A few years ago I had the privilege to attend a workshop discussion in Pune conducted by Prof. Wayne Brockbank, of the University Of Michigan School Of Business. The theme was HRs strategic role and how can HR be a business partner in real terms.  The large hall was jam packed with business heads and HR executives. The audience was kept spell bound with his vast practical knowledge, interesting anecdotes and enriching insights. His keen sense of humor helped in putting across some hard truths aimed at the HR fraternity. HR heads couldn’t help sportingly applaud the learned professor’s well intended puns. 🙂

The writings and interviews of Prof. Brockbank and his colleague Prof. Dave Ulrich on strategic HR are widely read and followed they have written some great books on this subject. Their practical experience as strategy and organizational consultants spans across 18 years of empirical research data from over 20,000 people.

What it means for HR to be a Business Partner?

It means that HR must begin with business logic and not with HR logic. The key differentiator is the external knowledge not the internal knowledge of HR.

Yes we can!

However general impression prevailing is that HR professionals still remain inwardly focused building on their functional expertise, models and processes.  Their awareness of external business reality – market, competitors, shareholders, industry structures and global trends seems to be low.

Yet it is now acknowledged by business heads of enlightened organizations that in a globalized world of fierce competition and change, intellectual and human capital are a vital source which can create organizational excellence and  provide sustainable competitive advantage.

And as Wayne Brockbank puts it – the world is telling HR: ‘We need to have you add greater value.  But if you need to have that, you need to start from the business standpoint and not the HR standpoint’.

So is the HR as it stands configured today getting their act together?  If not what are the issues that need to be addressed?

Please do share your thoughts! Thank you.

Advertisements

About dilipnaidu

An open mind! Love to share my thoughts and a keenness to learn. An engineer and a MBA I had a wonderful innings in the Army and later moved to consultancy and teaching. My current interests are reading, music, growing culinary herbs, playing golf and yoga. I am serious on "Living life less seriously". A warm welcome to you be well and be cheerful always.

13 responses »

  1. HR – STRATEGIC BUSINESS PARTENER
    From times immemorial; whenever any organized activity, involving human beings (HR) takes place, it results in benefitting the organization. The gain may be in the form of finances, efficiency, better service, better care, compassion or satisfaction. These are also strategic aims of any business or organization. HR, therefore, has always been part of core business of the organization.
    Why then the Q – How can HR be a ‘strategic business partner’?

    In fact HR was developed to such an extent that it was predominant in the functioning of any organization. Consider the oldest organizations like Healthcare, Armed Forces, or Production Factories. Irony of ‘growth’ is that we tend to forget our roots. (It is a subject of discussion separately). The fact however is that in spite of HR’s development in the past; today it has been relegated to a mere administrative function.

    Good point however is that for the last 10-15 yrs we are reviving the growth & development of HR to be in sync with being a strategic business partner. Please consider these two cases.

    Case 1
    Patient care is the accepted norm in hospitals all over the world. In our country’s scenario to provide basic patient care in terms of cleaning, washing, sponging, bed making, bed pan service, moving the patient within the hospital & service of food & water; we employ the services of sweepers, ward boys, & helpers. These services are catered for male & female patients separately. This was done keeping in view the social pattern of life, methods of hygiene & sanitation, & methods of disposal of human waste. These methods & services have since undergone a sea change. The HR who employ persons to provide these services, have not changed their methods & processes. They continue to issue appointment letters specifying these duties & responsibilities separately. Their argument is, as the ‘Factories Act 1948’ has not changed, so how can they change their processes.

    There lies the catch. There is nothing in the Act which, restraints the HR from multi tasking a person with changed compensation. Even the old employees can be assigned new jobs by taking the unions into confidence. In view of the changed level of education & increased mobility of the work force; changes in job content are desirable. Imagine the financial gains to the organization by multi tasking & reduction in the number of employees. A dynamic situation indeed.

    Case 2
    To introduce a new diagnostic equipment costing a few lakhs of rupees (say 20L) in a hospital – a flurry of activities take place. Doctors discuss the need, financial people comment on the availability of funds or loans. Viability & profitability of the venture keeping in mind the likely no of patients using the equipment & its life span are considered. It takes a few months or even a year or two before the desired equipment is introduced.

    On the other hand, as & when an employee retires or leaves the hospital; HR department doesn’t lose any time to employ a new one. It’s HR’s chance to prove their efficiency. This new employee at the present rate of pay & perks will cost the hospital more than 20L Rupees, during his service. No permission or sanction is required. HR manager doesn’t have to apply his mind. Accepted process & procedure takes over, no Qs asked. Is it really so?? HR to become a strategic business partner has to think & act differently. Eg, Rework the reduced ‘requirement’ of multitasked employees in the hospital, contract employees in view of mobility & education level of the now available workforce. Set of new possibilities are available. A dynamic situation.
    HR, therefore need not be a mere strategic business partner but a ‘Dynamic Strategic Business Partner’. R L S

    Like

    • dilipnaidu says:

      Thanks Roshan, to take-on this critical issue facing businesses today. The two examples given do indicate how much HR is a victim of its own function.

