitate strategic conversations.

Create high performance and make others look good.

Help the organisation to learn from experience.

Influence strategy effectively and efficiently.

And for the aspiring CEO? To be a CHRO demands commercial acumen, an understanding of cultural differences and shifting demographics, an ability to lead change, technological savvy, expertise in designing innovative performance and reward models and manage succession and talent at the highest levels. The best CHROs are skilled at promoting HR across the organisation and are credible advisors to the Board and CEO. HR Directors who have made the leap to CEO have typically had a chequered career – in a positive way. They tend to have worked on more than one continent, in more than one sector or industry, and have been successful in highly commercial, revenue generating or business unit leadership roles at some point in their professional lives. They have also experienced a variety of organisational life stages (growth, turnaround etc.) and have successfully navigated some of the scenarios these bring about (mergers and acquisitions, joint ventures, divestitures, restructuring etc.).

A triple-lock approach to career management centred on gaining experience of leading across sectors, boundaries (geographical, political, regulatory and cultural) and complex scenarios (capability evidenced through experience and results), can make the CEO position less elusive. Through conscious planning and being willing to take challenging, ambiguous and potentially risky opportunities as they arise, it’s possible to focus on gaining the breadth and depth of experience appropriate to the CEO role. Ensuring a period of time in a commercial revenue focused role, taking on a broader COO (Chief Operating Officer) role or a NED (Non-Exec Director) position demonstrates commerciality and only improves the odds of landing that elusive CEO position.

It’s not an easy journey but by focusing on the creation of a value-able HR function and crafting a structured, challenging, and perhaps atypical career progression whilst unapologetically raising personal and functional profile, it is quite possible for capable, confident, results driven HR Directors to achieve an ambition to become CEO. Gallus was launched to put the belief back into business – belief is core to everything we do! Since 2008 Gallus have partnered with ambitious organisations and leaders across the world to make strategy reality, and to build high performance environments that everybody can believe in. With a strong track record in creating fast growth or dynamic change in complex, regulated and emerging sectors; Gallus focus on four pillars of belief - strategic alignment, leadership capability, change agility and enterprise risk management - to drive clarity, create momentum, accelerate growth and generate sustainable value.

We’re ambitious for our clients and believe in their futures…

Find out more about how Gallus can create value for you - start your journey towards clear, valuable momentum here www.gallusconsulting.com

0203 751 6345

www.gallusconsulting.com