Time to spit the HR

We like all-things HR, which is why we love to read as much good content about HR as we can find in the vast internet. The industry is in the middle of a strategic revolution, so there's never been a better time to discuss HR. But it can be tough prioritizing our time when there's so much HR goodness out there to ingest. Where to begin? Who to follow regularly?

The human resources industry has seen a lot of change this decade. The introduction of artificial intelligence, machine learning and software-as-a-service products has made the industry more efficient and productive.

It’s time to tell good-bye to the Department of Human Resources. Well, not the beneficial tasks it executes.

CEOs across the globe are disappointed with their HR people. They would like to be able to handle their chief human resource officers (CHROs) the way they manage their CFOs—as sounding boards and trusted partners—and rely upon their talents in linking people and numbers to diagnose deficiencies and strengths in the organization, find the right fit between employees and jobs, and notify on the talent implications of the company’s policy.

But it’s a rare CHRO who can assist in such an active role. Most of them are process-oriented generalists who possess expertise in personnel perks, wages, and labor associations. They are focused on internal elements such as engagement, empowerment, and handling cultural issues. What they can’t do very well is relate HR to real-world business requirements. They don’t know how important decisions are made, and they have exceptional difficulty analyzing why people—or whole parts of the organization—aren’t achieving the business’s performance goals.

The solution is revolutionary, but it is grounded in practicality. The proposal is to abolish the position of CHRO and split HR into two strands. One—we might call it HR-A (for administration)—would essentially manage compensation and perks. It would report to the CFO, who would have to understand compensation as a talent magnet, not just a large cost. The other, HR-LO (for leadership and organization), would concentrate on improving the people capabilities of the business and would report to the CEO.

HR-LO would be led by high potentials from operations or finance whose business expertise and people skills give them a firm chance of attaining the top two layers of the organization. Leading HR-LO would build their expertise in judging and developing people, assessing the company’s internal workings, and associating its social system to its financial performance. They would also draw others from the business side into the HR-LO pipeline. After a few years, these high potentials would lead to either horizontal or higher-level line management jobs. In either case, they would continue to grow, so their time in HR-LO would be seen as a developmental start rather than a ticket-punching exercise.

The proposal is just a bare outline. There could be plenty of opposition to it. But the problem with HR is genuine. One way or another, it will have to increase the business acumen needed to help organizations perform at their best.