After a read at SystematicHR titled “HR Versus Finance – Influence, Power, and a Seat at the Table Part 1“, here’s the question that has me puzzling this morning,
“Is human capital more or less valuable than financial capital?”
In bobble head fashion, I start my nodding while thinking “Yes, people are more valuable than wheelbarrows full of cash.” Bobble, bobble. Then I hit the thesis statement (as it were)
I completely agree [with Jeff Hunter of Talentism] that with todayâ€™s shift to a knowledge economy, the value of human capital (talent) versus the value of other capital is clearly higher. Finance is currently a more analytical center that happens to provide great insight into the performance of the organization to the executive team. However, if the real power exists in execution, then HR should have a stronger partnership with the business than it currently does.
And here is where my mind went – “Execution” is Not Enough. To be a valued advisor to leadership, you must not only fulfill your stated responsibilities, but you must also demonstrate how your activities drive the organization to become critical to the leadership of an organization. Insight is what makes a valued contributor, be it an individual, a department, or a consulting organization.
I would argue that no one spends as much time reflecting and analyzing the company’s performance as does Finance or Marketing. (Full disclosure: – I am deeply rooted in the analytical and monitoring functions, and earn my living working with leaders seeking to propel or refine their businesses through improvements in their process and practices. This rant will have a bias – heads up.) A function (or individual) is repositioned when they offer new insight beyond stating the statistics of their tasks being recorded. The rub is that for divisions, this has to be a visible/palpable passion of the senior division manager, or these powerful insights will never garner the attention they deserve.
When Finance simply reports the numbers (execution), they get marginalized. It is in the analytics that measure execution of the organization at large against the strategy (and the fiscal equivalent, the budget and forecast) that Finance brings insight to the conversation. To do this successfully requires that Finance develop an understanding of the functions driving revenue growth, expense, and capital consumption. Effectively, learn about the business that drives the results. When this happens, we see the Finance organization play a significant role in guiding senior management toward achievement of strategy.
Operations often suffers from the same logic as HR – “we are at the core of our business delivery, we should be the right hand of the business.” Proper execution in either of these functions means status quo, be it keeping the seats filled or machines humming. This is the stated scope (read “minimum”) accountability that a manager has been hired to fulfill. The lights are on, the business is servicing customers. And?
We’ve seen operations embrace TQM, 6 Sigma and LEAN initiatives in a way that creates insight (and improved profitability). By developing a clearer understanding of their underlying processes, Operations not only demonstrates that they have a sound handle on their business, but that they can incorporate information from other disciplines to improve their contribution to the organization as a whole. This can come in the form of new-found capacity, quicker throughput, or reduced costs in production. All have a measurable bearing on the organization, well beyond simply keeping the machines humming at yesterday’s levels.
For an HR organization to play the role of trusted advisor, they must begin thinking about their work from a n analytical perspective (and I don’t mean regulatory reporting or compensation management). Moving beyond execution means understanding the drivers and constraints surrounding the organizations’ strategy, and working with leadership to reduce those human capital related risks that threaten the realization of these goals. Much of this comes under the heading of “talent management”, but HR must be able to demonstrate the ability to offer insight to begin a trusted consultant relationship with peer functions before aspiring to the highest levels of influence.
A few examples to make this point:
- Talent Management begins by looking like a Customer Service function. More time should be spent working to retain and develop internal candidates than is spent seeking external professionals. HR Managers should have regular dialogue with functional managers about existing staff, turnover trends, growth potential, and opportunities to increase employees awareness of the business through exposure to different areas and competencies within the business.
- HR must track internal talent like an Increasingly Valuable Commodity. Functional managers don’t do enough to manage personnel from a development perspective, and can really use some assistance. Begin capturing the data and analyzing the reports that identify how the recruited talent is being used. Ensure they have training opportunities necessary to grow professionally (and increase their contribution). Helping managers grow and develop their staff goes a long way toward cultivating trusted relationships, and also creates the networks necessary to move superstars around move quickly to address mission-critical issues.
- Ensure management understands that they are Recruiting Future Leaders, not hiring for the current Opening. This is the only way you develop a deep bench – by thinking two moves ahead of a candidate’s entry point. If you aren’t helping managers look down the road (like Finance does with dollars-and-cents capital), HR remains a fire-fighting exercise of recruitment and orientation.