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HR is Failing as a 21st Century Strategic Solution for Business

February 27, 2013

CEOs Need to Know - Hiring Best PracticesA recent KPMG survey “Rethinking Human Resources in a Changing World” found that skepticism about the effectiveness of HR is rising at the board level. Of 400 senior executives interviewed, just 17% said HR is good at demonstrating its value to the business, and only 15% said HR provides insightful and predictive workforce analytics.

This aligns with what I hear – especially from executive management on the front line such as CFOs, operations directors in manufacturing and sales/marketing executives.

This raises two key questions

Does HR need to be a strategic function? and, if it does, what does that mean and how does it become strategic?

Should HR be strategic? Is the past what HR’s legacy will be going forward?

The traditional HR function came out of the early days of manufacturing, when it was all about absence, pay, hiring and firing. As it gradually evolved into human resource management, the function became more about developing the skills the business needed, largely through training, as well as attracting and retaining skilled and motivated employees.

So, let’s fast forward to the 21st century. A world where young adults recognize that the world has changed, going from a job for life, to one career built in multiple companies, to a world where an individual may have several different careers over their working life.

Businesses themselves are also changing work practices – utilizing cross-border teams, planning for a global workforce, building high-collaboration teams, supporting remote work, outsourcing, employing new technology and looking for ways to hire and retain talent.

People are core to this change and businesses will struggle to survive without a robust talent acquisition and retaining strategy. Traditional hiring practices won’t cut it in the 21st century.

Interestingly, 41% of respondents in the KPMG survey found that social media is making it easier for competitors to poach talent.

So the imperative for HR to become more strategic is compelling. But how can the 20th century HR model adapt to this change?

Making HR fit for the 21st century

HR needs to become more proactive – not just planning for what positions will be required but becoming better at identifying the talent needed for those positions. The 20th century definition for identifying talent is all about experience, hard skills such as advanced abilities to code in Cobol and education.

The 21st century strategy for identifying talent goes beyond those traditional markers to include “fit” analysis. This involves identifying the most critical soft skills, primary rewards/culture, behavioral environment and type and level of problem solving abilities involving people, tasks and systems. With a “job benchmark”, the 21st century company is able to compare applicants using a valid and reliable talent assessment that aligns structurally to the job benchmark. The result is a powerful ability to judge each candidate with pinpoint accuracy around total talent.

Using a “total talent” HR business strategy, will enable companies to better deliver what IBM calls the “integrated supply chain for talent,” – forecasting skill gaps, training, re-skilling and resupplying – and filling their ranks with “high performers”.

Companies with the ability to connect their business needs to their soft skill and acumen talent requirements in addition to their workforce needs – especially for high-level hard skill positions – will gain the decisive competitive advantage.

So, how can this transition be made?

The good news is that it is happening in some companies, large and small, and it is much easier than most HR executives realize. The tools exist and have a solid track record of success in defining a job’s talent requirements and identifying those talents in candidates.

To move away from the historic transactional role, I believe HR needs to focus on these areas:

Talent management

  1. Identify what role-based talent is needed for its near-term business strategy
  2. Put plans in place to identify and attract the right talent
  3. Retain and develop the talent of the those already within the business

Result: Consistent hiring of high performers, high personal job satisfaction, lower turnover of high performers

Employee engagement

Provide employees with knowledge and skills to recognize, understand, appreciate and adapt to different talent profiles.

Result: More proactive communications, a greater collaborative work environment, personal motivation at its highest possible level and up-skilling soft skills that enables business performance – from the individual level right up through the organization.

Achieving this will mean changing the minds of board directors and HR people:

  • Recognizing what it is that adds value through a deep understanding of external and internal business realities and how value is defined by stakeholders inside and outside the business
  • Creating a culture of “HR learning” that leads to implementing new, more effective strategic tools and processes – ultimately developing the HR leaders of tomorrow to maintain this shift
  • Delivering the strategic input the business needs, not talking about it
  • Understanding how globalization will impact the business locally, especially talent management and organizational culture
  • Driving policy that grows the bottom line, through understanding which factors impact revenue streams
  • Working far more closely with Operations to identify what those factors are and how to increase productivity and revenue

In conclusion

How to address talent management, from hiring to retaining top talent, is a shift that is already being made in forward-thinking businesses. For most, the traditional HR function is not adding enough value to keep the organization competitive (and may be hindering growth and success) and should not be tolerated.

If you are an HR professional going through this type of repositioning let’s talk. If you are an operational executive frustrated with HR’s lack of strategic effectiveness, let’s talk.

Because of my HR background (18 years in corporate HR) one of my most enjoyable roles today as an organizational development consultant is helping HR to be seen as “high value” internally.

Carl Nielson is founder and principal of The Nielson Group, formed in 1998 to help organizations create breakthrough performance.

The Nielson Group’s key expertise includes strategies for hiring top performers through job-talent matching, executive coaching, developing senior management teams and nonprofit boards, cross-functional employee engagement, team effectiveness and goals-and-role alignment. Carl has been recognized for his work in predictive selection, executive coaching, team development and high-potential identification.

Prior to starting his own company, Nielson served for 18+ years in HR and operational management roles. Today, Carl’s consulting practice addresses all areas of employee development, leadership development, hiring-for-fit and team effectiveness. In his spare time, Carl serves students in high school and college with career coaching with the Career Coaching for Students program which he authored. The program is now used throughout the United States and parts of Canada.

He holds a BS degree in Organization and Industrial Psychology and is a Certified Professional Behavioral Analyst, Certified Professional Motivators Analyst and Certified Professional TriMetrix® Analyst. He is also a certified facilitator of The Coaching Clinic for managers and supervisors.

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