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How Human Resources Can Help CEOs Compete

Many businesses view HR as a sort of necessary expense: an overhead cost to be mitigated and absorbed, not a value-adding strategic revenue generator. This syncs well with the old-school, traditional idea of HR, and represents a long-held paradigm in business.

But as Bafaro, Ellsworth, and Gandhi at McKinsey explain, CEOs should be using HR to compete in their industries, and HR should be explicitly using talent to drive revenue. The days of reactionary HR are gone; the future is HR as a mission-critical partner.

From Business Partner to Talent Value Leader

One of the most important things companies can do to get more from their HR is to crank up the specificity of their roles. Many HR business partners – those who advise management on talent concerns – tend to function as generalists, applying broad maxims and rules to things like succession planning and leadership development.

Instead, McKinsey calls for a shift to a new role: talent value leaders. TVLs should be vested with the actual authority to making hiring and firing decisions based on their tactical and strategic knowledge of talent, but should also be held accountable for the performance of that talent. Using specific metrics, the TVL guides the growth and development of their human resources.

Talent is so valuable as to be treated as a core competency, and that competency should have a dedicated owner.

Optimizing HR Operations

As companies scale, HR can easily become bogged down in the quagmire of transactional and operational tasks. Indeed, McKinsey’s research shows that typical HR departments spend up to 60 percent of their time on these tasks that could (and should) be automated, as they follow a strict and specific set of escalation procedures and workflows.

Businesses, then, must invest in HR automation technology so HR can be fully freed to tackle strategic initiatives and not simple rote tasks.

Broader, More Flexible Leaders

As the strategic importance of HR grows, so too does the need for top-qualified candidates to fill its roles. But in order to keep HR plugged into – and actively engaged in – the broader vision of the company at large, McKinsey recommends not sheltering lifelong HR leaders within their veiled silo, but instead creating an executive rotation of sorts that asks executives from different departments to perform “stints” in HR, and rewards them for their participation.

This not only keeps HR completely in the loop on the pulse of the company, but it instills in the corporate culture a sense of the importance and value of HR as a strategic driver, and elevates its esteem and prioritization moving forward.

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Gone are the days when HR was little more than the payroll department. Today, HR can and must be adding value to your business through talent, and shaping the strategic future of your company.

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