HR Leadership

I had the pleasure of speaking this morning at the HR Leadership Summit in Houston.  The topic was “Engaging HR with the board of directors”, and the audience was very engaged.  It’s a topic I’ve spoken around quite a bit, but never directly about.  Therefore, preparing for the event was a great opportunity for me to think about the subject much more critically, and in far more detail.

 

The corporate landscape is littered with evidence of what happens when HR doesn’t have a strong seat at the table.  Countless works of strategic brilliance in corporations fail due to lack of execution.  Historically successful companies suddenly flounder because of a change in leadership. During periods of downsizing, companies often end up losing the wrong people.  Although the reasons for corporate failures are complex, many can often be averted if leadership were to give more thought to the importance of human resources and talent management during strategic inflection points. Having a robust and fully engaged Human Resource executive is imperative in today’s complex business environment.  Here are some common downfalls I notice in companies I come across that I would recommend to CEOs and boards:

 

• Failure to include, as part of a strategic exercise, an analysis of talent gaps.  Significant strategic shifts, such as new products/services, new markets, or scale growth through M&A will always require skills that a company does not have (or have enough of).  Simply stretching the individuals who got you to where you are today won’t do the trick.  You need more people, or different ones, and a good HR executive should help develop the plan to get you there.

 

• Failure to understand the importance of culture. It’s important to understand “what it feels like to work here today” in a time of strategic shift.  This is particularly important in the case of M&A activity, when two engrained cultures are force-fitted together.  A leadership team needs to understand the components of its own culture that are its strengths as well as its weakness (yes, there are both). How will that culture play into new strategic decisions that are being made – new countries for growth, new product lines or distribution channels, or appending an entirely new company? Ask an HR leader to help you develop a cultural assessment of the organization.

 

• Lack of a robust succession plan.  Any organization owes it to investors (public, private or charitable) to have a sustainable business strategy.  Key leadership roles must be underpinned by individuals who can either succeed (planned) or replace (unplanned) the person in the current spot.  A strong succession plan identifies who these candidates are (or if external hire is preferred), what skills they currently lack and need to have developed, and what risks exist for their undesired departure. It should be the HR function’s responsibility to provide the support to develop this plan for the board.

 

• Lack of performance feedback and career development.  Communication to employees about how they are doing, how performance impacts their compensation, and how the organization views their development is essential in today’s environment of underemployment of skilled labor.  A world-class organization needs to have a transparent and consistent performance evaluation process as the foundation of its compensation program, and a competitive program for career development for its top and emerging talent. 

 

Every CEO and board of directors should have highest confidence in their top executive team. Those in the operating units are often considered natural succession candidates for the top job.  CEOs and boards (and the SEC for that matter) fully understand what skills are required to fill the role of a CFO.  However, I have been perplexed on numerous occasions to find that a CEO is comfortable putting the HR function under another top executive, or worse yet, parking someone in the HR role because “they are good with people”.  It’s no wonder in cases like this that HR is considered merely a compensation officer, and the individual has to fight their way to the table to be a part of the strategic conversation.

 

The best HR executives have a thorough mastery of the functional skills -- fully understanding the intricacies of how compensation and rewards should be balanced for both short and long-term results to maximize desired results. In addition, they should have a clear understanding (and at best experience) in the operations of the business including current strategic drivers and future direction of the organization.  And finally, they should be the "go-to" people in the organization on how to create the right kind of environment to incentivize the behaviors of the desired culture.  Making the organization the "best place to work" is undoubtedly owned by the entire leadership team, but many of the tools and ideas reside in a world-class HR department.

 

Business success is the result of great vision combined with great people.  Having one of your strongest players in the HR role makes the job of CEOs and boards of directors far less stressful, and the strategy far more robust and sustainable.

 

 

 

Comments

[Ann Marie]

Anna. I could not agree more. However I would also add the leadership of the organization owns
Performance feedback. The ongoing value of this feedback is key to any change in strategy. The difference in performance assessment in an M&A is always very unique.

[Anna Catalano]

Ann Marie, Thanks for your comment! I couldn't agree more that top leadership owns the responsibility! With the help of a great HR executive, a company should be able to maximize recruitment and retention of the best people!!