Should HR Have a Seat at the Strategic Table?

Most HR professionals would give you a resounding “YES !!” when asked this question. However, before we jump to conclusions it makes sense to weigh the pros and cons of such a step. More importantly we must answer the question of “Why is HR not at the strategic table in the first place?”

To answer the latter question of “Why is HR not at the strategic table in the first place?” we believe it boils down to simple branding.

Now don’t get us wrong, it’s not that we don’t value what HRs do, they’re great. However, the general perception of the department is that of an administrator, a support role and not as a strategic business partner. Since we’re dealing with basic human psychology in general, perception plays a waaaaay bigger role than product. You may have the best product going but if it’s wrongly perceived you might as well throw your product out the window and go over to your aunt’s place for a nice slice of pie.

So is the case of HR. A McKinsey study — “State of Human Capital”[1] found that people in HR was perceived of having a “Support-Function mindset, low tolerance level for risk and a limited sense of Strategic authorship.” Some pretty horrible perceptions to have especially if you’re gunning for a Strategic position. These perceptions do have grounds. Think about it, HR’s role can be generalised to a non-HR person as:

· Payrolls

· Compliance

· Labour Relations

· Talent Acquisition

· Learning and Development

The first three out of those five roles are incredibly administrative and supportive roles. Moreover, those are the roles that HR plays out more frequently as opposed to the last two that aren’t as supportive in nature (EG: It’s stupid but just to drive the point home, firms usually don’t hire as frequently as they pay their existing employees). Hence in a person’s mind it gets rooted in their head that “HR = Administrative + Support” and so the association is strengthened due to the frequency at which these supportive roles are conducted. (Consumer Behaviour 101).

Any CEO or Board wouldn’t like their administrators making decisions solely because administrators don’t have the capacity to understand the market. Hence, they can’t have a concreate opinion on strategy. Thus, they can’t be business partners[2].

On the other hand, Talent Acquisition & Learning and Development are the “business partner” kind of roles. Managers in these two roles need to have a strong understanding of the firm’s strategic goals to recruit and engage the employees. Their knowledge of labor market trends can add to a firm’s decision to buy or train their talent. Thus, HR managers in these two roles would add value to a firm’s strategy. No doubt that these managers are in a position to answer strategy questions such as:

· Are there enough skilled people in place?

· Is the leadership engaged and committed?

· Do the Employees have the Leaderships’ confidence?

· Do employees understand the objectives of the company?

· Do employees feel good about where they are working?

· What are the people implications of a: Merger or Acquisition? Downsizing? Etc. (I honestly can’t think of any but you get the jist)

Questions that any Board or Strategy Table would need to know as it concerns the very Human Capital they use to achieve their marketing and financial targets. But unfortunately, like said, it’s associated with HR which in turn is associated with being administrators.[3]

In conclusion, yes, HR does need a seat at the Strategic Table. However, to do that they need to market themselves better and change their administrative perception.

Now, going a step further than the topic we move onto “How can HR get their butts in that Strategy seat?”

Simply put, market themselves differently. Split HR into the administrative roles and the strategical roles. That way the former’s perception doesn’t overflow into the other one and thus undermines the latter’s role.

To drive the point home take for example, suppose Bentley was to launch multiple cars that compete directly with the likes of Honda City, Maruti DZire, Toyota Corolla at the same price same everything. Yes, there will be buyers but that’s not the point. Given time people’s perception of Bentley would start to get fuzzy.

“Are they a super-premium or a cheap brand?”

Hence the Bentley premium perception would start to be eroded. That’s why Volkswagen (owners of Bentley and Skoda) split products into different firms. Bentley for stupidly expensive cars and Skoda to compete at lower prices.[4] [5]

Similarly, to shed that administrator’s perception HR should split into one department that does the admin work and the Strategic part of HR that sits at the Table.


Listening to: “At Night. Alone” by Mike Posner https://itunes.apple.com/in/album/at-night-alone/1112946015


References

BENJAMIN ZHANG, S. G. (2016, November 26). These 14 giant corporations dominate the global auto industry. Retrieved from Business Insider: http://www.businessinsider.in/These-14-giant-corporations-dominate-the-global-auto-industry/articleshow/55628962.cms

CANDIDO, J. (2017, May 19). Why HR expertise is a critical addition to your board. Retrieved from The Globe and Mail: https://www.theglobeandmail.com/report-on-business/careers/leadership-lab/why-hr-expertise-is-a-critical-addition-to-your-board/article34986443/

Graber, S. (2014, October 31). It’s Not HR’s Job to Be Strategic. Retrieved from Haness Review: https://hbr.org/2014/10/its-not-hrs-job-to-be-strategic

McKinsey & Company. (2012). The State of Human Capital 2012 — Why the human capital function still has far to go. New York City, USA: McKinsey & Company.

Peterson, V. (2016, August 18). MARKETING STRATEGY: DO YOU NEED A SUB-BRAND? Retrieved from Art Version: https://artversion.com/blog/marketing-strategy-sub-branding/

[1] (McKinsey & Company, 2012)

[2] (Graber, 2014)

[3] (CANDIDO, 2017)

[4] (BENJAMIN ZHANG, 2016)

[5] (Peterson, 2016)

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