Malcolm Higgs is dean of Henley Management College and a professor
of management studies.
Managers have begun to emphasise the importance of HR strategy
and the need to align it with the overall strategy of the business.
However, what has been less clear is whether this change and others
have been driven by HR practitioners seeking a more significant
role, or whether they reflect a more profound shift in thinking
about the significance of people management.
Until recently, there has been little evidence that focusing on
people management has any impact on the performance of an organisation.
In addition, HR managers have too often relied on advocacy, without
supporting their reasoning with business-based arguments.
Research is also beginning to show clear links between people management
issues and the business performance. For example, intangible assets
can account for anything up to 55 per cent of variation in the market
value of a company. Such "intangibles" include:
- the ability to develop committed employees by aligning individual
and organisational values;
- quality of the leadership of the business (not just the chief
executive, but the broader leadership team);
- the ability to work in a way which avoids "turf wars"
between different functions or departments;
- the ability to develop the capability of employees to acquire
skills and work in new ways;
- the ability of the organisation to change and make changes stick.
A new view of the role of HR is clearly required. If people management
is crucial to business success, then the HR function must undergo
some substantial changes.
First, HR managers should become valued advisors to line managers.
Second, HR must broaden its remit from purely operational matters
towards more a strategic approach. This means turning attention
outside the business, benchmarking against other organisations,
and collecting and analysing data on competitors.
HR no longer primarily represents employee perspectives; today
it is also a pillar of business and contributes alongside all other
functions to building the commitment and loyalty of employees. So,
it needs to be in a position to anticipate what changes are required,
rather than responding to line managers' requests for change.
Organisations have begun to work with HR in the ways outlined
above. Their experiences, together with broader research, have
led to a way of looking at HR that is based on the extent of focus
on people and strategy.
The potential roles are quite varied and have implications in
terms of how the HR function is structured, resourced and developed.
New roles include:
- Change capability building.
- Providing advice and service.
- Planning and metrics.
- Strategy and policy formulation.
What will it take for HR managers to succeed in the new role?
Research has created a picture of those capabilities that add
value to a business. Most important of these is "personal
credibility". Others are:
- Business knowledge and understanding.
- Delivering relevant HR practices effectively.
- Effective management of change processes.
An argument has been made that if HR is central to supporting
business success then it needs to be represented on the board.
However, it is not a question of functional representation at
board level that is important but rather an issue of the extent
to which board members have developed an attitude encompassing
The most skilful HR leaders have developed their ability to coach
and support the top leadership. While this is difficult, it may
in future be the unique role for the HR executive.
This summary is part of a longer article which can be ordered
through back issues of the series (£3 each UK and Ireland;
£4 each continental Europe; £5 each rest of world)
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