“The discipline I believe so strongly in is HR, and it’s the last discipline that gets funded. Marketing, manufacturing – all these things are important. But more often than not, the head of HR does not have a seat at the table. Big mistake.” These words were once uttered by Howard Schultz, CEO of Starbucks.
As Schultz mentioned, not many organisations have given their heads of HR a seat at the executive table. The report, Navigating the C-Suite: Leadership Imperatives for HR, that discussed strategies HR could use to earn a seat in the C-Suite, revealed that most high-performing organisations have the head of HR reporting directly to the CEO.
Experts say that it would be productive for HR to be involved in executive decisions but many organisations have yet to change their mindset when it comes to HR in the C-Suite. Besides mindset, they advise that HR has to break out of its “silo mentality” to be involved in the business aspects of the organisation and be treated as a strategic partner.
In Harvard Business Review’s, The New Path to the C-Suite, the authors discussed that HR has largely been seen as an administrative role. The discipline still has to gain clout in the C-Suite. Moreover, even in forward thinking companies, the HR leader has largely been relegated to managing policies and cultural initiatives.
Experts warn the perception of HR plays a major role. Gary Lai, Managing Director of Southeast Asia, Charterhouse Partnership, says: “HR always plays a supporting function because profit-and-loss falls under different business units. In certain organisations, HR has the supporting role and in small and medium-sized enterprises (SMEs), HR and administration are tied in one.”
However, he does add that larger multinationals are starting to recognise HR. “They pay decent money when it comes to HR to help increase their skills. However, SMEs need to (also) recognise HR plays a strategic role and have to help expand and increase skills for their HR.”
Employers also say that organisations ,and CEOs in particular, need to understand the importance of HR in the C-Suite. Eckart E. Jensen, Vice President of HR in Southeast Asia, Daimler, says his organisation is a technology-driven company, but it is the people who make the difference.
“Our cars are developed, produced and sold by people. All CEOs in the future will learn it the hard or soft way that you have to bring in professionals as discussion partners to manage the HR,” Eckart says.
Lai adds that another major obstacle for HR reaching the C-Suite is that the function is not seen as revenue-generating. “HR Directors have profit-and-loss responsibilities but they are different from business perspectives.”
Earning the way to the top
The New Path to the C-Suite also noted that organisations are increasingly filling their Chief HR Officer positions with leaders from functions on the business side, such as law or operations. As such, the authors concluded that CHROs need to have an understanding of the commercial or business functions of their organisations before earning that promotion.
Employers say trying to change mindset begins with HR making the effort to learn more about the business so that it can be seen as a strategic partner in discussions. Lai explains that key people understand the business. “People within HR need to understand that they can’t be working in a silo, they need to know what the business is doing.”
For instance, Lai says that Microsoft demands that staff from all business units also support its core software operation. Those that are not able to straddle that line are unlikely to be promoted to the most senior roles, including HR professionals.
Eckart says that it is a must to understand the business. “If you don’t understand the challenges the business has, what the customers want, and the impact of the business, you will never be an equal discussion partner and you will just be a listener.”
In Daimler, the HR team is given a big role to play when it comes to the business. Eckart says: “We have certain CEOs in the organisation who headed the HR function in the past. Even our board member was the head of Executive Development Management for several years.”
Eckart says that management and HR can do something to improve HR skills in order to be treated as an equal partner at the executive table. Daimler has some initiatives to ensure that its HR builds its business acumen. In Daimler Australia, the organisation hosts “lunch bites”. “The respective supervisors of line functions give input to all employees during lunch breaks. They talk about the market development, and how to look into a balance sheet, so employees can get familiar with the business stuff,” explains Eckart.
The Singapore team conducts “lunch bites” for its financial services division. He adds that Daimler does not have barriers between functions, so employees can always approach a colleague from a different division and ask them about their function.
He adds that HR can also get training at the Daimler corporate academy, take part in job shadowing, and get information from town hall meetings.
Lai says that management can also give opportunities to HR to move or work with different areas of the business. “Management can move high potentials to different business units to increase their skills, such as through a management trainee programme. Also, the HR Director can bring a potential manager to discussions and meetings. Ultimately, HR needs to understand the business that is run and you cannot put this in a classroom,” explains Lai.
Requirements for the Chief HR Officer
• Possesses business or commercial acumen
• Acts as an internal advisor or consultant to the CEO and the board
• Possesses change management skills
• Able to “market” the CHRO position to the CEO and the board
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