      Your statement “These methods & services have since undergone a sea change” is so true – it is HR that not kept pace with change.

      Unless HR understands the business challenges and forces in the environment it will perforce be reduced to an administrative function. And this will affect the competitive strengths of the organization. So the leadership too will need to find ways and means to re-engineer its HR and maybe split it into Strategic and functional. And yes the function has to be ‘dynamic’.

      The staffing of these will have to be done imaginatively to ensure a good fit. And Hema Ravichander’s article gives some interesting clues.

      I am so glad you have taken the interest and expressed you views comprehensively for the benefit of readers.

      Thanks friend!

      Like

      • girish says:

        Respected sir,

        I on my request to my superiors am going through job rotation in different departments under different department heads. My role in the company is to improve the practices of the different departments including HR with the help of the strategies to be followed and applied in the company.Thanks to you for our discussions in TASMAC and for practical tips. I am now in the process of playing the correct role of Strategic HR in contributing to the profitability of the business.

        With deep regards and wishes,

        Yours faithfully ,

        Girish kohli

        Like

  2. Shraddha Kelkar says:

    very well analysed article Mr. Sriram. It definitely gives new insights about strategic HR. According to me HR often mirrors the maturity of an organisation. In less mature organisations, HR functions are still at very primary level. Whereas the mature and hence successful organisations have given strategic role to HR.

    Like

    • dilipnaidu says:

      Hi Shraddha … thank you for your response. I am not sure whether ‘most successful give strategic role to HR or the vice-verse – those organizations who give strategic role to HR do become successful.

      Thanks & regards!

      Like

  3. Sriram says:

    When we talk of HR, we usually refer to the systems and processes that are required to acquire, develop, support & retain employees in an organization. Hence by its very definition HR function is more tactical than strategic as the systems that have emerged are perceived as more ‘operational’ than ‘strategic’ and there is hardly anyone revisiting the existing systems / processes.

    Marketing & Finance are subjects that are strategic in their very nature and have separate operational inputs – Sales & Accounting respectively – to focus on operational issues.

    HR however does not have this separation & hence it loses out in being perceived as strategic. Boudreau & Ramstad have coined a new term for the Strategic equivalent of HR called ‘Talentship’, because just as marketing uses sales data to guide the future sales, finance uses accounting data to project into the future, Talentship will be guided by HR data to take the strategic decisions relating to ‘Talents’.

    Another approach suggested is to do away with the word resource and replace it with the word Capital. So it becomes Human Capital Management – which is a far more accurate description of the ‘asset class’ of human capabilities. This nomenclature is important because resources are ‘expensed’ with while capital is ‘invested’. So HCM automatically gets a strategic focus & gets to cut free from being seen as a cost center to a investment center.

    Given that marketing & finance are not inexhaustible sources of competitive advantage any longer (how many more micro segments & mass-customization will we achieve? How many new ways of structuring finance are there?) the only resource thats left as yet unexploited is Human Capital.

    By its very nature – Humans are infinite in potential. So its possible for a human to be a Gandhi or an Einstein or a Usain Bolt or a Bill Gates or a Warren Buffet as well as to be the faceless masses living below the poverty line. As Master Ooguay’s lesson to Shifu about the power of belief & nurture of a peach seed & infusing it with the power to defeat Tai Lung – it is possible to develop human potential to any extent with no limits.

    Advanced research in neuroscience (which are currently baby steps in the understanding of how the brain functions) indicate that it is possible for us to train our brains to help us become capable of handling even so called ‘difficult’ to develop right brain functions like creativity, artistry, etc. Also, with superior computing abilities & data analytics, we are able today to mine reams of data to prove the existence of a “Human Capital Value Add” to business & a NPV / IRR on a Human Capital Initiative! So now we can talk the language of marketing & finance – how has HR practices added to bottom line results & what is the exact dollar value of Human Performance – just like marketing justifies its Branding spends & Finance displays its ‘deft’ handling of risks & finance costs to improve bottom lines.

    While all this exciting stuff is happening in the development of the ‘tools’ for Strategic HR, where are the ‘people’ who can be effective users of these tools? Its a sorry state of affairs that a country of our population has hardly any BSchools that deliver comprehensive HR courses that incorporate the latest practices & as Hema Ravichander laments in this article (see link below)
    http://www.livemint.com/articles/Authors.aspx?author=HR%20Matters&type=wa
    while she could get non-HR talent to manage routine HR functions she needed a Subject Matter Expert to deal with matters of ‘Organizational Effectiveness’.

    The joke ofcourse in B School circles is – those who can do; those who can’t do HR! so if this is the ‘talent’ thats entering the domain, how can HR ever get strategic? How can it convince CEOs & Boards that its initiatives deliver on strategic objectives & provide ROIs & IRRs far superior to what marketing / operations or finance initiatives can?

    So the challenge is this – the subject matter that is Strategic HR has evolved academically. However whats missing are the torch bearers & adopters who will engage with the subject & implement it in organizations – just as the finance & marketing guys do! Currently all Strategic HR initiatives are ‘outsourced’ – to the mercers & the hays of the world for lack of talent inhouse!

