Room for HR at the top table?
With talent management initiatives starting to heavily influence the executive agenda, this is a golden age for HR directors. But should their expertise be welcomed onto the board? Widget Finn reports.
Should there be space on the main board for the HR director? It’s a perennial debate that always provokes heated arguments in the HR press, usually coming to no particular conclusion. The current argument is that since talent management is top of the list for most organisations, its champion should sit at the top table.
Just 53 of the FTSE-100 companies have an HR director on their main board. Valerie Scoular, group HR director of marketing services company Aegis Group, argues against an increase. “There’s too much debate on this among the HR community, and we’re in danger of undermining our professional position by demonstrating lack of confidence in getting caught up in the conversation.”
She claims the wrong question is being asked. “If we look at the shape of boards and the balance between executives and non-executives, the UK is following the American model of reducing the number of executives.”
Scoular argues leaders with commercial responsibility are capable of taking responsibility for the human capital of the organisation. “We shouldn’t assume you have to have HR on the board to ensure HR is part of the debate. After all, in most companies there is normally a strategy meeting once a year, which is an opportunity for the HR director to contribute to the agenda and help shape the people objectives to deliver business results.”
Andrew Wallbridge, European consultant at HR consultancy BlessingWhite, agrees the HR specialist should be exerting influence in areas other than the main board. “Many main boards are set up just to oversee corporate governance, so it’s the senior executive boards where the presence of HR should be felt.”
The HR contingent should put up or shut up, says Nick Holley, executive director of the HR Centre of Excellence at Henley Management College: “Too many of them bleat about not having a seat at the top table; those who are there just get on with it. And so they should, since CEOs are crying out for help in these areas, which are becoming increasingly more critical.”
The percentage of intangibles on the company balance sheet has increased from 35 per cent in 1980 to 85 per cent today, which reflects the growing importance of talent, leadership and brand. The whole people agenda has become more critical in a knowledge economy, yet it seems there aren’t enough HR professionals of sufficient quality to carry it through.
Mike Haffenden, director of the Corporate Research Forum, claims HR directors just aren’t up to the standard required. “The HR function includes prophets and plumbers. The latter do a pretty good job, installing the basic stuff and keeping it all ticking over. But there are relatively few prophets who can transform organisations – and the worst scenario is when plumbers become prophets.”
Haffenden enjoys stirring controversy, arguing HR should leave people alone. “People will do well in a great context, and the HR professionals should concentrate on creating an environment where the strategy is clear, communications are honest and the values are good.” He recalls working with two contrasting multinationals. “In one, all the HR effort went into recruiting very bright people who were sent off to do a programme at Harvard, then returned to work in the same stifling organisation as before. The other employed people who were no brighter but flourished in a great environment.”
It seems senior HR professionals are often their own worst enemy.
There is a perception they’re not commercially savvy, which is borne out by Holley’s informal research.
“A headhunter reported to me that 95 per cent of the senior HR people he meets cannot enumerate the value they add to the business, and they produce the worst CVs because they talk about what they do, not the value they add.”
The main problem, touched on by Haffenden, is HR has historically been a specialist function. Tim Richardson, director of talent at PricewaterhouseCoopers (PwC) UK, says the industry hasn’t helped itself in the past by using “jargon and language that isn’t grounded in real business nor reflects hard-edged commercialism”. PwC’s main board, like other professional services organisations, is made up of partners who have mainly come through the professional route, making for a broader background.
“Our director with responsibility for people comes from our advisory business, while his predecessor was a tax partner, but they both used functional experts like myself to help carry out their jobs with credibility,” says Richardson.
E.ON UK recognises the value of broad-based HR experience. Its head of HR, Andrew Jordan, comes from an engineering background. “I worked for Rolls-Royce as a graduate engineer, moved into manufacturing and then got involved in graduate training and recruitment. So I brought to the role an understanding of the overall operation together with marketing, sales and customers. We look at line managers as potential candidates for the HR function, and vice versa, and recently a senior line manager was appointed from an HR role.”
The language of the board is finance says Holley, and if you can’t speak the language you won’t be understood. “Not enough HR people have the right background or think in the right ways.”
Businesses are beginning to wake up to the value of people as they become increasingly global and the UK moves from a manufacturing to a service base. This is a golden opportunity for HR to re-invent itself, acquiring new skills to take on its changing role and responsibilities.
How can this be done? According to Alun Griffiths, who has line manager experience himself and is group HR director at technology consultancy W.S. Atkins, it’s essential to give HR people broad business experience early in their careers. “They shouldn’t develop their careers up a narrow silo called HR, but a broad one called business. There should be a continuous cross-over so the two frames of reference are aligned together.”
Griffiths says there is a strong role for mentoring. “Executive directors and senior people with financial and commercial expertise can play a useful role as mentors to young HR high-fliers, encouraging them to see people issues in a business context.”
Atkins devotes an entire board meeting each year to people issues. Griffiths comments: “This is very important for the HR function because they know their work is being considered at the highest level, and it’s also important in shaping the agenda and ensuring it is promulgated around the wider business.”
Scoular, who was a customer services director at BA and has held a variety of line jobs, recommends practical business experience for the next generation of HR. “It’s important to be hands-on, by running a cost centre or sales team and taking on middle management responsibilities.” But she adds senior HR people have to become specialists in changing organisational performance through the effective use of people. “It requires a degree of sophistication and intellectual thought while focussing on the challenge of quantitative rather than qualitative measures.”
So will a re-invented, commercially acute, numerate HR professional justify a place on the main board? No need, claims Holley: “The end goal is not to be on the board but to be in a position to influence the organisation. The HR director is the only person apart from the finance director who sees the whole organisation as opposed to being focussed on operations, marketing and so on. If he builds trust he can tell the CEO what he needs to hear, but no-one else can tell him.”
Griffiths also argues that the whole point is to spotlight people issues. “I’ve been HR director for four years, but only on the board for six months. However, I hope I was influencing strategy long before that. Being on the board isn’t necessarily a pre-condition of being influential but a recognition that one has already been influential.”
As for talent management, he doesn’t see it as the fiefdom of the HR director. “I take the view that it is as much the role of the chief executive who is concerned to develop and retain talent in the organisation systematically, as an embedded process in the business.”
Clearly senior HR has a challenging role in helping to shape the future strategy of organisations. But whether it is on the board or alongside it remains to be seen. One thing is certain – the debate will run and run.
HR DIRECTORS – WHO ARE THEY?
47% are men
22% were headhunted into their role
25% were promoted internally
90% have been in HR more than ten years
HR DIRECTORS’ VIEWS ON HR
82% believe that experience in another function will further their HR careers
53% believe that generalists have better career prospects in HR
69% say that HR is gaining prestige as a profession
31% claim that there will be fewer HR jobs in their organisation in the future
Source: CIPD
