A New Role for HR

Nov 2

Why HR needs to change

From the perspective of most CEOs today, HR is not getting the job done and much has been published lately about the need for HR to change to help organizations navigate through dynamic business environments and the talent crunch. Great business thinkers are mandating HR have a deeper understanding of the business, focus on key revenue and profit drivers, and leverage data to help predict and inform key talent decisions. I read endless articles on how HR can help engage employees by ensuring managers treat employees with respect and dignity and create flexible workplaces.

You will get no argument from me on the above points. For years, I have been advocating that HR needs to align to the business strategy to become relevant. I have been focused on how to get HR to be a revenue driver, to use data in creative ways to inform decisions, and to create a superior employee experience.

However, this may not be enough in today’s modern organization. The statistics are staggering – Fortune 500 companies currently have a life expectancy of 15 years compared to 75 years in 1955. Most publicly traded organizations have an intense short-term focus on profits to provide greater return to shareholders. Today, organizations are struggling to find good talent, have workforces that do not reflect the customer base, and “worker productivity has slowed to a pace last consistently recorded in the early 1980s” (WSJ, August 2015). Organizations are sucking the life out of the typical US worker.

There is also an overwhelming feeling of mediocrity that has pervaded our workplace; much of this attributed to the short-term focus of organizations. It is becoming clear, however, for an organization to have long-term sustainability, it must figure out how to break out of this mediocrity. This cannot be accomplished by a short-term focus on profits, but rather a sustainable long-term focus on advancing an organization’s purpose and staying true to its values.

The importance of purpose and values

The purpose is the organization’s impact on the lives of those it serves and the values are the desired organizational culture (HBR, September 2014). These along with the vision and mission lay out the core of an organization– its impact, strategic direction, and operating principles:

Modern organizations are shifting towards being purpose-driven. Purpose is becoming so critical to an organization’s sustainability that some predict the distinction between profit and not-for-profit organizations will cease to exist by 2020 (Forbes, August 2015). When an organization is advancing its purpose and staying true to its values, sales and profit naturally follow. An organization’s purpose and values are also what attracts, inspires, motivates, and engages talent.

The new role of HR

HR is in a perfect position to take advantage of these trends and play a key role in driving them. In the new world, HR should be the advocate of the organization’s purpose and the protector of its values. This can have an enormous impact, as decisions based on short-term needs are often not aligned to an organization’s purpose or values. When decisions conflict with the organization’s purpose and values, they render the purpose and values meaningless and threaten the long-term sustainability of the organization. While making decisions aligned to the purpose and organization in the face of serious challenges is no easy task, it can lead to innovation, something for which every organization strives. (Ton, Zeynep, 2014, The Good Jobs Strategy). HR can facilitate this by bringing every discussion back to: how will our decision advance our purpose and are we acting in a way that is aligned to our values?

Each HR function will also need to consider their role in advocating the purpose and protecting the values:

Taking on this role for HR will not be easy. The HR team will first need to fully embrace the purpose and understand its relationship and impact to the organizational strategy and operations at a very detailed level. In addition, HR will need to ensure that initiatives undertaken by the organization are truly aligned with the purpose and determine ways to measure the return on purpose. This means, that it is critical now more than ever that HR has a deep understanding of the business, uses data to inform its decisions and ensures a superior employee experience as it will require all of this and more to influence the workforce to stay true to the purpose. HR will have to be able to build fact-driven business cases in order to influence the business to stay focused on the long-term. The CHRO will need to be a true strategic and operational partner to the other leaders of the organization. It will require time and the support and guidance of the CEO and other leaders for HR to transition into this role, but the potential impact this can have on an organization’s sustainability and ability to inspire and motivate its staff is well worth it.