    So is HR strategic? YES. (enough literature & research proves it). Is Industry ready for Strategic HR? YES (its craving for solutions that Strategic HR can deliver). Is there talent in the market to apply & deliver? NO!

    Just because the messenger does not understand the message & delivers it poorly does not make the message poor. HR needs to be liberated from the current ‘practitioners’ who are hardly aware of HR (anecdotes abound in Hema’s article) then with the true practitioners HR can be & is already strategic & delivers hard results beyond imagination!

    Cheers!

    Like

    • dilipnaidu says:

      Cheers to you Sri for the comprehensive treatment to this post. I would like to pen a few lines on the same.

      Re: HR not having a separation such as in Marketing – Sales & Finance – Accounting – isn’t it possible to have a Strat HR incl (OD & Organizational Analysis & other strat related) within the HR deptartment? Also with due regard to Boudreau & Ramstad’s new term for the Strategic equivalent of HR as ‘Talentship’ is good but isn’t HR already aware of the futuristic dimension of talent management? Of course just being aware is not good enough 🙂

      Yes I agree the need to view a HCM as a competitive and for this all the three components –Intellectual capital, Social Capital and Emotional capital will have to operate as mutually reinforcing elements.

      And also Master Ooguay’s lesson to Shifu about the power of belief & nurture of a peach seed & infusing it with the power to defeat Tai Lung – it is possible to develop human potential to any extent with no limits is true, perfect and inspiring 🙂

      I’d love to know a some more on the approach to this research in neuroscience where it becomes possible to activate & build our right brain functions. Yes I am sure with superior computing abilities & data analytics; we may be able to mine reams of data to prove the existence of a “Human Capital Value Add” to business & a NPV / IRR on a Human Capital Initiative! This will surely help HR establish its credibility.

      And of course Hema Ravichander’s article states with convincing clarity the sorry state of affairs. However the best option as mentioned in the article seems to be the lateral infusion into HR from the other line functions. It does seem to be a practical and viable one.

      I will surely source and read the article on ‘The India Way: How India’s Top Business Leaders are Revolutionizing Management’.

      Thanks & regards

      Like

  4. Lubna says:

    For the HR to get its act together, it is vital that HR is regarded as an important function and not just an adm function.. HR representatives must have a key role to play in business strategy. While the role of the HR department is changing, we have a long way to go till there is a complete shift and HR is not relegated to merely a hiring/firing/compensation activity.

    Like

    • dilipnaidu says:

      Welcome Lubna … what you say is true in most cases … however it is also true that most HR folk do not work enough on understanding the forces in the external environment. As such when change happens HR lags behind.and their advice to top management is out of context.

      But I agree with you that the leadership too must take the initiative to use their HR effectively.

      Thanks & regards..

      Like

  5. Sachin Macwan says:

    Dear Sir,

    In today’s world HR is the heart of the organization. Only 23% of corporate leaders see their HR departments as currently playing major role in coming u with a corporate strategy that would have significantly impact on operating results. The main objective of business leaders would be profit maximization. So, they want vibrant, courageous and charismatic leaders who can bring hallmark changes to the organization.

    The words of Jeffrey Immelt (current CEO of GE) inspire me, “…….The secret to all of these dimensions of developing leaders is to have a great team of human resource professionals. Enduring companies must have a passion for people. GE has a great HR team that protects our valuable human assets. I want to give them special recognition this year……” Here, the contribution of HR department is being taken into consideration since they gave tremendous output to the business. The man behind the curtain is Bill Conaty (senior VP HR of GE).

    The question arises here, how HR can be strategic business partner in the organization? HR must increase its knowledge of Finance and Accounting, Marketing and Sales, Operations, and Information Technology and sharpen in key business skills.

    Making HR as a Strategic Partner:

     An effective HRIS (Human Resource Information System) saves time and reduces cost of all level tasks. HR should focus on the system.

     Knowledge and Talent management should go to gather in the organization. HR should have knowledge of all departments, which will help them to find a right candidate for talent management.

     The effectiveness of employees also depends upon your existing corporate practices and structure, so HR should go through that too.

     Implementation of HR score card may open new arenas for the employees. It will eventually, lead to the strategic contribution for the organization.

    In a nutshell, HR department should touch every level and each department of the organization. HR has to create faith and hope in the hearts of the employees to get this done. The road of strategic business partner goes through the stations like change management process and human capital development.

    Strategy Lover:-)

    Like

    • dilipnaidu says:

      Hi Strategy Lover Sachin 🙂

      I find your comments quite interesting. You have provided some convincing arguments to prove HR effectiveness such as the GE example.

      Yes there are several success stories where HR played critical role. One which I admire most is the Southwest Airlines saga where Libby Sartain was the brilliant and forceful HR head. So there you when there is talent and initiative in the HR department the invitation to the strategy table is bound to come :).

      Thanks & cheers!

      Like

  6. The University of Michigan is only 40 minutes away from me in Ann Arbor, which I have done several posts about. You would love it Dilip! Margie

    Like

    • dilipnaidu says:

      Oh wow Margie, how nice to know that. We in this field hold the University in high esteem. I’d love to read the posts on your blog. Thanks and regards.

      Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s