Zapaterismo: HR = Strategic = Laughable

Thomas Otter from SAP put out a challenge to HR/talent management bloggers the other day in response to a Deloitte-Economist study that I was fortunate enough to get wind of shortly after it came out. So, though I don't consider myself a true HR blogger yet, it got me thinking and now I want to give my two cents, as well.

The Deloitte-Economist study discusses, among other things, the gap between HR's perception of how "strategic" they are versus business line executives' view of the situation.

The debate about making HR a "strategic business partner" has been raging for at least a decade, and the rhetoric never changes. Apparently, neither does the reality.

Edward Lawler, John Boudreau, and Susan Albers Mohrman from the Center for Effective Organizations at USC asked HR executives in 2004 how much time they spend working on strategic issues, and then asked the same question again last year. Though HR leaders think they spent significantly more time being "strategic" now than they did a few years ago, their actual answer to the question has remained the same - the number still hovers around 20%. Along the same lines, the Fast Company article, "Why We Hate HR," that Thomas cites came out in 2005, and by and large the landscape hasn't changed.

So change is slow, but really, will HR ever be strategic? It seems doubtful.

Certainly, what's made HR and Talent Management appear more mission-critical of late has little to do with HR and everything to do with the convergence of a number of trends that HR has no impact on (or worse, might have planned for had they been more forward-thinking!).

The first is obvious - the aging workforce. Baby boomers around the world are getting old and retiring (or at least they're supposed to be retiring), and therefore companies are losing large chunks of their workforces and senior leadership in short periods of time. This creates a need for better succession planning and more robust leadership development, yadda, yadda, yadda.

You could say that the declining number of people of working age is a second trend, but really this is just a derivative of the first - the primary reason this number is going down is because the enormous baby boomer generation is getting too old to work.

The second and third trends have more to do with the changing nature of the economy and pace of business. For most of the developed world, knowledge work is becoming increasingly important to the survival of both companies and entire countries. We've evolved from agricultural and raw materials-based societies (primary), to industrial nations (secondary), to service-based economies (tertiary), and now to presumably a fourth dominant production type that has to do with creative outputs. Of course, every step implies greater value-add but also means you need more educated and more talented people to do the work well. On top of that, global markets are increasingly open and improvements in technology are further devastating barriers and speeding up work (trend #3).

Mix these three trends together, let stand, and you get a much-ballyhooed war for talent.

A fourth trend might be the growing % of revenue that goes toward headcount (also inter-weaved with the trends above), which is driving companies to increase productivity and alignment.

Anyway, I probably missed a trend or two, but you get the idea. HR is now "strategic" and getting C-level attention because global trends have made talent more critical to organizations.

Is it just me, or isn't that the same as saying accounting becomes "strategic" during a recession, because thriftiness is temporarily crucial to survival?

Of course, I'm not trying to say that the talent squeeze is as fleeting as an economic downturn, but I think the analogy is very appropriate. When faced with constrained resources, it's necessary for people to focus on streamlining and improving their operations, which is what HR is doing. So the trends might drive them to be more sophisticated service providers and business partners, but where does the "strategic" come from?

(As an aside, there's no guarantee that the talent squeeze will uniformly make HR departments more effective operationally, much less "strategic." From what I can tell, HR is primarily relying on third-party technology vendors and consultants to give them solutions that will keep them afloat, even though these people rarely know their business or what's best for it. See point #1 in the Fast Company article about HR people not being the sharpest tacks...)

Some say analytics will make HR strategic. Analytics are fabulous, when done well (I think it's a stretch to say Jac Fitz-Enz's idea of analytics fit into this category), and good data can obviously provide immense insight. But does implementing Six Sigma make a manufacturing unit strategic? In its own way, perhaps. But it's likely only going to take on true strategic importance in an organization whose value proposition and key customer is focused on exceptionally high quality and reliability (chip makers, for example). In that vein, the ability to recruit and hire the right talent would be hugely strategic to a staffing agency or executive search firm, but not necessarily to the rest of us.

So to wrap this up and to stop being a nagging nancy, I'll put forward my own view of what Strategic HR would actually look like. You may already see where I'm going.

The first stop is what I alluded to in the previous paragraph - alignment with org strategy. HR people need to be business people first. They need to not only be aware of, but truly understand the company's business model and strategic direction, as well as macro economic trends and the competitive and market landscape.

This latter point - looking externally - is key in that it starts to take the function outside of the operational realm. There are some cool things that an HR department can do to drive strategy and competitive advantage by looking at internal, HR-specific tools and measures. For example, if a retail org has "revenue per customer visit" as a KPI, they can look at which talent pools and competencies best drive that metric and start developing and hiring people appropriately. However, if HR is going to wait for business leaders to figure out the market outlook, it will never gain a seat at the table until after the strategy and business model have been pieced together.

Going back to my snide remark above, had HR seen it as their job to understand and track demographic and workforce trends, they might have anticipated the talent squeeze earlier and started looking at implications for both HR (better talent management) and the rest of the business (how wage inflation in certain jobs due to competition for talent might create a need for additional capital or need to be offset by efficiency gains elsewhere). Similarly, if HR were responsible for understanding talent markets and economic trends in different parts of the world, they might be able to propose expanding into specific emerging markets based on both customer demand and the availability of able employees.

These are just a couple of examples, but the point is that HR can't settle for just knowing it's own organization if it is to be strategic. "Strategic" implies a broad perspective and forward thinking so that one can make decisions about what the next move needs to be. Maybe this is asking too much of HR. But if that's the case, then HR people need to stop whining about being strategic and accept their role as a business partner and service provider, and just focus on how they can do their job better. That may put them in the same position as accounting or supply chain, but if the company's primary motive is to maximize profit and they can only have an indirect impact on that, why should they deserve a special seat?